New Mexico is home to various legal entities designed for cooperatives, including Regular Cooperative Associations, Marketing Cooperative Associations, and Rural Electric Cooperative Associations. Each type serves distinct purposes under specific statutes, aiming to foster cooperative efforts in various sectors.
Statutes
Regular Cooperative Associations
The 2018 New Mexico Statutes, Chapter 53 – Corporations, Article 4 – Cooperative Associations, outline the regulatory framework Regular Cooperative Associations. Under these statutes, associations have the flexibility to engage in a wide range of lawful activities, including acquiring, selling, producing, operating, manufacturing, furnishing, exchanging, or distributing various types of property, commodities, goods, or services, and conducting any lawful business venture (NM Stat § 53-4-3, 2018).
Foreign corporations operating cooperatively and compliant with their respective state laws can seek authorization from the public regulation commission (or secretary of state) to operate as a foreign cooperative corporation in New Mexico (NM Stat § 53-4-41, 2018). Additionally, both associations formed under Chapter 53, Article 4 NMSA 1978 and foreign corporations approved to conduct business in New Mexico are subject to an annual license fee of twenty dollars ($20.00), as specified under NM Stat § 53-4-45 (2018).v
Marketing Cooperative Associations
The Marketing Cooperative Associations – was created to promote, foster and encourage the intelligent handling, processing and orderly marketing of agricultural products and the organization and incorporation of cooperative marketing associations of agricultural producers. NM Stat § 76-12-2 (2018). Associations formed under these rules are considered nonprofit. This means they’re not set up to make money for themselves or their members directly. Instead, their goal is to benefit their members who are either producers or users of the products they buy (NM Stat § 76-12-3 (2018)).
An association formed under this act can be involved in various activities related to agricultural products. This includes marketing or selling these products, as well as activities like harvesting, preserving, processing, packaging, grading, storing, shipping, or using them. It also covers manufacturing or selling byproducts, supplying machinery, equipment, feed, fertilizer, seeds, oil, gasoline, or other supplies. Additionally, it can provide financial support for these activities or offer cooperative business or educational services to genuine agricultural producers (NM Stat § 76-12-5 (2018)).
May have but does not need to have “cooperative” in the association name(NM Stat § 76-12-7 (2018)).
Every association that follows the Cooperative Marketing Association Act and every foreign association allowed to operate in this state under that act must get a yearly license from the secretary of state to do business here. Both local and foreign corporations need to pay a $25 fee each year to the secretary of state before getting this license (NM Stat § 76-12-20 (2018)).
Rural Electric Cooperative Associations
The 2018 New Mexico Statutes, Chapter 62 – Electric, Gas, and Water Utilities, Article 15, known as the Rural Electric Cooperative Associations, allow for the creation of nonprofit membership corporations called cooperative corporations. These cooperatives are established under the Rural Electric Cooperative Act with the primary aim of supplying electric power and encouraging the use of electricity in rural regions.
Credit Union Act
The Financial Institutions Division oversees and regulates credit unions established under the Credit Union Act ( §58-11-1 NMSA 1978). Credit unions are cooperative, nonprofit financial institutions created under or governed by the Credit Union Act. They aim to promote saving habits among members, offer fair and reasonable credit options, and empower members to manage their own finances democratically to enhance their economic and social well-being.
It’s important to note that the Financial Institutions Division does not regulate federal credit unions. These are overseen by the National Credit Union Administration (NCUA), with New Mexico falling under NCUA Region 4.
Governance & Management
Regular Co-op Association
Cooperatives can be established by five or more natural persons or two or more associations, providing a versatile platform for collaborative endeavors (NM Stat § 53-4-2, 2018). Within the cooperative structure, each member typically holds one vote, with exceptions for group representation, and proxy voting is expressly prohibited, although voting by mail may be permitted as outlined in NM Stat § 53-4-13, § 53-4-14, and § 53-4-15 (2018). Effective management is ensured through a board comprising a minimum of five directors, facilitating strategic decision-making and operational oversight (NM Stat § 53-4-18, 2018). Furthermore, groups initially incorporated under different state laws but operating cooperatively have the option to transition and align with the Cooperative Association Act upon a two-thirds majority vote, necessitating amendments to their articles and bylaws to comply with the Act’s provisions (NM Stat § 53-4-40, 2018).
Marketing Co-op Association
Five or more natural persons of full age, engaged in the production of agricultural products either as tenants or landlords, who are residents of this state or any other, or two or more cooperative associations, organized under the laws of this state or any other, may form a nonprofit cooperative association with or without capital stock, under the provisions of this act. NM Stat § 76-12-4 (2018)
The affairs of the association shall be managed by a board of not less than five or [nor] more than twenty-one directors to be elected by the members with such qualifications as may be provided for in the articles of incorporation or bylaws. All of the directors shall be members of the association or officers, directors or members of member associations.NM Stat § 76-12-14 (2018)
The officers of every such association shall be a president, one or more vice presidents, a secretary and a treasurer and such other officers as may be authorized in the bylaws. The president and at least one of the vice presidents must be members and directors of the association. The office of secretary and treasurer may be combined. The treasurer may be other than a member of the association and as such shall not be considered as an officer, but as a function [functionary] of the board of directors. Officers shall be elected by the directors in the manner and for such terms as the bylaws provide.NM Stat § 76-12-15 (2018)
Members might have to sign contracts when joining the association. These contracts outline that members agree to use the facilities set up by the association, sell their products to or through the association, or buy their supplies from the association or its facilities, as specified in the contract (NM Stat § 76-12-16 (2018)).
Articles of Incorporation
Regular Cooperative Association
Marketing Cooperative Association
Rural Electric Cooperative Association
Sample Bylaws and Operating Agreements
Electrical Cooperative Bylaws:
Food Coop Bylaws:
Educational Cooperative Bylaws
Housing Cooperative Bylaws
Cooperative Support Organizations
Author
Pat Feghali is an attorney licensed in New Mexico and Ohio. She works mostly in small business formations, real estate law, and estate planning.
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