Correction Notice Regarding Articles of Incorporation Amendment
We would like to bring to your attention an error in the recently mailed version of the redline proposed amendments to the Articles of Incorporation. Upon review, it has come to our attention that in Article 3, Section 2, the word "not" was incorrectly crossed out. This error was inadvertent and does not accurately reflect the intended language of the amendment. We apologize for any confusion. The corrected version of the amendment is as follows:
ARTICLE 3
SECTION 2.with eEach Member shall be entitled to only one (1) vote. in the affairs of this Cooperative and Memberships shall not be transferable except only with the consent and approval of the Board of Directors of this Cooperative. Voting by proxy shall be prohibited.
Please note that the correct language was presented in the clean copy on our website and in the proposed amendments to the Bylaws. If you have any questions or concerns regarding this correction, please do not hesitate to contact us.
A complete version of the proposed amendments to the Articles of Incorporation and the Bylaws are available above, by clicking on the green buttons labeled "Proposed Articles and Bylaws". Both a clean copy and updated redline version are available.
General Frequently Asked Questions
The Articles of Incorporation is the founding legal document that provides a framework for the governance of the Cooperative and is filed with the Minnesota Secretary of State.
Bylaws are the set of rules and procedures for operating the Cooperative. In general, Bylaws should define the basic rights and responsibilities members have in voting and capitalizing the Cooperative, as well as the basic responsibilities of the Board of Directors and management. Bylaws should be flexible enough to deal with changing business and market conditions as well as the general procedures that will be followed to make organizational decisions. Bylaws define the Cooperative's basic democratic structure and provide the general rules for the internal governance of the Cooperative; they do not codify specific decisions or policies.
As time passes, the industry changes, technology advances and member needs/expectations grow. It is important to periodically review and amend the Articles of Incorporation and the Bylaws in order to keep these important documents relevant and effective. It has been over 10 years since these documents were last revised and the world has changed significantly in that time.
Yes, both documents have been amended in the past. It is routine for the Board of Directors and Cooperative staff to review Articles of Incorporation and Bylaws on a regular basis. Over time, changes and adjustments are recommended. However, because they may not be urgent or substantial, and the process of presenting amendments to the membership is costly, recommendations are saved for a time when a vote is most needed, there are enough changes to warrant the expense, and the timing makes sense for the Cooperative, which is the case for 2024. The most recent amendments were made in 2014.
The purpose of this review is to ensure that these documents are current, compliant with changes in law, and reflect best practices in the industry. Alterations are intended to modernize archaic language, increase clarity, simplify where possible, and facilitate the more efficient operation of the Cooperative.
Most changes are simple language and grammatical updates that make the documents easier to read and understand. Other changes help keep the documents current and relevant either by including technology, industry best practices or allowing for flexibility into the future.
A full, red-lined copy of the proposed amendments and their explanations can be viewed online at https://www.kpcoop.com/articles-and-bylaws.
Over the last year, the Board of Directors, Kandiyohi Power Cooperative staff, an attorney, and an independent communication consultant conducted a review of the Cooperative’s Articles of Incorporation and Bylaws. The purpose of this review is to ensure that these documents are current, compliant with changes in law, and reflect best practices in the industry. After reviewing these documents line by line and comparing them to Cooperative business procedures, future needs, and industry advancements, necessary alterations were identified and suggested. After discussion and review of these recommendations, the Board of Directors, during the January 2024 Board Meeting, approved the proposed amendments to the Articles of Incorporation and Bylaws for a vote by the members.
The proposed amendments will be presented to all members for a vote. The changes require a “yes” from a majority of the votes cast.
Voting begins in late March and runs through 9am on April 23, 2024. The results will be announced at the Annual Meeting on April 23, 2024.
To place your vote:
On the paper ballot received in the mail, vote to approve the amendments by selecting “YES” on the question “Should the Articles of Incorporation of this cooperative be amended and restated as sent to the membership and recommended by the board of directors?”, and on the question “Should the Bylaws of this cooperative be amended as sent to the membership and recommended by the board of directors?,” then place the ballot into the envelope marked “Ballot Envelope” and seal. Then place the “Ballot Envelope” in the return envelope addressed to “Kandiyohi Power Cooperative, Attn: Secretary,” seal and mail it. Please allow sufficient time for delivery.
*Mail ballots will only be accepted if received by 4:00 p.m. on April 22, 2024.
Member ballot packages also include the option to vote for a director to represent the membership on Board.
Ballot packages will be mailed late March with further instructions.
If the proposed amendments don’t pass, the Articles and Bylaws remain as they are today. However, the proposed amendments have been identified as important and necessary, therefore the Board and the Cooperative will need to begin a process of identifying why the proposed amendments did not pass, revisit potential adjustments, and then re-present changes to the membership in the near future.
The most significant changes are interrelated, so it makes the most sense to get an up-or-down vote on all the revisions at one time. In addition, the process to present a vote on proposed amendments to members is expensive due to considerations of time, printing, postage, etc. It is a Bylaw requirement that all members receive notice of the amendments to these documents and the opportunity to vote on them for approval.
The complete list of the Bylaw changes can be found online at https://www.kpcoop.com/articles-and-bylaws. If you have questions or concerns, please call 800-551-4951 during business hours.
Amendment Frequently Asked Questions
The bulk of changes proposed reflect an update in language and/or grammar to make the Articles of Incorporation and Bylaws easier to understand. Complicated language has been simplified, discontinued practices have removed, and various sections were relocated in an order that makes more sense. While the adjustments may look overwhelming on the redline document, the actual proposed changes are not nearly as significant as they appear.
A clean copy of the proposed Articles of Incorporation and Bylaws is also available at https://www.kpcoop.com/articles-and-bylaws. This document may make understanding the result of your vote easier to follow.
It’s been over 10 years since the Bylaws have been reviewed or altered and in that time technology has drastically changed. As the Cooperative approached the review process, it was a priority to make sure the Articles of Incorporation and the Bylaws reflect the need to communicate and conduct business electronically. Language related to how Board of Director meetings are held, member communication takes place, and/or how member votes are made has been updated to include the option of using electronic methods. The language proposed clearly connects these practices to the use of technology without limiting the Cooperative to specific methods to provide flexibility in the future as technology continues to evolve.
The membership responsibility section of the proposed amendments was updated and expanded to clarify the responsibilities of a member. It reflects current Cooperative practices and mirrors the agreement members make on the Cooperative’s application for membership. The responsibilities listed provide clarity of past assumptions and are necessary to maintain the distribution system and provide reliable service. To highlight the primary points of this section, in order to maintain service and the rights of membership you must pay your bill or associated fees and allow the cooperative access to its equipment on your property.
The Arbitration section was introduced to expedite and reduce the cost of resolving disputes between a member and the Cooperative. This alternative to a jury trial allows either party to opt for arbitration. Recognizing the longstanding acceptance of arbitration in Minnesota law, the section aligns with practices adopted by many cooperatives in the state. The Minnesota Rural Electric Association and the Cooperative's insurance company collaborated in developing the language, aiming to provide a fair and efficient method for dispute resolution. The inclusion of this section allows for flexibility, as either the member or the Cooperative can choose arbitration, contributing to an overall more accessible and streamlined process.
The Security Interest amendment introduces a mechanism for the Cooperative to safeguard its financial interests by securing the complete and timely payment of a Member’s obligations. This is achieved by granting the Cooperative a continuing security interest in the member's allocated capital. Essentially, this amendment acts as a protective measure, providing the Cooperative with a legally recognized interest in the allocated capital of a member, ensuring a reliable means to secure and receive payment for the member's financial commitments. The intent is to bolster the Cooperative's financial stability by establishing a mechanism that encourages and guarantees the fulfillment of member obligations.
The Liability Limits amendment serves to establish clear service expectations while defining the extent of the Cooperative's liability. It limits the Cooperative's liability to damages caused specifically by gross negligence or willful misconduct. Additionally, the amendment addresses force majeure events and sets a demarcation point for responsibility. The overall aim is to protect the Cooperative from certain legal and financial risks associated with providing electric service. By delineating these parameters, the amendment helps manage and mitigate potential liabilities while ensuring accountability for actions involving gross negligence or willful misconduct.
The advisory actions amendment highlights the paramount authority and responsibility of the Board in governing and managing the Cooperative. It emphasizes the importance of comprehensive research and due diligence when considering advice and recommendations from Members during meetings. By underscoring the Board's ultimate authority, the amendment emphasizes the need for a careful evaluation of Member input before making final decisions. This reinforces a structured decision-making process that ensures thorough consideration of diverse perspectives while maintaining the Board's overarching responsibility for effective governance and management of the cooperative.
The proposed changes aim to provide a clearer delineation of qualifications for directors, ensuring a more transparent and informed selection process. By specifying the qualifications explicitly, the amendment seeks to establish a comprehensive framework aligned with the organization's goals, values, and the skills essential for effective governance. This enhancement strengthens the criteria for directorship and promotes a board with diverse expertise and a better understanding of the organization's mission.
The disqualification of a Director amendment introduces clear criteria and procedures for the potential disqualification of a Director, with a focus on ensuring transparency, accountability, and a consistent approach. This amendment establishes a direct link between the qualifications outlined in Article 5 Section 3 and the disqualification of a Director. By doing so, it provides a structured framework to address situations where a Director's actions, conflicts of interest, or behavior could compromise their ability to fulfill their responsibilities. The amendment aims to maintain the integrity of the Cooperative's governance by upholding clear standards and procedures, fostering transparency in decision-making, and ensuring accountability for Directors.
The Vacancies section introduces specific guidelines for filling vacancies on the Board, emphasizing a transparent and member-involved process. The new language ensures that, in the event of a vacancy, an election will be held within the vacant district, allowing members to vote for the candidate of their choice to fill the vacancy under all circumstances. Notably, the amendment removes the Board's authority to appoint a Board member, reinforcing the principle of member-driven governance. This change aims to maintain a democratic and inclusive approach to filling Board vacancies, wherein members actively participate in the selection of their representatives through the electoral process.
The proposed changes eliminate the board's authority to unilaterally appoint a new member in the event of a mid-term vacancy. Instead, the decision would be reinstated to the hands of the membership, allowing a more transparent and inclusive process. Members will participate in the selection through a democratic vote, promoting accountability, representation, and collective decision-making within the organization's governance structure.
This change promotes transparency in governance by ensuring that candidates for the Board of Directors disclose financial backing received from others in support of their campaign efforts.
The Unclaimed Capital Credit Service Charge provision grants the Board the authority to impose a service charge on unclaimed capital credits in the future if they so choose. This service charge is designed to offset the administrative costs associated with maintaining unclaimed accounts. The introduction of such a fee serves multiple purposes: it encourages timely claiming of capital credits, promotes financial efficiency by covering administrative expenses, and ensures fairness in the overall distribution process. By having the flexibility to implement a service charge, the Cooperative aims to create a system that not only encourages members to claim their capital credits promptly but also ensures that the administrative burden of managing unclaimed accounts is addressed in a sustainable and equitable manner.