Proposed Bylaws Revision

SOUTHWESTERN ELECTRIC COOPERATIVE, INC.

Proposed Bylaws Revision — Summary of Material Changes

The revision draft reflects a comprehensive modernization of the Cooperative’s governing documents. The changes summarized below represent material, substantive revisions, particularly concentrated in the areas of Member classification, the Annual Meeting and elections process, Director qualifications, voting methods, and capital credits. Minor grammatical and typographical corrections are not addressed in this summary but are contained in the revision draft.

Elimination of the Associate Member Class

The previous bylaws created two classes of members:

• Regular Members — entitled to vote, receive service, and hold office.
• Associate Members — a non-voting class that received no service, held no capital credits, and could not serve as Directors.

The revision eliminates the Associate Member class entirely, replacing the two-class structure with a single Member class. The language governing Associate Members, and references to them throughout the document (including in Sections 8 and 10), has been deleted.

Practical effect: The Cooperative will no longer maintain or offer Associate Memberships. Existing Associate Members (if any) would need to apply as full Members or their status would lapse.

Separation of Elections from the Annual Meeting

The previous bylaws contemplated that Directors would be elected by secret written ballot at the Annual Meeting itself, with Members physically present casting votes. The revision restructures this significantly:

• The Annual Meeting’s role in the election process is now limited to announcing the results of Director elections, rather than being the venue where voting occurs.
• Actual voting on Director elections takes place before the Annual Meeting through mail, electronic, Cooperative facility (in-person polling), or aggregate (combination) balloting — all managed in advance of the meeting date.
• The Order of Business is updated accordingly: item (e) now reads “Report on the Election of Directors or the Election of Directors”, reflecting that the election may already be complete.

This change brings the election structure in line with practices common at cooperatives that have moved to pre-meeting balloting, allowing broader Member participation beyond those who attend the Annual Meeting in person. Notwithstanding the foregoing, it should be noted the revision still provides the ability to conduct elections and vote on matters at the Annual Meeting at the discretion of the Board of Directors.

Expanded Meeting Format Flexibility

The revision explicitly authorizes the Board to hold the Annual Meeting in person or by video conferencing, or web-based conferencing, provided Members have a reasonable opportunity to participate. This codifies remote meeting authority.

 

 

The revised bylaws formalize four distinct methods by which Member votes may be conducted — on any matter, not just Director elections. This is a meaningful expansion from the prior bylaws, which only addressed voting at a meeting and limited mail balloting:

 

Method	Description
Mail Ballot	Written ballots mailed to each Member with a fixed Election Date for return. Notice required at least 30 days in advance.
Electronic Ballot	Ballots distributed and cast electronically. Member must have an email address on file. Board determines terms to protect election integrity.
Cooperative Facility Voting	In-person polling at Cooperative Headquarters and/or designated facilities in each District. Ballots delivered at least 30 days before Election Date.
Aggregate (Combined)	A combination of mail, electronic, and/or facility voting used together. Board has discretion to combine methods for any given election.

 

The Board retains exclusive authority to determine which method(s) to use for any given election or vote. The Credentials and Election Committee’s authority to establish ballots and procedures operates within whatever method the Board selects.

Election Date Definition

The draft introduces a defined term — Election Date — used consistently throughout the election provisions. The Election Date is either:

• The date of the Annual Meeting, if the election is held at the meeting; or
• The ballot return deadline, if the election is conducted by mail, electronically, or at a Cooperative facility.

This clarifies timing for nomination deadlines, notice requirements, and committee appointments, all of which are keyed off the Election Date.

Notice to Members — Expanded Content Requirements

The notice of nominations mailed to Members must now include not only candidate names and districts, but also information sufficient to explain all available voting procedures (mail, electronic, facility, aggregate). This ensures Members understand how to participate regardless of which method(s) the Board selects.

Director Election by Plurality — Codified

The draft explicitly states that Directors are elected by a plurality of votes cast, with ties resolved by drawing of lots. This codifies the plurality standard, which was previously implied but not stated in the bylaws.

Cooling-Off Period for Former Employees

Under the prior bylaws, a current employee or agent of the Cooperative was disqualified from serving as a Director, but there was no waiting period for former employees. The revision adds a three-year cooling-off period: a person who was employed by the Cooperative within three years of the applicable Election Date is disqualified from running.

This change is intended to prevent recently departed employees from immediately transitioning to Director roles, reducing the risk of conflicts of interest.

Competing Business Disqualification — Narrowed

The previous disqualification for being involved in a competing enterprise was broader, including businesses primarily engaged in selling electrical appliances, fixtures, or supplies to Cooperative Members. The revision narrows this to businesses selling electric energy or supplies to the Cooperative — a more focused conflict-of-interest test.

District Residency Requirement — Codified

Directors must now reside and receive service at their primary place of abode within the Directorate District they represent or seek to represent. This requirement was implied by the district structure but is now an explicit qualification.

Elimination of Non-Natural Person Director Exception

The prior bylaws included a provision allowing a duly elected officer or agent of a Member that is not a Natural Person (e.g., a corporation or LLC) to serve as a Director even if such officer did not independently satisfy the age or natural-person qualifications. This exception has been deleted. Under the revised bylaws, all Directors must be Natural Persons aged 18 or older, without exception.

The threshold for triggering a special election to fill a Board vacancy has been revised:

 

Prior Language	If the remaining term is less than 180 days, the vacancy may be filled by plurality vote at the Annual Meeting.
Revised Language	If the remaining term is less than 95 days from the applicable Election Date, the vacancy shall be filled by special election conducted as expeditiously as practicable, but no later than 145 days from the date of vacancy.

 

This revision shortens the threshold from 180 days to 95 days from the Election Date, and replaces the Annual Meeting fill mechanism with a dedicated special election process with a firm 145-day deadline. This gives the Board clearer guidance and ensures vacancies are resolved on a defined timeline.

Removal of Post-Annual-Meeting Board Session

The prior bylaws required a regular Board meeting to be held immediately following the adjournment of the Annual Meeting. This automatic post-annual-meeting requirement has been deleted. The Board now operates solely on its regular monthly meeting schedule as set by resolution, with no mandatory session tied to the Annual Meeting.

Expanded Remote Participation Authority

Section 6(E) has been updated to authorize participation by conference telephone, video conferencing, or any other virtual communication platform that allows all participants to hear and communicate with one another — expanding the prior narrower language limited to telephone/similar equipment. Participation by any such means constitutes presence at the meeting for all purposes, including quorum.

 

The revision removes two procedural requirements that previously governed the election of Officers (President, Vice President, Secretary, Treasurer) by the Board:

• Secret written ballot — Officers were previously required to be elected by secret written ballot among the Directors. This requirement has been removed, leaving the Board free to elect Officers in whatever manner it determines.
• Prohibition on nominations — Officers were previously elected without prior nomination. This restriction has also been removed, allowing the Board to use a nomination process if it chooses.

These changes give the Board more procedural flexibility in conducting its organizational meeting after the Annual Meeting.

Capital Credit Assignability — Updated Standard

The previous bylaws restricted capital credit assignment to successors in interest or occupancy of premises served by the Cooperative, unless the Board determined otherwise. The revision replaces this with a broader, board-policy-driven standard: capital credits may be assignable pursuant to policies of general application established by the Board of Directors. This gives the Board more flexibility to craft assignment policies as circumstances evolve.

New: Capital Credit Retirement upon Membership Termination

The revision adds an entirely new provision granting the Board discretionary authority to retire capital credits upon the termination of any Member’s membership — whether by expulsion, withdrawal, resignation, or cessation of existence. Previously, this discretionary early retirement right only applied upon the death of a Member. The new provision mirrors the death-retirement framework and requires the terminated Member (or legal representatives) to request early retirement in writing, with retirement subject to the Board’s terms and the condition that the Cooperative’s financial position is not impaired.

Unlocatable Member Capital Credits — Simplified

If a Member cannot be identified or located after due diligence when capital credits are being retired, the Board may declare those credits as permanent equity. The prior bylaws included a restoration provision requiring payment to such a Member if later found. The revision eliminates that restoration requirement — once declared as permanent equity, those credits remain so without further obligation to locate or pay the Member.

Interest on Overdue Balances — Removed

The prior bylaws allowed the Cooperative to deduct from a Member’s capital credits not only amounts owed to the Cooperative, but also accrued interest at the Illinois legal judgment rate, compounded annually. The revision removes the interest component — only the principal balance owed is deducted before capital credit retirement.

The prior bylaws included, as Section 10(F), a formal USDA nondiscrimination compliance statement referencing Title VI of the Civil Rights Act, Section 504 of the Rehabilitation Act, and the Age Discrimination Act, along with USDA complaint filing procedures. This section has been deleted from the bylaws in its entirety. Instead this language has been included in the Cooperative’s website for compliance purposes.

 

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