Adjusting Co-op Bylaws for Modern Voting

Outdated laws, charters and bylaws exist everywhere. In the state of Minnesota, for example, it was once illegal for nursing homes and senior centers to play bingo more than two days per week. After a review of outdated laws, the legislature removed it from the books in 2015.

Just as it makes sense to get rid of antiquated laws, it is beneficial for your evolving Cooperative (Co-op) to review and update your bylaws to keep up with your membership and changing times.

Outdated bylaws can create confusion, higher costs and even low voter response rates in member elections, especially when you’re seeking to modernize your voting options. Sometimes, your Co-op’s bylaws just need a little tuneup, but in other cases, it may require a complete overhaul.

How Do You Know It’s Time to Update Your Bylaws?

If any of these scenarios apply to you, it’s time to start updating your co-op bylaws:

• Your Cooperative doesn’t have a bylaw committee. A bylaw committee should be well-rounded and diverse in skill sets, age, etc. In short, it should be representative of your membership and understand how updates can help your Co-op save money and increase member convenience.
• Your bylaws haven’t been updated or amended for years (or ever).Amendments and updates to bylaws and election policies may require member approval, so it is important to establish procedures or follow those already in place to ensure everything is legal and legitimate. And since you’re focusing on your bylaws, don’t make them too difficult to amend in the future and you’ll be better able to adapt as your Cooperative continues to evolve.
• No one is quite sure exactly how to update your organization’s bylaws.Consult an attorney before beginning the process and keep them in the loop throughout – in some cases, state statutes override an organization’s bylaws, so working with legal counsel is the only way to be certain your Cooperative is compliant. One common reason many Co-ops review and revise their bylaws is to include the ability to offer online and mobile voting options in the organization’s elections.

Why Is This an Area of Focus?

Members are increasingly requesting the ability to vote anywhere, any time to make participation on their Co-op’s governance convenient. Additionally, online voting saves postage, printing, mailing and staff costs. Cooperative bylaws often need to be amended to allow for modernization of election procedures.

How to Update Co-op Bylaws

Updating Co-op bylaws for modern voting or other reasons is a good step toward progress. It shows your members you are committed to improving the organization. Amendments also help maintain compliance whenever there are changes in governing laws and regulations on Cooperatives. Most importantly, updated bylaws ensure policies and resolutions remain beneficial for all parties.

Knowing how to update bylaws requires a thorough understanding of specific procedures, which may vary according to your location and current policies. Here are four steps you can take to ensure proper amendments to your Co-op regulations.

1. Review Existing Bylaws

Start by reviewing the proprietary lease, certificate of incorporation, and other governing documents. Analyze the amendment process in your bylaws and ensure you’re following the outlined procedures for changing rules.

Some Cooperatives may require a super-majority or majority vote from the board of directors or the shareholders. Others have different rules on what constitutes a quorum. To proceed with the amendment, study your current bylaws to avoid legal repercussions.

2. Check Your Indemnification Provisions

Board members in Cooperatives often serve on a voluntary basis. It would be wise to revisit your bylaws’ indemnification provisions to assure your directors that they are protected against possible legal liabilities when they perform their duties as board members.

Update your bylaws with specific language instead of simply stating that their indemnification follows Business Corporate Laws. Ensure coverage by making your amendments clear and direct. Remember to review insurance policies for directors and officers and include a provision on coverage against most claims unrelated to willful misconduct.

3. Propose Bylaw Amendments

Identify areas for improvement and create a draft of all proposed amendments. Use clear and precise language and prepare a rationale for each proposal to help members understand the need for the change.

4. Notify Your Members

Inform your members about the proposed bylaw amendments. Once the changes are approved by the board, be sure to distribute updated copies. Make your current bylaws accessible to all members and remember to keep a record of the amendments process. Monitor compliance now and then to guarantee adherence and prevent legal liabilities.

Consult the Experts on Election Bylaws

Does your Co-op have questions about when and how to amend bylaws? Our experts at Survey & Ballot Systems (SBS) can help — we provide turnkey solutions for Cooperatives and other Member-Based Organizations. Contact us today, and we can share our best practices and guidance.