Bill Eliminating Roadblock to Cooperative Development Gets Committee Approval
Madison – Legislation to revitalize cooperative development efforts has received unanimous approval from the Assembly Committee on Financial Institutions.
Authored by Representative Al Ott (R-Forest Junction), Assembly Bill 228 restores a long-standing registration exemption for cooperatives offering securities.
“The previous exemption from this onerous registration requirement was both functional and critical to establishing and successfully operating Wisconsin cooperative businesses, which, in turn, created Wisconsin jobs,” Ott said.
Assembly Bill 228 restores a previous exemption for cooperatives from having to file with the Department of Financial Institutions if they are going to offer the sale of securities such as preferred stock.
A 2009 update to the federal Uniform Securities Law resulted in a significantly narrowed and considerably more restrictive state-level securities registration exemption for cooperatives. The redesigned exemption is proving to be a significant barrier to cooperative development.
“The current restrictive exemption has resulted in confusion, delays, and substantial legal costs that were not an issue for cooperative business start-ups under prior law,” stated Ott. “These costs are proving to be a deciding factor in whether or not to move forward with a new cooperative business.”
The formation of a new cooperative often requires the sale of preferred stock to individuals willing to assist with financing a cooperative’s start-up. The costs associated with the meeting the current registration requirements, which are necessary to offer such preferred stock, have put the brakes on opportunities to create cooperative businesses that can add value to goods, provide desirable services, and strengthen communities – particularly rural communities – across Wisconsin.
“Assembly Bill 228 will restore vitality to cooperative business development in Wisconsin,” said Ott. “This bill is a clear signal to those who are seeking to organize cooperatives for the good of their communities and local economies that Wisconsin is, in fact, ‘Open for Business’.”
The bill now moves on to the full State Assembly for consideration. A vote is scheduled for Tuesday, October 18th. |
