2026 PROPOSED BYLAW AMENDMENT EXPLANATION

Fall River Rural Electric Cooperative’s Board of Directors is proposing a change to bylaw Article XI – Disposition of Property. Here is the information for you to review in advance of your vote.

Voting to occur from May 14, 2026 through 10 a.m. June 13, 2026. Check the insert with your ballot and Energy Expo booklet.

ARTICLE XI Proposed Bylaw Amendment-Key Points for Members:

1. Ensure Member Control – This changes the voting threshold from 66.67% of all members to 75% of voting members, ensuring that any major decision to sell or dispose of Cooperative assets requires overwhelming member support.
2. Protection Against Unwanted Takeovers – The amendment prevents Fall River from merging with investor-owned or non-cooperative entities. Only another cooperative could be considered for consolidation.
3. Clear Member Safeguards – A consolidation or merger cannot occur without a detailed plan presented to members, followed by a 75% majority vote of approval. Members remain in full control of the Cooperative’s future.
4. Transparency in Asset Disposition – The amendment clearly defines “substantial” property (10% of total assets), reducing ambiguity and ensuring members are fully informed before any vote.
5. Board & Member Alignment – The Board of Directors has reviewed and supports this proposed change as a way to strengthen Cooperative governance and protect member ownership.

ARTICLE XI - Disposition of Property (Current Bylaw Language)

The Cooperative may not sell, lease or otherwise dispose of all or any substantial portion of its property unless such sale, lease or other disposition is authorized at a meeting of the members thereof by the affirmative vote of not less than two‑thirds (2/3’s) of all of the members of the Cooperative, and unless the notice of such proposed sale, lease or other disposition shall have been contained in the notice of the meeting; provided, however, that notwithstanding anything herein contained, the Board of the Cooperative, without authorization by the members thereof, shall have full power and authority to authorize the execution and delivery of a mortgage or mortgages or a deed or deeds of trust upon, or the pledging or encumbering of, any or all of the property, assets, rights, privileges, licenses, franchises and permits of the Cooperative, whether acquired or to be acquired, and wherever situated, as well as the revenues and income there from, all upon such terms and conditions as the Board shall determine, to secure any indebtedness of the Cooperative and to carry on the day to day operations of the Cooperative. Upon proper notice to the members, the Board may, upon the affirmative authorization of a two‑thirds (2/3’s) of all members of a Cooperative, sell, lease, merge or otherwise dispose of all or a substantial portion of its property to another Cooperative, doing business in the State, pursuant to the Act under which this Cooperative is incorporated. This Article of the Bylaws can only be amended upon a two‑thirds (2/3’s) affirmative vote of all of the members of the Cooperative.

ARTICLE XI – Disposition of Property (Final Version)

Section 1. Disposition of Substantial Property.
The Cooperative shall not sell, lease, or otherwise dispose of all or any substantial portion of its assets, rights, or property unless such transaction is first:

1. Specified in the notice of the meeting at which such vote is to occur, with adequate details of the proposed disposition provided to the membership at least twenty (20) days prior to said meeting.
2. Authorized by the affirmative vote of not less than three-fourths (seventy-five percent 75%) of the members voting, provided that at least 10% of the membership has voted, in accordance with Article III of these Bylaws; and
3. Definition of “Substantial Portion.” For the purposes of this Article, a “substantial portion” shall be defined as property, assets, or rights having a value equal to or exceeding ten percent (10%) of the total book value of the Cooperative’s assets as reflected on its most recent year-end audited financial statement. The Board may adopt a policy further defining or clarifying “substantial” in light of specific transactions or asset categories.

Section 2. Consolidation or Merger. The Cooperative may consolidate or merge only with an entity operating on a cooperative basis that provides electric energy (“Consolidate or Merge”). To Consolidate or Merge, the Cooperative must comply with this Bylaw.

 

1. Board Approval. To Consolidate or Merge, the Board must approve an agreement or plan to Consolidate or Merge (“Consolidation or Merger Agreement”) stating the:

 

1. terms and conditions of the Consolidation or Merger;
2. name of each Entity Consolidating or Merging with the Cooperative;
3. name of the new or surviving Consolidated or Merged Entity (“New Entity”);
4. manner and basis, if any, of converting memberships or ownership rights of each Consolidating or Merging Entity into memberships or ownership rights of, or payments from, the New Entity;
5. number of directors of the New Entity, which must equal or exceed five directors;
6. date of the New Entity’s annual meeting;
7. names of New Entity directors who will serve until the New Entity’s first annual meeting; and
8. other information required by Law.

 

2. Member Approval. To Consolidate or Merge:

 

1. after the Board approves a Consolidation or Merger Agreement, three-fourths (seventy-five percent 75%) of the members voting must approve the Consolidation or Merger Agreement.

 

3. Notice. The Cooperative shall notify Directors of a Board Meeting, and Members of a Member Meeting, at which Directors or Members may consider a Consolidation or Merger Agreement. This notice and any material soliciting Member approval of the Consolidation or Merger Agreement must contain, or be accompanied by, a summary or copy of the Consolidation or Merger Agreement and the New Entity’s articles of incorporation and bylaws and any provision which would require Director or Member approval if contained in a proposed Articles or Bylaws Amendment.

 

4. Other Requirements. The New Entity directors named in the Consolidation or Merger Agreement must sign and file articles of Consolidation or Merger in a manner, and stating the information, required by Law. The Cooperative shall comply with all other requirements for Consolidation or Merger specified by Law.

Section 3. Authority of the Board – Mortgages and Encumbrances.
Notwithstanding anything contained herein, the Board of Directors shall retain full authority, without member approval, to:

(a) Authorize the execution and delivery of mortgages, deeds of trust, or similar instruments, or
(b) Pledge, encumber, or otherwise grant security interests in any or all of the Cooperative’s assets, rights, licenses, franchises, or revenues, whether now owned or hereafter acquired,
to secure indebtedness of the Cooperative incurred in the normal course of business or to ensure the effective day-to-day operations of the Cooperative.

Section 4. Amendment of This Article.
This Article XI – Disposition of Property – shall not be altered, amended, or repealed except upon the affirmative vote of three-fourths (seventy-five percent, 75%) of the members voting, provided that a quorum has voted, at a meeting of the members duly noticed and convened for that purpose in accordance with these Bylaws.