Secretary of State
House of Representatives Passes Bill Permitting New Generation Cooperations

Last week, following testimony by Secretary of State Alison Lundergan Grimes, Kentucky’s Chief Business Official; Agriculture Commissioner James R. Comer; co-sponsors Rep. Mike Denham and Rep. John Tilley; and attorney Tom Rutledge, the House Committee on Agriculture and Small Business passed unanimously House Bill 441, which would enact the Kentucky Uniform Limited Cooperative Association Act. Today, the House of Representatives also overwhelmingly passed the bill in a 92-2 vote.

A cooperative is a statutory business entity. Currently, equity in a cooperative comes solely from its patrons; outside investors cannot be members. HB 441, while maintaining the option of the traditional cooperative business structure, would permit groups to form “new generation cooperatives,” which, according to Rutledge, may include outside investors as members while preserving other hallmarks of cooperatives, such as patron control, limited individual liability, and tax advantages.

Denham said the bill “may revolutionize the way we do rural development in agriculture and energy,” and it could be useful to businesses in other industries as well. Rep. Wilson Stone explained that the option of forming new generation cooperatives is a critical tool to developing a biofuels industry and lauded the bill as “forward-thinking.” Before the Committee, Comer expressed similar sentiments, noting that HB 441 would serve the KDA’s mission to “enhance rural development and try to create jobs in rural communities.”

Secretary Grimes testified that HB 441 “allows a new option; it creates the ability for an entity to stimulate economic growth – an opportunity that does not exist now.” She observed that the bill would be particularly helpful to small businesses and the agriculture community, which she said “need and deserve our government’s support.” Secretary Grimes hopes the Senate will support the bi-partisan effort to “keep Kentucky’s doors open for business by making sure our statutes are modern, streamlined, and effective.”

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