Exemption of Certain Cooperative Securities

Exemption of Certain Cooperative Securities. By authority delegated to the Secretary of State in Section 75-71-203 of the Act to promulgate rules, the Secretary of State finds that it is not in the public interest or necessary for the protection of investors to require registration under Section 75-71-301 of the Act of the following securities transactions: A. Any transaction in a membership, equity interest, or retention certificate, issued by a cooperative, corporation, or nonprofit corporation organized under the cooperative, business corporation, or nonprofit corporation laws, respectively, of any state, and operated as a nonprofit membership cooperative (collectively a “cooperative”), if: 1. Not traded to the public; 2. Each member of the cooperative has one vote with respect to matters that must be approved by the members of the cooperative or has a number of votes that are in proportion to the amount of business transacted (patronage) with the cooperative and not in proportion to the number of shares of ownership interests held by the member in the cooperative; 3. The governing documents of the cooperative provide that the shares or other ownership interests can be held only by persons or parties who patronize the cooperative; 4. The governing documents of the cooperative provide that no dividends shall be paid and no distributions shall be made except for cash patronage dividends or non-cash patronage dividends; and 5. No person receives any commission or other compensation directly or indirectly as a result of or based upon the sale of such securities. B. Any transaction in an instrument, certificate, or like security issued by a cooperative as defined in Subsection (A) of this Rule in lieu of a cash patronage dividend to a member of the cooperative.