Legislation to revitalize cooperative development efforts has received unanimous approval from the Wisconsin State Assembly.

 

Authored by Representative Al Ott (R-Forest Junction), Assembly Bill 228 restores a long-standing registration exemption for cooperatives offering securities. The Assembly approved the measure Tuesday evening on 96-0 vote.

 

“I applaud the Assembly’s bi-partisan support for this important economic development bill,” Ott said. “The previous registration exemption was both functional and critical to establishing and successfully operating Wisconsin cooperative businesses, which, in turn, created Wisconsin jobs.”

 

Assembly Bill 228 restores an 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.

 

An 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 new legal costs for cooperative business start-ups,” 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 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, and the strong vote of support in the Assembly, 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 State Senate for consideration.