Definition
A member of a co-operative can be:
- someone who has signed the application for registration
- someone admitted by the co-operative under its rules
- members of a merged co-operative
- a corporation (if allowed by the co-operative rules)
- a minor (if the co-operative rules do not have age restrictions). A minor cannot vote (unless their membership is joint with someone who has these rights) and cannot hold office or be a director.
The minimum number of members a co-operative must have is:
- five active members or a lesser number if approved by the Registrar; or
- two co-operatives (in the case of a co-operative group).
It is an offence for a director to knowingly allow a co-operative to carry on business for more than 28 days from the date the co-operative ceases to have the minimum number of members.
Becoming a member
A person is qualified to become a member of a co-operative if:
- there are reasonable grounds to believe the person will be an active member
and
- the person is eligible under the rules.
A person intending or applying to become a member, is to be given a copy of or a notice that the following documents are available for inspection:
- the co-operative rules
- all relevant special resolutions that have been passed by the co-operative
- the most recent financials information reported to members
- written notice of any entry fees or regular subscriptions to be paid.
Distributing co-operatives that have a minimum share subscription of more than $200 must also give an intending member a current disclosure statement that has been registered with Fair Trading. The disclosure statement must include information to inform prospective members:
- of the nature and extent of their financial involvement or liability as a member
- the active membership provisions for the co-operative
- the rights and liabilities attaching to shares in the co-operative, and
- any other information that may be directed by the Registrar.
Active membership
The rules will specify what a member must do for the co-operative to remain an active member. These requirements are based on the needs of the co-operative and members. A member who is not active is not entitled to vote and must, eventually, have his or her membership cancelled.
Fees and regular subscriptions
The co-operative rules may require members to pay entry fees and regular subscriptions.
The regular subscription may be based on:
- the value of business the member does with the co-operative; or
- on profits earned by the co-operative on business done by the member with the co-operative.
Register of members
A co-operative must maintain a register of its members. The register must contain the information specified in the Co-operatives National Law (the CNL). Members have the right to inspect this register free of charge. Members may obtain copies of entries free of charge unless the rules require a fee be paid.
The CNL imposes restrictions on the use and disclosure of information obtained from the register.
Rights and liabilities of members
The rights and liabilities of members are:
- a member can only exercise their rights once:
- their name appears in the register of members
- they have paid for their membership, or acquired a share or interest as required by the rules
- the right to vote attaches to membership not shareholding. Members are entitled to one vote irrespective of the number of shares they may hold. Joint members have one vote between them.
- members who are minors are not entitled to vote and cannot hold any office in a co-operative
- only active members are entitled to vote at a meeting or in a postal ballot
- 20% of active members (or lesser percentage if specified in the rules) may requisition a meeting
- a member is entitled to inspect various co-operative registers and documents. Go to the running a co-operative page for more information
- members are liable to the co-operative for the amounts each member owes to the co-operative in relation to their membership. This includes any amount unpaid on the shares held by the member and any charges payable by the member under the rules
- a member may also have liabilities in relation to any trade or other business they conduct with the co-operative and any fines imposed by the co-operative.
Fines
If the rules allow, a co-operative may fine a member for breaching its rules. The rules must also state the maximum fine that can be imposed.
A fine must not be imposed unless the member:
- is given written notice stating the reason for imposing the fine
- has had reasonable opportunity to appeal the case to the board in person or in writing.
Disputes between members
Disputes between members, the co-operative or the board must be dealt with in accordance with the dispute resolution procedures contained in the rules. For more information on resolving disputes visit the managing co-operatives disputes page.
Ending a membership
A membership ends if the:
- membership is cancelled due to inactivity
- member is expelled or resigns under the rules of the co-operative
- member becomes bankrupt or insolvent (unless the rules state otherwise)
- member dies
- contract of membership is cancelled due to misrepresentation or mistake
- member is a corporation and the corporation is deregistered
- where the co-operative has shares, if the member ceases to hold shares in the co-operative.
Cancellation of inactive memberships and cancellation of members’ shares
The board must give the inactive member at least 28 days’ notice of their intention to cancel the membership.
The board must declare a membership cancelled if:
- the whereabouts of a member is not known, and has not been known for at least three years (or a shorter time if stated in the co-operative rules)
- the member is currently inactive, and has not been active at any time during the last three years (or a shorter time if stated in the co-operative rules)
If the co-operative has share capital, the board must declare the shares of the member to be
forfeited at the same time the membership is cancelled.
A co-operative’s board may defer cancellation of membership for a period of up to 12 months in limited circumstances (including if there are grounds to believe that unusual circumstances prevented the member fulfilling the active membership obligations).
The CNL sets out circumstances in which the membership of an inactive member cannot be cancelled including if the co-operative is insolvent, under administration, if a receiver has been appointed or if the co-operative is being wound up.
A maximum penalty of $2000 may be imposed for failure to cancel the membership of inactive members.
Repayments of amounts due to a member on cancellation resignation or expulsion
Members are entitled to be paid amounts owing to them (including repayment of share capital as appropriate) within 1 year. The board can delay repayment if it considers repayment would adversely affect the financial position of the co-operative. The amount due must be paid as soon as repayment would not adversely affect the co-operative’s financial position and must be paid within 10 years (or shorter period if specified in the rules).
Need more information?
Contact:
Registry and Accreditation
Free Call: 1800 502 042
PO Box 22
Bathurst NSW 2795