AS Title 10, Chapter 25: Electric and Telephone Cooperative Act

Article 1. Substantive Provisions. Chapter 25. Electric and Telephone Cooperative Act. Sec. 10.25.010. Powers of electric or telephone cooperative; prohibited action. (a) Except as provided in (b) of this section, an electric or telephone cooperative may (1) sue and be sued in its corporate name; (2) have perpetual existence; (3) adopt a corporate seal and alter it; (4) construct, buy, lease, or otherwise acquire, and equip, maintain, and operate, and sell, assign, convey, lease, mortgage, pledge, or otherwise dispose of or encumber lands, buildings, structures, electric or telephone lines or systems, dams, plants and equipment, and any other real or personal property, tangible or intangible, that is necessary, convenient, or appropriate to accomplish the purpose for which the cooperative is organized; (5) buy, lease, or otherwise acquire, and use, and exercise and sell, assign, convey, mortgage, pledge or otherwise dispose of or encumber franchises, rights, privileges, licenses, and easements; (6) borrow money and otherwise contract indebtedness, and issue evidences of indebtedness, and secure the payment of the indebtedness by mortgage, pledge, or deed of trust of, or any other encumbrance upon its real or personal property, assets, franchises, or revenues; (7) construct, maintain, and operate electric transmission and distribution lines or telephone or related telecommunications service lines along, on, under and across publicly owned lands and public thoroughfares, including, without limitation, all roads, highways, streets, alleys, bridges, and causeways; (8) exercise the power of eminent domain; (9) become a member of other cooperatives or corporations or own stock in them; (10) conduct its business and exercise its powers inside or outside the state; (11) adopt, amend, and repeal bylaws; (12) make all contracts necessary, convenient, or appropriate for the full exercise of its powers; (13) make donations for the public welfare or for charitable, scientific, or educational purposes; (14) do and perform any other act and thing, and have and exercise any other power that may be necessary, convenient, or appropriate to accomplish the purpose for which the cooperative is organized. (b) An electric or telephone cooperative may not use cooperative funds to promote or oppose the candidacy of a candidate for director of the cooperative. Sec. 10.25.020. Powers of electric cooperative. An electric cooperative may (1) generate, manufacture, purchase, acquire, accumulate, and transmit electric energy, and distribute, sell, supply, and dispose of electric energy to its members, to governmental agencies and political subdivisions, and to other persons not exceeding 10 percent of the number of its members; however, a cooperative that acquires existing electric facilities may continue service to persons, not in excess of 40 percent of the number of its members, who are already receiving service from these facilities without requiring them to become members, and these persons may become members upon the terms as may be prescribed in the bylaws; (2) assist persons to whom electric energy is or will be supplied by the cooperative in wiring their premises and in acquiring and installing electrical and plumbing appliances, equipment, fixtures, and apparatus by financing them, and in connection with these services wire or have wired the premises, and buy, acquire, lease, sell, distribute, install, and repair electric and plumbing appliances, equipment, fixtures, and apparatus; (3) assist persons to whom electric energy is or will be supplied by the cooperative in constructing, equipping, maintaining, and operating electric cold storage or processing plants by financing them or otherwise; (4) operate a waste heat distribution system; (5) operate a heating distribution system that was in existence on June 9, 1988; (6) provide sewer, water, or gas utility service if the cooperative has received a certificate of convenience and necessity under AS 42.05.221 — 42.05.281 from the former Alaska Public Utilities Commission or the Regulatory Commission of Alaska for each type of service provided; (7) provide direct satellite television programming services; in this paragraph, “direct satellite television programming services” means a video broadcast signal that is received directly from a satellite by an end user. Sec. 10.25.030. Powers of telephone cooperative. (a) A telephone cooperative may (1) furnish, improve, and expand telephone or related telecommunications service to its members and to other users not in excess of 10 percent of the number of its members; however, telephone or related telecommunications service may be made available by a cooperative through interconnection of facilities to any number of subscribers of other telephone or related telecommunications systems, and through pay stations to any number of users, and a cooperative that acquires existing telephone facilities or related telecommunications facilities may continue service to persons, not exceeding 40 percent of the number of its members, who are already receiving service from the facilities without requiring them to become members, and these persons may become members on terms as may be prescribed in the bylaws; (2) connect and interconnect its telephone or related telecommunications service lines, facilities, or systems with other telephone or related telecommunications service lines, facilities, or systems; (3) make its facilities available to persons furnishing telephone or related telecommunications service inside or outside the state. (b) [Repealed, § 22 ch 29 SLA 2020.] Sec. 10.25.040. Name. (a) The name of a cooperative must include the words “electric,” “telephone,” “telecommunications,” or “telecom,” as appropriate to its purpose, and “cooperative” or “association,” and the abbreviation “Inc.” (b) The name of a cooperative must be distinguishable on the records of the Department of Commerce, Community, and Economic Development from the name of any other organized entity and from a reserved or registered name. The Department of Commerce, Community, and Economic Development may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this subsection. (c) The provisions of (a) of this section do not apply to a corporation that becomes subject to this chapter by compliance with AS 10.25.290 and 10.25.300 or 10.25.820 and that elects to retain a corporate name that does not comply with (a) of this section. Sec. 10.25.050. Incorporators. Five or more persons, including cooperatives, may organize a cooperative. Sec. 10.25.060. Articles of incorporation. (a) The articles of incorporation of a cooperative must recite that they are executed under this chapter and must state (1) the name of the cooperative; (2) the address of its principal office; (3) the names and the addresses of the incorporators; (4) the names and addresses of its directors. (b) The articles may contain any provisions not inconsistent with this chapter that are considered necessary or advisable for the conduct of its business. The articles shall be signed by each incorporator and acknowledged by at least two of the incorporators, or on their behalf, if they are cooperatives. It is not necessary to recite in the articles the purpose for which the cooperative is organized or any of its corporate powers. Sec. 10.25.070. Bylaws. The board of directors shall adopt the first bylaws of a cooperative to be adopted following an incorporation, conversion, merger, or consolidation. Thereafter the district delegates in cooperatives having three or more districts that are not connected by a road system to another district of the cooperative may adopt, amend, or repeal the bylaws by the affirmative vote of a majority of the district delegates voting on the adoption, amendment, or repeal at a meeting of the district delegates. In all other cooperatives the members shall adopt, amend, or repeal the bylaws by the affirmative vote of a majority of the members voting on the question. The bylaws must set out the rights and duties of members, district delegates, and directors and may contain other provisions for the regulation and management of the affairs of the cooperative consistent with this chapter or with the articles of incorporation of the cooperative. Sec. 10.25.080. Membership. (a) Each incorporator of a cooperative shall be a member of the cooperative or of another cooperative that is a member of it. A person may not become a member unless that person agrees to use electric energy, telephone or related telecommunications service, or other services furnished by the cooperative when they are made available through its facilities. (b) Membership in a cooperative is not transferrable, except as provided in the bylaws. The bylaws may (1) prescribe additional qualifications and limitations on membership; (2) require membership as a condition of obtaining service from the cooperative; (3) provide for termination or suspension of membership; however, a membership may not be terminated unless procedures for termination are contained in the bylaws. Sec. 10.25.090. Meetings of members and district delegates. (a) An annual meeting of the members of a cooperative shall be conducted as provided in the bylaws of the cooperative. An annual meeting of the members of a cooperative that has been divided into districts as provided for in AS 10.25.190 may consist of separate annual meetings of the members of each district. Unless prohibited by the articles or bylaws of the cooperative, the members of a cooperative may conduct an annual meeting by teleconference or another means of communication that ensures all members participating can hear each other during the meeting. (b) Special meetings of the members or district delegates may be called by a majority of the board of directors or by not less than 10 percent of all members or 10 percent of all district delegates. A special meeting of the members of a cooperative that has been divided into districts as provided for in AS 10.25.190 may consist of separate special meetings of the members of each district. (c) An annual meeting of district delegates of a cooperative shall be conducted as provided in the bylaws of the cooperative. Sec. 10.25.100. Notice of meetings. Except as otherwise provided in this chapter or the articles or bylaws of a cooperative, written notice stating the time and place of each meeting of the members or district delegates shall be given to each member or district delegate, in person or by mail, electronic mail, or text message, not less than 15 days nor more than 60 days before the date of the meeting. Notice of a special meeting of the members, together with notice of the purpose for which the meeting is called, shall be given to each member or district delegate personally or by mail, electronic mail, or text message, not less than 90 days nor more than 120 days before the date of the meeting. If mailed, notice is considered given when the notice is deposited in the United States mail with postage prepaid addressed to the member or district delegate at the address of the member or delegate as the address appears on the records of the cooperative. If sent by text or electronic mail, notice is considered given when the notice is sent to the member's telephone number, if the telephone is capable of receiving text messages, or the electronic mailing address on record with the cooperative. Sec. 10.25.110. Quorum requirements. (a) Unless the bylaws prescribe the presence of a greater percentage or number of the members for a quorum, a quorum for the transaction of business at all meetings of the members of a cooperative or the members of a district of a cooperative having not more than 1,000 members is five percent of all members, and a quorum for the transaction of business of the members of a cooperative or the members of a district of a cooperative having more than 1,000 members is 50 members. If less than a quorum is present, or considered present under (c) of this section, at a meeting, a majority of those present, or considered present under (c) of this section, may adjourn the meeting from time to time without further notice. (b) Unless the bylaws prescribe the presence of a greater percentage of the district delegates for a quorum, a quorum for the transaction of business at all meetings of the district delegates of a cooperative is 25 percent of all district delegates. (c) Unless prohibited by the articles or bylaws, a member or delegate who votes on a matter by electronic communication received or mail postmarked before a meeting begins is considered to have attended the meeting for the matter on which the member or delegate voted. Sec. 10.25.120. Voting. Each member is entitled to one vote on each matter submitted to a vote of the membership. Each member of a district is entitled to one vote on each matter submitted to a vote at a district meeting. A member may not vote by proxy but may vote, if the bylaws so provide, by mail or electronic transmission, as specified by the cooperative, except that electronic transmission may not be the only allowed option for voting. Sec. 10.25.125. Record date. To determine the members entitled to notice of a meeting of the members or to vote on a matter that is to be submitted to a vote of the members, or for any other proper purpose, the board of directors may fix a date that occurs not more than 30 days before the date of notice or distribution of mail or electronic ballots as the record date for the determination. If a record date is not fixed for the determination of members entitled to notice of a meeting or to vote on a matter, the date on which notice of the meeting or of mail or electronic voting is first distributed is the record date. When a determination of members entitled to vote at a meeting is made, the determination applies until the meeting is adjourned sine die. Sec. 10.25.130. Waiver of notice. A person entitled to notice of a meeting may waive notice in writing either before or after the meeting. Attendance at a meeting is a waiver of notice of the meeting, unless the person attends solely to object to the transaction of business because the meeting has not been legally called or convened. Sec. 10.25.140. Board of directors. The business of a cooperative shall be managed by a board of not less than five directors, each of whom shall be a member of the cooperative or of another cooperative which is a member of it. The bylaws shall prescribe the number of directors, their qualifications other than those prescribed in this chapter, and the manner of holding meetings of the board of directors and of electing successors to directors who resign, die, or are otherwise incapable of acting. The bylaws shall provide for the removal of directors from office for cause and for the election of their successors. Directors may not receive salaries for the services as directors and, except in emergencies, may not receive salaries for their services in any other capacity without the approval of the members. The bylaws may, however, prescribe a fixed fee for each day of attendance at a meeting of the board of directors or other meeting while officially representing the cooperative and for each day of necessary travel to and from a meeting of the board of directors or other meeting while officially representing the cooperative and may provide for insurance and reimbursement of actual expenses incurred while performing duties as a director. Sec. 10.25.145. Liability, indemnification, and insurance. (a) A protected person is not individually liable for conduct performed within the scope of the person's duties for the cooperative. However, the protected person may be held individually liable for conduct if it was not reasonable for the person to believe that the conduct was in, or not contrary to, the best interests of the cooperative. (b) Unless prohibited by the articles of incorporation or bylaws, the cooperative shall indemnify a protected person who is or may be made a party to a contested matter against expenses actually and reasonably incurred in connection with the contested matter. However, the cooperative may not indemnify the protected person if the person did not reasonably believe the conduct to be in, or not opposed to, the best interests of the cooperative. With respect to a criminal action or proceeding, the cooperative shall indemnify a protected person unless the person had reasonable cause to believe that the conduct was unlawful. (c) A cooperative may purchase and maintain insurance on behalf of a protected person against liability asserted against the protected person and incurred in an official capacity or arising out of the person's status, whether or not the cooperative would have the power to indemnify the person against the liability under this section. (d) In this section, (1) “conduct” includes action, inaction, and omission; (2) “contested matter” means a proposed, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative; (3) “expenses” include attorney fees, judgments, fines, and amounts paid in settlement; (4) “protected person” means a director, officer, employee, or agent of a cooperative. Sec. 10.25.150. Term of office of directors. The directors of a cooperative named in articles of incorporation, consolidation, merger, or conversion hold office until the next annual meeting of the members and until their successors are elected and qualify. Each elected director holds office for the term for which elected and until a successor is elected and qualifies. Sec. 10.25.160. Staggered terms of office for directors. Instead of electing all directors annually, the bylaws may provide that directors shall be elected for terms not to exceed four years, or until their successors are elected and qualify, and that the terms of directors shall be staggered so that not all terms expire at the same time. Sec. 10.25.170. Quorum of board. A majority of the board of directors constitutes a quorum. Sec. 10.25.175. Board meetings open; exceptions; notice; remedy. (a) A meeting of the board of directors may be attended by members of the cooperative. Except when voice votes are authorized, a vote shall be conducted in such a manner that the members may know the vote of each person entitled to vote. The board of directors may conduct a meeting by teleconference, or another means of communication that ensures all participating directors can hear each other during the meeting, if the board gives reasonable notice of the meeting and if members of the cooperative are able to attend the meeting sites and hear the meeting. This section applies only to a meeting at which a quorum of the board participates. (b) If excepted subjects are to be discussed at a meeting, the meeting must first be convened as a regular or special meeting and the question of holding an executive session to discuss matters that come within the exceptions contained in (c) of this section shall be determined by a majority vote of the board. No subjects may be considered at the executive session except those mentioned in the motion calling for the executive session unless auxiliary to the main question. Formal action may not be taken during the executive session. (c) The following excepted subjects may be discussed in an executive session: (1) matters the immediate knowledge of which would clearly have an adverse effect on the finances of the cooperative; (2) subjects that tend to prejudice the reputation and character of a person; however, the person may request a public discussion; (3) matters discussed with an attorney for the cooperative, the immediate knowledge of which could have an adverse effect on the legal position of the cooperative; (4) personnel matters. (d) Notice shall be given for all regular or special meetings of the board of directors as provided in the bylaws of the cooperative. (e) A member affected by action taken contrary to this section may bring a suit in the superior court. The court may order appropriate equitable relief after considering the circumstances of the case. Action taken contrary to this section is not void if other equitable relief is available and appropriate. Sec. 10.25.180. General powers of board. The board of directors may exercise all of the powers of a cooperative not conferred upon the members by this chapter, its articles of incorporation, or its bylaws. Sec. 10.25.190. Districts. The bylaws may provide for the division of the territory served or to be served by a cooperative into two or more districts for any purpose, including, without limitation, the nomination and election of directors and the election and functioning of district delegates. These delegates, who shall be members, may nominate and elect directors. The bylaws shall prescribe the boundaries of the districts, or the manner of establishing the boundaries, and the manner of changing the boundaries, and the manner in which the districts function. A member at any district meeting and a district delegate at any meeting may not vote by proxy, by mail, or by electronic transmission. However, the election of directors shall be by mail or, if the bylaws so provide, by electronic transmission, as specified by the cooperative, except that electronic transmission may not be the only allowed option for voting. Sec. 10.25.200. Officers, agents, and employees. The officers of a cooperative are those officers authorized by the bylaws. The officers shall be elected annually by the board of directors from among its members. If authorized by the bylaws, the election may be conducted by written ballot. When a person holding an office ceases to be a director, that person ceases to hold office. The board of directors may appoint those other agents or employees that it considers necessary or advisable and shall prescribe their powers and duties. An officer may be removed from office and a successor elected in the manner prescribed in the bylaws. Sec. 10.25.210. Amendment of articles of incorporation. A cooperative may amend its articles of incorporation as follows, except that it may change the location of its principal office in the manner set out in AS 10.25.230 : (1) the proposed amendment shall be presented to the members or district delegates at a meeting or by written notice; if the proposed amendment is presented at a meeting, the notice of the meeting must set out or have attached to it the proposed amendment; (2) if the proposed amendment, with any changes, is approved by the affirmative vote of not less than two-thirds of those members or district delegates voting on it, the presiding officer of the board of directors shall execute and acknowledge articles of amendment on behalf of the cooperative, and the officer designated by the board shall affix and attest to the seal of the cooperative; if the cooperative accepts ballots both at a meeting and by mail or by electronic transmission, a member may vote by mail, by electronic transmission, or at the meeting, as specified by the cooperative, except that electronic transmission may not be the only allowed option for voting. Sec. 10.25.220. Contents of articles of amendment. (a) The articles of amendment must recite that they are executed under this chapter and must state (1) the name of the cooperative; (2) the address of its principal office; (3) the amendment to its articles of incorporation. (b) The presiding officer executing the articles of amendment shall make and annex to them an affidavit stating that the provisions of AS 10.25.210 and this section regarding the amendment were complied with. Sec. 10.25.230. Change of location of principal office. A cooperative may, upon authorization of its board of directors or its members, change the location of its principal office by filing a certificate reciting the change of principal office, executed and acknowledged by its presiding officer under its seal, attested by the officer designated by the board, in the office of the commissioner. Sec. 10.25.235. Member's right to examine books and records. A member of a cooperative may, at a reasonable time and for a proper purpose, examine and make copies of the books and records of the cooperative at the principal office of the cooperative. The cooperative may charge a member an amount equal to the actual cost of duplicating documents requested under this section. The cooperative may withhold books and records concerning specific matters that were prepared for or during an executive session under AS 10.25.175 (c) and not subsequently made public by the cooperative. The cooperative may also withhold the identity of public information that was referred to during the executive session. Article 2. Merger, Consolidation, and Conversion. Sec. 10.25.240. Merger. (a) Except as provided in (b) of this section, one or more cooperatives, each designated in this section as “merging cooperative,” may merge into another cooperative, designated in this section as “surviving cooperative,” by complying with the following requirements: (1) the proposition for the merger of the merging cooperatives into the surviving cooperative and proposed articles of merger shall be submitted to the members of each merging cooperative and of the surviving cooperative; the notice shall have attached to it a copy of the proposed articles of merger; (2) if the proposed merger and the proposed articles of merger, with any amendments, are approved by the affirmative vote of not less than two-thirds of those members of each cooperative voting on them, articles of merger in the form approved shall be executed and acknowledged on behalf of each cooperative by its presiding officer and its seal shall be affixed by the officer designated by the board. (b) A merger of electric or telephone cooperatives may not take effect unless the surviving cooperative expressly agrees to comply with the terms of each collective bargaining agreement entered into between a merging cooperative and a labor organization representing employees of the cooperative that is in effect on the date of merger. Sec. 10.25.245. Merger of cooperative and corporation organized under AS 10.05 . [Repealed, § 24 ch 134 SLA 1988.] Sec. 10.25.250. Contents of articles of merger. (a) The articles of merger must recite that they are executed under this chapter and must state (1) the name of each merging cooperative and the address of its principal office; (2) the name of the surviving cooperative and the address of its principal office; (3) a statement that each merging cooperative and the surviving cooperative agree to the merger; (4) the names and addresses of the directors of the surviving cooperative; (5) the terms and conditions of the merger and the manner of carrying it into effect, including the manner in which members of the merging cooperatives may or shall become members of the surviving cooperative. (b) The articles of merger may contain provisions not inconsistent with this chapter that are considered necessary or advisable for the conduct of the business of the surviving cooperative. (c) The presiding officer of each cooperative shall make and annex to the articles an affidavit stating that the provisions of this section regarding the articles were complied with by the cooperative. Sec. 10.25.260. Consolidation. Two or more cooperatives, designated in this section as “consolidating cooperative,” may consolidate into a new cooperative, designated in this section as the “new cooperative,” by complying with the following requirements: (1) the proposition for the consolidation into the new cooperative and proposed articles of consolidation shall be submitted to the members of each consolidating cooperative; the notice shall have attached to it a copy of the proposed articles of consolidation; (2) if the proposed consolidation and the proposed articles of consolidation, with any amendments, are approved by the affirmative vote of not less than two-thirds of those members of each consolidating cooperative voting on them, articles of consolidation in the form approved shall be executed and acknowledged on behalf of each consolidating cooperative by its presiding officer and its seal shall be affixed and attested by the officer designated by the board. Sec. 10.25.270. Contents of articles of consolidation. (a) The articles of consolidation must recite that they are executed pursuant to this chapter and must state (1) the name of each consolidating cooperative and the address of its principal office; (2) the name of the new cooperative and the address of its principal office; (3) a statement that each consolidating cooperative agrees to the consolidation; (4) the names and addresses of the directors of the new cooperative; (5) the terms and conditions of the consolidation and the manner of carrying it into effect, including the manner in which members of the consolidating cooperatives may or shall become members of the new cooperative. (b) The articles of consolidation may contain provisions not inconsistent with this chapter that are considered necessary or advisable for the conduct of the business of the new cooperative. (c) The presiding officer of each consolidating cooperative executing the articles of consolidation shall make and annex to the articles an affidavit stating that the provisions of this section regarding the articles were complied with by the cooperative. Sec. 10.25.280. Effect of consolidation or merger. (a) In the case of a consolidation the existence of the consolidating cooperatives ceases and the articles of consolidation are the articles of incorporation of the new cooperative. In the case of a merger the separate existence of the merging cooperatives ceases and the articles of incorporation of the surviving cooperative are amended to the extent that changes are provided for in the articles of merger. (b) The rights, privileges, immunities, and franchises, and all real and personal property including, without limitation, applications for membership, all debts due on whatever account, and all other choses in action, of the consolidating or merging cooperatives are transferred to and vested in the new consolidated or surviving cooperative without further act or deed. (c) The new consolidated or surviving cooperative is responsible and liable for the liabilities and obligations of each of the consolidating or merging cooperatives and a claim existing or action or proceeding pending by or against the consolidating or merging cooperatives may be prosecuted as if the consolidation or merger had not taken place, but the new consolidated or surviving cooperative may be substituted in its place. (d) Neither the rights of creditors nor liens upon the property of the cooperatives are impaired by the consolidation or merger. Sec. 10.25.290. Conversion of existing corporation. (a) A corporation organized under the laws of the state and supplying or having the corporate power to supply electric energy or to furnish telephone or related telecommunications service may be converted into a cooperative by complying with the requirements of this section and thereupon becomes subject to this chapter as if originally organized under this chapter. (b) The proposition for the conversion of the corporation into a cooperative and proposed articles of conversion shall be submitted to a meeting of the members or stockholders of the corporation, or in case of a corporation having no members or stockholders, to a meeting of the incorporators of the corporation. The notice of the meeting shall have attached to it a copy of the proposed articles of conversion. (c) If the proposition for the conversion of the corporation into a cooperative and the proposed articles of conversion, with any amendments, are approved by the affirmative vote of not less than two-thirds of those members of the corporation voting on them or, if the corporation is a stock corporation, by the affirmative vote of the holders of not less than two-thirds of those shares of the capital stock of the corporation represented at the meeting and voting on them, or, in the case of a corporation having no members and no shares of its capital stock outstanding, by the affirmative vote of not less than two-thirds of its incorporators, articles of conversion in the form approved shall be executed and acknowledged on behalf of the corporation by its presiding officer and its seal shall be affixed and attested by the officer designated by the board. Sec. 10.25.300. Articles of conversion: contents and use as articles of incorporation. (a) The articles of conversion must recite that they are executed under this chapter and must state (1) the name of the corporation and the address of its principal office prior to its conversion into a cooperative; (2) the statute or statutes under which it was organized; (3) a statement that the corporation elects to become a cooperative, nonprofit, membership corporation subject to this chapter; (4) its name as a cooperative; (5) the address of the principal office of the cooperative; (6) the names and addresses of the directors of the cooperative; (7) the manner in which members, stockholders, or incorporators of the corporation are to become members of the cooperative. (b) The articles of conversion may contain provisions not inconsistent with this chapter considered necessary or advisable for the conduct of the business of the cooperative. (c) The presiding officer executing the articles of conversion shall make and annex to it an affidavit stating that the provisions of this section were complied with regarding the articles. The articles of conversion are the articles of incorporation of the cooperative. Article 3. Dissolution. Sec. 10.25.310. Dissolution of cooperative that has not commenced business. A cooperative that has not commenced business may be dissolved by delivering articles of dissolution to the commissioner. A majority of the incorporators shall execute and acknowledge articles of dissolution on behalf of the cooperative. The articles must state (1) the name of the cooperative; (2) the address of its principal office; (3) that the cooperative has not commenced business; (4) that sums received by the cooperative, less that part disbursed for expenses of the cooperative, have been returned or paid to those entitled to them; (5) that no debt of the cooperative is unpaid; (6) that a majority of the incorporators elect to dissolve the cooperative. Sec. 10.25.320. Dissolution of cooperative that has commenced business. (a) A cooperative that has commenced business may be dissolved in the manner set out in this section. (b) The proposition to dissolve shall be submitted to the members of the cooperative. The notice must state the proposition. (c) The proposition is approved by the affirmative vote of at least two-thirds of the members voting on the proposition if the number of members voting to approve it constitutes a majority of all members of the cooperative. (d) Upon approval, a certificate of election to dissolve, hereafter designated the “certificate,” executed and acknowledged on behalf of the cooperative by its presiding officer under its seal, attested by the officer designated by the board, shall be submitted to the commissioner for filing together with an affidavit by the officer executing the certificate stating that the statements in the certificate are true. The certificate must state the name of the cooperative, the address of its principal office, and that the members of the cooperative have voted to dissolve the cooperative. Sec. 10.25.330. Effect of filing certificate of dissolution and affidavit; corporate existence; involuntary dissolution. (a) Upon the filing of the certificate and affidavit by the commissioner, the cooperative shall cease to carry on its business except to the extent necessary for the winding up of business. However, its corporate existence continues until articles of dissolution have been filed by the commissioner. (b) A cooperative that does not file its articles of dissolution within two years after the date of filing the certificate mentioned in (a) of this section shall be involuntarily dissolved by the commissioner. Before dissolving the cooperative under this subsection, the commissioner shall give the cooperative written notice of the pending dissolution by mailing the notice to the cooperative. The commissioner shall mail the notice and any subsequent certificate of dissolution to the cooperative in the same manner as required for notices and certificates of involuntary dissolution under AS 10.06.633 (i). Sec. 10.25.340. Notice to creditors and claimants. The board of directors shall immediately have a notice of the dissolution proceedings mailed to each known creditor of and claimant against the cooperative and publish it once a week for two successive weeks in a newspaper of general circulation in the city or borough in which the principal office of the cooperative is located. Sec. 10.25.350. Termination of cooperative affairs. The board of directors shall wind up and settle the affairs of the cooperative, collect sums owing to it, liquidate its property and assets, pay and discharge its debts, obligations, and liabilities, other than those to patrons arising by reason of their patronage, and do all other things required to wind up its business. After paying or discharging or adequately providing for the payment or discharge of all its debts, obligations, and liabilities, other than those to patrons arising by reason of their patronage, the directors shall distribute remaining sums, first, to patrons for the pro rata return of all amounts standing to their credit by reason of their patronage and, second, to members for the pro rata repayment of membership fees. Sums then remaining shall be distributed among its members and former members in proportion to their patronage, except to the extent participation in the distribution has been legally waived. The board of directors shall thereupon authorize the execution of articles of dissolution. The presiding officer shall execute and acknowledge articles of dissolution on behalf of the cooperative and the officer designated by the board shall affix and attest to the seal. Sec. 10.25.360. Contents of articles of dissolution. (a) The articles of dissolution must recite that they are executed under this chapter and must state (1) the name of the cooperative; (2) the address of its principal office; (3) the date on which the certificate of election to dissolve was filed by the commissioner; (4) that there are no actions or suits against the cooperative; (5) that all debts, obligations and liabilities of the cooperative have been paid and discharged or that adequate provision has been made for them; (6) that the provisions of AS 10.25.320 — 10.25.360 have been complied with. (b) The presiding officer executing the articles of dissolution shall make and annex to the articles an affidavit stating that the statements contained in the articles are true. Article 4. Miscellaneous Provisions. Sec. 10.25.370. Filing of articles, certificates, and affidavits. Articles of incorporation, amendment, consolidation, merger, conversion, or dissolution, when executed and acknowledged and accompanied by the affidavits required by this chapter, shall be presented to the commissioner for filing. Upon finding that the articles presented conform to the requirements of this chapter, the commissioner, upon payment of the fees provided in this chapter, shall file the articles in the records of the commissioner's office. Upon filing, the incorporation, amendment, consolidation, merger, conversion, or dissolution provided for is in effect. This section also applies to certificates of election to dissolve and affidavits executed under AS 10.25.320 — 10.25.360. Sec. 10.25.375. Cancellation of certificates issued and filings accepted. The commissioner may, within one year after a filing, and after written notice to the cooperative or individual making a filing, cancel a certificate issued or filing accepted under this chapter, on any ground existing at the time notice of cancellation is made for which the commissioner could have originally refused to issue the certificate or accept the filing. The notice of cancellation must state the reason for the proposed cancellation. A cooperative or individual may request a hearing within 90 days after receipt of the notice. The notice of cancellation becomes final if the cooperative or individual does not request a hearing within 90 days after receipt of notice. Notice of cancellation must be sent by certified mail with return receipt requested. If the return receipt is not received by the department within a reasonable time and the department has made diligent inquiry as to the current address of the corporation, notice may be made by publication in a newspaper of general circulation in the vicinity of the registered office of the cooperative or the address of the individual who made the filing, and the cancellation becomes final 60 days after publication of the notice. Sec. 10.25.380. Nonprofit operation. A cooperative shall be operated on a nonprofit basis for the mutual benefit of its members and patrons. The bylaws of a cooperative or its contracts with members and patrons must contain such provisions relating to the disposition of revenues and receipts as may be necessary and appropriate to establish and maintain its nonprofit and cooperative character. Sec. 10.25.390. Disposition of property to secure indebtedness. The board of directors of a cooperative may, without authorization by the members of the cooperative, authorize the execution and delivery of mortgages or deeds of trust of, or the pledging or encumbering of, the property, assets, rights, privileges, licenses, franchises and permits of the cooperative, whether acquired or to be acquired, and wherever situated, as well as the revenue therefrom, upon the terms and conditions the board of directors determines, to secure an indebtedness of the cooperative. Sec. 10.25.400. Limitations on disposition of property. (a) A cooperative may not otherwise sell, lease, or dispose of more than 15 percent of the cooperative's total assets, less depreciation, as reflected on the books of the cooperative at the time of the transaction unless the transaction is authorized under this section. The transaction is approved by the affirmative vote of not less than two-thirds of the members voting on the transaction if the number of members voting to approve it constitutes a majority of all the members of the cooperative. However, notwithstanding a provision of this chapter or any other provision of law, the board of directors may, upon the authorization of a majority of those members of the cooperative voting on the issue in an election in which at least 10 percent of the eligible members return ballots, sell, lease, or otherwise dispose of all or a substantial portion of its property to another cooperative or to the state if the sale complies with (d) of this section. (b) Before a vote to authorize the disposition or sale of more than 15 percent of the total assets of the cooperative, other than a vote to authorize disposition or sale to the state or another cooperative, the board of directors shall (1) have the tangible and intangible property that is proposed for sale appraised by two appraisers; one appraiser shall be chosen by the proposed buyer; the appraisers may not be associated with the cooperative or a proposed buyer of cooperative property; each appraiser shall deliver a copy of the appraisal to the cooperative and to the proposed buyer; the first proposed buyer shall advance to the cooperative money sufficient to pay for the appraisals; if a buyer other than the first proposed buyer purchases the assets based on the appraisals, the actual buyer shall reimburse the first proposed buyer for the cost of the appraisals; (2) notify all cooperative members, at least 90 days in advance, of a vote on disposition of cooperative property; the notice must contain detailed proposals for disposition of the property; (3) at least 90 days before the vote, notify all other cooperatives situated and operating in the state that the property is available for disposition and include with the notice one copy of each appraisal of the property; (4) at least 30 days before the vote, mail to all members any alternate proposals made by another cooperative, or by cooperative members if an alternate proposal signed by at least 50 members has been submitted to the board, together with any recommendation that the board has made; and (5) place each proposal for which notice has been given on the ballot. (c) This section does not apply to the transfer of cooperative property under AS 10.25.240 — 10.25.300. (d) The sale of a cooperative may not take effect unless the purchaser expressly agrees to comply with the terms of each collective bargaining agreement entered into between the cooperative being sold and a labor organization representing employees of the cooperative that is in effect on the date of sale. (e) [Repealed, § 22 ch 29 SLA 2020.] Sec. 10.25.410. Nonliability of members for debts of cooperative. A member is not liable or responsible for any debts of the cooperative and the property of the members is not subject to execution therefor. Sec. 10.25.420. Effect of recordation of mortgages and other instruments. A mortgage, deed of trust, or other instrument executed by a cooperative, which affects real and personal property and which is recorded in the real property records in the city, borough, or other recording districts in which the property is located or is to be located has the same effect as if recorded, filed, or indexed as provided by law in the proper office in the city, borough, or other recording district as a mortgage of personal property. All after-acquired property of the cooperative described or referred to as being mortgaged or pledged in a mortgage, deed of trust or other instrument is subject to the lien thereof immediately upon the acquisition of such property by the cooperative, whether or not the property was in existence at the time of the execution of the mortgage, deed of trust or other instrument. Recordation of such mortgage, deed of trust or other instrument constitutes notice and has the same effect with respect to after-acquired property as it has under the laws relating to recordation of property owned by the cooperative at the time of the execution of the mortgage, deed of trust or other instrument and described in it or referred to as being mortgaged or pledged thereby. The lien of such mortgage, deed of trust or other instrument upon personal property after its recordation continues for the period of time specified in the instrument without refiling or the filing of a renewal certificate, affidavit or other supplemental information required by the laws relating to the renewal, maintenance or extension of liens upon personal property. Sec. 10.25.430. Validity of mortgage under Rural Electrification Act. A mortgage made by a cooperative organized under this chapter to the United States of America, or an agency or instrumentality of it, to secure indebtedness incurred under 7 U.S.C. 901 — 950bb-2 (Rural Electrification Act ), as amended, is not void as against creditors of the mortgagor and subsequent purchasers and encumbrancers of the property in good faith for value because the mortgage is not accompanied by an affidavit of the parties to it, or an affidavit of the agent or attorney-in-fact of a party to it, that the mortgage is made in good faith to secure the amount named, and without a design to hinder, delay or defraud creditors.

A mortgage made by a cooperative organized under this chapter to the United States of America, or an agency or instrumentality of it to secure indebtedness incurred under 7 U.S.C. 901 — 950bb-2 (Rural Electrification Act ), as amended, need not set out the date upon which the indebtedness secured by it becomes due. Sec. 10.25.440. Construction standards. Construction of electric lines and facilities, or telephone lines and facilities, by a cooperative shall, as a minimum requirement, comply with the standards of the National Electrical Safety Code in effect at the time of construction. Sec. 10.25.450. Directors, officers, or members as notaries. A person authorized to take acknowledgments under the laws of this state is not disqualified from taking acknowledgments of instruments to which a cooperative is a party because the person is an officer, director, or member of the cooperative. Sec. 10.25.460. Registered office and registered agent. Each cooperative shall have and continuously maintain in the state a registered (1) office, which may be, but need not be, the same as the location of the principal office; (2) agent who is either an individual resident in the state whose business office is identical with the registered office or a domestic or foreign corporation authorized to transact business in the state whose business office is identical with the registered office. Sec. 10.25.470. Change of registered office or registered agent. A cooperative may change its registered office or change its registered agent, or both, upon filing in the office of the commissioner a statement setting forth (1) the name of the cooperative; (2) the address of its registered office; (3) if the address of its registered office is changed, the address of the new registered office; (4) the name of the registered agent; (5) if its registered agent is changed, the name of its new registered agent; (6) that the address of its registered office and the address of the business office and its registered agent, as changed, will be identical; (7) that such change was authorized by resolution adopted by its board of directors. Sec. 10.25.480. Execution and filing of statement. The statement of change of office or agent shall be executed by the cooperative by its presiding officer and directed to the commissioner. If the commissioner finds that the statement conforms to this chapter, the commissioner shall file it in the commissioner's office. Upon the filing, the change of address of the registered office, and the appointment of the registered agent, or both, as the case may be, is effective. Sec. 10.25.490. Resignation of registered agent. A registered agent of a cooperative may resign by filing a written notice of resignation, executed in duplicate, with the commissioner. The commissioner shall immediately mail a copy of it to the cooperative at its registered office. The appointment of the agent terminates 30 days after receipt of the notice by the commissioner. Sec. 10.25.500. Service on cooperative. (a) The registered agent of a cooperative is an agent of the cooperative upon whom process, notice, or demand required or permitted by law to be served upon the cooperative may be served. (b) When a cooperative fails to appoint or maintain a registered agent in the state, or when its registered agent cannot with reasonable diligence be found at the registered office, then the commissioner is an agent of the cooperative upon whom process, notice, or demand may be served. Sec. 10.25.510. Service on commissioner. (a) Service on the commissioner is made by delivering to and leaving with the commissioner, or with a clerk having charge of the corporation department of the commissioner's office, duplicate copies of the process, notice, or demand. The commissioner shall immediately have one copy forwarded by registered mail, addressed to the cooperative at its registered office. Service on the commissioner is returnable in not less than 30 days. (b) The commissioner shall keep a record of each process, notice, and demand served under this section, and shall record the time of service and the commissioner's action with reference to it. Sec. 10.25.520. Other means of service not affected. Nothing in AS 10.25.500 and 10.25.510 limits or affects the right to serve process, notice, or demand required or permitted by law to be served on a cooperative in any other manner permitted by law. Sec. 10.25.530. Fees. (a) The commissioner shall establish by regulation and charge and collect fees for (1) filing articles of incorporation; (2) filing articles of amendment; (3) filing articles of consolidation or merger; (4) filing articles of conversion; (5) filing certificate of election to dissolve; (6) filing articles of dissolution; (7) filing certificate of change of principal office and designation or change of registered office and registered agent; and (8) acting as agent for service of process. (b) The department may by regulation charge each cooperative subject to this chapter a fixed fee in place of the various fees specified in this chapter and for the routine administrative services rendered to the corporation by the department. (c) [Repealed, § 28 ch 90 SLA 1991.] Sec. 10.25.540. Business license and taxation of cooperatives. (a) Cooperatives under this chapter shall apply for a business license and pay the initial license fee as provided by the Alaska Business License Act ( AS 43.70 ), as amended. (b) Before March 1 of each year, (1) each telephone cooperative shall pay to the state, instead of state and local ad valorem, income, and excise taxes that may be assessed or levied, a percentage of its gross revenue earned during the preceding calendar year; (2) each electric cooperative shall pay to the state, instead of state and local ad valorem, income, and excise taxes that may be assessed or levied, a tax on the number of kilowatt hours of electricity sold at retail by the cooperative during the preceding calendar year. Sec. 10.25.550. Amount of telephone cooperative gross revenue tax. The telephone cooperative gross revenue tax shall be computed as follows: (1) one percent of gross revenue for cooperatives that have furnished telephone service to consumers for less than five years as of December 31 of the preceding calendar year; (2) two percent of gross revenue for cooperatives that have furnished telephone service to consumers for five years or longer as of December 31 of the preceding calendar year. Sec. 10.25.555. Amount of electric cooperative tax. (a) The electric cooperative tax shall be computed as follows: (1) one-fourth mill per kilowatt hour for cooperatives that have furnished electric energy and power to consumers for less than five years as of December 31 of the preceding calendar year; (2) one-half mill per kilowatt hour for cooperatives that have furnished electric energy and power to consumers for five years or longer as of December 31 of the preceding calendar year. (b) In this section, “mill” means one-tenth of one cent. Sec. 10.25.560. Manner of computing telephone cooperative gross revenue. Gross revenue of a telephone cooperative includes all revenue earned from local and toll services. Sec. 10.25.570. Refund to local governments. The proceeds of the telephone cooperative gross revenue tax and the electric cooperative tax, less the amount expended by the state in their collection, shall be refunded to an organized borough or a city of any class incorporated under state law, in the proportion that the revenue was earned within the city or the borough area outside the city. However, taxes collected on gross revenue earned by a telephone cooperative or on the sale of electricity by an electric cooperative outside a city or organized borough shall be retained by the state and deposited into its general fund. Sec. 10.25.580. Inventory and fixtures subject to taxation. The inventory and fixtures of a business operated by a cooperative incidental to the furnishing of central station electric service, including, without limitation, appliance stores or departments, are not exempt from ad valorem taxes. The inventory and accounts of these businesses shall be separately maintained and taxes shall be paid upon them as provided by law. Sec. 10.25.590. Connection and interconnection of facilities. A telephone cooperative organized or doing business under this chapter, hereafter designated as applicant, may require a person furnishing telephone service to the public in the state, hereafter designated as company, to interconnect its lines, facilities or systems with, or otherwise make available the lines, facilities or systems to, the applicant's telephone lines, facilities or systems, in order to provide a continuous line of communication for the applicant's subscribers. If the company and the applicant are unable to agree upon the terms and conditions of interconnection, including compensation, the superior court shall, upon petition of the parties, or either of them, establish the terms and conditions. The terms and conditions shall be reasonable and nondiscriminatory. Sec. 10.25.600. Correction of defectively organized cooperatives. If a cooperative has filed defective articles of incorporation, or has failed to do all things necessary to perfect its corporate organization, it may file corrected articles of incorporation, or amend the original articles, and do and perform all acts and things necessary for the correction of the defects. The action so taken is valid and binding upon all persons concerned. The capacity of the cooperative to file corrected articles of incorporation or amendments to the original articles, or to do and perform all acts and things necessary, may not be questioned. Article 5. General Provisions. Sec. 10.25.610. [Renumbered as AS 10.25.810 .] Sec. 10.25.620. [Renumbered as AS 10.25.820 .] Sec. 10.25.630. [Renumbered as AS 10.25.830 .] Sec. 10.25.640. [Renumbered as AS 10.25.840 .] Sec. 10.25.650. [Renumbered as AS 10.25.850 .] Sec. 10.25.810. Purpose. Cooperative, nonprofit, membership corporations may be organized under this chapter for the purpose of supplying electric energy or telephone or related telecommunications service and promoting and extending the use of these services. Sec. 10.25.820. Chapter extended to existing cooperatives. This chapter applies to all nonprofit cooperatives organized under any other law of the state for the purpose of supplying electric energy and power, or telephone or related telecommunications service, to its members, or for the purpose of promoting and extending the use of electric energy and power or telephone or related telecommunications service. These cooperatives are subject to this chapter as if originally organized under it. Sec. 10.25.830. Construction of chapter. This chapter is complete in itself and is controlling. The provisions of any other law of the state relating to the organization of a corporation, except as provided in this chapter, do not apply to a cooperative organized under this chapter. The enumeration of an object, purpose, power, manner, method or thing does not exclude like or similar objects, purposes, powers, manners, methods or things. Sec. 10.25.840. Definitions. In this chapter, (1) “commissioner” means the commissioner of commerce, community, and economic development; (2) “cooperative” means a corporation organized under this chapter or that becomes subject to this chapter in the manner provided in this chapter; (3) “person” means a natural person, firm, association, corporation, business trust, partnership, federal agency, state or political subdivision, or an agency of the state or political subdivision, or a body politic; (4) “presiding officer” means the presiding officer of the board of directors of the cooperative; (5) “related telecommunications service” means (A) the transmission and reception of messages, impressions, pictures, and signals by means of electricity, electromagnetic waves, or any other source of energy, force variations, or impulses, whether conveyed by cable, wire, radiated through space, or transmitted through other media; or (B) a service capable of electronically generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information, through the use of broadband Internet access, data center services, information technology, or other technology services; (6) “telephone service” means communication service whereby voice communication through the use of electricity is the principal intended use, and includes all telephone lines, facilities, or systems used in the rendition of this service. Sec. 10.25.850. Short title. This chapter may be cited as the Electric and Telephone Cooperative Act.