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Share Redemption Procedure 
Adopted on September 13, 2008; Amended May 9, 2015

 

According the Bylaws Section 9.6 of the Mad River Glen Cooperative, the Cooperative is required to provide for the redemption of shares: 

 

Section 9.6 - Redemption. Shares may be redeemed upon request of the holder following termination of ownership for any reason or under other extraordinary circumstances approved by the Board. Redemption shall be made only after replacement capital is obtained from another owner. Redemption proceeds shall be limited to the carrying value of the share on the books of the Cooperative or the Cooperative's net book value per share, whichever is lesser, less a reasonable processing fee, if any, as determined by the Board. Reapplication for ownership following redemption of shares shall be subject to purchase of a share of stock of the Cooperative. For all purposes of this Article of the Bylaws, the term "carrying value" shall mean the price paid to the Cooperative for a share at the time the share is first issued.

 

How requests for Share Redemption shall be made: 

 

Section 2.7 - Termination. Ownership may be terminated voluntarily by a owner at any time upon written notice to the Cooperative and tender of all outstanding stock certificates. Ownership may be terminated for sufficient cause by the Board, provided that such person is accorded a fair hearing, including adequate notice of the charges and the opportunity to speak and present evidence. Upon termination of ownership for any reason, all rights and interests in the Cooperative shall cease except for rights to return of invested capital pursuant to Articles IX and X hereof.

 

Regarding shares held as security for the payment of a promissory note (installment plan):   

 

Section 9.3 - Payment for shares. Shares shall be issued only upon full payment of their purchase or subscription price which shall not be less than par value. Promissory notes of owners may be accepted by the Cooperative as full or partial payment for shares. In such case, the Cooperative shall hold the shares as security for the payment of the note. Until such notes are paid in full, the corresponding shares, to the extent of unpaid balances, shall be carried on the books of the Cooperative and upon all financial statements made by the Cooperative as "capital stock issued for notes," and the notes shall be carried on such books and statements as "notes given for capital stock." 

 

Regarding situations where shareholders owe the Cooperative money: 

 

Section 9.7 - Lien and offset. The Cooperative shall have a first lien on all shares for amounts otherwise due and payable to the Cooperative by the owner. The Cooperative may, at any time after such amounts remain due and payable for thirty days, offset such amounts against accumulated payments for shares. Such offset may not be effected by the owner or by anyone acting in the right of the owner.

 

Regarding Retained Patronage Rebates: 

 

Section 10.6 - Retained amounts. Patronage rebates not currently distributed by check shall be credited or charged to revolving capital accounts in the names of recipient owners. Retained patronage rebates shall accrue no dividend or interest, and shall not be transferable or assignable except with the express consent of the Cooperative. The Cooperative shall have a first lien on retained patronage rebates for amounts otherwise due and payable to the Cooperative by the owner. The Cooperative may, at any time after such amounts remain due and payable for thirty days, offset such amounts against retained patronage rebates to the extent such amounts may exceed accumulated payments for shares. Such offset may not be effected by the owner or by anyone acting in the right of the owner.

 

And

 

Section 10.7 - Redemption. Retained patronage rebates that are no longer needed for capital purposes of the Cooperative may be redeemed in such amounts and at such times as may be determined by the Board of Trustees. At that time they shall be redeemed only in the order of the oldest outstanding amounts and only on a ratable basis among such amounts for each fiscal year. Retained patronage rebates shall be redeemed at their carrying value on the books of the Cooperative or their net book value, whichever is lesser.

 

Regarding Annual Purchase Requirements (APRs) due to the Cooperative: 

 

Section 2.1 - Eligibility. Ownership in the Cooperative shall be voluntary and open to any individual who: (i) is in accord with, and desires to further, the purpose of the Cooperative; (ii) will purchase, or subscribe for, not less than one nor more than four shares of common stock; and (iii) will equally with all other owners in good standing, during each fiscal year of the Cooperative provide advance service revenues limited to a maximum annual commitment as follows: In 1995, the maximum commitment shall be $200.00 for each owner; and in each year after 1995, the maximum annual commitment shall be increased in proportion to the increase, if any, in the consumer price index during the preceding calendar year. For purposes hereof, the consumer price index shall be the U.S. Consumer Price Index (All Urban Consumer Items, [CPI-U]), published by the United States Department of Labor, Bureau of Labor Statistics or the successor to such index or the most similar or comparable index subsequently compiled and so designated by the Cooperative's Board of Trustees.

 

And

 

Section 2.4 - Obligations. Owners shall remain reasonably current in payments of their share subscription and service revenue requirements. An owner who becomes delinquent in meeting such obligations to an extent determined by the Board shall, no sooner than thirty days after delivery of written notification, be placed into inactive status. His or her voting and other rights shall then be suspended, and the Cooperative may issue to another owner the ownership interest held by such person. An owner in inactive status may attain good standing only upon full payment of all arrearages, with interest, and only when and as an ownership interest shall become available. Owners shall notify the Cooperative of any changes to their name or address. References herein to the rights and entitlements of owners shall be understood to refer only to owners in good standing.

 

Regarding Cooperative Net Loss carried forward: 

Section 10.8 - Allocation of net loss. In the event the Cooperative shall incur a net loss in any fiscal year, such loss may be charged against retained savings or other unallocated equity accounts. If the net loss exceeds such amounts, or in any event if the Board so determines, the amount of such loss may either be carried forward to offset adjusted net savings of subsequent fiscal years or allocated to owners in the same manner as for adjusted net savings except that such allocation shall not exceed the total of invested capital. Any such allocated net loss shall be charged first against retained patronage rebates of prior fiscal years and then against patronage rebate allocations of subsequent fiscal years. Allocated net losses which are not so offset may be charged against the carrying value of shares only upon termination of ownership. Allocated net losses shall not otherwise be assessed to or collected from owners.

PROCEDURE:

 

  1. A shareholder who wishes to redeem their share should notify the Co-op Administrative Manager of their desire to redeem.  Only a written notification from the shareholder will be considered “Official”.  Subscription shares are not eligible for redemption until they have been paid in full. 

 

  1. The actual share redemption and payment to the shareholder will be made on only one date for each fiscal year, after the audited Financial Results are approved by the Board (the “Annual Redemption Date”).

 

  1. Share redemption payments will be made by December 31 for share redemption requests made during prior fiscal years that have not yet been redeemed and for which sufficient replacement capital has been received by the Cooperative..

 

  1. The calculation of replacement capital shall only include the amounts received for shares purchased out right plus the amounts received in payment of promissory notes for shares purchased on subscription plans.. The calculation of replacement capital shall be made for each fiscal year for which redemption requests were made by shareholders.

 

  1. The redemption proceeds for each share will be calculated using the audited financial reports for the fiscal year in which the redemption request was made.  The net book value per share is calculated by dividing the Total Equity from the audited financials by the number of outstanding shares as of the end of the fiscal year. In the case of subscription shares, once paid in full, the Carrying Value does not include interest paid. 

 

  1. Redemption proceeds calculation summary:
    1. Carrying Value or Net Value per Share, whichever is less
    2. Plus any accumulated shareholder Retained Patronage Rebates
    3. Minus any shareholder debt owed to the Cooperative not already allocated against Retained Patronage Rebates
    4. Minus any accumulated Cooperative Net Loss not allocated against Retained Patronage Rebates or carried forward on the books of the Cooperative
    5. Minus a reasonable processing fee, as determined by the Board

 

  1. The Annual Purchase Requirement (APR) is considered "advance service revenues" due and payable to the Cooperative.  All unpaid APR's due prior to and including the fiscal year in which the share redemption request is Official are due to the Cooperative, and shall be deducted from redemption proceeds. If a redemption request is made prior to December 1 of that fiscal year no APR will be required for that year. However if no APR is paid the shareholder will not receive discounts or have voting rights.   

 

  1. The sum of share redemption payments shall not exceed the value of replacement capital  received from share sales in the fiscal years for which share redemption requests were made by shareholders.

 

  1. In the event that replacement capital has not been received for all redemption requests, redemption requests will be paid out in the order in which they were made, starting with the request with the earliest Official date. 

 

  1. A shareholder may request that their share be redeemed (and proceeds distributed) earlier than the Annual Redemption Date in situations of extraordinary circumstances.  In these situations, the shareholder must establish, in writing to the satisfaction of the Board of Trustees that extraordinary circumstances exist.  In these situations, an exception to the Annual Redemption Date provision will be granted; however, exceptions to Replacement Capital provision of Section 9.6 will not be granted.