Article 2. General Provisions of California Food And Agricultural Code >> Division 20. >> Chapter 1. >> Article 2.

The purpose of this chapter is to do all of the following:
  (a) Promote, foster, and encourage the intelligent and orderly marketing of agricultural products through cooperation.
  (b) Eliminate speculation and waste.
  (c) Make the distribution of agricultural products between producer and consumer as direct as can be efficiently done.
  (d) Stabilize the marketing of agricultural products.

The following are all here recognized:
  (a) Agriculture is characterized by individual production in contrast to the group or factory system that characterizes other forms of individual production.
  (b) The ordinary form of corporate organization permits industrial groups to combine for the purpose of group production and the ensuing group marketing, and the public has an interest in permitting farmers to bring their industry to the high degree of efficiency and merchandising skill evidenced in the manufacturing industries.
  (c) The public interest urgently needs to prevent the migration from the farm to the city in order to keep up farm production and to preserve the agricultural supply of the nation.
  (d) The public interest demands that the farmer be encouraged to attain a superior and more direct system of marketing in the substitution of merchandising for the blind, unscientific, and speculative selling of crops.

Associations which are organized pursuant to this chapter are "nonprofit," since they are not organized to make profit for themselves, as such, or for their members, as such, but only for their members as producers.

Any provisions of law which are in conflict with this chapter do not apply to any association which is provided for in this chapter.

Any exemption under any existing law which applies to any agricultural product in the possession, or under the control, of the individual producer, shall apply similarly and completely to such product which is delivered by its farmer members that are in the possession, or under the control, of the association.

A person, firm, corporation, or association, that is hereafter organized or doing business in this state, may not use the word "cooperative" as part of its corporate name or other business name or title for producers' cooperative marketing activities, unless it has complied with this chapter.

Any corporation or association which is organized pursuant to previously existing statutes for the purpose of cooperatively marketing products as defined in this chapter or under Title 23 (commencing with Section 653aa), Part 4, Division 1 of the Civil Code shall be deemed to be organized and existing pursuant to, and by virtue of, this chapter, and all of the provisions of this chapter, and any of the restrictions and benefits of such provisions, shall apply to such corporation.

Any association which is organized pursuant to this chapter is not any of the following:
  (a) A conspiracy, a combination in restraint of trade, or an illegal monopoly.
  (b) An attempt to lessen competition, to fix prices arbitrarily, or to create a combination or pool in violation of any law of this state.

The marketing contracts and agreements between an association which is organized pursuant to this chapter and its members and any agreements authorized in this chapter are not illegal, in restraint of trade, or contrary to any statute which is enacted against pooling or combinations.

The General Corporation Law (Division 1 (commencing with Section 100) of Title 1 of the Corporations Code) as added by Chapter 682 of the Statutes of 1975 and as heretofore or hereinafter amended and all powers and rights under such law applies to each association which is organized pursuant to this chapter, except where such provisions are in conflict with or inconsistent with the express provisions of this chapter. For the purpose of associations organized without shares of stock, the members shall be deemed to be "shareholders" as the term is used in the General Corporation Law.

(a) Subject to subdivision (c), Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure does not apply to any proprietary interest in an association organized in accordance with this chapter. Any proprietary interest that would otherwise escheat to the state pursuant to Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure shall instead become the property of the association.
  (b) This section shall apply to all proprietary interests which as of January 1, 1988, have not yet been paid or delivered to the Controller pursuant to the provisions of Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure.
  (c) Notwithstanding subdivision (a), no proprietary interest shall become the property of the association under this section unless all of the following requirements are satisfied:
  (1) At least 60 days prior notice of the proposed transfer of the proprietary interest to the association is given to the affected member by first-class or certified mail to the last address of the member shown on the association's records, and by publication in a newspaper of general circulation in the county in which the member last resided as shown on the association's records. Notice given in that manner constitutes actual notice.
  (2) No written notice objecting to the transfer is received by the association from the affected member or, if the member is deceased, from the member's heirs or the executor or executrix of the estate, prior to the date of the proposed transfer.
  (d) "Proprietary interest" means and includes any membership, membership certificate, membership share, share certificate, or equity or dividend certificate of any class representing a proprietary interest in, and issued by, the association together with all accrued and unpaid earnings, dividends, and patronage distributions relating thereto.

(a) An association organized pursuant to this chapter may request the board of supervisors of the county in which the association's principal place of business is located to issue a certificate stating that the association meets the requirements of subdivision (b). When the certificate is provided by the board of supervisors to the association, the Franchise Tax Board shall exempt the association from the minimum franchise tax as provided in paragraph (2) of subdivision (c) of Section 23153 of the Revenue and Taxation Code.
  (b) The board of supervisors shall issue a certificate if all of the following conditions are met:
  (1) The association is located in an economically distressed area.
  (2) At least 90 percent of the association's members are, or have been, within the previous 12 months unemployed or dependent on public social services for their income.
  (3) The request is made during the association's first income year.
  (c) The certificate issued by the board of supervisors shall be retained by the association. The association shall forward a copy of the certificate to the Franchise Tax Board upon request.
  (d) As used in this section, "economically distressed area" means a county in which the unemployment rate is either 9 percent, or 2 percent above the statewide average, whichever is greater; or in which 8 percent of the residents are dependent on public social services for their income, or 2 percent more of the residents than the statewide average are dependent on public social services for their income, whichever is greater.