Community Food Co-Op
   

Bylaws Change: Member-Owner Investment in Your Co-op

Proposed Changes to the Articles of Incorporation and Bylaws

In 2006, the Co-op’s member-owners approved changes to the Articles of Incorporation and the Bylaws authorizing the Co-op to pay member-owner dividends (formerly called patronage dividends) to its members based on member purchases. That vote allowed the Co-op to share member profits with its member-owners, something that was not possible before the vote.

The Co-op is now asking its members to approve another change to the Articles of Incorporation and the Bylaws that would allow the Co-op to raise capital through issuing new investment shares to its members. This would allow our membership to invest in the Co-op and be paid dividends, when declared by the Board of Directors. These new shares would not impact the existing member-owner dividend system.

The Co-op plans to use to proceeds of the investment shares to pay down debt associated with its acquisition and remodel of the Holly Street Building. In practical terms, this would save the Co-op having to pay lenders interest on its debt, improve its balance sheet, and may allow the Co-op to pay investment share dividends to its member-owner investors.

The Co-op’s management explored how other co-ops across the country are raising additional capital to enhance and improve their operations and the services they provide to their members. Many have investment shares, member loan programs, or have issued stocks or bonds. We believe that offering members the opportunity to become investors in the Co-op is the best choice for our co-op. It has been a two-year process to bring this to a vote of the membership and a lot of thought went into the decision.

The Co-op’s Board of Directors and management encourage you to carefully consider, and hopefully approve, the proposed change. We think this is an exciting opportunity for our member-owners to invest in their co-op!


FAQs

Why vote?

Even if you, personally, don’t want to invest, consider voting to make this option available to your fellow member-owners.

What is required to approve the changes?

Approximately 700 affirmative votes. Robust participation in the election is critical to attain this threshold.

Why now?

Financially, the Co-op does not need to make this change now. The Co-op Board and management have had an ongoing desire to create an opportunity for member investment and consider it to be a great connection to our community that is mutually beneficial.

What is the benefit to the member-owner?

The member-owner can invest in the Co-op and earn a rate of return on their investment.

What is the benefit to the Co-op?

Paying off debt on the Co-op’s most valuable asset, the Holly Street Building, strengthens the Co-op’s financial position.

What are Class A shares?

Our current $90 membership is called common shares. We will replace the term "common shares” with Class A shares. Only Class A shares are eligible for full voting rights and to receive the member-owner dividend.

What are Class B, C, and D shares?

The new investment shares will be called Class B, C, and D. They will receive an annual investment dividend should the Board declare one.

What return could I get on my investment?  

Class

Number of Shares

Price per Share

Dividend Rate

Number of years until Redeemable

Minimum Purchase

Class B

2,000

$100

2.75%

1

$500

Class C

2,000

$500

4%

4

$2,500

Class D

1,800

$1,000

5%

5

$10,000

Where can I get the full version of the Amended and Restated Articles of Incorporation and the proposed Bylaws?

At the service desks, on the Co-op website, and at the Annual Meeting.

What happens if the changes are approved?

Election results will be announced in early April. If approved, member-owners can start the investment process by contacting Finance Manager Jon Edholm or General Manager Jim Ashby and reviewing a disclosure document that outlines investment terms and risks. Investments will be accepted through December 31, 2018.
 

  

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