Making decisions in a co-operative

The board of directors is responsible for managing the affairs of a co-operative and should engage in responsible decision-making. Certain decisions are made by members passing either an ordinary or special resolution.

Ordinary resolution

This is a resolution that is passed by a simple majority vote (50 percent or more vote yes) of members at a general meeting of the co-operative or, if the rules permit, by postal ballot.

Special resolution

The Co-operatives National Law (the CNL) requires certain decisions to be made by a special resolution. This is a resolution passed by:

  • a two-thirds majority of members at a general meeting of the co-operative
  • a two-thirds majority of members in a postal ballot (other than a special postal ballot), or
  • a three-quarters majority in a special postal ballot

A co-operative’s rules can require that a majority of more than two-thirds or three-quarters is needed to pass a special resolution.

Notice requirements for special resolutions

At least 21 days’ notice is required to be given for a special resolution setting out:

  • the intention to propose the special resolution; and
  • the reasons for proposing the special resolution; and
  • the effect of the special resolution being passed.

Where the special resolution is to amend the co-operative’s primary activities or active membership requirements the notice to members must also state:

  • whether the member is eligible to vote on the resolution
  • the full text of the proposed resolution, and
  • a copy of section 156 of the CNL concerning cancellation of membership of an inactive member

Special postal ballots require the issue of a disclosure statement and at least 28 days’ notice to members. See special postal ballots below.

Ordinary and special resolution by way of a postal ballot

A co-operative’s rules should specify the matters that may be determined by postal ballot.

Postal ballots must be conducted in accordance with the national regulations and the rules of the co-operative. Regulation 3.9 of the Co-operatives National Regulations (the Regulations) outlines the requirements.

Members of a co-operative can require that a postal ballot be conducted for the passing of a special resolution. Section 250 of the CNL sets out the requirements for a requisition.

Special postal ballot

The CNL requires voting by special postal ballot for:

  • Conversion from a co-operative with share capital to a co-operative without share capital, or vice versa (s.35)
  • Conversion from a distributing co-operative to a non-distributing co-operative, or vice versa (s.35)
  • A special resolution requiring members to take up or subscribe for additional shares and or deducting amount for additional shares (s.82)
  • On the requisition of members (s.250)
  • A special resolution to require members to lend money to the co-operative (s.343)
  • An acquisition of disposal of certain assets (s.359)
  • Increasing the maximum permissible level of share interest in a co-operative (s.363)
  • Making certain share offers (s.374)
  • Merging a co-operative with another co-operative (ss.396 and 476)
  • Initiating a transfer of engagements (ss.396 and 476)
  • Transferring the incorporation of a co-operative to another scheme (s.404)
  • Executing a compromise or arrangement between a co-operative and its members (s.414)
  • Voluntarily winding-up the co-operative (s.445).

Disclosure Statement required for special postal ballot

A disclosure statement is required for a special postal ballot.The disclosure statement must contain sufficient information to allow members to make an informed assessment of the proposal.

The CNL sets out general requirements about what must be included in each disclosure statement, including:

  • details of the current financial position of the co-operative
  • the interests of the directors of the co-operative in the proposal
  • any compensation or consideration which would be paid to officers or members of the co-operative in relation to the proposal.

The Registrar may require a report by an independent person regarding certain aspects of a proposal to accompany the disclosure statement. Example disclosure statements are available from Registry Services.

The disclosure statements must be approved by the Registrar before distribution to members. A draft statement, together with the applicable fee, must be submitted to the Registrar for approval at least 28 days before it is intended to be provided to members.

Once it is approved by the Registrar, the co-operative can send the members notice of the postal ballot and a copy of the approved disclosure statement.

Exemption from special postal ballot requirements

The Registrar may exempt a co-operative from the need to conduct a special postal ballot as required under sections 35, 343, 359, 396, 404 and 445. The application for exemption must be provided in writing and must be accompanied by the applicable fee.

Registering the special resolution

Each special resolution passed by the co-operative must be lodged:

A special resolution has effect from the date it is passed except:

  • a special resolution to amend the rules – has effect from the date the amendment is registered
  • a special resolution to change the name – has effect from the date a certificate of registration is issued in the new name
  • a special resolution required to be passed by special postal ballot (other than for voluntary winding up) – has effect from the date the special resolution is registered
  • a special resolution for the voluntary winding up of a co-operative – has effect when the result of the special postal ballot is noted in the co-operative’s minutes.

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

Prev Making changes in a co-operative
Next Managing co-operative disputes