About co-operatives

Co-operatives are democratic organisations owned and controlled by their members. They are usually based on values of self-help, responsibility, and equality.

Co-operatives are different from public companies. In co-operatives, voting rights are based on membership rather than shareholding. That is, every member has only one vote.

Co-operative's liability

When a co-operative is formed, it has a separate legal identity from its members. As a legal entity, the co-operative bears liability for its acts. The co-operative, not the members, is responsible for any legal claims against it.

Distributing or non-distributing

Co-operatives can be either distributing or non-distributing. Distributing co-operatives must have share capital. Members must also hold at least the minimum shareholding specified in the rules.

A distributing co-operative may distribute to members a part of the surplus generated in a year by way of:

• a rebate, or
• the issue of bonus shares to members, or
• the issue of a limited dividend.

Non-distributing co-operatives need no share capital. They must not distribute surplus funds to members.

If the co-operative is wound up, members can only get back the nominal value of their shares. Any surplus must be distributed according to the co-operative's rules. A non-distributing co-operative structure is more likely suitable for community organisations.

What can a co-operative do?

Co-operatives can engage in a variety of social and commercial activities. They may carry out any activity defined within their rules.

Membership

General co-operatives must always have at least 5 active members. The maximum number of members is not limited.

Only active members of the co-operative can vote or retain their membership. Active members are persons who use or support the co-operative's primary activities. Go to co-operatives active membership for information on primary activities and active membership.

The role of NSW Fair Trading

NSW Fair Trading oversees the registration of co-operatives in NSW. The co-operatives are registered under the Co-operatives National Law (NSW). The Co-operatives National Law (NSW) is in the appendix of the Co-operatives (Adoption of National Law) Act 2012.

NSW Fair Trading maintains the register of co-operatives in NSW and is responsible for:

• registering a co-operative
• receiving and recording co-operative documents including:
  • annual reports
  • special resolutions, including changes to the rules
  • changes to directors and office bearers.

Obtaining copies of documents

All documents filed with NSW Fair Trading are in the Public Register. They are publicly available and can be accessed for a fee. Go to accessing co-operatives public records for more information.