Co-operatives are people centred organisations that are owned, controlled and used by their members. A co-operative’s main purpose is to benefit its members.

The International Co-operative Alliance (ICA), an independent, non-government association that unites and represents co-operatives worldwide defines a co- operative as:

“…an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise”.

Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Their members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Co-operatives are different from other forms of incorporation because of their member ownership, democratic structure and the use of funds for mutual, rather than individual, benefit.

When a co-operative is formed it has its own legal identity separate from its members.

A co-operative can:

• enter into and enforce contracts, including the ability to hold, acquire and deal with property
• sue or be sued
• continue regardless of changes to membership.

Although there are benefits to be gained from incorporating as a co-operative, there are also obligations.

For example, directors have similar responsibilities to those of company directors, the co-operative must maintain proper financial and membership records and registers, and decisions which have a significant impact on the co-operative must be approved by the members.

As a legal entity in its own right, a co-operative bears liability for its acts. This means that legal claims made against a co-operative are the responsibility of the co-operative.

Top of page

Members are liable for the amounts each member owes the co-operative in respect of their membership. For most this means the fees or subscriptions due to the co-operative.

Top of page

Co-operatives can be established as either a ‘trading’ or a ‘non-trading’ organisation.

A trading co-operative may distribute any surplus funds to its members.

A non-trading co-operative will use surplus funds to support its activities. Funds are not distributed to members.

A non-trading co-operative is also likely to be more appropriate for a community organisation.

When forming a co-operative, the Registry of Co-operatives & Associations will ask you to specify the type of co-operative you wish to establish.

Top of page

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 four categories, including:

• Consumer – buying and then selling goods to members at a competitive rate.
• Marketing – branding, marketing and distributing members’ products and services.
• Service – providing services to members, such as health, electricity or housing.
• Community – resource, information and skill sharing that encourages ownership and participation.

Top of page

Co-operatives registered under the Co-operatives Act 1992 subscribe to the international principles of co-operation. The principles act as guidelines ensuring the organisation remains in the control of members and operates for their benefit. The principles are:

1st Principle: Voluntary and open membership

Co-operatives are voluntary organisations, open to all who are able to use their services and willing to accept the responsibilities of membership, without discrimination.

2nd Principle: Democratic member control

Co-operatives are democratic organisations controlled by their members, who actively participate in the setting of policies and decision-making. Members have equal voting rights (one member, one vote).

3rd Principle: Member economic participation

Members contribute equally to the funds of the co-operative and control the allocation of surplus funds.

4th Principle: Autonomy and independence

Co-operatives are independent organisations controlled by their members. Any agreements entered into with other organisations must ensure democratic control by members and the co-operatives independence.

5th Principle: Education, training and information

Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operative. They inform the general public about the nature and benefits of co-operation.

6th Principle: Co-operation among co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together.

7th Principle: Concern for community

Co-operatives work for the sustainable development of their communities through policies approved by their members.

Top of page

Co-operatives are regulated and supervised by NSW Fair Trading’s Registry of Co-operatives & Associations under the Co-operatives Act 1992.

NSW Fair Trading, through the Registry, is committed to the development and growth of co-operatives in New South Wales.

Top of page

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@services.nsw.gov.au

Top of page