Co-operatives exist to deliver benefits to their members. They are organisations that are owned, controlled and used by their members.

Co-operatives can be structured so that the profits are put back into the co-operative or distributed to members. They are therefore suitable for both commercial and non-commercial organisations.

Co-operatives are regulated and supervised by the Office of Fair Trading’s Registry of Co-operatives & Associations. This fact sheet explains the nature of co-operatives registered under the Co-operatives Act 1992 (the Act).

What are the benefits of a
co-operative?

Co-operatives play an important role in our community. There are more than 700 registered
co-operatives in NSW, operating in sectors as diverse as publishing, tourism, catering, dairy produce, labour hire, taxis, housing, travel, meat wholesaling, arts and crafts, recycling and child care. With a multi-million-dollar turnover each year, co-operatives contribute significantly to the economy of NSW.

Co-operatives belong to and are run for the benefit of their members. They differ from traditional businesses, whose main objective is to maximise profits. By forming a co-operative you will become part of a growing body of people who believe there is more to business than just profits. The primary goal of a co-operative is to ensure that the needs of the members become the driving force of the organisation and because they are democratic organisations, each member has an equal say in co-operative matters.

How are co-operatives different?

Co-operatives are different from other types of organisations because they are owned and controlled by the people that use their services. They do have similarities to other types of

organisations in that they have a legal identity and must follow sound business practices.

Co-operatives registered under the Act also subscribe to the international principles of
co-operation. These principles encompass the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. The principles have a simple purpose – they are guidelines ensuring the organisation remains in the control of the members and operates for their benefit.

The activities of co-operatives

Co-operatives can be involved in a variety of social and commercial activities. A co-operative may carry out any activity defined within its rules.
Co-operatives generally fall into three category types. These include:

• consumer – buying and then selling goods to members at a competitive rate
• marketing  – marketing and distributing members’ products, such as selling art and craft or agricultural products
• service – providing services to members, such as health, electricity or housing.

Registration of a co-operative

To register a co-operative you must have at least five interested people. For further details on registration please refer to the fact sheet How to form a co-operative or go to www.fairtrading.nsw.gov.au

Co-operative rules

Every co-operative must have a set of rules that meets the requirements of the Act. The
co-operative’s rules are a contract between the
co-operative and its members. They detail how the co-operative will function. The Registry has developed model rules that can be amended to

suit the requirements of the group. The rules of the co-operative must indicate the level of participation required by a member. This is known as the active membership provision.

As the co-operative grows the rules may need to be altered. To make rule changes a special resolution needs to be voted on by members and then registered by the Registry.

Management

A co-operative must have a board of directors who is responsible for managing the operations of the co-operative. There is no minimum number of directors required, however the Registry recommends that there are at least three directors who must all be over the age of 18 years.

Annual general meetings

An annual general meeting (AGM) must be held within 19 months from the date of registering a new co-operative.

Second and subsequent AGM’s need to be held within 5 months after the end of each financial year.

An audited annual report must be lodged with the Registry within 28 days of the AGM.

Record keeping

The board is required to keep the following records:

• minutes of all meetings
• a register of members, directors, shares, loans, debentures, fixed assets, notifiable interests,
  co-operative capital units (CCUs), deposits, cancelled memberships
• financial records.

Resolving a dispute

Disputes may arise over the application or interpretation of the co-operative’s rules. The rules of a co-operative must have a procedure for resolving disputes that allows for natural justice to be applied. The first step is to try and resolve the matter internally. If an amicable resolution is not reached the Registry’s approved rules provide for mediation using the guidelines of the NSW Law Society. If settlement fails, arbitration can take place in accordance with the Commercial Arbitration Act 1984.

Where to get more information

Registry of Co-operatives & Associations
PO Box 22
154 Russell Street
Bathurst NSW 2795

Tel: 6333 1400
Freecall: 1800 502 042 (outside Bathurst)
Fax: 6333 1444
Email: registryinquiries@oft.commerce.nsw.gov.au