Types of Australian co-operatives
Important Notice
The information below gives an overview of some common features and
differences between the types co-operatives that can be registered in
Australia. It
does not
cover the whole of the
Co-operatives Act.
The information is not a substitute for
professional advice and
should not be relied on as legal advice.
Introduction
Australian co-operatives law allows the formation of two types of
co-operatives - a
trading
co-operative and a
non trading
co-operative, in recognition that co-operatives can provide both economic and
social benefits to people.
Common features
Legal capacity of a natural person.
Can conduct commercial activities.
Can own subsidiary companies.
Minimum of five members over 18 years of age.
Members can be individuals and/or corporations.
Members have
limited liability.
Members must have an active relationship with the co-operative.
Voting is attached to membership - one member one vote.
Members elect a board of directors to manage the business of the co-operative.
Directors have fiduciary and common law duties.
Annual general meetings held once a year.
Annual audited financial accounts available to members and lodged with the
government.
Trading (distributing) co-operative
A
trading
co-operative is formed to undertake a commercial venture where
members can share in profits made from trading and the asset growth of the
co-operative. This type of co-operative is popular with primary producers,
other small businesses and
community enterprises. Because a
trading
co-operative
can provide a
pecuniary benefit to members, this type of co-operative is subject to a
disclosure regime under Australian co-operatives legislation.
A
trading
co-operative has the following characteristics -
-
A member must support an activity associated with the primary
activity of the co-operative, e.g. a dairy farmer is required to deliver
an agreed quantity of milk to the co-operative in any given period to remain an
'active' member.
-
A
trading
co-operative must have a share capital.
-
Disclosure statements are required for formation and issuing shares.
-
Bonus shares can be issued to members upon asset sale or revaluation.
-
Shares can be issued at a premium.
-
Members may be required to subscribe to more shares or lend money to the
co-operative.
-
Surplus funds can be distributed to members by way of a 'limited' dividend on
shares
held, bonus shares and/or a rebate in proportion to the business done by
the
member with the co-operative.
-
Surplus funds from winding up is distributed to members in proportion to share
capital held by a member.
Non trading (non distributing) co-operative
A
non trading
co-operative is a 'not-for-profit' organisation that can be formed
with or without shares. While a
non trading
co-operative can conduct commercial activities, it is prohibited under law to
distribute surplus funds to
members from profits or upon winding up. As members of a
non trading
co-operative receive no pecuniary benefit from their ownership of the
co-operative, the co-operative is not subject to the disclosure regime that
applies to a
trading
co-operative.
A
non trading
co-operative has the following characteristics -
-
A member must maintain a relationship with the co-operative associated with its
primary activity, e.g. a parent must have a child enrolled in a child care
co-operative to be an 'active' member. Payment of a
regular subscription by a member is also sufficient to establish 'active'
membership of a
non trading
co-operative.
-
No disclosure statement required for formation (except NSW) or issuing shares.
-
Shares cannot be issued at a premium.
-
Bonus shares cannot be issued either from asset revaluation or sale, or from
profits.
-
Members cannot be compelled to acquire more shares or lend money to the
co-operative.
-
Profits made from trading are reinvested in the co-operative and/or distributed
to a charitable organisation.
-
Surplus funds from winding up are distributed to another similar
'not-for-profit'
organisation approved by members of the co-operative.
|
