Co-operative active membership

Active membership provisions

Members must meet the cooperative's active membership requirements to keep their membership and right to vote.

The active membership provisions in a co-operative’s rules set out:

• the co-operative’s primary activities
• what a member has to do to be active.

Primary activity

A co-operative’s primary activity:

• is the main purpose why the co-operative exists. This activity can be either by itself or with other activities.
• makes a significant contribution to the co-operative's business. (i.e. it contributes at least 10% to the co-operative's turnover, income, expenses, surplus or business).

Active membership requirements

The active membership requirements must:

• be reasonable when considered in relation to the activities of the co-operative as a whole
• have clear, repetitive and measurable obligations
• clearly define the period in which a member is required to use or support an activity or to maintain a relationship with the co-operative. For example members must undertake specified obligations each financial or calendar year.

For distributing co-operatives, active members must:

• use a co-operative activity that supports its primary activity
• follow any other provisions in the rules that have been approved by the Registrar.

For non-distributing co-operatives, members can be considered active by paying a regular subscription. These subscription fees must go towards the co-operative's primary activity.

A co-operative must, at all times, be able to identify which members are active or inactive.

Changing the active membership provisions

The Registrar must approve any changes to the rules of active membership, except if:

• it is a minor change in the way in which the existing primary activities are expressed
• it only changes the amount of any regular subscription required to be paid
• it only changes the amount of product required to be supplied or purchased
• it only changes the number of hours a member must work or volunteer.

Prior approval by the Registrar is required to add a new primary activity or remove a primary activity.

Adding a new membership obligation or removing an existing one requires prior approval by the Registrar.

The Co-operatives National Law (CNL) requires that members be given special notice about any proposed change. For more information, see the co-operatives rules.

Cancelling the membership of inactive members

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 co-operative doesn't know where a member is for at least 3 years (or shorter if stated in the co-operative rules)
• the member has been inactive for the last three years (or shorter if stated in the cooperative rules).

If the co-operative has share capital, the board must announce the forfeiture of the inactive member's shares. It must be announced at the same time the membership is cancelled.

In limited cases, the co-operative’s board may delay canceling a membership for up to 12 months. This may include if the board decides that there are valid reasons preventing the member from fulfilling their obligations.

Co-operatives may face a maximum penalty of $2000 for failing to cancel a membership for the above reasons.

A membership cannot be cancelled in some specific cases, as outlined in the CNL (NSW). This includes if the co-operative is:

• insolvent
• under administration, or
• being wound up.

A member can apply for a Supreme Court order against the cancelling of membership within 6 months after the board announces their intention to cancel the membership.

Repayment of amounts due to a member on cancellation

Members have the right to receive any amounts owed to them (including share capital) within one year. The board can delay repayment if they consider that it will affect the co-operative's financial position. The amount due must be paid as soon as the repayment will not affect the co-operatives financial position. This must be within 10 years (or a shorter period if specified in the rules).