KRS 272.201: Membership certificate -- Capital stock -- Payment for -- Voting rights --

Purchase or redemption of stock.

(1) When a member of an association established without capital stock has paid the

membership fee in full, the member shall receive notice of s uch membership

whether by a certificate of membership, letter, or otherwise. Such membership shall

not be transferable except as may be prescribed in the articles of incorporation and

bylaws of the association.

(2) No association shall issue capital stock until it has been fully paid for. Promissory

notes may be accepted by an association as full or partial payment. An association

may hold the stock as security for the payment of the note, but retention as security

shall not affect a member's right to vote.

(3) An association, in its bylaws, may limit the amount of voting stock which one (1)

member may own. No member of an association composed solely of producers of

agricultural products shall be allowed to control more than forty-nine percent (49%)

of such association's voting power.

(4) An association, in its bylaws, may provide that no member shall have more than one

(1) vote.

(5) An association organized under KRS 272.101 to 272.341 whose members are one

(1) or more associations may determine by its bylaw s the number of votes to which

each member-association is entitled and provide for the appointment or election of

delegates to cast the votes and to represent the member -associations at all

membership meetings.

(6) An association organized with stock may i ssue preferred stock, with or without the

right to vote. Such stock may be redeemable or retirable by the association on terms

and conditions provided for by the articles of incorporation and printed on the face

of the certificate.

(7) The voting stock of an association shall be transferable only to persons engaged in

the production of agricultural products or to associations of such persons. Such

restrictions must be printed upon every certificate of voting stock.

(8) Except when its debts exceed fifty per cent (50%) of its assets, an association may

purchase for cash its capital stock at book value or par value, whichever is less, and

may call such stock for redemption on the same basis pursuant to a plan for rotating

ownership of such stock set forth in its articles of incorporation or in its bylaws. The

determination of book value by the board of directors shall be incontestable except

for fraud.