Co-operative active membership

Active membership provisions

Members of a co-operative must satisfy the active membership requirements in the co-operative’s rules in order to be entitled to vote and to retain their membership.

The active membership provisions in a co-operative’s rules set out:

  • the co-operative’s primary activities
  • what a member has to do to be active

Primary activity

A co-operative’s primary activity is:

  • either by itself or together with another activity, the basic purpose for which the co-operative exists
  • makes a significant contribution to the business of the co-operative (i.e. it contributes at least 10% to the turnover, income, expenses, surplus or business of the co-operative).

Active membership requirements

The active membership requirements:

  • must be reasonable when considered in relation to the activities of the co-operative as a whole
  • the obligations of members must be clear, repetitive and measurable
  • clearly define the period in which a member is required to use or support an activity or to maintain a relationship with the co-operative. For example members must undertake specified obligations each financial or calendar year.

For distributing co-operatives the active membership provisions must require a member to use an activity of the co-operative for carrying on a primary activity together with any other provisions approved by the Registrar.

For non-distributing co-operatives an obligation to pay a regular subscription to be applied to a primary activity of the co-operative is sufficient to establish active membership of the co-operative.

A co-operative must be able to identify which members are active or inactive at any point in time.

Changing the active membership provisions

Prior approval of the Registrar is required before the active membership provisions are changed, except in the following circumstances:

  • if it is a minor change in the way in which the existing primary activities are expressed
  • if it only changes the amount of any regular subscription required to be paid
  • if it only changes the amount of product required to be supplied or purchased
  • if it only changes the number of hours a member must work or volunteer

The inclusion of an additional primary activity or the removal of a primary activity requires prior approval.

The inclusion of a new active membership obligation or removal of an existing obligation requires prior approval.

The Co-operatives National Law (the CNL) also requires that special notice in relation to a proposed change be given to members. Go to the co-operatives rules for more information.

Cancellation of membership of inactive members

The board must give the inactive member at least 28 days’ notice of their intention to cancel the membership.

The board must declare a membership cancelled if:

  • the whereabouts of a member is not known, and has not been known for at least three years (or a shorter time if stated in the co-operative rules)
  • the member is currently inactive, and has not been active at any time during the last three years (or a shorter time if stated in the co-operative rules).

If the co-operative has share capital, the board must declare the shares of the member to be forfeited at the same time the membership is cancelled.

A co-operative’s board may defer cancellation of membership for a period of up to 12 months in limited circumstances. These may include if there are grounds to believe that unusual circumstances prevented the member fulfilling the active membership obligations.

A maximum penalty of $2000 may be imposed for failure to cancel a membership due to the above reasons.

A membership cannot be cancelled in a number of circumstances that are specified in the Co-operative’s National Law (NSW), including if the co-operative is insolvent, under administration or being wound up.

A member may apply to the Supreme Court for an order against cancellation of membership within 6 months after notice of the board’s intention to cancel the membership is given.

Repayment of amounts due to a member on cancellation

Members are entitled to be paid amounts owing to them (including repayment of share capital as appropriate) within 1 year. The board can delay repayment if it considers repayment would adversely affect the financial position of the co-operative.   The amount due must be paid as soon as repayment would not adversely affect the co-operative’s financial position and must be paid within 10 years (or shorter period if specified in the rules).

Further information

For further information please contact:

Registry Services
PO Box 22
Bathurst NSW 2795
Telephone: 02 6333 1400
Freecall: 1800 502 042
Email: registryinquiries@finance.nsw.gov.au

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