Running a co-operative
Understand co-operatives’ duties, from naming and registers to directors’ responsibilities and financial reporting under the Co-operatives National Law.
The information in this guide doesn't cover all of a co-operative's duties. It should not be used as a substitute for the Co-operatives National Law (CNL).
Displaying a co-operative name
The co-operative’s full name must be legible and easy to read on:
- each seal
- all notices, advertisements and official publications (including websites)
- business documents (including letters, invoices and 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
Each NSW co-operative must locate its registered office 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 always have at least 5 active members. If the number of active members falls below 5, the directors should contact NSW Fair Trading immediately.
Co-operative directors and officers
The board of directors must manage the co-operative's affairs per the law and its rules. Board meetings must be held at least once every three months using any agreed-upon technology.
The directors of smaller co-operatives are likely to be directly involved in all aspects of the business. In larger co-operatives, the directors 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 by its rules.
Duties of directors and officers
The directors and officers of a co-operative, under the CNL and general law, must:
- Act in good faith. Directors must be honest and act in the best interests of the co-operative.
- Act with care and diligence. Directors must be up-to-date with the co-operative's financial status and business performance. They must obtain professional advice if necessary.
- Not misuse position or information. Directors must not improperly use their position or information to cause harm to the co-operative or gain an advantage for themselves or someone else.
- Avoid conflicts of interest. Any conflict must be declared and dealt with by the CNL.
- Prevent insolvent trading. Directors must prevent the co-operative from incurring debt while it is insolvent or if it will become insolvent due to incurring the debt.
Director responsibilities
Directors must ensure the co-operative complies with its obligations under the CNL, including:
- Keeping financial records. Financial records must accurately record and explain the co-operatives' performance, financial transactions and position.
- Notifying co-operative changes. Nsw fair trading must be notified of any change of directors, secretary, chief executive officer (ceo), registered address and rules within 28 days.
- Maintaining registers. Directors must ensure that specified registers are maintained. They must be available for inspection as required.
- Reporting to members. Directors must provide financial reports to members no later than 5 months after the end of the co-operative’s financial year.
- Lodging annual returns. Annual returns or reports must be lodged with nsw fair trading no later than 5 months after the end of the co-operative’s financial year.
- Complying with rules. Directors must ensure that the co-operative operates following its rules.
Director remuneration
A director's remuneration for their services is limited to the following:
- 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 board of directors meetings or any of the co-operative's committee of director meetings
- in attending any general meetings of the co-operative.
Co-operative registers
Directors must ensure the co-operative keeps registers of:
- directors
- 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
- loans made or guaranteed by the co-operative, and any securities taken by the co-operative
- co-operative capital units (CCUs) issued by the co-operative and their holders
- memberships cancelled due to inactivity
- notifiable interests
- fixed assets
- 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 in written or electronic form. They must contain the particulars as 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 moved from one office to another.
Inspection of registers and other documents
Members can 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 co-operative CCUs issued by the co-operative and their holders'
- register of memberships cancelled due to inactivity under Part 2.6 of the CNL.
The CNL restricts the use and disclosure of information obtained from a register to matters directly related to the co-operative.
Appointment of a secretary
The board must appoint a secretary who is an adult person and ordinarily lives in Australia. The secretary supports the board of directors in their duties and responsibilities as board members.
The secretary is liable for failing to comply with the obligations imposed on co-operatives under the CNL. The co-operative rules may also assign specific duties to the secretary.
Financial reporting requirements
All co-operatives must provide financial reports to members no later than 5 months after the end 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 must be given for annual general meetings (AGMs) or special general meetings (SGMs). 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 an SGM or AGM is as specified in the co-operative’s rules.
The minutes of every meeting must be entered in the minute books within 28 days of the meeting. The minutes must also be signed within a reasonable time by the chairperson of the meeting or the chairperson of the next 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 each calendar year. It must also be held no later than 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 must have enough opportunity to ask questions or comment on the co-operative's management 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
- signed within a reasonable time after the meeting by the chairperson of the meeting or chairperson of the next meeting.
Other obligations
Co-operatives must comply with any relevant State and Commonwealth laws that apply to its operations.
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