Co-Operatives
Co-Operatives
A trading co-operative is usually formed where:-
a business is to be run, usually where most of the dealings of the co-operative are with its members (eg a buying scheme or a selling scheme);
- profit making for the benefit of members is not the primary purpose and may even be prohibited;
- all members have equal voting rights;
- no member is permitted to hold more than 20% of the shares;
the capital contributed by each member is used to fund the co-operative, rather than being invested for the benefit of each member;
- all active members have the right to be elected as a director of the co-operative;
- members are expected to actively participate in the operations of the co-operative.
Minimum requirements
- A co-operative must have a minimum of:-
- five members, each of whom must hold at least one share in the co-operative;
- five directors, each of whom must be an active member of the co-operative;
- a common seal;
- an auditor who must audit the co-operative’s accounts annually.
Other material issues
- A member’s share(s) can be transferred, forfeited (for inactivity or inappropriate behaviour);
The co-operative may pay a dividend to members each year. The maximum amount of the dividend must not exceed 20% of the total issued capital of the co-operative.
On a winding up of the co-operative, each member is entitled to have their capital contribution returned. The surplus assets are to be divided in the same way as for a company.
Each of the directors of the co-operative are subject to the same responsibilities and liabilities as those imposed upon directors of corporations under the Corporations Act.
- Directors are responsible for admitting applicants as members of the co-operative.
Notification must be given to the Registrar of Co-Operatives of:-
- changes to the officers of the co-operative
- changes to the name, rules or auditor of the co-operative
- changes to the address of the co-operative
- any proposal to expel a member or re-admitting an expelled member Procedure for formation
The following must be prepared and submitted to the Registrar of Co-Operatives:-
- Application to approve name, rules and disclosure statement;
- Disclosure statement;
Rules (the model rules are preferred, as any changes to them must be set out in a separate document and each change must be justified to the Registrar.
Within 28 days of receiving the first lodgment, the Registrar will either approve your application or advise of any inadequacies or deficiencies in the documents lodged.
When approved, the Registrar will send an Application to register the co-operative which is to be completed at your Formation Meeting, a meeting of all initial members of the co-operative - and there must be no less than 5 members. At that meeting, all members are to receive a copy of the rules and all members must sign the rules, the disclosure statement and the application to register. If members wish to amend the rules at the formation meeting, those amendments must be approved by the Registrar before the application to register can be dealt with. Several other procedural matters must also be attended to at the formation meeting.
Within 2 months of the formation meeting, various documents must be lodged with the Registrar. If those documents are in order, the co-operative will be registered. The co-operative will not exist until the date of its registration.