Running a co-operative

The following information does not set out all the obligations of a co-operative and should not be relied on as a substitute for the Co-operatives National Law (the CNL).

Displaying a co-operative name

The co-operative’s full name must appear in legible characters on:

• each seal
• all notices, advertisements, official publications (including websites)
• business documents (including letters, invoices, receipts)

Co-operatives must publicly and prominently display a notice at their registered office:

• stating the co-operative’s full name
• identifying the premises as the registered address.

Registered office

The registered office of each NSW co-operative must be located in NSW. NSW Fair Trading must be notified of any change of address of a co-operative’s registered office within 28 days.

Minimum number of members

A co-operative must have at least 5 active members at all times. The directors should contact Fair Trading urgently if the number of active members falls below 5 active members.

Co-operative directors and officers

The board of directors is responsible for managing the affairs of the co-operative in accordance with the legislation and the co-operative’s rules. Board meetings must be held at least once every 3 months using any technology agreed by the board.

The directors of smaller co-operatives are likely to have direct involvement in all aspects of the business. The directors of large co-operatives will often have a more administrative role.

The role of directors includes:

• planning long-term business and financial strategies
• determining and implementing policies
• assessing business and financial performance
• ensuring the co-operative complies with its statutory reporting and other obligations under the CNL
• ensuring the co-operative operates in accordance with its rules

Duties of directors and officers

The directors and officers of a co-operative have obligations and duties under the CNL and general law. These include:

• acting in good faith - must act honestly and in the best interests of the co-operative and for a proper purpose
• acting with care and diligence - directors need to keep adequately informed of the financial status and business performance of the co-operative and obtain professional advice if necessary
• not misusing position or information - directors must not improperly use their position and information to gain an advantage for themselves or someone else or to cause harm to the co-operative
• avoiding conflicts of interest - any conflict must be declared and dealt with in accordance with the CNL
• preventing insolvent trading - directors must prevent the co-operative incurring a debt whilst it is insolvent or if it will become insolvent as a result of incurring the debt.

Director responsibilities

Directors are responsible for ensuring the co-operative complies with its obligations under the CNL, including:

• keeping financial records - financial records must correctly record and explain its financial transactions, financial position and performance
• notifying co-operative changes - change of directors, secretary, CEO, registered address and rule changes must be notified to Fair Trading within 28 days
• maintaining registers - ensuring specified registers are maintained and are available for inspection by members and other persons as required
• reporting to members - provide financial reports to members within 5 months of the end of the co-operative’s financial year
• lodging annual returns - annual returns or reports are required to be lodged with Fair Trading within 5 months of the end of the co-operative’s financial year
• complying with rules - ensuring the co-operative operates in accordance with its rules.

Director remuneration

The remuneration a director may receive for services as a director is limited to:

• fees, concessions and other benefits approved at a general meeting of the co-operative
• director’s travelling and other expenses the director properly incurs:
  • in attending meetings of the board of directors or any meetings of committee of directors of the co-operatives
  • in attending any general meetings of the co-operative.

Co-operative registers

Directors must ensure the co-operative keeps registers of:

• register of directors
• register of members (including their shareholding, if any)
• register of:
  • loans to, securities given by, debentures issued by and deposits received by the co-operative and
  • the names of people who have given loans or deposits to, or hold securities or debentures given or issued by the co-operative
• register of loans made or guaranteed by the co-operative, and any securities taken by the co-operative
• register of Co-operative capital units (CCUS) issued by the co-operative and their holders
• register of memberships cancelled due to inactivity under Part 2.6
• register of notifiable interests
• register of fixed assets
• register of subordinated debt.

The registers must be kept in NSW at:

• the co-operative’s registered office
• principal place of business
• an office where the work involved in maintaining the register is done, or
• another place approved by the Registrar

The registers must be kept in either written or electronic form and contain the particulars specified in Schedule 2 of the Co-operatives National Regulations (the Regulations).

The co-operative must notify the Registrar within 28 days if the registers are not kept at the registered office or are moved from one office to another.

Inspection of registers and other documents

Members are entitled to inspect the following registers and documents free of charge during all reasonable hours:

• co-operatives legislation
• the rules of the co-operative
• minutes of each general meeting
• the last annual report
• register of directors
• register of members
• register of names of people who have given loans or deposits to, or hold securities or debentures given or issued by the co-operative
• register of loans made or guaranteed by the co-operative, and any securities taken by the co-operative
• register of CCUS issued by the co-operative and their holders
• register of memberships cancelled due to inactivity under Part 2.6

The CNL imposes restrictions on the use and disclosure of information obtained from a register.

Appointment of a secretary

The board must appoint a secretary who is an adult person who ordinarily resides in Australia. The secretary’s role is to support and advise the board of directors concerning their duties and responsibilities as board members.

The secretary is personally liable for any failure to comply with the obligations imposed on co-operatives under the CNL. The co-operative rules may also provide for specific duties to be undertaken by the secretary.

Financial reporting requirements

All co-operatives are required to provide financial reports to members within 5 months after the end of the co-operative’s financial year. The reporting requirements differ for small and large co-operatives.

See co-operatives financial reporting for information on the financial reporting obligations of co-operatives.

General meetings

Fourteen (14) days’ notice is required for the AGM or a special general meeting (SGM). If a special resolution is to be considered 21 days’ notice is required. The quorum (ie. the number of members who must be present) for a SGM or AGM is as specified in the co-operative’s rules.

The minutes must be entered in the minute books within 28 days of the meeting and signed within a reasonable time by the chairperson of the meeting or chairperson of the following meeting.

Annual general meeting (AGM)

A co-operative must hold its first AGM within 18 months of registration. Subsequent AGMs must be held at least once in each calendar year and within 5 months after the end of the co-operative’s financial year as set out in the co-operative’s rules.

The ordinary business of the AGM includes:

• consideration of the annual financial report
• consideration of the directors’ report and auditor’s report (if relevant)
• election of directors
• appointment of an auditor, if necessary.

At the AGM members as a whole must have a reasonable opportunity to ask questions or make comments on the management of the co-operative and the conduct of any audit.

Minutes of meetings

Minutes of each general meeting, board meeting and committee meeting must:

• be kept in the English language
• entered in the appropriate books within 28 days after the meeting
• be signed within a reasonable time after the meeting by the chairperson of the meeting or the chairperson of the next meeting.

Other obligations

Co-operatives must comply with any relevant State and Commonwealth laws that apply to its operations.

Visit the following organisations for more information:

• Australian Taxation Office
• Office of the Australian Information Commissioner
• Anti-Discrimination Board NSW
• NSW Industrial Relations (employment)
• Fair Work Ombudsman (employment)
• SafeWork NSW (safety)

Need more information?

Contact:

Registry and Accreditation

Make an enquiry online

Free Call: 1800 502 042

PO Box 22
Bathurst NSW 2795