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cooperatives_and_associations
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/Factsheet_print/Cooperatives_and_associations/Running_a_cooperative/Cooperative_membership/_Co-operatives_active_membership.pdf
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Standard fact sheet.
/Factsheet_largeprint/Cooperatives_and_associations/Running_a_cooperative/Cooperative_membership/_Co-operatives_active_membership.pdf
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Large print fact sheet.

Co-operatives active membership 

Active membership requirements mean that only those members who actively utilise or support the co-operative's primary activities remain members and retain control of the co-operative. Failure to meet active membership requirements has significant consequences for members as they cannot vote and eventually their membership will be cancelled.

What is the active membership provision? 

The active membership provision has two parts:

  • identifying those co-operative activities that are primary activities, and
  • the manner and extent to which a member is required to utilise or support an activity or, to maintain a relationship with the co-operative in connection with a primary activity.

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What is a primary activity? 

A co-operative must have at least one primary activity.

A primary activity is, either by itself or together with another activity, the basic purpose for which the co-operative exists, and so makes a significant contribution to the business of the co-operative.

An activity may be considered as making a significant contribution to the co-operative if it contributes at least 10% to the turnover, income, expenses, surplus or business.

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Relationship with the co-operative 

The active membership rule(s) of a co-operative must set out the manner and extent to which a member must utilise or support an activity to maintain a relationship with the co-operative.

The co-operative’s members determine this appropriate method and level of utilisation, support or the relationship. However, the manner and extent of the required utilisation, support or relationship must be considered reasonable in relation to the activities of the co-operative as a whole.

When considering an appropriate active membership rule it is important to ensure:

  • the obligations of members are reasonable, clear, repetitive and measurable, and
  • the period in which a member is required to utilise or support an activity or to maintain a relationship with the co-operative is clearly defined. For example members must undertake specified obligations each financial or calendar year.

Co-operatives must consider implementation of necessary procedures to ensure correct identification of active and inactive members at any point in time.

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Changing the active membership provisions 

The Registrar must approve in writing the terms of any proposed resolution or the guidelines which will result in changes to the active membership provisions prior to the members voting on any change.

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Notice of an active membership resolution 

Members must be given at least 21 days written notice of a meeting at which an active membership resolution is to be proposed. The notice must specify:

  • the intention to propose the special resolution,
  • the reasons for making the special resolution, and
  • the effect of the special resolution being passed.

The notice must also:

  • specify whether the member is eligible to vote on the resolution
  • specify the full text of the proposed resolution, and
  • contain the provisions concerning cancellation of membership of an inactive member.

If the notice to a member states that he or she is not eligible to vote on the resolution the member may, after endeavouring to settle the matter with the co-operative, apply to the Registrar for a determination as to the member’s eligibility to vote. However a determination as to eligibility is only effective if given before the relevant meeting is held.

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Proposal to submit an active membership resolution to a general meeting 

If a co-operative’s board is meeting to consider a proposal to submit an active membership resolution to a meeting of the co-operative, all directors are eligible to vote on the proposal at the board meeting.

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Cancellation of a membership 

A co-operative’s board must follow a specified procedure to cancel the membership of a member who has been inactive for a period of three years. A co-operative’s rules may stipulate a shorter time period of inactivity in its rules. Where a co-operative has share capital, the board will declare the shares of the member to be forfeited at the same time the membership is cancelled.

Notice of intention to cancel a membership must be given to the member at least 28 days prior to cancellation. If the member’s whereabouts is not known, a notice should be published in a newspaper circulating in the district in which the registered office of the co-operative is situated.

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Deferral of cancellation of membership and prohibition on cancellation 

A co-operative’s board may, by resolution, defer cancellation of membership for a period of up to 12 months if the board has reasonable grounds to believe that a member has become inactive due to unusual circumstances that prevent the member fulfilling his or her active membership obligations.

A membership cannot be cancelled if the co-operative is insolvent or under administration.

A person may apply to the Supreme Court for an order against cancellation of membership.

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Repayment of amounts due to a member on cancellation 

A co-operative must comply with the legislation concerning repayment of amounts due to members on cancellation of their co-operative membership including the periods within which amounts must be repaid.

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Further information 

For further information please contact:

Registry Services
PO Box 22
Bathurst NSW 2795
Telephone: 6333 1400
Freecall: 1800 502 042
Email: registryinquiries@finance.nsw.gov.au

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