Making decisions in a co-operative
Learn about ordinary and special resolutions, postal ballots, and disclosure requirements for co-operatives under the Co-operatives National Law (NSW)
The board of directors is responsible for managing a co-operative and is required to make responsible decisions.
Some decisions are made by members passing either an ordinary or special resolution.
Ordinary resolution
This is a resolution that is passed by a simple majority vote (where 50% or more vote yes) of members at a general meeting of the co-operative. If the rules permit, the votes can be done by postal ballot.
Special resolution
The Co-operatives National Law (the CNL) requires that certain decisions be made by a special resolution. This is a resolution passed by:
- a two-thirds majority of members at a general meeting of the co-operative
- a two-thirds majority of members in a postal ballot (other than a special postal ballot), or
- a three-quarters majority in a special postal ballot.
A co-operative’s rules can require that a majority of more than two-thirds or three-quarters is needed to pass a special resolution.
Notice requirements for special resolutions
At least 21 days’ notice must be given for a special resolution outlining:
- the intention to propose the special resolution
- the reasons for proposing the special resolution
- the effect of the special resolution being passed.
If the special resolution is to amend the co-operative’s primary activities or active membership requirements, the notice to members must also state:
- whether the member is eligible to vote on the resolution
- the full text of the proposed resolution, and
- a copy of section 156 of the CNL, which concerns the cancellation of membership of an inactive member.
Special postal ballots require the issue of a disclosure statement and at least 28 days’ notice to members. See special postal ballots below.
Ordinary and special resolution by way of a postal ballot
A co-operative’s rules should specify the matters that may be determined by postal ballot.
Postal ballots must be held according to the national regulations and the rules of the co-operative. Regulation 3.9 of the Co-operatives National Regulations (the Regulations) outlines these requirements.
Members of a co-operative can require that a postal ballot be conducted for the passing of a special resolution. Section 250 of the CNL sets out the requirements for a requisition.
Special postal ballot
The CNL requires voting by special postal ballot for:
- Conversion from a co-operative with share capital to a co-operative without share capital, or vice versa (s.35)
- Conversion from a distributing co-operative to a non-distributing co-operative, or vice versa (s.35)
- A special resolution requiring members to take up or subscribe for additional shares and/or deducting amount for additional shares (s.82)
- On the requisition of members (s.250)
- A special resolution to require members to lend money to the co-operative (s.343)
- An acquisition or disposal of certain assets (s.359)
- Increasing the maximum permissible level of share interest in a co-operative (s.363)
- Making certain share offers (s.374)
- Merging a co-operative with another co-operative (ss.396 and 476)
- Initiating a transfer of engagements (ss.396 and 476)
- Transferring the incorporation of a co-operative to another scheme (s.404)
- Executing a compromise or arrangement between a co-operative and its members (s.414)
- Voluntarily winding-up the co-operative (s.445).
Disclosure Statement required for special postal ballot
Every special postal ballot requires a disclosure statement. The statement must give members enough information to assess the proposal properly.
The CNL sets out general requirements for disclosure statements. They must include certain information such as:
- details of the current financial position of the co-operative
- the interests of the directors of the co-operative in the proposal
- any compensation that would be paid to officers or members of the co-operative in relation to the proposal.
The Registrar may request an independent report on specific aspects of a proposal to go with the disclosure statement. Examples of disclosure statements are available from Registry and Accreditation.
The Registrar must approve the disclosure statements before they are distributed to members. A draft statement and its applicable fee must be submitted for the Registrar's approval at least 28 days before being provided to members.
Once approved by the Registrar, the co-operative can send members a notice of the postal ballot and a copy of the approved disclosure statement.
Exemption from special postal ballot requirements
The Registrar may exempt a co-operative from needing to conduct a special postal ballot as required under sections 35, 343, 359, 396, 404 and 445 of the CNL. This application for exemption must be provided in writing and accompanied by the applicable fee.
Registering the special resolution
Each special resolution passed by the co-operative must be lodged:
- with the Registrar for registration by completing a Form C10 Application to Register Rule Amendment
- within 28 days
- with the prescribed lodgement fees (late fees apply).
A special resolution has effect from the date it is passed except:
- a special resolution to amend the rules. This has effect from the date the amendment is registered
- a special resolution to change the name. This has effect from the date a certificate of registration is issued in the new name
- a special resolution that must be passed by special postal ballot (other than for voluntary winding up). This has effect from the date the special resolution is registered
- a special resolution for the voluntary winding up of a co-operative. This goes into effect when the result of the special postal ballot is noted in the co-operative’s minutes.