Errata and Updates
Van P. Baldwin
Errata and Updates
Last updated February 2, 2009
RE: "ELECTRONIC COMMUNICATIONS"
In the latter part of 2004, the California legislature enacted a number of provisions related to electronic communications within corporate settings. For example, meetings of a cooperative's members or Board of Directors may be held via video screen, and "notices" of meetings and "annual reports" could be sent by e-mail, assuming certain requirements are met.
Although the Sample Bylaws (and related "Legal Sources and Comments") in the Sourcebook do not reflect these new provisions, generally electronic communications would not have to be provided for in the bylaws (even though it would certainly be helpful, and perhaps less confusing, to have relevant bylaw provisions guiding co-op personnel).
Approximately 11 sections of the Sample Bylaws could be expanded to reflect the new electronic provisions. Generally, however, the Board of Directors may simply authorize the use of electronic communications. But, again, the Board needs to make sure that the various requirements for lawful electronic communications are followed.
The phrase "the Incorporators and" should be stricken from the statement "IN WITNESS WHEREOF, the undersigned, being the Incorporators and the initial Directors of this Corporation" to read only "IN WITNESS WHEREOF, the undersigned, being the initial Directors of this Corporation". Also, the reference to "Director" beneath each signature line of both the "witness" and the "declaration" sections should be replaced by the typed name of each initial Director. These article changes are based upon subsequent interactions with the Secretary of State's office.
In the third line of Section 5.03(b) of the “Sample Bylaws,” the word “or” should be replaced by “of.”
Due to a recent change in the Internal Revenue Code, any distribution of dividends on capital no longer reduces the amount of surplus available for the distribution of patronage refunds, assuming that the cooperative’s governing documents do not provide otherwise. This law change is effective for tax years beginning after October 22, 2004, and could result in significant tax savings for at least some co-ops. Cooperatives distributing patronage refunds should review all relevant documents (e.g., bylaws) to determine whether any amendments are needed. (This change is already reflected in the “Sample Bylaws” of Chapter 5.)
The footnote (“10” re Chapter 12) related to the above change in the tax law should now read “Internal Revenue Code section 1388(a), as amended in 2004.”
Articles of Incorp.
The model Articles of Incorporation included on this website have been modified from the original version to delete the words "the Incorporators and" from the "witness" sentence. Also, the reference to "Director" beneath each signature line of both the "witness" and the "declaration" sections should be replaced by the typed name of each initial Director. These article changes are based upon subsequent interactions with the Secretary of State's office.
Return to A Legal Sourcebook for California Cooperatives: Start-Up and Administration main page.