An active member is a person who maintains a relationship with a co-operative, either by purchasing or supplying goods or services, paying an annual subscription (non-distributing co-operatives only), or having another form of relationship such as having a child enrolled at a child care co-operative or being a tenant of a housing co-operative. Once a member ceases to be active in accordance with the co-operative's rules, their membership is cancelled.

Board of Directors

Like other incorporated bodies, a co-operative is governed by a Board of Directors which is responsible for managing the business of a co-operative for the benefit of members. Also see Directors.

Cardinal stakeholder group

Is the stakeholder group that a business or an organisation is established to serve. In a for-profit company, the cardinal stakeholder group is its investor shareholders. In contrast, the cardinal stakeholder of a co-operative are the members who use of its services, whether they be consumers, parents, farmers, businesses or tenants. Also see Stakeholders.

Community buyout

A community buyout occurs when members of the public purchase an existing business that is threatened with closure. In Australia, community buyouts usually occur in small rural communities where a business provides an essential service such as a general store, post office, petrol station or hotel. A community buyout usually results in the formation of a community enterprise incorporated as a co-operative. More information.

Community enterprise

A community enterprise is a business that is owned, controlled and used by the people who live in a particular geographic area. Membership of a community enterprise is voluntary and open to the general public. It is a sustainable business that does not rely on charitable donations or subsidies for its continued existence. Most community enterprises in Australia are incorporated as co-operatives. More information.

Consumer co-operative

A consumer co-operative Is an enterprise that aggregates the purchasing power of individuals and families to provide cheaper prices for goods and services and/or to obtain goods and services that would otherwise be unavailable. Consumer co-operatives can either operate as a community enterprise or a buying group among individuals with a common need.

Co-operative

A co-operative can be described as an organisation which is owned and controlled by the persons who use its services. In Australia, it is an incorporated body registered under state or territory co-operatives law.

A co-operative is a unique form of private enterprise which is based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Self help, expressed through mutual action as a group, provides the motivation for self reliance and assuming responsibility for taking control of one's own affairs. Democracy and equity sustain the solidarity of the group by ensuring that no individual member can secure power or gain advantage to the detriment of other members.

Seven internationally recognised co-operative principles act as guidelines by which co-operatives put these values into practice, and form the basis of co-operatives legislation in Australia and other countries.

Co-operative company

A "co-operative company" is a taxation term that describes a company or a co-operative that is eligible to receive taxation benefits under Division 9 of the Commonwealth Income Tax Assessment Act. The term also refers to a small number of agricultural co-operatives in the Australian state of Victoria that are incorporated as companies because they were formed before Victoria's first co-operatives legislation in 1953.

Co-operatives Act

The Co-operatives Act is the legislation that regulates non financial co-operatives in Australia. Click here for links to the various state and territory Co-operatives Acts.

Democratic control

Democratic control means the final authority to control the affairs of a co-operative rests with the members who use its services. Members elect directors and vote on major decisions such as appointing the auditor, amending the co-operative's rules, approving the sale of its main assets and winding up the co-operative. Democratic control is exercised by members at general meetings or by postal ballot. Every member has one vote only, irrespective of the amount of capital contributed by them or their use of the co-operative's services.

Demutualisation

The term "demutualisation" is often used in the broader community to describe changes in corporate form. For example, a change from a co-operative to a company limited by shares is often referred to as a demutualisation. The process of demutualisation involves a change in organisation that results in members surrendering their rights to participate in any common fund that constitutes the organisation.

Upon demutualisation, there is effectively a distribution or an allocation of any accumulated mutual surplus to members. Commonly, mutual organisations that demutualise distribute the benefit of any accumulated surplus to members by issuing shares in the demutualised entity, or an equivalent cash payment from reserves or from the proceeds of the sale of demutualised shares, in exchange for giving up their membership interests.

Directors

Directors are those persons with legal responsibility for providing direction and supervision of a co-operative. In some small co-operatives, directors may be referred to as "committee members". Directors are elected by members and a majority of directors must be active members. Co-operative directors have similar duties to those of company directors. They can only act at a properly convened board meeting except where they are delegated to perform a function authorised by the Board of Directors.

Distributing co-operative

Also known as a trading co-operative, a distributing co-operative can distribute surplus funds to members, and members can share in the assets of the co-operative upon winding up. Distributing co-operatives must have share capital. This type of co-operative is used for commercial activities such business services, buying groups, and agricultural, fish marketing and forestry services. More information.

Incorporated body

Is a legal person that has an existence separate from the persons who are its members. An incorporated body has the legal capacity of a natural person (a human being), and has the power to hold property, enter into contracts, and sue and be sued in its corporate name. It has perpetual succession and continues to exist until action is taken to dissolve it.

An incorporated body is also described as a corporation, a corporate body, a body corporate or legal entity. Companies, co-operatives, incorporated associations and aboriginal corporations are all incorporated bodies.

Limited liability

Like other incorporated bodies, a co-operative has limited liability. This means that the co-operative is responsible for its debts, not the members who own the enterprise. Members are, however, liable for the amount, if any, unpaid on their shares, any charges payable by them in accordance with the co-operative's rules and any debts they owe to the co-operative. In certain circumstances, directors may be held personally liable for the debts of the co-operative if they are found to have breached their duties under law.

Member

A member Is a term used to describe a legal owner of a co-operative. In a co-operative with shares, a member can also referred to as a shareholder.

Mutual

A mutual is an organisation where there is a complete identity between the participants in the enterprise and its members, and where the income of the enterprise is derived soley from its members.

Mutuality principle

For an organisation where members contribute and pool their money to achieve a common purpose, their contributions (including payments for services) are excluded as assessable income to the organisation. The principle is that taxable income must be derived by outside parties (a person cannot make a profit out of himself or herself). The receipt of surplus funds by members is merely returning the recipients' own funds to themselves.

Non-distributing co-operative

Also known as a non trading co-operative, a non-distributing co-operative is a 'not-for-profit' organisation that can be formed with or without shares. While a non-distributing co-operative can conduct commercial activities, it is prohibited under co-operatives law from distributing surplus funds to members from profits, asset revaluation or upon winding up. This type of co-operative is commonly used to provide social, cultural and recreation services to its members. More information.

Primary activity

Is an activity that is related to the main purpose of a co-operative and is used as the basis for determining whether or not a member is an active member. All co-operatives must have at least one primary activity.

Private enterprise

A private enterprise is a business or an organisation whose membership records are not open to the public. Private enterprises include proprietary companies, co-operatives and incorporated associations.

Public sector mutual

A public sector mutual is a government owned corporation that is contracted to provide services to the government. Public sector mutuals are gaining popularity overseas as a means for governments to reduce costs by outsourcing the employment of public servants to government owned enterprises. Also see Mutual.

Registrar of Co-operatives

Is a statutory officer created under Australian co-operatives legislation who is charged with the responsiblily for the administration of the legislation. The Registrar is usually is a senior state/territory government official. More information.

Rules

The rules are the constitution of a co-operative and are a collection of clauses that describe the internal structure of a co-operative. In Australia, the rules include active membership provisions, qualification for members and directors, conducting board and general meetings, resolving disputes, and how surplus funds will be distributed. In a formal sense, the rules constitute a contract between members, officers, directors and the co-operative, all of whom are all required to observe the rules.

Social business

A social business is a cause-driven enterprise which has social objectives, such as helping bring people out of poverty by providing health, housing and financial services to the poor. People and institutions invest in a social business purely for social purposes, not personal profit. Investors/owners can gradually recoup the money they invest in the enterprise, but cannot take any profits beyond that point. More information.

Social enterprise

Social enterprises are not-for-profit organisations that aim to enhance the social well being of individuals and families. In Australia, social enterprises can either be member benefit organisations, such as co-operative social enterprises, or enterprises that provide social services to stakeholders other than members, eg charities.

Stakeholders