Since early 2020, the COVID-19 pandemic has disrupted how lawyers and their clients conduct business and has changed how businesses interact with their owners and members. For cooperative businesses and their attorneys, the pandemic had a specific effect in the spring of 2020: it prevented cooperatives from holding annual member meetings.
Wisconsin cooperatives scrambled to find ways to hold annual meetings when health concerns and governmental orders prevented in-person meetings. What was once routine – annual meetings held at the same place and time each year – became impossible. Both cooperative bylaws and the Wisconsin Cooperative Association Act, Wis. Stat. ch. 185, required that cooperatives hold annual member meetings. But cooperatives faced questions of how those statutory and bylaw requirements could be met and how director elections and other business could be conducted. Cooperatives and their legal advisors had to consider fundamental questions, including one of the most basic: what constitutes a legal meeting. When cooperatives and their lawyers looked for alternatives to traditional in-person member meetings, existing statutory rules provided few options.
Necessity pushed cooperative leaders to consider creative solutions. One electric cooperative, Richland Electric Cooperative, found an ingenious way to hold a socially distanced annual meeting at its principal office: It held its 2020 annual meeting as a “drive-in” meeting, with members staying in their vehicles parked in an open area near the principal office and the president and CEO of the cooperative leading the meeting from atop bucket trucks. Their comments and reports were broadcast to the radios in members’ vehicles using a low-power radio frequency, and members “honked” their assent or dissent to motions. Other cooperatives used the drive-in format in 2020, and some are using it again this year. A number of others – especially telephone cooperatives – turned to online meeting formats. But with little legal precedent for such formats, questions arose about whether an online “virtual” meeting was a legal annual meeting.
Legislative Response to Cooperatives’ Obstacles
Those questions were addressed by passage of 2021 Wis. Act 5, which became effective on Feb. 27, 2021. Act 5 made significant revisions to the member-meeting provisions of Wis. Stat. chapter 185, giving cooperatives the option for online member meetings. Before the amendments made by Act 5, Wis. Stat. chapter 185 required that member meetings be held “at the [cooperative’s] principal office” or another “place” determined by the cooperative’s board of directors.1 That wording seemed to preclude any meetings other than in-person meetings – meetings at a “place.” But that changed when Act 5 explicitly authorized online meetings.
The amendments made by 2021 Wis. Act 5 allow cooperatives to hold member meetings “by means of remote participation.”2 Members participating by remote communication are deemed to be “present in person” and may vote – under certain conditions. Those conditions are that 1) the cooperative “implements reasonable measures to verify that each person deemed present and permitted to vote at the member meeting by means of remote communication is a member”; and 2) those persons have a “reasonable opportunity to participate in the meeting and to vote on matters submitted to members, including an opportunity to read or hear the proceedings of the meeting concurrently with the proceedings.”3
The Act 5 amendments allow electronic voting during online meetings. For members to vote at member meetings, a cooperative’s bylaws must authorize electronic voting and the cooperative must be able “to authenticate that it is a member who is casting a vote.”4
Electronic voting is not new for cooperatives. It was permitted before Act 5 was enacted, but only in connection with an in-person meeting. An amendment to Wis. Stat. chapter 185 in 2010 authorized voting on motions by electronic means5 , and an amendment in 2015 authorized voting by electronic means for election or removal of directors.6 Like voting by mail (a process Wisconsin cooperatives have used for decades), voting by electronic means was an adjunct to in-person member meetings – until Act 5 expanded the use of electronic voting to online meetings.
Wisconsin cooperatives now have statutory authorization to hold online member meetings and use electronic voting with those meetings, but the provisions added to Wis. Stat. chapter 185 by Act 5 leave some questions open. Member meetings no longer must be tethered to a place, but the question of what constitutes a legal virtual member meeting will continue to be a concern for cooperatives and their lawyers.
The new provisions in Wis. Stat. section 185.13 make “participation” a requirement for online meetings, but the provisions do not define the details of “participation.” As anyone who has participated in meetings using online platforms such as Zoom can attest, glitches regularly occur, and online “participation” can often differ significantly from in-person participation. Members might be able to participate using an online meeting format, but not in the same way they can at an in-person meeting.
Meeting Formats After the Pandemic
It is likely that some Wisconsin cooperatives will continue to experiment with virtual meeting formats using off-the-shelf online meeting applications (for example, Zoom and WebEx), social media applications (for example, FaceBook and YouTube), and specialized proprietary applications (for example, the Perigon webcasting system developed by Wisconsin Independent Network).
But in post-pandemic times, online meetings might not replace in-person annual meetings. Annual meetings are more than business meetings; they are also social events, often featuring meals and prize giveaways. In-person annual meetings are a place to meet other members and interact with a cooperative’s directors and employees. Online meetings may suffice as participation for statutory purposes, but they cannot replace the social aspects of in-person meetings.
The new provisions in Wis. Stat. section 185.13 make “participation” a requirement for online meetings, but the provisions do not define the details of “participation.”
Even if some cooperatives move back to the traditional in-person format for member meetings, they should update their bylaws to allow the use of online meetings and online voting. That will provide the option for virtual meetings and the option for electronic voting on motions and director elections. As pandemic times proved: You never know when you might need to use online meeting procedures.
Along with authorizing online meetings, 2021 Wis. Act 5 authorizes cooperatives to take certain actions not allowed when there is no emergency. The new emergency-rule provisions give cooperative boards of directors power to relocate offices, to change rules for notice and conduct of board meetings, and to change deadlines during an emergency.7 The new provisions authorize cooperative boards to adopt bylaw provisions applicable in an emergency, including bylaw provisions changing procedures for annual meetings.8 Emergency is defined as “a catastrophic event that prevents a quorum of a cooperative’s directors or members from being readily assembled.”9
The statutory changes regarding emergencies were motivated by a unique public-health emergency. But they are unlikely to have much practical benefit for cooperatives as the pandemic and its effects recede. The likelihood of a future emergency necessitating such extreme measures seems remote.
The provisions of Act 5 authorizing virtual member meetings and remote member participation will likely prove more useful. Large cooperatives may use online meeting formats to better engage members who are spread over a large geographical area. Some cooperatives may use an online format for their business meetings and move the social function of an in-person meeting to another setting. Some cooperatives may use a hybrid approach, integrating online participation with an in-person meeting. And other cooperatives may use the online voting procedures to supplement their absentee voting process. The Act 5 provisions permitting online meetings were motivated by the pandemic, but they will be useful in non-pandemic times.
» Cite this article: 94 Wis. Law. 41-43 (July/Aug 2021).
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1 Wis. Stat. § 185.13(1).
2 Wis. Stat. § 185.13(7)(a).
3 Wis. Stat. § 185.13(7)(b).
4 Wis. Stat. § 185.13(7)(c).
5 2009 Wis. Act 387, creating Wis. Stat. § 185.12(5)(a)3.
6 2015 Wis. Act 87, amending Wis. Stat. § 185.12(5)(b).
7 Wis. Stat. § 185.03(13).
8 Wis. Stat. § 185.07(4)(b)
9 Wis. Stat. § 185.07(4)(a).