An Act to provide for the establishment of co-operatives and the regulation of their operations; and for related purposes.

Part 1 Preliminary

Division 1 Introduction

1   Name of Act

This Act may be cited as the Co-operatives Act 1992.

2   Commencement

This Act commences on a day or days to be appointed by proclamation.

3   Objects of this Act

(cf Vic Act s 3)

The objects of this Act are:

(a)  to enable the formation, registration and operation of co-operatives, and

(b)  to promote co-operative philosophy, principles, practices and objectives, and

(c)  to protect the interests of co-operatives, their members and the public in the operations and activities of co-operatives, and

(d)  to ensure that the directors of co-operatives are accountable for their actions and decisions to the members of co-operatives, and

(e)  to encourage and facilitate self-management by co-operatives at all levels, and

(f)  to encourage the development, integration and strengthening of co-operatives at local, regional, national and international levels by supporting and fostering State and National peak organisations and co-operative instrumentalities.

3A   Application to co-operative housing societies and other bodies

Except where expressly provided by this Act and except as provided by the regulations, this Act does not apply to or in respect of:

(a)  a co-operative housing body under the Co-operative Housing and Starr-Bowkett Societies Act 1998, or

(b)  a body that is of the same nature as such a co-operative housing body but that is not registered under that Act.

Division 2 Interpretation

4   Division of functions under this Act

(1)  The Minister has the function of determining policies for the administration of this Act.

(2)  The Registrar is to exercise the functions of Registrar in accordance with the policies determined by the Minister for the administration of this Act.

(3)  The Council is, in the exercise of its functions, to have regard to the policies determined by the Minister for the administration of this Act and is to exercise its functions in a manner that is consistent with those policies.

5   Definitions

(cf Vic Act s 4)

(1)  In this Act:

agreement means an agreement, arrangement or understanding:

(a)  whether formal or informal or partly formal and partly informal,

(b)  whether written or oral or partly written and partly oral, and

(c)  whether or not having legal or equitable force and whether or not based on legal or equitable rights.

alter, in relation to the rules of a co-operative, includes add to, substitute and rescind.

associate has the meaning given by Schedule 2.

association means an association registered under this Act.

board means the board of directors of a co-operative and includes a committee of management of a co-operative.

CCU means a co-operative capital unit, as provided for by Division 2 of Part 10.

component co-operative means a member of an association.

co-operative means a body registered under this Act as a co-operative and includes an association or federation.

Corporations Act means the Corporations Act 2001 of the Commonwealth.

Council means the Co-operatives Council constituted under this Act.

Court means the Supreme Court.

debenture means a document issued by a co-operative that evidences or acknowledges indebtedness of the co-operative in respect of money that is or may be deposited with or lent to the co-operative, whether constituting a charge on property of the co-operative or not, other than:

(a)  a cheque, order for the payment of money or bill of exchange, or

(b)  a promissory note having a face value of not less than $50,000, or

(c)  any other document of a class that is prescribed as exempt from this definition,

      and includes a unit of a debenture.

deed of arrangement means a deed of arrangement executed under Part 5.3A of the Corporations Act as applying under this Act or such a deed as varied and in force from time to time.

deposit taking co-operative means a co-operative which is permitted to under section 263A accept money on deposit.

director, in relation to a co-operative, includes:

(a)  a person who occupies or acts in the position of a director or member of the board of the co-operative, whether or not the person is called a director and whether or not the person is validly appointed or duly authorised to act in the position, and

(b)  a person in accordance with whose directions or instructions the directors or members of the board of the co-operative are accustomed to act.

federation means a federation registered under this Act.

financial records includes:

(a)  invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers, and

(b)  documents of prime entry, and

(c)  working papers and other documents needed to explain:

(i)  the methods by which financial statements are made up, and

(ii)  adjustments to be made in preparing financial statements.

financial statements means:

(a)  a profit and loss statement, and

(b)  a balance sheet, and

(c)  a statement of cash flows, and

(d)  if required by the accounting standards under the Corporations Act applying under this Act—a consolidated profit and loss statement, balance sheet and statement of cash flows.

foreign co-operative means a body corporate that is registered, incorporated or formed under, or subject to, a law in force outside New South Wales (including outside Australia), that regulates co-operatives or organisations having attributes the same as or similar to co-operatives but does not include:

(a)  a body incorporated under the Corporations Act, or

(b)  a financial institution or foreign society registered under financial institutions legislation within the meaning of the Financial Institutions (NSW) Code.

holding co-operative, in relation to a subsidiary, means the co-operative of which the subsidiary is a subsidiary.

inspector means a person appointed as an inspector under section 372.

model rules means the model rules approved by the Registrar under Part 5.

mortgage includes lien, charge or other security over property.

non-trading co-operative means a non-trading co-operative that complies with section 15.

officer, in relation to a co-operative, means:

(a)  a director, secretary or employee of the co-operative, or

(b)  a person who is concerned, or takes part, in the management of the co-operative, whether or not as a director, or

(c)  a receiver and manager, appointed under a power contained in an instrument, of property of the co-operative, or

(d)  an administrator of a deed of arrangement executed by the co-operative, or

(e)  a liquidator or provisional liquidator appointed in a voluntary winding up of the co-operative, or

(f)  an administrator of the co-operative appointed under Part 5.3A of the Corporations Act as applying under this Act or under Division 6 of Part 12 of this Act, or

(g)  a trustee or other person administering a compromise or arrangement made between the co-operative and another person or other persons.

primary activity is defined by section 115.

principal executive officer, in relation to a co-operative or to a subsidiary of a co-operative, means the principal executive officer of the co-operative or subsidiary for the time being, by whatever name called, and whether or not that officer is a director or the secretary.

records includes books, financial records, financial statements, minutes, registers, deeds, writings, documents and other sources of information compiled, recorded or stored in written form or on microfilm, or by electronic process, or in any other manner or by any other means.

Register means the Register of Co-operatives established under Part 15.

Registrar—see section 5B.

related (in the context of related bodies corporate) has the meaning given by Schedule 2.

relevant interest has the meaning given by Schedule 2.

rule means registered rule of a co-operative for the time being in force.

seal, in relation to a co-operative, means common seal or official seal.

share means share in the share capital of a co-operative.

subordinated debt has the meaning given by section 265.

subsidiary has the same meaning as in the Corporations Act.

surplus, in relation to a co-operative, means the excess of income over expenditure after making proper allowance for taxation expense, depreciation in value of the property of the co-operative and for future contingencies.

trading co-operative means a trading co-operative that complies with section 14.

(2)  Words and expressions that have a defined meaning in the Corporations Act have, when used in this Act in relation to a body corporate that is not a co-operative, the same meaning as in the Corporations Act.

(3)  In this Act:

(a)  a reference to a function includes a reference to a power, authority and duty, and

(b)  a reference to the exercise of a function includes, in relation to a duty, a reference to the performance of the duty.

(4)  Notes included in this Act do not form part of this Act.

(5)  A reference in this Act to a provision of the Corporations Act that is applied by or under this Act (or a part of this Act) is a reference to that provision to the extent that it is declared to apply to a matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 as a law of this State.

Note. For the purposes of comparison, a number of provisions of this Act contain bracketed notes in headings, drawing attention (“cf”) to equivalent or comparable (though not necessarily identical) provisions of the Co-operatives Act 1996 of Victoria, abbreviated in the notes as “Vic Act”.

5A   Qualified privilege

(cf Vic Act s 5)

(1)  If this Act provides that a person has qualified privilege in respect of an act, matter or thing, the person, in respect of that act, matter or thing:

(a)  has qualified privilege in proceedings for defamation, or

(b)  is not, in the absence of malice on the person’s part, liable to an action for defamation at the suit of a person.

(2)  In subsection (1):

malice includes ill-will to the person concerned or any other improper motive.

(3)  Neither this section nor a provision of this Act that provides as mentioned in subsection (1) limits or affects any right, privilege or immunity that a person has, apart from this section or such a provision, as defendant in proceedings, or an action, for defamation.

5B   Exercise of Registrar’s functions

(1)  The functions expressed to be conferred or imposed on the “Registrar” by or under this Act are to be exercised by the Director-General of the Department of Fair Trading.

(2)  For that purpose, a reference in this Act to the Registrar is to be read as a reference to the Director-General of the Department of Fair Trading.

Division 3 The co-operative principles

6   Co-operative principles

(cf Vic Act s 6)

In this Act, a reference to co-operative principles is a reference to the principles adopted by the International Co-operative Alliance, being the following principles:

Voluntary and open membership

Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

Democratic member control

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are organised in a democratic manner.

Member economic participation

Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

Autonomy and independence

Co-operatives are autonomous, self help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

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-operatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of co-operation.

Co-operation among co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

Concern for the community

While focusing on member needs, co-operatives work for the sustainable development of their communities through policies accepted by their members.

7   Interpretation to promote co-operative principles

(cf Vic Act s 7)

(1)  In the interpretation of a provision of this Act or the regulations, a construction that would promote co-operative principles is to be preferred to a construction that would not promote co-operative principles.

Division 4 Application of Corporations Act to co-operatives

8   Definitions

(cf Vic Act s 8)

In this Division:

excluded Corporations legislation provision means any provision of the Corporations legislation that does not apply to co-operatives as a law of the Commonwealth.

9   Excluded matter

(cf Vic Act s 9)

(1)  A co-operative is declared to be an excluded matter for the purposes of section 5F of the Corporations Act in relation to the whole of the Corporations legislation other than to the extent specified in this section.

Note. This section ensures that neither the Corporations Act nor Part 3 of the Australian Securities and Investments Commission Act 2001 of the Commonwealth will apply to a co-operative, other than to the extent specified in this section. Section 5F of the Corporations Act provides that if a State law declares a matter to be an excluded matter in relation to the whole of the Corporations legislation other than to a specified extent, then that legislation will not apply, except to the specified extent, in relation to that matter in the State concerned. However, other provisions of this Act apply certain provisions of the Corporations legislation to co-operatives as laws of this State.

(2)  Subsection (1) does not exclude the application of the following provisions of the Corporations legislation to co-operatives to the extent that those provisions would otherwise be applicable to them:

(a)  provisions that relate to any matter that the regulations provide is not to be excluded from the operation of the Corporations Act,

(b)  provisions that relate to the role of a co-operative in the formation of a company,

(c)  provisions that relate to substantial holdings of shares, by or involving a co-operative, in a company,

(d)  provisions that confer or impose functions on a co-operative as a member, or former member, of a corporation,

(e)  provisions that relate to dealings by a co-operative in securities of a body corporate, other than securities of the co-operative itself,

(f)  provisions that confer or impose functions on a co-operative in its dealings with a corporation, not being dealings in securities of the co-operative,

(g)  provisions that relate to securities of a co-operative, other than shares in, CCUs issued by, debentures of or deposits with a co-operative,

(h)  provisions relating to derivatives,

(i)  provisions relating to:

(i)  financial services licensees (as defined in section 761A of the Corporations Act) whose licence covers dealing in, or providing advice about, securities, or

(ii)  regulated principals (as defined in section 1430 of the Corporations Act) when dealing in, or providing advice about, securities as authorised by Subdivision D of Division 1 of Part 10.2 of that Act,

(j)  provisions relating to the carrying on of a financial services business (as defined in section 761A of the Corporations Act) relating to securities,

(k)  provisions relating to financial statements, and audits of financial statements, of:

(i)  financial services licensees (as defined in section 761A of the Corporations Act) whose licence covers dealing in, or providing advice about, securities, or

(ii)  regulated principals (as defined in section 1430 of the Corporations Act) when dealing in, or providing advice about, securities as authorised by Subdivision D of Division 1 of Part 10.2 of that Act,

(l)  provisions relating to money and scrip of clients of:

(i)  financial services licensees (as defined in section 761A of the Corporations Act) whose licence covers dealing in, or providing advice about, securities, or

(ii)  regulated principals (as defined in section 1430 of the Corporations Act) when dealing in, or providing advice about, securities as authorised by Subdivision D of Division 1 of Part 10.2 of that Act,

(m)  provisions relating to registers of interests in securities,

(n)  provisions relating to powers of a Court to cure procedural irregularities and to make other orders.

(3)  It is declared that subsection (1) does not operate to exclude the operation of the following provisions of the Corporations Act except in relation to shares in, CCUs issued by, debentures of or deposits with a co-operative:

(a)  Part 1.2A (Disclosing entities),

(b)  Chapter 2L (Debentures),

(c)  Chapter 6D (Fundraising),

(d)  Part 7.10 (Market misconduct and other prohibited conduct relating to financial products and financial services).

(4)  Subsection (1) does not apply if the co-operative is directed by an order of the Court under section 98 (j), or applies in accordance with the provisions of Division 3 of Part 12, to become registered as a company under the Corporations Act to the extent necessary for a co-operative to be registered as a company under Chapter 5B of that Act.

10   Applying the Corporations legislation to co-operatives

(cf Vic Act s 10)

(1)  The regulations may declare any matter relating to co-operatives to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to any excluded Corporations legislation provision or provisions (with such modifications as may be specified in the declaration).

Note. Part 3 of the Corporations (Ancillary Provisions) Act 2001 provides for the application of provisions of the Corporations Act 2001 and Part 3 of the Australian Securities and Investments Commission Act 2001 of the Commonwealth as laws of the State in respect of any matter declared by a law of the State (whether with or without modification) to be an applied Corporations legislation matter for the purposes of that Part in relation to those Commonwealth provisions. Section 14 (2) of the Corporations (Ancillary Provisions) Act 2001 ensures that a declaration made for the purposes of Part 3 of that Act only operates to apply a provision of the Corporations legislation to a matter as a law of the State if that provision does not already apply to the matter as a law of the Commonwealth. If a provision referred to in a declaration already applies as a law of the Commonwealth, nothing in the declaration will affect its continued operation as a law of the Commonwealth.

(2)  Without limiting subsection (1), any such regulations may:

(a)  specify modifications to the definitions and other interpretative provisions of the Corporations legislation relevant to any excluded Corporations legislation provision that is the subject of the declaration, and

(b)  provide for ASIC to exercise a function under any excluded Corporations legislation provision that is the subject of the declaration, but only if:

(i)  ASIC is to exercise that function pursuant to an agreement of the kind referred to in section 11 (8) or (9A) (b) of the Australian Securities and Investments Commission Act 2001 of the Commonwealth, and

(ii)  ASIC is authorised to exercise that function under section 11 of the Australian Securities and Investments Commission Act 2001 of the Commonwealth, and

(c)  specify that a reference to ASIC in any excluded Corporations legislation provision that is the subject of the declaration is to be read as a reference to another person, and

(d)  identify any excluded Corporations legislation provision to which the declaration relates by reference to that provision as in force at a particular time, and

(e)  specify a court of this State (other than the Supreme Court) to exercise any function conferred on a court or the Court by any excluded Corporations legislation provision to which the declaration relates.

(3)  Words and expressions used in this section and also in Part 3 of the Corporations (Ancillary Provisions) Act 2001 have the same meanings as they have in that Part.

11   Modifications to applied provisions

(cf Vic Act s 11)

(1)  If a provision of this Act declares a matter to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 (the declaratory provision) in relation to any provisions of the Corporations legislation (the applied provisions), the declaratory provision is taken to specify the following modifications:

(a)  a reference in the applied provisions to the constitution of a company is to be read as a reference to rules,

(b)  a cross-reference in the applied provisions to another provision of the Corporations Act is, if that cross-reference is not appropriate (because for example the provision cross-referred to is not among the applied provisions), to be read as a cross-reference to the equivalent provision of this Act,

(c)  a reference in the applied provisions to the Commonwealth is to be read as a reference to New South Wales,

(d)  any of the applied provisions that are not relevant to co-operatives or which are incapable of application to co-operatives are to be ignored,

(e)  modifications directed by the Registrar under subsection (2).

(2)  The Registrar may, by order published in the Gazette, give directions as to the modifications that are necessary or desirable for the effectual operation of applied provisions.

12   (Repealed)

Part 2 Formation

Division 1 Types of co-operatives

13   Types of co-operatives

(cf Vic Act s 13)

(1)  A body may be registered under this Act as a co-operative.

(2)  A co-operative may be either:

(a)  a trading co-operative, or

(b)  a non-trading co-operative.

14   Trading co-operatives

(cf Vic Act s 14)

(1)  A trading co-operative must have a share capital.

(2)  A trading co-operative is a co-operative that gives returns or distributions on surplus or share capital.

(3)  A trading co-operative must have a membership of:

(a)  2 or more co-operatives, in the case of an association, and

(b)  2 or more associations, in the case of a federation, and

(c)  5 or more active members, in the case of any other trading co-operative, or such lesser number as the Registrar may approve in a particular case.

15   Non-trading co-operatives

(cf Vic Act s 15)

(1)  A non-trading co-operative must not give returns or distributions on surplus or share capital to members other than the nominal value of shares (if any) at winding up.

(2)  A non-trading co-operative may or may not have a share capital.

(3)  A non-trading co-operative must have a membership of:

(a)  2 or more co-operatives, in the case of an association, and

(b)  2 or more associations, in the case of a federation, and

(c)  5 or more active members, in the case of any other non-trading co-operative, or such lesser number as the Registrar may approve in a particular case.

Division 2 Formation meeting

16   Formation meeting

(cf Vic Act s 16)

(1)  Before a proposed co-operative (other than an existing body corporate) can be registered, a formation meeting must be held in accordance with this section.

(2)  At the formation meeting:

(a)  a disclosure statement approved under section 17 must be presented to the meeting, and

(b)  the proposed rules of the co-operative approved under section 18 in respect of the proposed co-operative, and including active membership provisions in accordance with Part 6, must be passed by two-thirds of the proposed members of the proposed co-operative attending the meeting, and

(c)  the proposed members of the proposed co-operative must sign the application for membership which must be in a form approved by the Registrar, and

(d)  the proposed members must elect the first directors of the proposed co-operative in accordance with the proposed rules, and

(e)  the proposed members must authorise a person:

(i)  to apply to the Registrar for registration of the proposed co-operative, and

(ii)  to do any act or thing necessary to have the proposed co-operative registered.

(3)  The formation meeting must be held by:

(a)  not less than 2 suitably qualified co-operatives, in the case of an association, and

(b)  not less than 2 suitably qualified associations, in the case of a federation, and

(c)  not less than 5 persons suitably qualified to be members of the proposed co-operative in the case of any other co-operative, or such lesser number as the Registrar may have approved under section 14 or 15.

(4)  For the purposes of subsection (3), a person is suitably qualified to be a member if:

(a)  there are reasonable grounds to believe the person will be an active member of the proposed co-operative, and

(b)  in the case of a natural person, the person has attained the age of 18, and

(c)  the person satisfies any other requirements for membership set out in the proposed rules.

(5)  Each co-operative forming a proposed association and each association forming a proposed federation may be represented at the formation meeting by one person.

Division 3 Approval of disclosure statement and rules

17   Approval of disclosure statement

(cf Vic Act s 17)

(1)  A draft disclosure statement of a proposed co-operative must be submitted to the Registrar at least 28 days (or such shorter period as the Registrar may allow in a particular case) before the formation meeting is due to be held.

(2)  The disclosure statement of a proposed trading co-operative must contain the information necessary to ensure that prospective members are adequately informed of the nature and extent of a person’s financial involvement or liability as a member of the co-operative including so far as applicable:

(a)  the estimated costs of formation, and

(b)  the nature of the proposed membership of the co-operative, and

(c)  the rights and liabilities attaching to shares in the proposed co-operative (including the capital required for the co-operative), and

(d)  the projected income and expenditure of the co-operative for its first year of operation, and

(e)  information about any contracts required to be entered into by the co-operative, and

(f)  any other information that the Registrar directs.

(3)  The disclosure statement of a proposed trading co-operative must not include a statement purporting to be made by an expert or to be based on a statement made by an expert unless:

(a)  the expert has given, and has not withdrawn, the expert’s written consent to the submission of the disclosure statement with the statement included in the form and context in which it is included, and

(b)  there appears in the disclosure statement a statement that the expert has given, and has not withdrawn, the expert’s consent.

(4)  The disclosure statement of a proposed non-trading co-operative must be in a form approved by the Registrar and contain such information as is required by the Registrar.

(5)  The Registrar may:

(a)  approve the draft statement as submitted, or

(b)  approve the draft statement with specified amendments, or

(c)  approve a different statement to that submitted, or

(d)  refuse to approve the statement.

(5A)  The Registrar may require the person who submitted the draft statement to give the Registrar any additional information that the Registrar reasonably requires. When the information has been provided the Registrar may then act under subsection (5).

(6)  Approval may be given at any time before the formation meeting is held.

(7)  Subject to subsection (8), the Registrar approves of a disclosure statement by giving notice of the approval of the statement to the person who submitted the draft statement to the Registrar.

(8)  The Registrar is to be considered to have approved the disclosure statement as submitted to the Registrar unless at least 5 days before the formation meeting is due to be held:

(a)  the Registrar gives notice of approval of a different disclosure statement, or

(b)  the Registrar gives notice to the person who submitted the draft statement that the Registrar is still considering the matter or requires additional information, or

(c)  the Registrar gives notice of refusal to approve the disclosure statement.

(9)  A notice under this section must be in writing.

(10)  The Registrar may approve a disclosure statement with or without conditions.

(11)  In the case of a proposed non-trading co-operative, the Registrar may, in a particular case and either unconditionally or subject to conditions, dispense with the requirement that a disclosure statement be presented to the formation meeting.

Note. This section draws a distinction between requirements for disclosure statements for proposed trading and non-trading co-operatives. While the requirements for non-trading co-operatives are less onerous than those for trading co-operatives, the Registrar may require a non-trading co-operative to comply with requirements that are comparable to those for trading co-operatives.

18   Approval of rules

(cf Vic Act s 18)

(1)  A draft of the rules proposed for the co-operative (including active membership provisions in accordance with Part 6) must be submitted to the Registrar at least 28 days (or such shorter period as the Registrar may allow in a particular case) before the formation meeting is due to be held.

(2)  The proposed rules must:

(a)  be in accordance with section 107, and

(b)  be in a form that may reasonably be approved, and

(c)  if the rules contain any alterations of the model rules, be accompanied by a statement setting out the alterations and the reasons for the alterations.

(3)  If the rules do not make provision for any matter included in the model rules, the Registrar may approve the relevant provisions of the model rules as rules of the co-operative.

(4)  The Registrar may:

(a)  approve the rules as submitted, or

(b)  approve different rules to those submitted, or

(c)  refuse to approve the rules.

(5)  The Registrar approves of the rules by giving written notice of the approval of the rules to the person who submitted the draft alterations to the Registrar.

(6)  The Registrar must give written notice of the refusal to approve the rules to the person who submitted the rules to the Registrar.

Division 4 Registration of proposed co-operative

19   Application for registration of proposed co-operative

(cf Vic Act s 19)

(1)  An application for registration of a proposed co-operative (other than an existing body corporate) must:

(a)  be made in the form approved by the Registrar, and

(b)  be accompanied by the fee prescribed by the regulations, and

(c)  be signed by:

(i)  at least 2 directors in the case of an association or federation, and

(ii)  at least 5 suitably qualified members, including 2 directors elected at the formation meeting, in the case of any other proposed co-operative, or such lesser number of qualified members as the Registrar may have approved under section 14 or 15, and

(d)  be accompanied by:

(i)  2 copies of the proposed rules signed and certified by the persons who acted as chairperson and secretary at the formation meeting, and

(ii)  a copy of the disclosure statement presented to the formation meeting signed and certified by the persons who acted as chairperson and secretary at the formation meeting, and

(iii)  a statement listing the name, address, occupation and place and date of birth of each director, and

(iv)  any other particulars that the Registrar may require in a particular case.

(2)  The application must be lodged with the Registrar within 2 months after closure of the formation meeting for the proposed co-operative or within such extended period as the Registrar may allow.

20   Registration of co-operative

(cf Vic Act s 20)

(1)  When an application is made under this Division for registration of a proposed co-operative, the Registrar must register the co-operative and its rules if satisfied that the requirements for registration of the co-operative have been met.

(2)  The requirements for registration of a co-operative under this Division are as follows:

(a)  the proposed rules of the proposed co-operative must be the rules approved by the Registrar under section 18, and

(b)  the requirements of this Act and the regulations must have been complied with in respect of the proposed co-operative and compliance must be likely to continue, and

(c)  the proposed co-operative must be designed to function in accordance with the co-operative principles or, if it is not designed to function entirely in accordance with the co-operative principles, the Registrar must be satisfied that there are special reasons why the co-operative should be registered under this Act, and

(d)  there must be no reasonable cause for refusing registration of the proposed co-operative.

(3)  If the Registrar is not satisfied that the requirements for registration of the co-operative have been met, the Registrar is to:

(a)  refuse registration of the co-operative, or

(b)  refer the application to the Council for its recommendation.

(4)  If the Registrar refuses registration of the co-operative, the applicants for registration may request the Registrar to refer the application to the Council and the Registrar must comply with such a request. A request made by or on behalf of a majority of the persons elected as referred to in section 16 (2) (d) (the persons to be proposed as the first directors of the co-operative) is taken to have been made by the applicants for registration.

(5)  If the application is referred to the Council, the Council must either recommend registration or recommend refusal of registration but may only recommend refusal if of the opinion that:

(a)  the requirements for registration of the co-operative have not been met, or

(b)  the proposed co-operative would not be a genuine co-operative, or

(c)  the proposed co-operative is not designed or intended to serve fairly the interests of its members and prospective members.

(6)  The Registrar is required to comply with the Council’s recommendation.

21   Incorporation and certificate of registration

(cf Vic Act s 21)

(1)  The incorporation of the co-operative takes effect on the registration of the co-operative.

(2)  On the registration of the co-operative, the Registrar must issue a certificate of registration.

Division 5 Registration of existing body corporate

22   Existing body corporate can be registered

(cf Vic Act s 22)

A body corporate (other than a co-operative deemed to be registered under this Act) may apply to the Registrar to be registered as a co-operative under this Act, if before or after the commencement of this Act, the body corporate was:

(a)  incorporated or registered or deemed to be registered under the Corporations Act, or

(b)  incorporated or registered under any other Act relating to the incorporation or registration of bodies corporate.

23   Formation meeting

(cf Vic Act s 23)

(1)  Before applying for registration as a co-operative, the body corporate must pass a special resolution in accordance with its articles of association or rules approving of:

(a)  the proposed registration, and

(b)  any alterations of its existing memorandum and articles of association or rules necessary to enable the body corporate to comply with this Act.

(2)  At the meeting to pass the special resolution:

(a)  the proposed rules of the proposed co-operative approved under section 18, and including active membership provisions in accordance with Part 6, must also be passed by special resolution, and

(b)  in the case of a proposed trading co-operative, a disclosure statement approved under section 17 must be presented to the meeting.

24   Application for registration

(cf Vic Act s 24)

An application for registration must be:

(a)  in the form approved by the Registrar, and

(b)  accompanied by the fee prescribed by the regulations, and

(c)  accompanied by:

(i)  a declaration in writing signed by the directors or the committee of management of the body corporate stating that at a meeting of the directors or committee they formed the opinion that the body corporate will be able to pay its debts as they fall due, and

(ii)  a report in the form approved by the Registrar as to the affairs of the body corporate and showing its assets and liabilities, made up to the latest practicable date before the application, and

(iii)  a copy of the memorandum and articles of association or rules of the body corporate in force at the date of the application, and

(iv)  2 copies of the proposed rules of the co-operative, as provided for by the special resolution, and

(vi)  a list containing the name, address, occupation and place and date of birth of each director, and

(vii)  evidence to the satisfaction of the Registrar of the incorporation of the existing body corporate, and

(viii)  any other particulars that the Registrar may require in a particular case.

25   Requirements for registration

(cf Vic Act s 25)

(1)  When an application is made for registration of a co-operative under this Division, the Registrar must register the body corporate as a co-operative under this Act and register its rules under this Act if the Registrar is satisfied that the requirements for registration of the co-operative have been met.

(2)  The requirements for registration of a co-operative under this Division are as follows:

(a)  the proposed rules of the proposed co-operative must be the rules approved by the Registrar under section 18, and

(b)  the requirements of this Act and the regulations must have been complied with in respect of the proposed co-operative and compliance must be likely to continue, and

(c)  there must be no reasonable cause for refusing registration of the proposed co-operative.

(3)  If the Registrar is not satisfied that the requirements for registration of the co-operative have been met the Registrar may refuse to register the co-operative and its rules.

(4)  If the Registrar has determined under this section to register a body corporate under this Act, the body corporate must notify the authority responsible for registering the body corporate under the law under which it was previously registered of that determination.

(5)  Despite anything to the contrary in this Division, the registration of a body corporate as a co-operative does not take effect until the body corporate ceases to be registered under the law under which it was previously registered.

(6)  The body corporate must notify the Registrar in writing within 7 days after ceasing to be registered under that other law.

26   Certificate of registration

(cf Vic Act s 26)

(1)  On the registration of the body corporate as a co-operative the Registrar must:

(a)  issue a certificate of registration, and

(b)  publish notice of the issue of the certificate in the Gazette.

(2)  The corporate name of a body corporate registered as a co-operative is the name approved by the Registrar, as specified in the certificate of registration issued by the Registrar.

27   Effect of registration

(cf Vic Act s 27)

(1)  The body corporate is to be taken to be incorporated under this Act on its registration.

(2)  Except as expressly provided in this Act or the regulations, the registration and incorporation of the body corporate as a co-operative does not prejudice any right of a member in respect of any shares held at the time of registration and incorporation.

(3)  The change of registration and incorporation does not affect the identity of the body corporate which is deemed to be the same body after registration as a co-operative as it was before and no act, matter or thing is affected by the change.

Division 6 Conversion of co-operative

28   Conversion of co-operative

(cf Vic Act s 28)

(1)  A co-operative may, by alteration of its rules, convert from a trading co-operative to a non-trading co-operative or vice versa.

(2)  An alteration of the rules for the conversion of a co-operative must be approved by special resolution passed by means of a special postal ballot.

Division 7 Appeals

28A   Appeal against refusal to approve draft disclosure statement

(cf Vic Act s 29)

The person who submitted a draft disclosure statement to the Registrar under this Act may appeal to the Court against:

(a)  a decision of the Registrar to refuse to approve the statement, or

(b)  a failure of the Registrar to approve the statement.

28B   Appeal against refusal to approve draft rules

(cf Vic Act s 30)

The person who submitted draft rules to the Registrar under this Act may appeal to the Court against:

(a)  a decision of the Registrar to refuse to approve the rules, or

(b)  a failure of the Registrar to approve the rules.

28C   Appeal against refusal to register

(cf Vic Act s 31)

The applicants for registration of a proposed co-operative under this Part may appeal to the Court against:

(a)  a decision of the Council to recommend the refusal of the registration of a co-operative, or

(b)  in the case of a body corporate converting to a co-operative, against a failure of the Registrar to register the co-operative.

28D   Registrar to comply with Court order

(cf Vic Act s 32)

The Registrar must comply with an order of the Court on an appeal under this Division.

Division 8 General

28E   Stamp duty exemption for certain co-operatives

(cf Vic Act s 33)

(1)  This section applies to a co-operative that:

(a)  has as its primary activity the providing of any community service or benefit, and

(b)  was, before it was incorporated under this Act, an unincorporated club, association or body operating to provide sporting or recreational facilities for its members and not carried on for the pecuniary profit of its members.

(2)  An instrument or document transferring to such a co-operative any property which was, immediately before the co-operative was so incorporated, held by or on behalf of the unincorporated club, association or body is not chargeable with stamp duty.

28F   Acceptance of money by proposed co-operative

(cf Vic Act s 34)

(1)  A proposed co-operative or any person on its behalf or otherwise which accepts any money for the proposed co-operative before the proposed co-operative is registered must hold that money on trust until the co-operative is registered.

(2)  If a co-operative is not registered within the period of 3 months after the acceptance of any money under subsection (1), the proposed co-operative or the person who accepted the money on its behalf must refund the money to the person who paid it.

Maximum penalty: 60 penalty units.

28G   Issue of duplicate certificate

(cf Vic Act s 35)

The Registrar must issue a duplicate certificate of registration:

(a)  if the Registrar is satisfied that the original certificate is lost or destroyed, and

(b)  on payment of the fee prescribed by the regulations.

Part 3 Legal capacity, powers etc

Division 1 General powers

29   Effect of incorporation

(cf Vic Act s 36)

As a body corporate, a co-operative:

(a)  has perpetual succession, and

(b)  has a common seal, and

(c)  may sue and be sued in its corporate name, and

(d)  subject to this Act, is capable of taking, purchasing, leasing, holding, selling and disposing of real and personal property, and

(e)  may do and suffer all acts and things that bodies corporate may by law do and suffer and which are necessary or expedient.

30   Power to form companies, enter into joint ventures etc

Without limiting any other provision of this Part, a co-operative has power:

(a)  to form or participate in the formation of a body corporate or unit trust,

(b)  to acquire interests in and sell or otherwise dispose of interests in bodies corporate, unit trusts and joint ventures,

(c)  to form or enter into a partnership, joint venture or other association with other persons or bodies.

Division 2 Doctrine of ultra vires abolished

31   Interpretation

In this Division:

(a)  a reference to the doing of an act by a co-operative includes a reference to the making of an agreement by the co-operative and a reference to a transfer of property to or by the co-operative, and

(b)  a reference to legal capacity includes a reference to powers.

32   Objects of this Division

(1)  The objects of this Division are:

(a)  to provide that the doctrine of ultra vires does not apply to co-operatives, and

(b)  without affecting the validity of a co-operative’s dealings with outsiders, to ensure that the co-operative’s officers and members give effect to provisions of the co-operative’s rules relating to the primary activities or powers of the co-operative.

(2)  This Division is to be construed and have effect accordingly.

33   Legal capacity

(cf Vic Act s 40)

(1)  A co-operative has, both within and outside the State, the legal capacity of a natural person.

(2)  Without limiting subsection (1), a co-operative has, both within and outside the State, power:

(a)  to issue and allot fully or partly paid shares in the co-operative, and

(b)  to issue debentures of the co-operative, and

(c)  to distribute any of the property of the co-operative among the members, in kind or otherwise, and

(d)  to give security by charging uncalled capital, and

(e)  to grant a charge on property of the co-operative, and

(f)  to procure the co-operative to be registered or recognised as a body corporate in any place outside the State, and

(g)  to do any other act that it is authorised to do by any other law (including a law of a place outside the State).

(3)  Subsections (1) and (2) have effect in relation to a co-operative:

(a)  subject to this Act and the regulations but despite section 34 (2), and

(b)  if the co-operative’s rules contain an express or implied restriction on, or an express or implied prohibition of, the exercise by the co-operative of any of its powers, despite that restriction or prohibition, and

(c)  if the rules of the co-operative contain a provision stating the objects of the co-operative, despite that fact.

(4)  The fact that the doing of an act by a co-operative would not be, or is not, in its best interests does not affect its legal capacity to do the act.

34   Restrictions on co-operatives in rules

(1)  A co-operative’s rules may contain an express restriction on, or an express prohibition of, the exercise by the co-operative of a power of the co-operative.

(2)  A co-operative contravenes this section if:

(a)  it exercises a power contrary to an express restriction on, or an express prohibition of, the exercise of that power, being a restriction or prohibition contained in the co-operative’s rules, or

(b)  the rules of the co-operative contain a provision stating the objects of the co-operative and the co-operative does an act otherwise than in pursuance of those objects.

(3)  An officer of a co-operative who is involved in a contravention by the co-operative of this section also contravenes this section.

(4)  A person who contravenes this section is not guilty of an offence.

35   Results of contravention of restriction in rules

(1)  The exercise of a power or the doing of an act in contravention of section 34 is not invalid merely because of the contravention.

(2)  An act of an officer of a co-operative is not invalid merely because, by doing the act, the officer contravenes section 34.

(3)  The fact that the exercise of a power or the doing of an act contravenes or would contravene section 34 may be asserted or relied on only in:

(a)  a prosecution of a person for an offence against this Act, or

(b)  an application for an order under Division 5 of Part 4 (Oppressive conduct of affairs), or

(c)  an application for an injunction under section 443 (Injunctions) to restrain the co-operative from entering into an agreement, or

(d)  proceedings (other than an application for an injunction) by the co-operative, or by a member of the co-operative, against the present or former officers of the co-operative, or

(e)  an application by the Registrar or by a member of the co-operative for the winding up of the co-operative.

(4)  If (but for subsection (3)) the Court would have power under section 443 to grant, on the application of a person, an injunction restraining a co-operative, or an officer of a co-operative, from engaging in particular conduct constituting a contravention of section 34, the Court may, on the application of that person, order the co-operative or the officer to pay damages to that person or any other person.

Division 3 Persons having dealings with co-operatives

36   Assumptions entitled to be made

(cf Vic Act s 43)

(1)  A person is entitled to make the assumptions in section 37 in relation to:

(a)  dealings with a co-operative, and

(b)  dealings with a person who has, or purports to have, directly or indirectly acquired title to property from a co-operative.

(2)  If a person is entitled to assume a matter, the co-operative or anyone referred to in subsection (1) is not entitled to assert in proceedings in relation to the dealings that the matter is incorrect.

37   Assumptions

(cf Vic Act s 44)

(1) Rules complied with
A person may assume that the co-operative’s rules have been complied with.

(2) Director or officer
A person may assume that anyone who appears, from information provided by the co-operative that is available to the public from the Registrar, to be a director or officer of the co-operative:

(a)  has been duly appointed, and

(b)  has authority to exercise the powers and perform the duties customarily exercised or performed by a director or officer of a similar co-operative.

(3) Officer or agent
A person may assume that anyone who is held out by the co-operative to be an officer or agent of the co-operative:

(a)  has been duly appointed, and

(b)  has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar co-operative.

(4) Officer or agent with authority to warrant that document is genuine or true copy
A person may assume that anyone who is, or may be assumed to be, an officer or agent of the co-operative who has the authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy.

(5) Document duly executed
A person may assume that a document has been duly executed by the co-operative if it is signed by 2 people, one of whom is, or may be assumed to be, a director of the co-operative, and the other a director or officer of the co-operative.

(6) Document duly sealed
A person may assume that a document has been duly sealed by the co-operative if it bears what appears to be an impression of the co-operative’s seal and the sealing of the document appears to be witnessed by 2 people, one of whom is, or may be assumed to be, a director of the co-operative, and the other a director or officer of the co-operative.

(7) Proper performance of duties
A person may assume that the officers and agents of the co-operative properly perform their duties to the co-operative.

38   Person who knows or ought to know is not entitled to make assumptions

(cf Vic Act s 45)

This Division does not entitle a person to make an assumption, and does not prevent an assertion being made in relation to an assumption, if:

(a)  the person has actual knowledge that the assumption is not correct, or

(b)  the person’s connection or relationship with the co-operative is such that the person ought to know that the assumption is not correct.

39   (Repealed)

40   Lodgment of documents etc not to constitute constructive notice

(1)  A person is not to be considered to have knowledge of a co-operative’s rules, any of the contents of a co-operative’s rules, a document, the contents of a document, or any particulars, merely because of either or both of the following:

(a)  the rules, the document or the particulars have been lodged with the Registrar,

(b)  the rules, the document or the particulars are referred to in any other document that has been lodged with the Registrar, or lodged with a person under a previous law corresponding to a provision of this Act.

(2)  (Repealed)

(3)  Despite subsection (1), a member of a co-operative is to be considered to have knowledge of the rules of the co-operative.

41   Effect of fraud

(1)  A person’s entitlement under this Division to make an assumption is not affected merely by the fact that any person:

(a)  has acted or is acting fraudulently in relation to the dealing or acquisition or purported acquisition of title to property to which the assumption relates, or

(b)  has forged a document that appears to have been sealed on behalf of a co-operative.

(2)  However, the person is not entitled to make the assumption if the person has actual knowledge of that fraudulent action or forgery.

Divisions 4, 5

42–44(Repealed)

Division 6 Authentication and execution of documents and confirmation of contracts

45   Contractual formalities

(1)  So far as concerns the formalities of making, varying or discharging a contract, a person acting under the express or implied authority of a co-operative may make, vary or discharge a contract in the name of, or on behalf of, the co-operative as if that contract were made, varied or discharged by a natural person.

(2)  The making, varying or discharging of a contract in accordance with subsection (1) is effectual in law and binds the co-operative and other parties to the contract.

(3)  This section does not prevent a co-operative from making, varying or discharging a contract under its common seal.

46   Execution under common seal

A contract or other document executed, or purporting to have been executed, under the common seal of a co-operative is not invalid merely because a person attesting the affixing of the common seal was in any way, whether directly or indirectly, interested in that contract or other document or in the matter to which that contract or other document relates.

47   Authentication need not be under seal

(cf Vic Act s 50)

A document or proceeding requiring authentication by a co-operative may be authenticated by the signature of 2 people, one of whom is a director of the co-operative and one of whom is a director or an officer of the co-operative and need not be authenticated under the seal of the co-operative.

48   Co-operative may authorise person to execute deeds

(1)  A co-operative may, by writing under its common seal, empower a person, either generally or in respect of a specified matter or specified matters, as its agent or attorney to execute deeds on its behalf.

(2)  A deed signed by such an agent or attorney on behalf of the co-operative and under his, her or its seal, or under the appropriate official seal of the co-operative, binds the co-operative and has effect as if it were under the common seal of the co-operative.

(3)  The authority of such an agent or attorney, as between the co-operative and a person dealing with him, her or it, continues during the period (if any) mentioned in the instrument conferring the authority or, if no period is so mentioned, until notice of the revocation or termination of his, her or its authority has been given to the person dealing with him, her or it.

48A   Common seal

(cf Vic Act s 48)

A document or proceeding requiring authentication by a co-operative may be authenticated under the common seal of the co-operative.

49   Official seal

(1)  A co-operative may, if authorised by its rules, have for use in place of its common seal outside the State where its common seal is kept one or more official seals, each of which must be a facsimile of the common seal of the co-operative with the addition on its face of the name of every place where it is to be used.

(2)  The person affixing such an official seal must, in writing signed by the person, certify on the instrument to which it is affixed the date on which and the place at which it is affixed.

(3)  A document sealed with such an official seal is to be considered to be sealed with the common seal of the co-operative.

50   Other requirements as to consent or sanction not affected

This Division does not affect the operation of a law that requires some consent or sanction to be obtained, or some procedure to be complied with, in relation to the making, varying or discharging of a contract.

51   Transitional

This Division does not apply in relation to the making, varying or discharging of a contract before the commencement of this section, but applies otherwise in relation to a co-operative whether it gives its authority before, on or after that commencement.

Division 7 Pre-registration contracts

52   Contracts before registration

(cf Vic Act s 56)

(1)  If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a proposed co-operative, the co-operative becomes bound by the contract and entitled to its benefit if the co-operative, or a co-operative that is reasonably identifiable with it, is registered and ratifies the contract:

(a)  within a reasonable period after the contract is entered into, or

(b)  within any period agreed to by the parties to the contract.

(2)  The person is released from any liability under the pre-registration contract if the co-operative enters into another contract in substitution for it:

(a)  within a reasonable period after the pre-registration contract is entered into, or

(b)  within any period agreed to by the parties to the pre-registration contract.

(3)  The person is liable to pay damages to each other party to the pre-registration contract if a co-operative is not registered, or a co-operative is registered but does not ratify the contract or enter into a substitute for it:

(a)  within a reasonable period after the contract is entered into, or

(b)  within any period agreed to by the parties to the contract.

(4)  The maximum amount of damages the person is liable to pay to a party is the amount the co-operative would be liable to pay to the party if the co-operative had been registered and had ratified the contract and then completely failed to perform it.

(5)  If proceedings are brought to recover damages under subsection (3) because the co-operative is registered but does not ratify the pre-registration contract or enter into a substitute for it, the Court may do anything that it thinks just in the circumstances, including ordering the co-operative:

(a)  to pay all or part of the damages that the person is liable to pay, or

(b)  to transfer property that the co-operative received because of the contract to a party to the contract, or

(c)  to pay an amount to a party to the contract.

(6)  If the co-operative ratifies the pre-registration contract but fails to perform all or part of it, the Court may order the person to pay all or part of the damages that the co-operative is ordered to pay.

53   Person may be released from liability but is not entitled to indemnity

(cf Vic Act s 57)

(1)  Any of the parties to the pre-registration contract may release the person who entered into, or purported to enter into, the contract from any liability in relation to the contract.

(2)  The release must be in writing.

(3)  The party giving the release is not entitled to recover damages under section 52 from the person.

(4)  Despite any rule of law or equity, the person does not have any right of indemnity against the co-operative in respect of the person’s liability under this Division. This is so even if the person was acting, or purporting to act, as trustee for the co-operative.

54   Division replaces other rights and liabilities

(cf Vic Act s 58)

This Division replaces any rights or liabilities anyone would otherwise have in relation to the pre-registration contract.

55–61   (Repealed)

Part 4 Membership

Division 1 General

62   Becoming a member

(cf Vic Act s 64)

(1)  On the registration of a co-operative, the persons who signed the application for registration become members of the co-operative.

(2)  Other persons may be admitted as members of the co-operative as provided by its rules.

(2A)  A person under the age of 18 years may be admitted as a member of the co-operative unless the rules of the co-operative otherwise provide.

(3)  A body corporate is not (merely because it is a body corporate) disqualified from being a member of a co-operative unless the co-operative’s rules provide that bodies corporate are disqualified from being members.

(4)  If 2 or more co-operatives are merged, the members of the merged co-operative are:

(a)  the members of the merging co-operatives, and

(b)  other persons admitted as members of the merged co-operative in accordance with its rules.

63   Membership may be joint

Membership of a co-operative may be individual and, unless the rules of the co-operative provide otherwise, may be joint.

64   Qualification for membership—likelihood of being active member

(1)  A person is not qualified to be admitted to membership of a co-operative unless there are reasonable grounds for believing that the person will be an active member of the co-operative.

(2)  The board of a co-operative is under a duty to ensure that a person who is not qualified to be admitted to membership is not admitted.

(3)  The rules of a co-operative must contain provisions that:

(a)  impose a duty on all persons who become members to become active members, and

(b)  explain the consequences of failing to become or ceasing to be an active member.

65   Members under 18 years of age

(cf Vic Act s 69)

(1)  A member of a co-operative is not entitled to avoid any obligation or liability as a member under any contract, deed or other document entered into as a member on any ground relating to minority.

(2)  A person under the age of 18 years is not competent to hold any office in a co-operative.

(3)  A member of a co-operative who is under 18 years of age is not entitled to the vote attached to membership.

(4)  This section applies only to natural persons.

66   Members of associations

(cf Vic Act s 65)

(1)  The members of an association are:

(a)  the component co-operatives by which the association is formed, and

(b)  any other co-operative, admitted to membership in accordance with the rules of the association, and

(c)  any other body corporate or other body admitted to membership in accordance with subsection (2).

(2)  A body corporate or other body (not being a co-operative) may be admitted to membership of the association as a component co-operative if:

(a)  it is incorporated or registered under any other law, whether or not a law of New South Wales, and

(b)  in the opinion of the board of the association, it is designed to function in accordance with co-operative principles, and

(c)  it is eligible to be admitted to membership in accordance with the rules of the association.

67   Members of federations

(cf Vic Act s 66)

(1)  The members of a federation of associations are:

(a)  the associations by which the federation is formed, and

(b)  any other associations admitted to membership in accordance with the rules of the federation, and

(c)  any other bodies corporate admitted to membership in accordance with subsection (2).

(2)  If the Registrar certifies that there is no association to which a particular body corporate could conveniently or appropriately be admitted to membership, the body corporate may be admitted to membership of a federation.

68   Representatives of bodies corporate

(cf Vic Act s 70)

(1)  If a body corporate is a member of a co-operative, it may by instrument served on the co-operative appoint a person to represent it in respect of its membership.

(2)  A body corporate must not appoint a person to represent the body corporate as a member of a co-operative, if he or she is currently a member of the co-operative or a representative of another body corporate member.

Maximum penalty: 10 penalty units.

(3)  The power to appoint a representative is subject to any restriction imposed by the rules of the co-operative as to the entitlement of a person to represent a body corporate.

(4)  A person is not qualified to be appointed as the representative of a company that is not a listed corporation (within the meaning of the Corporations Act) unless the person is an officer, member or employee of the company.

(5)  A person appointed in accordance with this section to represent a member who is a body corporate is to be considered to be that member for the purpose of voting at meetings of a co-operative.

69   Notification of shareholders and share holdings

(cf Vic Act s 71)

On the request of the board of directors of the co-operative, a body corporate which is a member of the co-operative must make available for inspection by the board of directors of the co-operative:

(a)  a list of the names of all the shareholders of that body corporate and the number of shares held by each shareholder, or

(b)  in the case of a body corporate without share capital, a list of the members of the body corporate.

Maximum penalty: 20 penalty units.

70   Circumstances in which membership ceases—all co-operatives

(cf Vic Act s 72)

(1)  A person ceases to be a member of a co-operative in each of the following circumstances and as otherwise provided by this Act:

(a)  if the member’s membership is cancelled under Part 6 (Active membership requirements),

(b)  if the member is expelled in accordance with the rules of the co-operative,

(c)  if:

(i)  the member becomes bankrupt, or

(ii)  the member’s property becomes subject to control under the law relating to bankruptcy,

      unless provision is made to the contrary in the rules of the co-operative,

(d)  on death,

(e)  if the contract of membership is rescinded on the ground of misrepresentation or mistake,

(f)  in the case of a member that is a body corporate, if the body is deregistered.

(2)  On the death of a member, the member’s estate remains liable as the member until the member’s personal representative or some other person is registered in the member’s place.

71   Additional circumstances in which membership ceases—co-operatives with share capital

In the case of a co-operative that has a share capital, a member ceases to be a member in each of the following additional circumstances:

(a)  if the member’s share is transferred to another person in accordance with the rules of the co-operative, and the transferee is registered as holder in his or her place,

(b)  if the member’s share is forfeited in accordance with this Act or the rules of the co-operative,

(c)  if the member’s share is sold by the co-operative under a power conferred by the rules of the co-operative, and the purchaser is registered as holder in his or her place,

(d)  if the member’s share is purchased by the co-operative in accordance with the provisions of this Act,

(e)  if the amount paid up on the member’s shares is repaid to the member in accordance with the rules of the co-operative.

72   (Repealed)

73   Carrying on business with too few members

(cf Vic Act s 74)

(1)  If a co-operative continues to carry on business for more than 28 days after the number of members is reduced below the minimum number of members allowed, every person who is a director of the co-operative during the time when it so continues to carry on business and who knows it is carrying on business with fewer than the minimum number of members allowed is guilty of an offence.

Maximum penalty: 20 penalty units.

(2)  Each person who is guilty of an offence under subsection (1) is also liable to satisfy all obligations of the co-operative incurred after the 28 days referred to in subsection (1), and may be sued without any other member being joined in the action.

(3)  The minimum number of members allowed is:

(a)  for an association or federation—2 members, or

(b)  for any other co-operative—5 members, or such lesser number as the Registrar may have approved on the formation of the co-operative.

(4)  The Registrar may, by order, extend and further extend in a particular case the period of 28 days referred to in subsection (1).

(5)  An application for an extension must be made:

(a)  in a form approved by the Registrar, and

(b)  before the period to be extended expires.

Division 2 Rights and liabilities of members

74   Rights of membership not exercisable until registered etc

(cf Vic Act s 75)

(1)  A member of a co-operative is not entitled to exercise any rights of membership until:

(a)  the member’s name appears in the register of members, and

(b)  the member has made such payment to the co-operative in respect of membership or acquired such share or interest as may be provided in the rules of the co-operative.

(2)  The board of a co-operative must ensure that the name of a person admitted to membership is recorded in the register of members within 28 days after the person is admitted to membership.

Maximum penalty: 20 penalty units.

75   Liability of members to creditors

A member of a co-operative is not, as such a member, under any personal liability to a creditor of the co-operative.

76   Liability of members to co-operative

(1)  A member of a co-operative is not, as such a member, under any personal liability to the co-operative, except as provided by this section.

(2)  A member of a co-operative with a share capital is liable to the co-operative for the amount, if any, unpaid on the shares held by the member together with any charges payable by the member to the co-operative as required by the rules of the co-operative.

(3)  A member of a co-operative without a share capital is liable to the co-operative for any charges payable by the member to the co-operative as required by the rules of the co-operative.

76A   Co-operative to provide information to person intending to become member

(cf Vic Act s 77)

(1)  The board of a co-operative must provide each person intending to become a member of the co-operative with:

(a)  a consolidated copy of the rules of the co-operative, and

(b)  a copy of all special resolutions applicable to the member passed by the members of the co-operative, except special resolutions providing for an alteration of the rules of the co-operative, and

(c)  a copy of the last annual report of the co-operative under section 252.

(2)  The board of a non-trading co-operative or, with the consent of the Registrar, the board of a trading co-operative may comply with subsection (1) by:

(a)  giving the person intending to become a member notice that the documents referred to in that subsection may be inspected by the person at the registered office of the co-operative and at each other office of the co-operative in or outside New South Wales (including outside Australia), and

(b)  making those documents available for inspection.

(3)  The Registrar’s consent under subsection (2) may be given unconditionally or subject to conditions. The board of a co-operative to which consent has been granted subject to conditions must comply with those conditions in order to comply with subsection (2).

77   Entry fees and regular subscriptions

(cf Vic Act s 78)

(1)  The rules of a co-operative may:

(a)  require the payment by members of entry fees and regular subscriptions, and

(b)  provide for the repayment of those fees and subscriptions on a person ceasing to be a member.

(1A)  A member’s regular subscription may be based on the dealings between the member and the co-operative or may be otherwise determined in accordance with the rules of the co-operative.

(2)  A co-operative must give to any person intending to become a member written notice of any entry fees or regular subscriptions payable by a member to the co-operative.

(3)  A person who becomes a member of the co-operative is not liable to pay any entry fees or regular subscriptions except:

(a)  those fees or subscriptions of which the person was given written notice before becoming a member, and

(b)  any regular subscriptions which may be imposed by any subsequent alteration of the rules and of which the member has been given notice.

78   Members etc may be required to deal with co-operative

(1)  The rules of a co-operative may contain provisions that require a member to have any specified dealings with the co-operative for a fixed period and to enter into a contract for that purpose.

(2)  A co-operative may, if authorised by its rules, make a contract with a member containing provisions that require the member to have any specified dealings with the co-operative for a fixed period.

(3)  In particular, any such provisions of the rules or a contract may require a member:

(a)  to sell products through or to the co-operative, or

(b)  to obtain supplies or services through or from the co-operative, or

(c)  to pay to the co-operative specified sums as liquidated damages for any failure to comply with a requirement authorised by this section.

(4)  Any sum so required to be paid to the co-operative as liquidated damages is for the purposes of section 80 (Charge and set off of co-operative) to be considered to be a debt due from the member to the co-operative.

(5)  A contract authorised by this section is binding on the co-operative and all other parties even though but for this Act the contract would be invalid as being in restraint of trade.

(6)  Rules authorised by this section are authorised even though, but for this section, the rules might be invalid as being in restraint of trade.

79   Fines payable by members

(1)  A co-operative may impose a fine on a member for any infringement of the rules or by-laws of the co-operative.

(2)  The rules of the co-operative must specify the maximum fine that may be imposed on a member and a fine that is greater than that maximum must not be imposed.

(3)  No fine exceeding $20 is to be imposed unless:

(a)  written notice of intention to impose the fine and the reason for it has been given to the member, and

(b)  the member has been given a reasonable opportunity to appear before the board in person (with or without witnesses), or to send to the board a written statement, for the purpose of showing cause why the fine should not be imposed.

(4)  The co-operative may set off the whole or any part of the fine against any money due to the member in respect of any produce delivered by the member to the co-operative, but no part of the fine is to be set off against any advance due to the member from the co-operative in accordance with the rules against produce so delivered.

(5)  A member is not to be considered to have infringed the rules of a co-operative by a failure to deliver produce to the co-operative if the failure was due to the fact that before becoming a member of the co-operative the member had bound himself or herself under the rules of another co-operative to deliver the produce to that other co-operative and had actually delivered the produce to that co-operative.

80   Charge and set-off of co-operative

(cf Vic Act s 81)

(1)  A co-operative has, in respect of any debt due from a member or past member to the co-operative, a charge on each of the following:

(a)  the share or interest in the capital and the credit balance and deposits of the member or past member,

(b)  any dividend, interest, bonus or rebate payable to the member or past member,

(c)  any entry fees and regular subscriptions required to be repaid to a member when the member ceases to be a member.

(2)  The co-operative may set off any amount paid on account of that share or other thing, or any amount credited or payable to the member or past member, in or towards payment of the debt.

(3)  The charge created by this section may be enforced by the appropriation by the co-operative of the thing that is subject to the charge, but only after at least 7 days’ notice has been given to the member or past member.

(4)  Any share in respect of which capital has been so appropriated is to be cancelled.

81   Repayment of shares on expulsion

(1)  When a member is expelled from a co-operative in accordance with its rules, the co-operative is to repay to the member the amount paid up on the shares held by the member at the date of expulsion, less any amount owed by the member to the co-operative at the date of expulsion under the rules of the co-operative or any contract or otherwise.

(2)  If the balance sheet of the co-operative last issued before the expulsion of a member of the co-operative disclosed a loss or deficiency, there is to be a proportionate reduction in the capital to be repaid to the member.

(3)  That reduction is to be by an amount that bears to the amount of the loss or deficiency so disclosed the same proportion as the number of shares held by the member bore to the total number of shares held by all members of the co-operative as at the date of expulsion of the member.

(4)  Payment of any amount due to a member under this section is to be made at such time as may be determined by the board of the co-operative, but not later than 12 months after the date of expulsion.

(4A)  However, if the board considers that repayment within 12 months would adversely affect the financial position of the co-operative, or the former member consents in writing:

(a)  the board may defer payment until a later time determined by the board, or

(b)  the co-operative may appropriate the amount as a donation to the co-operative, but only if the former member consents in writing to the donation.

(4B)  If payment is deferred, the amount owing to the former member must be applied as follows:

(a)  if the co-operative is a deposit-taking co-operative—the co-operative may apply the amount as a deposit by the former member with the co-operative (subject to the requirements of section 135 as to interest on the deposit and to the requirements of section 136),

(b)  the co-operative may allot or issue debentures or CCUs of the co-operative to the former member in satisfaction of the amount.

(5)  Shares in respect of which capital has been repaid are to be cancelled.

Division 3 Death of member

81A   Meaning of “interest”

For the purposes of this Division, a deceased member’s interest in a co-operative includes each of the following:

•  the member’s membership itself

•  any credit balance due to the member

•  any loan from or to or deposit with the co-operative

•  any surplus arising on the sale by the co-operative as mortgagee of any property mortgaged by the deceased to the co-operative.

82   Transfer of share or interest on death of member

(cf Vic Act s 84)

Subject to section 170A, on the death of a member, the board is to transfer the deceased member’s share or interest in the co-operative to:

(a)  the personal representative of the deceased member, or

(b)  to such person as the deceased’s personal representative may specify in an application made to the co-operative within 3 months after the death of the member.

83   Transfer of small shareholdings and interests on death

(1)  If the total value of a deceased member’s shares or interest in a co-operative is less than $10,000 (or such other amount as may be prescribed), the board may, on the basis of such evidence as it considers sufficient, transfer the shares or interest in accordance with whichever of the following paragraphs is appropriate:

(a)  if the member or person dies testate—to the person who appears to the board to be entitled to the shares or interest under the will of the deceased member or person,

(b)  if the member or person dies intestate—to any person who appears to the board to be entitled to obtain a grant of administration of the estate of the deceased and that person is then to hold the shares or interest on the same trusts as if he or she had obtained such a grant.

(2)  No transfer is to be made under this section after evidence has been produced to the co-operative of the grant of letters of administration of the estate, or probate of the will, of the deceased member.

(3)  In this section, the transfer of an interest includes the payment of money.

84   (Repealed)

85   (Renumbered as sec 81A)

86   Value of shares and interests

The value of the shares or interest of a deceased member is to be determined for the purposes of this Division in accordance with the rules of the co-operative.

87   Stamp Duties Act 1920

The provisions of this Division are subject to section 122 (No dealings with shares etc of deceased persons to be registered without certificate of Chief Commissioner) of the Stamp Duties Act 1920.

88   Co-operative protected

Any transfer of property made by the board of a co-operative in accordance with the provisions of this Division is valid and effectual against any demand made on the co-operative by any other person.

Division 4 Disputes involving members

89   Grievance procedure

(cf Vic Act s 88)

(1)  The rules of a co-operative must set out a grievance procedure for dealing with any dispute under the rules between:

(a)  a member and another member, or

(b)  a member and the co-operative.

(2)  A member may appoint any person to act on behalf of the member in the grievance procedure.

(3)  The grievance procedure must allow for natural justice to be applied.

(4)  In this section and section 90, member includes any person who was a member not more than 6 months before the dispute occurred.

90   Application to Court

(cf Vic Act s 89)

(1)  The Court may, on the application of a member or the co-operative, make an order declaring and enforcing:

(a)  the rights or obligations of members of the co-operative between themselves, or

(b)  the rights or obligations of the co-operative and any member between themselves.

(2)  An order may be made under this section whether or not a right of a proprietary nature is involved and whether or not the applicant has an interest in the property of the co-operative.

(3)  The Court may refuse to make an order on the application or may make an order for costs against a party, whether successful or not, if it is of the opinion that:

(a)  the issue raised in the application is trivial, or

(b)  having regard to the importance of the issue, the nature of the co-operative, any other available method of resolving the issue, the costs involved, lapse of time, acquiescence or any other relevant circumstance, it was unreasonable to make the application, or

(c)  the unreasonable or improper conduct of a party:

(i)  has been responsible for the making of the application, or

(ii)  has added to the cost of the proceedings.

91–95   (Repealed)

Division 5 Oppressive conduct of affairs

95A   Extended meaning of “member”

(cf Vic Act s 90)

In this Division, a reference to a member of a co-operative includes, in the case of a co-operative that has a share capital, a reference to a person to whom a share in the co-operative has been transmitted by will or by operation of law.

95B   Application of Division

(cf Vic Act s 91)

This Division does not apply in respect of anything done under or for the purposes of Part 6.

96   Who may apply for court order

The following persons may apply to the Court for an order under this Division:

(a)  the Registrar,

(b)  a member who believes that the affairs of the co-operative are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members, or in a manner that is contrary to the interests of the members as a whole,

(c)  a member who believes that an act or omission, or a proposed act or omission, by or on behalf of the co-operative, or a resolution, or a proposed resolution, of a class of members, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or was or would be contrary to the interests of the members as a whole.

97   (Repealed)

98   Orders that Court may make

(cf Vic Act s 93)

On application under this Division, the Court may make such order or orders as it thinks fit including (without being limited to) one or more of the following orders:

(a)  an order that the Registrar appoint an administrator of the co-operative,

(b)  an order that the co-operative be wound up,

(c)  an order for regulating the conduct of affairs of the co-operative in the future,

(d)  an order for the repayment of the member’s shares in accordance with the provisions of this Act for repayment of share capital,

(e)  an order for the purchase of the shares of any member by the co-operative and for the reduction accordingly of the co-operative’s capital,

(f)  an order directing the co-operative to institute, prosecute, defend or discontinue specified proceedings, or authorising a member or members of the co-operative to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the co-operative,

(g)  an order appointing a receiver or a receiver and manager of property of the co-operative,

(h)  an order restraining a person from engaging in specified conduct or from doing a specified act or thing,

(i)  an order requiring a person to do a specified act or thing,

(j)  an order directing a co-operative to become registered as a company under the Corporations Act,

(k)  an order as to costs.

99   Basis on which Court makes orders

The Court may make an order under this Division if of the opinion:

(a)  that affairs of a co-operative are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members (the oppressed member or members), whether or not in the capacity of a member or members, or in a manner that is contrary to the interests of the members as a whole, or

(b)  that an act or omission, or a proposed act or omission, by or on behalf of a co-operative, or a resolution, or a proposed resolution, of a class of members of a co-operative, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members (the oppressed member or members), whether or not in the capacity of a member or members, or was or would be contrary to the interests of the members as a whole.

100   Winding up not to be ordered if oppressed members prejudiced

The Court is not to make an order under this Division for the winding up of a co-operative if it is of the opinion that the winding up of the co-operative would unfairly prejudice the oppressed member or members.

101   Application of winding up provisions

(cf Vic Act s 96)

If an order that a co-operative be wound up is made under this Division, the provisions of this Act relating to the winding up of co-operatives apply, with such adaptations as are necessary, as if the order had been made or an application duly filed in the Court by the co-operative.

102   Changes to rules

If an order under this Division makes any alteration to the rules of a co-operative:

(a)  the alteration has effect as if it had been duly made by special resolution of the co-operative, and

(b)  the co-operative must not (despite any other provisions of this Act) without the leave of the Court make any further alteration to the rules inconsistent with the provisions of the order.

103   Copy of order to be lodged with Registrar

(cf Vic Act s 98)

An applicant for an order under this Division must lodge an office copy of the order with the Registrar within 14 days after it is made.

Maximum penalty: 10 penalty units.

104   Compliance with orders

A person must not contravene an order under this Division that is applicable to the person.

Maximum penalty: 50 penalty units or imprisonment for 12 months, or both.

Division 6 Proceedings on behalf of co-operative by members and others

105   Bringing, or intervening in, proceedings on behalf of co-operative

(cf Vic Act s 99)

(1)  A person may bring proceedings on behalf of a co-operative, or intervene in any proceedings to which a co-operative is a party, for the purpose of taking responsibility on behalf of the co-operative for those proceedings, or for a particular step in those proceedings, (for example, compromising or settling them), if:

(a)  the person is:

(i)  a member, former member, or person entitled to be registered as a member, of the co-operative or of a related body corporate, or

(ii)  an officer or former officer of the co-operative, or

(iii)  the Registrar, and

(b)  the person is acting with leave granted under section 105A.

(2)  Proceedings brought on behalf of a co-operative may be brought in the co-operative’s name.

105A   Applying for and granting leave

(cf Vic Act s 100)

(1)  A person referred to in section 105 (1) (a) may apply to the Court for leave to bring, or to intervene in, proceedings.

(2)  The Court may grant the application if it is satisfied that:

(a)  it is probable that the co-operative will not itself bring the proceedings, or properly take responsibility for them, or for the step in them, and

(b)  the applicant is acting in good faith, and

(c)  it is in the best interests of the co-operative that the applicant be granted leave, and

(d)  if the applicant is applying for leave to bring proceedings, there is a serious question to be tried, and

(e)  either:

(i)  at least 14 days before making the application, the applicant gave written notice to the co-operative of the intention to apply for leave and of the reasons for applying, or

(ii)  it is appropriate to grant leave even if subparagraph (i) is not satisfied.

105B   Substitution of another person for person granted leave

(cf Vic Act s 101)

(1)  Any of the following persons may apply to the Court for an order that they be substituted for a person to whom leave has been granted under section 105A:

(a)  a member, former member, or person entitled to be registered as a member, of the co-operative or a related body corporate, or

(b)  an officer, or former officer, of the co-operative, or

(c)  the Registrar.

(2)  The application may be made whether or not the other person has already brought the proceedings or made the intervention.

(3)  The Court may make the order if it is satisfied that:

(a)  the applicant is acting in good faith, and

(b)  in all the circumstances, it is appropriate to make the order.

(4)  An order substituting one person for another person has the effect that:

(a)  the grant of leave is taken to have been made in favour of the substituted person, and

(b)  if the other person has already brought the proceedings or intervened, the substituted person is taken to have brought those proceedings or to have made that intervention.

105C   Effect of ratification by members

(cf Vic Act s 102)

(1)  A ratification or approval of conduct by members of a co-operative:

(a)  does not prevent a person from bringing or intervening in proceedings with leave under section 105A or from applying for leave under that section, and

(b)  does not have the effect that proceedings brought or intervened in with leave under section 105A must be determined in favour of the defendant, or that an application for leave under that section must be refused.

(2)  The Court may take into account a ratification or an approval of the conduct by members of a co-operative in deciding what order or judgment (including as to damages) to make in proceedings brought or intervened in with leave under section 105A or in relation to an application for leave under that section.

(3)  In taking a ratification or approval into account under subsection (2), the Court may have regard to:

(a)  how well-informed about the conduct the members were when deciding whether to ratify or approve the conduct, and

(b)  whether the members who ratified or approved the conduct were acting for proper purposes.

105D   Leave to discontinue, compromise or settle proceedings brought, or intervened in, with leave

(cf Vic Act s 103)

Proceedings brought or intervened in with leave must not be discontinued, compromised or settled without the leave of the Court.

105E   General powers of the Court

(cf Vic Act s 104)

(1)  The Court may make any orders, and give any directions, that it thinks just in relation to proceedings brought or intervened in with leave, or in relation to an application for leave, including:

(a)  interim orders, and

(b)  directions about the conduct of the proceedings, including requiring mediation, and

(c)  an order directing the co-operative, or an officer of the co-operative, to do, or not to do, any act, and

(d)  an order appointing an independent person to investigate, and report to the Court, on:

(i)  the financial affairs of the co-operative, or

(ii)  the facts or circumstances which gave rise to the cause of action the subject of the proceedings, or

(iii)  the costs incurred in the proceedings and the person granted leave.

(2)  A person appointed by the Court under subsection (1) (d) is entitled, on giving reasonable notice to the co-operative, to inspect and make copies of any books of the co-operative for any purpose connected with their appointment.

105F   Power of Court to make costs order

(cf Vic Act s 105)

At any time, the Court may, in relation to proceedings brought or intervened in with leave under section 105A or an application for leave under that section, make any orders it thinks just about the costs of the person who applied for or was granted leave, of the co-operative or of any other party to the proceedings or application, including an order requiring indemnification for costs.

Part 5 Rules

106   Effect of rules

(1)  The rules of a co-operative have the effect of a contract under seal:

(a)  between the co-operative and each member, and

(b)  between the co-operative and each director, the principal executive officer and the secretary of the co-operative, and

(c)  between a member and each other member.

(2)  Under the contract, each of those persons agrees to observe and perform the provisions of the rules as in force for the time being so far as those provisions are applicable to that person.

107   Content of rules

(cf Vic Act s 107)

(1)  The rules of a co-operative must set out or otherwise make provision for the matters specified in Schedule 1.

(2)  The rules must be divided into paragraphs numbered consecutively.

(3)  The rules may state the objects of the co-operative.

(4)  The rules may incorporate any provision of the model rules approved under section 109A.

(5)  The rules may provide for the imposition of a fine on a member for any infringement of the rules.

(6)  If the rules provide for the imposition of a fine, the rules must specify the maximum fine that may be imposed on a member.

(7)  The maximum fine fixed by the rules must not exceed any amount that may be prescribed as the maximum fine.

(8)  The rules may contain other provisions not inconsistent with this Act or the regulations.

108   Purchase and inspection of copy of rules

(cf Vic Act s 108)

(1)  Any member is entitled to obtain from a co-operative a copy of its rules on payment of the amount required by the rules of the co-operative or, if the rules do not prescribe an amount, on payment of $5.

(2)  The amount required by the rules must not exceed the fee prescribed by the regulations for obtaining a copy of the rules from the Registrar.

(3)  Any person is entitled to obtain from the Registrar a copy of the rules of a co-operative on payment of the fee prescribed by the regulations.

109   (Repealed)

109A   Model rules

(cf Vic Act s 110)

(1)  The Registrar may by notice published in the Government Gazette approve model rules for co-operatives or for any class of co-operatives and alter or repeal the model rules from time to time.

(2)  The model rules may make provision for anything for which the rules of a co-operative may make provision.

(3)  If the model rules provide for a matter and the rules of a co-operative of the class to which the model rules apply do not provide for that matter, the provision of the model rules relating to that matter is deemed to be included in the rules of the co-operative.

110   Rules can only be altered in accordance with this Act

(cf Vic Act s 111)

(1)  The rules of a co-operative cannot be altered except as provided by this Act.

(2)  (Repealed)

111   Alteration by special resolution

(cf Vic Act s 113)

The rules of a co-operative must be altered by special resolution unless otherwise specified in this Act.

112   Alteration by resolution of the board

(1)  The rules of a co-operative may be altered by a resolution passed by the board if:

(a)  the alteration does no more than give effect to a requirement, restriction or prohibition imposed by or under the authority of this Act, or

(b)  the Registrar is satisfied that approval of the alteration by the members of the co-operative is not necessary and alteration by the board would be appropriate.

(2)  If the rules of a co-operative are altered pursuant to this section, the co-operative must cause the alteration to be notified in writing to its members as soon as practicable after the alteration takes effect and in any event not later than the date on which notice is given to the members of the next annual general meeting of the co-operative following the taking effect of the alteration.

113   Alteration does not take effect until registered

(cf Vic Act s 115)

(1)  An alteration of the rules of a co-operative does not take effect unless and until it is registered by the Registrar.

(2)  An application for registration of an alteration must:

(a)  be made in a form approved by the Registrar, and

(b)  be made within 28 days, or such other period as may be prescribed by the regulations, after the alteration is made, and

(c)  be accompanied by a consolidated copy of the rules of the co-operative, including the alteration.

(3)  The Registrar must register the alteration unless:

(a)  the Registrar is satisfied that the alteration is contrary to this Act or the regulations, or

(b)  the Registrar has other reasonable cause to refuse to register the alteration.

(4)  The Registrar may refer any alteration to the Council for advice and report but is not required to follow the advice of the Council on the alteration.

(5)  A certificate of registration of any alteration of the rules of a co-operative given by the Registrar is, in favour of any person giving financial accommodation to the co-operative on the faith of the certificate or in favour of any guarantor of that financial accommodation, conclusive evidence that the alteration in the rules was duly made.

113A   Appeal against refusal to register alteration

(cf Vic Act s 117)

A co-operative may appeal to the Court against:

(a)  a decision of the Registrar to refuse to register an alteration of its rules, or

(b)  a failure of the Registrar to register an alteration of its rules.

113B   Registrar to comply with Court order

(cf Vic Act s 118)

The Registrar must comply with an order of the Court on an appeal under this Part.

114   False copies of rules

(1)  A person who gives to a member of a co-operative or to a person intending or applying to become a member of a co-operative a copy of any rules or any alterations of rules, other than those which have been duly registered, representing that they are binding on the members of the co-operative is guilty of an offence.

Maximum penalty: 10 penalty units.

(2)  Any person who makes an alteration to any of the rules of a co-operative after they have been registered and circulates them representing that they have been duly registered when they have not been is guilty of an offence.

Maximum penalty: 10 penalty units.

Part 6 Active membership requirements

Division 1 Definitions etc

115   Primary activity—meaning

A primary activity of a co-operative is an activity specified in the rules of the co-operative as a primary activity of the co-operative.

116   Active membership—explanation

For the purposes of this Act, a member of a co-operative is an active member of the co-operative if the member:

(a)  utilises or supports an activity of, or maintains a relationship or an arrangement with, the co-operative, in connection with the carrying on of a primary activity of the co-operative, in the manner and to the extent which the rules of the co-operative provide is sufficient to establish active membership, or

(b)  maintains such other relationship or arrangement with the co-operative in connection with the carrying on of a primary activity of the co-operative as the regulations provide is sufficient to establish active membership.

117   Active membership provisions and resolutions—explanation

(1)  Active membership provisions in the rules of a co-operative are provisions in the rules which specify:

(a)  which of the activities of the co-operative are the primary activities of the co-operative, and

(b)  the manner in which and the extent to which a member of the co-operative is required to utilise or support an activity of, or maintain a relationship or an arrangement with, the co-operative, in connection with the carrying on of a primary activity of the co-operative, in order to establish active membership of the co-operative.

(2)  An active membership resolution is a resolution which would, if given effect to, make or amend active membership provisions in the rules of a co-operative.

Division 2 Rules to contain active membership provisions

118   Number of primary activities required

A co-operative must have at least 1 primary activity.

119   Rules to contain active membership provisions

(1)  The board of a co-operative must ensure that the rules of the co-operative contain active membership provisions in accordance with this Part.

(2)  An alteration of the rules of a co-operative effected for the purposes of this section is not an alteration which may be effected by a resolution passed by the board under section 112.

120   Failure to have active membership provisions

(1)  If the rules of a co-operative do not contain active membership provisions as required by this Part, the Council may by resolution alter the rules of the co-operative so that they contain active membership provisions.

(2)  The active membership provisions are to be provisions that in the opinion of the Council are appropriate to the co-operative concerned, having regard to:

(a)  the rules and activities of the co-operative, and

(b)  the membership structure of the co-operative, and

(c)  such other matters as the Council thinks are relevant.

(3)  Before taking action under this section, the Council must:

(a)  give notice in writing to the co-operative concerned that it proposes to take the action, and

(b)  take into account any representations made by the co-operative concerning the matter within the time allowed by the notice for the making of representations.

(4)  A resolution of the Council under this section operates to alter the rules of the co-operative accordingly, but section 113 (Alteration does not take effect until registered) applies to any such alteration.

(5)  The fact that active membership provisions in the rules of a co-operative resulted from the operation of this section does not prevent the alteration of those provisions in accordance with this Act.

121   Factors and considerations for determining primary activities etc

(cf Vic Act s 124)

(1)  The board of a co-operative must ensure that the relevant factors and considerations are taken into account in determining the following:

(a)  which of the activities of a co-operative are its primary activities,

(b)  the manner and extent to which a member is required to utilise or support an activity of, or maintain a relationship with, a co-operative, in connection with the carrying on of a primary activity of the co-operative, to establish active membership of the co-operative.

(2)  The relevant factors and considerations are as follows:

(a)  the primary activity or (if more than one) the primary activities taken together should constitute the basic purpose for which the co-operative exists and a significant contribution to the business of the co-operative,

(b)  the manner and extent of required utilisation, support or relationship should be reasonable when considered in relation to the activities of the co-operative as a whole,

(c)  such other factors and considerations as may be prescribed.

(3)  The regulations may provide for the matters to be taken into account in determining whether an activity or activities makes or make a significant contribution to the business of the co-operative and for that purpose may specify minimum percentages of turnover, minimum amounts of income or minimum amounts of business necessary to constitute “significant contribution”.

(4)  Factors and considerations may be prescribed so as to apply to co-operatives generally, to a specified class of co-operatives or to a specified individual co-operative.

(5)  Nothing in this section limits the right of active members other than the board of the co-operative to propose an active membership resolution.

122   Regular subscription—active membership of non-trading co-operative

(cf Vic Act s 126)

(1)  Active membership provisions for a non-trading co-operative may include provision that the payment of a regular subscription by a member of the co-operative, to be applied in connection with a primary activity of the co-operative, is sufficient to establish active membership of the co-operative.

(2)  A member of a co-operative who would, on payment of such a subscription, be an active member of a co-operative is to be considered to be an active member until the subscription is due and payable.

123   Active membership provisions—trading co-operatives

(cf Vic Act s 125)

(1)  (Repealed)

(2)  The only active membership provisions which may be contained in the rules of a trading co-operative are:

(a)  provisions requiring a member to utilise an activity of the co-operative in connection with the carrying on of a primary activity specified in the provisions to establish active membership, and

(b)  such other active membership provisions as the Council may approve.

(3)  A reference in this section, and in any active membership provisions of the rules of a co-operative, to the supply to or purchase from a co-operative by a member of goods or produce includes a reference to:

(a)  the supply to or purchase from a body corporate constituted by an Act for the purpose of the marketing of goods or produce if the body corporate in turn supplies to or purchases from the co-operative, and

(b)  the existence of a relationship or arrangement between the member and the co-operative which is prescribed by the regulations as being sufficient to establish the relationship of supplier or purchaser.

Division 3 Active membership resolutions

124   Prior approval of active membership resolutions

(1)  An active membership resolution cannot be proposed at a meeting of a co-operative unless:

(a)  before the meeting, the Registrar has approved in writing of the terms of the proposed resolution, or

(b)  the active membership provisions which would result from the proposed resolution fall within guidelines approved of in writing by the Registrar before the meeting.

(2)  Before giving an approval under this section, the Registrar may require additional information from the proposers of the resolution for the purpose of deciding whether or not to approve of the resolution.

(3)  If the Registrar refuses approval, the Registrar must inform the co-operative in writing of the reasons for the refusal.

125   Appeal against refusal of approval

(1)  The co-operative is entitled to have a decision of the Registrar to refuse approval of a proposed active membership resolution reviewed if the reason for the refusal is that the resolution would result in active membership provisions which are not appropriate for the co-operative or would result in unreasonable active membership provisions.

(2)  The review is to be carried out by the Council at the request of the co-operative.

(3)  The Council may recommend to the Registrar that the Registrar approve of the proposed resolution and the Registrar is to comply with such a recommendation.

126   Notice of meeting

(1)  At least 21 days’ written notice must be given to members of a co-operative of a meeting at which an active membership resolution is to be proposed.

(2)  The notice must, in addition to the other matters required to be specified:

(a)  specify whether the member is eligible to vote on the resolution, and

(b)  specify the full text of the proposed resolution, and

(c)  contain a copy of section 127 (Cancellation of membership of inactive member).

(3)  If the notice to a member states that he or she is not eligible to vote on a 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.

(4)  The Registrar may determine the matter, on the information available to the Registrar, by direction in writing to the co-operative and the member.

(5)  The Registrar’s determination as to eligibility has effect but only if given before the meeting concerned is due to be held.

126A   Eligibility to vote on active membership resolution

(cf Vic Act s 128)

The only members of a co-operative who are eligible to vote on an active membership resolution when the rules do not contain active membership provisions are those members who would be active members if the resolution had already taken effect.

126B   Eligibility of directors to vote on proposal at board meeting

(cf Vic Act s 129)

If the board of a co-operative is meeting to consider a proposal to submit an active membership resolution to a meeting of the co-operative:

(a)  subject to paragraph (b), a director is only eligible to vote on that proposal if he or she would be eligible to vote on the resolution at the meeting of the co-operative, or

(b)  if less than 2 directors (whether or not they are present at the meeting of the board of directors) would be eligible to vote on the resolution at the meeting of the co-operative, all the directors are eligible to vote on that proposal at the meeting of the board of directors.

126C   Other entitlements of members not affected

(cf Vic Act s 130)

A provision of this Division which renders a member of a co-operative ineligible to vote on a resolution does not affect any other right, entitlement, obligation or duty of the member as a member.

Division 4 Cancellation of membership etc of inactive members

127   Cancellation of membership of inactive member

(cf Vic Act s 131)

(1)  The board of a co-operative must declare the membership of a member cancelled if:

(a)  the whereabouts of the member are not presently known to the co-operative and have not been known to the co-operative for at least the required period before that time, or

(b)  the member is not presently an active member of the co-operative and has not been an active member of the co-operative at any time during the required period immediately before that time.

(2)  This section applies to a member only if he or she was a member of the co-operative throughout the required period.

(3)  The question of whether a member was an active member at a particular time in the past is to be determined as if the active membership provisions concerned had been in force at that time.

(4)  The board’s declaration under this section has the effect of cancelling the membership concerned.

(5)  A person may apply to the Council for an order under section 129 in respect of the cancellation of the person’s membership under this section.

(6)  In this section the required period in relation to a co-operative, means:

(a)  3 years, or

(b)  if a shorter period is provided for in the rules of the co-operative, that shorter period.

128   Shares to be forfeited if membership cancelled

(cf Vic Act s 134)

(1)  If a co-operative has a share capital, the board of the co-operative is to declare the shares of a member to be forfeited at the same time as the member’s membership is cancelled under section 127.

(2)  The board’s declaration has the effect of forfeiting the shares concerned.

(3)  Nothing in this section affects the operation of section 134.

129   Order of Council against cancellation

(1)  The Council may, if satisfied in a particular case that the cancellation of a member’s membership under section 127 was or would be unreasonable, direct by order in writing that the membership should not have been cancelled or should not be cancelled.

(2)  While such an order is in force:

(a)  the membership concerned is not required to be cancelled and any shareholding of the member is not required to be forfeited, and

(b)  the person whose membership was cancelled is entitled to be reinstated as a member of the co-operative with all the rights and entitlements (including any shareholding) attaching to or arising from the former membership.

(3)  Reinstatement of a member under this section is to be effected in accordance with the directions of the Council.

130   Deferral of forfeiture by board

(cf Vic Act s 134)

(1)  The board of a co-operative may by resolution defer cancellation of a member’s membership for a period of up to 12 months:

(a)  if the board has reasonable grounds to believe that a member has ceased to be an active member due to unusual circumstances which prevent the member fulfilling his or her active membership obligations, or

(b)  if:

(i)  the board thinks that during that period an active membership resolution may be put to the members of the co-operative, and

(ii)  the effect of the resolution would be relevant to the question of whether the member is an active member.

(2)  The board of the co-operative must review the resolution to defer before the end of the deferral period to determine if a further resolution should be made under subsection (1).

131   Cancellation of membership prohibited in certain circumstances

(cf Vic Act s 135)

Unless the regulations otherwise provide, the board of a co-operative must not declare the membership of a member to be cancelled under this Part:

(aa)  if the co-operative is insolvent or there are reasonable grounds for suspecting that the co-operative is insolvent, or

(a)  if the co-operative is under administration under Part 5.3A of the Corporations Act as applying under this Act, or

(b)  if a compromise or an arrangement is being administered in respect of the co-operative, or

(c)  if the co-operative is in the course of being wound-up, or

(d)  if an appointment of a receiver (whether or not a receiver and manager) of any property of the co-operative is in force, or

(e)  if the co-operative has, for the purposes of being registered as a company under the Corporations Act, filed with the Registrar a copy of the entry made in the minute book of the co-operative under section 193 (Postal ballots), or

(f)  in such other circumstances as may be prescribed.

132   Notice of intention to cancel membership

(1)  The board of a co-operative must ensure that not less than 1 month’s notice of its intention to declare the membership of a member to be cancelled is given to the member:

(a)  by notice in writing sent to the member by post, or

(b)  if the member’s whereabouts are unknown to the co-operative, by notice published in a newspaper circulating in the district in which the registered office of the co-operative is situated.

(2)  No notice is required to be given under this section if the member’s whereabouts are unknown to the co-operative and the amount required to be repaid to the member in respect of the cancelled membership (whether by reason of the cancellation of shares or otherwise) does not exceed $50.

133   Failure to cancel membership—offence by director

(cf Vic Act s 133)

If the board of a co-operative fails to cancel the membership of a member as required by this Part, a director of the co-operative who did not use all due diligence to prevent that failure is guilty of an offence.

Maximum penalty: 20 penalty units.

134   Repayment of amounts due in respect of cancelled membership

(cf Vic Act s 138)

(1)  If the membership of a member of a co-operative is cancelled under this Part, the co-operative must, within 12 months after the date of cancellation:

(a)  repay to the former member the amount due to the member in respect of that cancellation, or

(b)  apply that amount in accordance with subsection (2) if:

(i)  the board is of the opinion that repayment would adversely affect the financial position of the co-operative, or

(ii)  the board and the former member so agree.

(2)  The amount due may be applied as follows:

(a)  if the co-operative is a deposit-taking co-operative, the co-operative may apply the amount as a deposit by the former member with the co-operative (subject to the requirements of section 135 as to interest on the deposit),

(b)  the co-operative may allot or issue debentures or CCUs of the co-operative to the former member in satisfaction of the amount,

(c)  the co-operative may appropriate the amount due as a donation to the co-operative, but only if the former member consents in writing to the donation.

(3)  The amount due to a member in respect of the cancellation of membership includes any amount paid up in respect of shares forfeited as a result of the cancellation of membership.

(4)  If the former member is subsequently readmitted to membership, any amount held by the co-operative under this section must, if the member so requests, be applied towards the cost of admission to membership (including any subscription for share capital).

(5)  If:

(a)  a former member cannot be found, after the use of all due diligence by the co-operative to find the former member, and

(b)  the amount otherwise required to be paid under this section does not exceed $100 (or any other amount that may be prescribed by the regulations),

      the co-operative may retain that amount.

135   Interest on deposits, debentures and CCUs

(cf Vic Act s 139)

(1)  This section applies when the amount due to a former member under section 81 or 134 is applied as a deposit with the co-operative or the co-operative allots or issues debentures or CCUs to the former member in satisfaction of the amount.

(2)  The deposit, debenture or CCU bears interest during any period:

(a)  in the case of a co-operative with share capital:

(i)  at the rate (or, if there is more than one rate, at the higher or highest rate) of dividend payable in respect of that period on the share capital of the co-operative, or

(ii)  if the rate of dividend payable in respect of that period has not been determined, at the rate (or the higher or highest rate) payable in respect of the immediately preceding period for which a rate has been determined, or

(iii)  if a rate of dividend has never been determined in respect of the share capital of the co-operative, at the rate that the board of the co-operative considers reasonable, or

(b)  in the case of a co-operative without share capital, at the rate that the board of the co-operative considers reasonable, or

(c)  if the rules provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b), at that higher rate.

(3)  A former member may agree to the rate of interest being less than that which would otherwise be payable under this section and may agree to no interest being paid.

(4)  The following provisions of the Corporations Act (as applied by section 266 of this Act) do not apply to an allotment or issue of debentures under this section:

(a)  Chapter 2L (Debentures),

(b)  Chapter 6D (Fundraising).

136   Repayment of deposits, debentures and CCUs

(1)  A deposit, debenture or CCU to which an amount due to a former member is transferred under section 81 or this Division is to be repaid to the former member as soon as repayment would not, in the opinion of the board, adversely affect the financial position of the co-operative.

(2)  The deposit, debenture or CCU must in any case be repaid within 10 years (or within such shorter period as the rules of the co-operative may require) after cancellation of the member’s membership.

(3)  The Council may extend the period for repayment under subsection (2) of any deposit, debenture or CCU to which an amount due to a former member was transferred before the date of assent to the Statute Law (Miscellaneous Provisions) Act (No 2) 1997, if satisfied that repayment of the amount within that period would cause the co-operative financial hardship.

(4)  An extension of a period by the Council is to be for such period as it considers reasonable and may be given subject to conditions.

(5)  The period for repayment is extended accordingly, but only while the co-operative complies with any conditions to which the extension is subject.

(6)  The Council may, on the application of the former member concerned, reduce the period for repayment under subsection (2) if satisfied that it would be reasonable in the particular case to require repayment of the amount within the shorter period.

137   Register of cancelled memberships

A co-operative is to keep a register specifying the prescribed particulars of persons whose membership has been cancelled under this Part.

138   (Repealed)

Division 5 Entitlements of former members

139   Former shareholders to be regarded as shareholders for certain purposes

(1)  This section applies to a co-operative only if the co-operative has a share capital.

(2)  Even though a person’s shares in a co-operative have been forfeited under this Part, the person is to be regarded as the holder of shares in the co-operative (the same in all respects as those that were forfeited) for the following purposes:

(a)  the entitlements of a shareholder in respect of the purchase of shares in the co-operative pursuant to an offer described in section 299 (a), (b) or (c), or the purchase of all the shares in the co-operative, if the offer or purchase occurs within 5 years after the person’s shares were forfeited,

(b)  the entitlement of a shareholder when the co-operative becomes registered as a company if the relevant special resolution under section 316 (2) is passed within 5 years after the person’s shares were forfeited,

(c)  the entitlement of a shareholder to a distribution of surplus in a winding-up of the co-operative that commences within 5 years after the person’s shares were forfeited.

(3)  Subsection (2) (a) does not apply in respect of:

(a)  an offer described in section 299 (a) or (c) that is made by another co-operative, or

(b)  the purchase of all the shares in the co-operative by another co-operative.

(4)  Subsection (2) (c) does not apply if the winding-up is for the purposes of a merger under Division 1 of Part 12.

(5)  To remove doubt, it is declared that the entitlement under subsection (2) (a) of a person whose shares have been forfeited does not include an entitlement to vote on any matter.

(6)  This section does not apply to a forfeited shareholding in a co-operative if section 140 operates to require that forfeited shareholding to be regarded as a forfeited shareholding in another co-operative.

140   Entitlements of former shareholders on mergers etc

(cf Vic Act s 144)

(1)  This section applies when a person’s shares in a co-operative (the original co-operative) are forfeited under this Part and within 5 years after that forfeiture:

(a)  the original co-operative becomes a subsidiary of another co-operative (the new co-operative), or

(b)  another co-operative (the new co-operative) is created as a result of a merger under Division 1 of Part 12 involving the original co-operative, or

(c)  the engagements of the original co-operative are transferred to another co-operative (the new co-operative) under Division 1 of Part 12.

(2)  That person is, for the purposes of the operation of section 139 (and the further operation of this section) to be regarded as having held shares in the new co-operative and as having had those shares in the new co-operative forfeited under this Part when the person’s shares in the original co-operative were forfeited.

(3)  The extent of the forfeited shareholding in the new co-operative is as determined in accordance with the following:

(a)  if the entitlement of active members of the original co-operative in the circumstances concerned is solely an entitlement to be allotted shares in the new co-operative, the forfeited shareholding in the new co-operative is the shareholding to which the person would have been entitled had the person’s shares in the original co-operative not been forfeited,

(b)  in any other case, the forfeited shareholding in the new co-operative is the shareholding that is the same in all respects as the forfeited shareholding in the original co-operative.

(4)  The determination under subsection (3) (a) of the person’s shareholding in the new co-operative is to be made:

(a)  solely on the basis of the person’s shareholding in the original co-operative when the shares were forfeited or (in a further operation of this section in respect of the person) when the person was first to be regarded as having a forfeited shareholding in the original co-operative, and

(b)  without regard to any additional shareholding in the original co-operative to which the person would have become entitled had the shares not been forfeited (whether as a result of any bonus share issue or otherwise).

141   Set-off of amounts repaid etc on forfeited shares

(cf Vic Act s 145)

(1)  If a person has an entitlement because of the operation of section 140, the entitlement operates to extinguish any liability of the co-operative:

(a)  to repay to the person under section 134 (Repayment of amounts due in respect of cancelled membership) any amount in respect of the forfeited shares concerned, or

(b)  in respect of a deposit held by the co-operative, or debentures or CCUs allotted or issued to the person, under section 134 in respect of the forfeited shares concerned (except a liability to pay interest that is due but unpaid).

(2)  If an amount has been repaid to a person under section 134 or 136, the amount repaid is to be set-off against any entitlement of the person under section 139 in respect of the forfeited shares concerned.

(3)  If the amount repaid cannot be set-off against the entitlement because the entitlement is not, or is only partly, an entitlement to money, the entitlement is lost unless the person pays to the co-operative the amount repaid to the person and does so within the period required under subsection (4).

(4)  If the circumstances specified in subsection (3) arise, the co-operative concerned must:

(a)  give notice in writing of the matter by post to the person concerned at the person’s address last known to the co-operative, specifying a period of not less than 28 days after the notice is given during which any amount repaid must be paid to the co-operative, and

(b)  publish a general notice to that effect in a newspaper circulating in the district in which the registered office of the co-operative is situated.

142   Entitlement to distribution from reserves

A person whose membership of a co-operative has been cancelled under this Part is nevertheless to be considered to still be a member for the purposes of any distribution from reserves of the co-operative that takes place within 5 years after the person’s membership was cancelled.

143   Minister may exempt co-operatives from provisions

(1)  The Minister may, after consultation with the Council, by order in writing exempt a specified co-operative or a co-operative that is a member of a specified class of co-operatives from all or specified provisions of this Division.

(2)  An exemption may be granted unconditionally or subject to conditions. A co-operative that contravenes a condition of an exemption is taken not to be exempt from the relevant provision or provisions of this Division.

Part 7 Shares

Division 1 Preliminary

144   Share capital required except for non-profit co-operatives

(1)  (Repealed)

(2)  A co-operative may convert from being a co-operative with a share capital to being a co-operative without a share capital, and vice versa, by appropriate alteration of its rules.

(3)  Conversion to a co-operative without a share capital is subject to the restrictions imposed by section 145.

145   Restrictions on conversion to co-operative without share capital

(1)  Conversion to a co-operative without a share capital cannot be effected unless the Council approves in writing of the conversion but the Council’s approval is not required if all the members of the co-operative have an equal shareholding.

(2)  An alteration of the rules for the conversion cannot be passed until at least 2 weeks after a notice has been published in a newspaper circulating generally in the district in which the registered office of the co-operative is situated advising of the proposal to submit the proposed alteration to members of the co-operative.

(3)  The Registrar may refuse to register the alteration for conversion if satisfied that:

(a)  the holders in aggregate of not less than 10% of the number of issued shares of the co-operative object to the conversion, or

(b)  the holders in aggregate of not less than 10% of the nominal value of all debentures, deposits and CCUs issued by the co-operative object to the conversion, or

(c)  creditors of the co-operative to whom not less than 20% of the aggregate debt of the co-operative is owed object to the conversion.

(4)  The Registrar is not to register an alteration of the rules of a co-operative for its conversion to a co-operative without a share capital unless satisfied that the co-operative is not and will not be carried on for the pecuniary profit of its members.

146   Nature of share in co-operative

(1)  A share or other interest in a co-operative:

(a)  is personal property,

(b)  is transferable or transmissible as provided by this Act and the rules of the co-operative,

(c)  is, subject to the rules of the co-operative, capable of devolution by will or by operation of law.

(2)  Subject to subsection (1):

(a)  the laws applicable to ownership of and dealing with personal property apply to a share or other interest of a member in a co-operative as they apply to other property, and

(b)  equitable interests in respect of a share or other interest of a member in a co-operative may be created, dealt with and enforced as in the case of other personal property.

Division 1A Disclosure

146A   Disclosure to intending members in trading co-operative

(1)  The board of a trading co-operative must give a person who intends to acquire shares in the co-operative and is not already a member of the co-operative a current disclosure statement that:

(a)  has been approved by the Registrar under section 17 (Approval of disclosure statement), or

(b)  complies with section 146B and has been filed by the co-operative with the Registrar.

(2)  The disclosure statement must be given before the person becomes bound to acquire the shares.

(3)  The disclosure statement is in addition to any information required to be provided to the person under Part 4 (Membership).

(4)  A disclosure statement is current until whichever of the following happens first after the statement is prepared:

(a)  there is a change in the rights or liabilities attaching to any class of share in the co-operative,

(b)  there is a significant change in the financial position or prospects of the co-operative,

(c)  any of the next financial, directors’ or auditors’ reports required to be prepared under section 243 (1) become available.

(5)  If a disclosure statement stops being a current disclosure statement because of a change mentioned in subsection (4) (a) or (b), the co-operative must, within 14 days after the change:

(a)  give the Registrar written notice:

(i)  that the disclosure statement is no longer current because of a change mentioned in subsection (4) (a), or

(ii)  that the disclosure statement is no longer current because of a change mentioned in subsection (4) (b), and

(b)  file a current disclosure statement with the Registrar that complies with section 146B.

146B   Content of disclosure statement to intending members

A disclosure statement given to a person because of section 146A (1) (b) must contain:

(a)  a statement of the rights and liabilities attaching to shares in the co-operative concerned, and

(b)  a copy of the last annual report of the co-operative required under section 252, unless a copy of the report:

(i)  has already been given to the person under this Act, or

(ii)  has been made available for inspection under a notice given to the person under section 76A, and

(c)  any other relevant information about the financial position and prospects of the co-operative if there has been a significant change since the date of the last annual report, and

(d)  any other information that the Registrar directs.

146C   Exemptions from disclosure requirements

(1)  The Registrar may, by notice in the Gazette, exempt the board or boards of a trading co-operative or a class of trading co-operatives from a requirement under section 146A or 146B.

(2)  An exemption under this section may be given only if the Registrar is satisfied that compliance with the requirement would be inappropriate in the circumstances or would impose an unreasonable burden.

(3)  An exemption under this section may be given unconditionally or subject to conditions. A board that contravenes a condition of an exemption is taken not to be exempt from a requirement under section 146A or 146B.

Division 2 Issue of shares

146D   Adoption of certain Corporations Act provisions about shares

(1)  The shares of a co-operative are declared to be applied Corporations legislation matters for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to sections 716 (2), 722, 723, 724, 725, 728, 729, 730, 733, 734 and 737 of the Corporations Act, subject to the following modifications:

(a)  a reference in those sections to a company is to be read as a reference to a co-operative, and

(b)  a reference in those sections to ASIC is to be read as a reference to the Registrar, and

(c)  a reference in those sections to a disclosure document is to be read so as to include a reference to a disclosure statement, of any type, under this Act, and

(d)  such other modifications (within the meaning of Part 3 of the Corporations (Ancillary Provisions) Act 2001) as may be prescribed by the regulations.

(2)  However, subsection (1) applies only if:

(a)  the shares are offered to persons who are not members of the co-operative, or

(b)  the invitation is made to persons who are not members of the co-operative.

147   Shares—general

(cf Vic Act s 150)

(1)  The share capital of a co-operative varies in amount according to the nominal value of shares from time to time subscribed.

(2)  Shares are to be of a fixed amount which is to be specified in the rules of the co-operative.

(3)  A co-operative may have more than one class of shares provided the share holding and the rights of shareholders comply with the co-operative principles.

(4)  Subject to this Part and Part 4, shares must not be issued to a non-member.

148   Minimum number of shares to be subscribed for

(1)  A member of a co-operative with a share capital must subscribe for such minimum number of shares as may be required by the rules.

(2)  The minimum number may be determined by reference to the use made by the member of the co-operative or in any other manner specified in the rules.

(3)  An alteration of the rules as to the minimum number of shares to be subscribed for does not operate to require an existing member of the co-operative to subscribe for additional shares (but an existing member is not prevented from agreeing to subscribe for additional shares).

(4)  This section does not affect section 155 (Members may be required to take up additional shares).

149   Minimum paid up amount

(cf Vic Act s 151)

(1)  No share is to be allotted unless at least 10% of the nominal value of the share has been paid.

(2)  Any balance unpaid in respect of shares at the time of allotment is to be paid by periodic subscriptions or in such manner as may be specified in the rules or permitted by this Act.

(3)  This section does not apply to a bonus share issued under section 151 (4) (a), 156 or 282.

150   Shares not to be issued at a discount

A co-operative must not issue shares at a discount.

151   Issue of shares at a premium

(cf Vic Act s 153)

(1)  A trading co-operative may issue shares at a premium.

(2)  A premium may be in the form of cash or other valuable consideration.

(3)  If a trading co-operative issues shares for which it receives a premium, a sum equal to the aggregate amount or value of the premiums on those shares must be transferred to a share premium account.

(4)  The share premium account is to be regarded as paid up share capital of the trading co-operative and may be applied in any one or more of the following ways:

(a)  in paying up unissued shares to be issued to members of the co-operative as fully paid bonus shares,

(b)  in paying up in whole or in part the balance unpaid on shares previously issued to members of the co-operative,

(c)  in the payment of dividends, if those dividends are satisfied by the issue of shares to members of the co-operative,

(d)  in writing off the preliminary expenses of the co-operative,

(e)  in providing for the premium payable on redemption of shares, debentures or CCUs.

152   Joint ownership of shares

A share may be held by 2 or more persons jointly, unless the rules of the co-operative provide otherwise.

153   Dividends etc

(1), (2)  (Repealed)

(3)  The rules of a co-operative may authorise the payment, in respect of shares held in excess of a specified number, of a rate of dividend that is higher than the rate of dividend payable in respect of shares not in excess of that number.

(4)  The rules of a co-operative may authorise the payment of different rates of dividend on shares based on the business done by shareholders with the co-operative.

(5)  Any dividend, bonus or rebate to a member must be applied to paying off any subscription or calls on shares which may at the time the dividend, bonus or rebate becomes payable be due by the member and unpaid.

154   Issue of shares to active members in exchange for property

A co-operative may, if authorised by its rules to do so, issue fully paid up shares to an active member of the co-operative the consideration for which is real or personal property of at least the value of the equivalent cash consideration.

155   Members may be required to take up additional shares

(cf Vic Act s 155)

(1)  If authorised by the rules of the co-operative, the board of a trading co-operative may require a member to take up or subscribe for additional shares in accordance with a proposal approved by a special resolution of the co-operative.

(2)  The board of a trading co-operative may deduct amounts in payment for additional shares from money due to members in respect of dealings with the co-operative, in accordance with a proposal approved by a special resolution of the co-operative.

(3)  Any proposal to require a member to take up or subscribe for additional shares must:

(a)  be accompanied by a disclosure statement, approved by the Registrar, that explains the purpose for which the funds raised by the issue of the additional shares are to be used, and

(b)  clearly show the total number of additional shares to be issued and the basis on which the shares are to be apportioned amongst members, and

(c)  be accompanied by a statement informing the member that the member may inform the board by notice on or before the date specified in the statement (being a date before the passing of the special resolution) that the member resigns on the passing of the special resolution.

(4)  Any proposal to deduct amounts in payment for additional shares from money due to members in respect of their dealings with the trading co-operative must clearly show:

(a)  the basis on which the deductions are to be made, and

(b)  the time and manner of making those deductions.

(5)  A proposal approved under this section is binding on:

(a)  all members of the trading co-operative at the date of the passing of the special resolution other than a member who has given a notice of resignation in accordance with subsection (3) (c), and

(b)  all persons who become members of the trading co-operative after that date and before the total number of shares to be issued pursuant to the proposal has been issued.

(6)  Sections 17 (except subsections (2), (4) and (11)) and 28A apply to the approval of a disclosure statement under this section with any necessary modifications and in particular as if any reference in section 17 to a formation meeting were a reference to the special resolution.

(7)  The requirements in respect of a proposal to take up additional shares under subsection (3) do not apply to the issue of bonus shares under section 151 (4) (a), 156 or 282 (1) (b).

156   Bonus share issues

(cf Vic Act ss 156 and 158)

(1)  The rules of a trading co-operative may authorise the issue of bonus shares to members of the co-operative if the assets of the co-operative (other than those acquired for resale at a profit):

(a)  have been sold at a profit, or

(b)  have been revalued at a greater value than that disclosed prior to the revaluation in the books of the co-operative.

(2)  Bonus shares may be issued in accordance with the rules, subject to the following restrictions:

(a)  each issue must have been approved by a special resolution of the co-operative,

(b)  they are to be issued as fully paid up shares with no payment required to be made by a member of the co-operative to whom they are issued,

(c)  they are to be issued only in respect of shares that are fully paid up as at the date of issue of the bonus shares,

(d)  the total nominal value of bonus shares issued by a co-operative under this section during any 12 month period must not exceed 20% or such other percentage as may be prescribed of the nominal value of the issued share capital of the co-operative immediately before the date of issue of the bonus shares.

(3)  Notice of the meeting or postal ballot at which a resolution is to be proposed as a special resolution for the purpose of approving a bonus share issue must be accompanied by:

(a)  a statement of the value of the assets concerned as disclosed in the books of the co-operative before the sale or revaluation, and

(b)  if the issue arises from, or partly from, a sale of assets, a statement of the price for which the assets were sold, and

(c)  if the issue arises from, or partly from, a revaluation of assets, a certificate of value of the assets, being a certificate furnished in respect of a valuation made not more than 12 months before the date of the notice by a prescribed person or a person having prescribed qualifications, and

(d)  particulars of acquisitions of shares in the co-operative made during the 3 years immediately preceding the date of the notice by or on behalf of each of its directors and his or her spouse and the father, mother, children, brothers and sisters of each such director and spouse, and

(e)  a certificate signed by 2 directors of the co-operative stating that to the best of their knowledge and belief the issue of bonus shares would not be imprudent and that no circumstances are known to them as to why the issue should not take place.

(f)  (Repealed)

Division 3 Beneficial and non-beneficial interests in shares

157   Notice of non-beneficial ownership at time of transfer

(1)  If it may reasonably be expected (having regard to all relevant circumstances) that on registration of a transfer of shares the transferee will hold some or all of the shares non-beneficially, the instrument of transfer must include a non-beneficial ownership notice.

(2)  A non-beneficial ownership notice is a notice that:

(a)  contains a statement to the effect that, on registration of the transfer, the transferee will hold particular shares non-beneficially, and

(b)  sets out particulars of those shares, and

(c)  is signed by or on behalf of the transferee.

(3)  The transferee is guilty of an offence if this section is not complied with when an instrument of transfer of shares is lodged by or on behalf of the transferee with the co-operative for registration of the transfer.

Maximum penalty: 10 penalty units or imprisonment for 3 months, or both.

(4)  An offence under this section does not affect the validity of the registration of a transfer of shares.

158   Notice of non-beneficial ownership not notified at time of transfer

(cf Vic Act s 160)

(1)  If on the registration of an instrument of transfer of shares the transferee holds non-beneficially any of the shares transferred, notice of that fact must be given to the co-operative except in respect of any shares for which particulars were set out in a non-beneficial ownership notice under section 157 included in the instrument of transfer.

(2)  The notice must:

(a)  set out the name and address of the transferee, and

(b)  contain a statement to the effect that, as from registration of the transfer, the transferee holds the shares non-beneficially, and

(c)  set out particulars of those shares, and

(d)  be signed by or on behalf of the transferee.

(3)  The notice must be given within 14 days after the registration of the transfer (even if before the end of that 14 days the transferee begins to hold any of the relevant shares beneficially).

(4)  The transferee is guilty of an offence if this section is not complied with.

Maximum penalty: 10 penalty units or imprisonment for 3 months, or both.

(5)  This section does not apply in respect of any shares for which particulars were set out in a non-beneficial ownership notice under section 157 included in the instrument of transfer.

159   Registration as beneficial owner of shares notified as non-beneficially transferred

(1)  If an instrument of transfer of shares lodged with a co-operative includes a non-beneficial ownership notice (section 157) in respect of particular shares (the relevant shares) but on registration of the transfer the transferee holds some or all of the relevant shares beneficially, notice of that fact must be given to the co-operative.

(2)  The notice must:

(a)  set out the name and address of the transferee, and

(b)  contain a statement to the effect that, as from registration of the transfer, the transferee holds the relevant shares beneficially, and

(c)  set out particulars of the relevant shares, and

(d)  be signed by or on behalf of the transferee.

(3)  The notice must be given within 14 days after the registration of the transfer (even if before the end of that 14 days the transferee begins to hold any of the relevant shares non-beneficially).

(4)  The transferee is guilty of an offence if this section is not complied with.

Maximum penalty: 10 penalty units or imprisonment for 3 months, or both.

160   Notification of change in nature of shareholding

(cf Vic Act s 162)

(1)  A person must notify the co-operative in accordance with this section of the change in the person’s shareholding in the co-operative if the person:

(a)  commences to hold any shares beneficially that the person currently holds non-beneficially, or

(b)  commences to hold any shares non-beneficially that the person currently holds beneficially.

Maximum penalty: 10 penalty units or imprisonment for 3 months, or both.

(2)  The notice must:

(a)  set out the name and address of the person, and

(b)  contain a statement to the effect that, as from the time of the change, the person holds the shares beneficially or non-beneficially (as appropriate), and

(c)  specify the time of the change and set out particulars of the shares affected, and

(d)  be signed by or on behalf of the person.

(3)  The notice must be given within 14 days after the change (even if before the end of that 14 days another such change affecting any of the shares occurs).

161   Presumption of awareness

For the purposes of this Division, a person is, unless the contrary is established, to be presumed to have been aware at a particular time of a circumstance of which an employee or agent of the person was aware at that time, but only if the employee or agent has duties or acts in relation to the transfer to, or ownership by, the person of a share or shares in the co-operative concerned.

162   Presumption that shares held non-beneficially

(1)  A person is to be taken to hold particular shares non-beneficially whenever the person:

(a)  holds the shares in a capacity other than that of sole beneficial owner, or

(b)  without limiting paragraph (a), holds the shares as trustee for, as nominee for, or otherwise on behalf of or on account of, another person.

(2)  A person is to be considered to hold shares beneficially at a particular time unless the person holds the shares non-beneficially at that time.

163   Noting of beneficial and non-beneficial interests in register of members

(1)  The register of members kept by a co-operative must contain a statement of the shares that each member holds beneficially and of the shares that each member holds non-beneficially.

(2)  In determining for the purposes of an entry in the register whether a member of a co-operative holds shares beneficially or non-beneficially, regard is to be had only to the following information:

(a)  information contained in a non-beneficial ownership notice under section 157 included in an instrument of transfer registered by the co-operative,

(b)  information contained in a notice given to the co-operative under any other provision of this Division.

164   Registration as trustee etc on death of owner of shares

(1)  A trustee, executor or administrator of the estate of a dead person who was the registered holder of a share in a co-operative may be registered as the holder of that share as trustee, executor or administrator of that estate.

(2)  A trustee, executor or administrator of the estate of a dead person who was entitled in equity to a share in a co-operative may, with the consent of the co-operative and of the registered holder of that share, be registered as the holder of that share as trustee, executor or administrator of that estate.

165   Registration as administrator of estate on incapacity of shareholder

(1)  This section applies to a person (the appointed person) who is appointed under a law of a State or Territory relating to the administration of the estates of persons who, through mental or physical infirmity, are incapable of managing their affairs, to administer the estate of another person (the incapable person).

(2)  If the incapable person is the registered holder of a share in a co-operative, the appointed person may be registered as the holder of that share as administrator of the estate of the incapable person.

(3)  If the incapable person is entitled in equity to a share in a co-operative, the appointed person may, with the consent of the co-operative and of the registered holder of that share, be registered as the holder of the share as administrator of the estate of the incapable person.

166   Registration as Official Trustee in Bankruptcy

(1)  This section applies when a share in a co-operative that is the property of a bankrupt vests by force of the Bankruptcy Act 1966 of the Commonwealth in the Official Trustee in Bankruptcy.

(2)  If the bankrupt is the registered holder of the share, the Official Trustee may be registered as the holder of that share as the Official Trustee in Bankruptcy.

(3)  If the bankrupt is entitled in equity to the share, the Official Trustee may, with the consent of the co-operative and of the registered holder of the share, be registered as the holder of that share as the Official Trustee in Bankruptcy.

167   Liabilities of person registered as trustee or administrator

(1)  A person registered under section 164, 165 or 166 is, while so registered, subject to the same liabilities in respect of the share as those to which he, she or it would have been subject if the share had remained, or had been, registered in the name of the dead person, the incapable person or the bankrupt.

(2)  The person registered is subject to no other liabilities in respect of the share.

168   Notification of trusts in register of members

Shares held by a trustee in respect of a particular trust may, with the consent of the co-operative, be marked in the register of members in such a way as to identify the shares as being held in respect of the trust.

169   No notice of trust except as provided by this Division

Except as provided in this Division:

(a)  no notice of a trust, whether express, implied or constructive, is to be entered on a register or be receivable by the Registrar, and

(b)  no liabilities are affected by anything done under a provision of this Division, and

(c)  nothing done under a provision of this Division affects a co-operative with notice of a trust.

Division 4 Sale etc of shares

170   Sale or transfer of shares

(cf Vic Act s 172)

(1)  A share in a co-operative cannot be sold or transferred except:

(a)  in accordance with Division 3 of Part 4 and section 170A on the death of a member,

(b)  to a person appointed to administer the estate of a shareholder under a law relating to the administration of the estates of persons who, through mental or physical infirmity, are incapable of managing their affairs, or

(c)  with the consent of the board, to any person if there are reasonable grounds for believing that the person will be an active member of the co-operative.

(2)  A share in a co-operative cannot be sold or transferred except in accordance with the rules of the co-operative.

170A   Transfer on death of member

(cf Vic Act s 173)

(1)  On the death of a member, the member’s share in the co-operative cannot be transferred to a person other than an administrator or executor except with the consent of the board of the co-operative.

(2)  The board may only give its consent under subsection (1) if there are reasonable grounds for believing that the person will be an active member of the co-operative.

170B   Restriction on total shareholding

(cf Vic Act s 174)

The board of a co-operative must not consent under section 170 or 170A to the sale or transfer of a share if as a result of the sale or transfer the nominal value of the shares held by the purchaser or transferee would exceed:

(a)  20% of the nominal value of the share capital of the co-operative, or

(b)  if a lower percentage is specified in the rules of the co-operative, that lower percentage of the nominal value of the share capital of the co-operative.

171   Transfer not effective until registered

A transferor of a share remains the holder of the share until the transfer is registered and the name of the transferee is entered in the register of members in respect of the share.

Division 5 Repurchase etc of shares

172   Purchase and repayment of shares

(cf Vic Act s 176)

(1)  The rules of a co-operative may authorise the co-operative to:

(a)  purchase any share of a member in the co-operative at the request of the member, and

(b)  repay to a member, with the member’s consent, the whole or any part of the amount paid up on any share held by the member when the sum repaid is not required for the activities of the co-operative.

(2)  The amount paid by a co-operative under this section in purchasing shares or repaying any amount paid up on shares, or both, in any financial year of the co-operative must not exceed the sum of:

(a)  5% of the nominal value of the issued share capital of the co-operative immediately before the commencement of that financial year, and

(b)  the amount of any additional share capital of the co-operative subscribed for during that year.

(3)  The Council may by order in writing exempt a co-operative from the operation of subsection (2) in respect of a particular financial year, either unconditionally or subject to conditions.

(4)  The amount paid for a share when it is repurchased may be an amount determined by the board that is less than the nominal value of the share but only:

(a)  if the books of the co-operative disclose that the amount paid is the net shareholder’s equity per share in the undertaking of the co-operative, or

(b)  in accordance with the rules of the co-operative.

(5)  This section does not apply if the member has been expelled from the co-operative or the member’s membership has been otherwise cancelled under Part 6.

(6)  A co-operative must not repurchase shares or repay amounts paid up on shares if:

(a)  the co-operative is likely to become insolvent because of the repurchase of the shares or because of the repayment of amounts paid up on the shares, or

(b)  the co-operative is insolvent.

173   Deposits, debentures or CCUs in lieu of payment when share repurchased

(cf Vic Act s 177)

(1)  If a co-operative repurchases a share of a member, the co-operative may instead of paying the purchase price to the member:

(a)  in the case of a deposit-taking co-operative, apply the amount as an interest bearing deposit by the member with the co-operative, or

(b)  allot or issue debentures or CCUs of the co-operative to the member in satisfaction of the amount.

(2)  Subsection (1) applies only:

(a)  if the board is of the opinion that payment of the repurchase price would adversely affect the financial position of the co-operative, or

(b)  if the board and the member so agree.

(3)  The deposit, debenture or CCU bears interest during any period:

(a)  in the case of a co-operative with share capital:

(i)  at the rate (or, if there is more than one rate, at the higher or highest rate) of dividend payable in respect of that period on the share capital of the co-operative, or

(ii)  if the rate of dividend payable in respect of that period has not been determined, at the rate (or the higher or highest rate) payable in respect of the immediately preceding period for which a rate has been determined, or

(iii)  if a rate of dividend has never been determined in respect of the share capital of the co-operative, at the rate that the board of the co-operative considers reasonable, or

(b)  in the case of a co-operative without share capital, at the rate that the board of the co-operative considers reasonable, or

(c)  if the rules provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b), at that higher rate.

(4)  The deposit, debenture or CCU must be repaid to the member as soon as repayment would not, in the opinion of the board, adversely affect the financial position of the co-operative.

(5)  The deposit, debenture or CCU must in any case be repaid within 10 years (or within any shorter period that the rules of the co-operative may require) after the repurchase of the shares concerned.

174   Cancellation of shares

A co-operative is to cancel any share purchased by or forfeited to the co-operative in accordance with this Act or the rules of the co-operative.

Part 8 Voting

Division 1 Voting entitlements

175   Voting to which this Part applies

This Part applies to all voting, whether at meetings, in ballots (including postal ballots) or by circulated resolution.

176   Voting

(cf Vic Act s 180)

(1)  The right to vote attaches to membership and not share holding.

(2)  Except as provided in subsections (3) and (4), each member has only one vote at a meeting of the co-operative.

(3)  Except as specifically authorised by this Act, the rules of a co-operative must not contain a provision that restricts the voting rights of members.

(4)  If the rules so provide, the chairperson has a second vote at a board meeting or general meeting.

(5)  In the case of joint membership:

(a)  the joint members have only one vote between them, and

(b)  that vote may be exercised (subject to the grant of a proxy or power of attorney) only by the joint member determined in accordance with the rules.

(6)  If shares are held jointly, each member (other than a joint member) holding the share is entitled to vote at a general meeting.

177   Rules of certain co-operatives formed to carry on club may restrict voting rights

(1)  The rules of a co-operative which has as a primary activity the operation, maintenance or carrying on of a club may provide for different classes of membership and restrict the voting rights attaching to membership of those different classes, but only if:

(a)  the Council approves of the provisions concerned, and

(b)  the membership of the class or classes entitled to full voting rights constitutes at least 40% of the total membership of the co-operative.

(2)  Any such provision in the rules of a co-operative must not be amended except with the approval of the Council.

(3)  This section applies only to the following co-operatives:

(a)  any co-operative that holds a club licence under the Liquor Act 2007 (regardless of when it was registered under this Act),

(b)  any co-operative that was registered under this Act before the date of assent to the Statute Law (Miscellaneous Provisions) Act (No 2) 1997,

(c)  any co-operative that does not trade outside this State (regardless of when it was registered under this Act).

178   Effect of relevant share and voting interests on voting rights

(1)  Subject to section 176 (5) and (6), a member of a co-operative is not entitled to vote if another person (whether or not a member of the co-operative) has a relevant interest in any share held by the member or in the right to vote of the member.

(2)  A member who is not entitled to vote because of this section may apply to the Council for a review of the matter.

(3)  The Council may order that the member is entitled to vote if it is satisfied in the circumstances of the case that loss of the right to vote would be unjust or unreasonable, and any such order of the Council has effect accordingly.

179   Voting by proxy

(cf Vic Act s 181)

(1)  If the rules so provide, voting may be by proxy at a general meeting.

(2)  The instrument of proxy may specify the manner in which a proxy is to vote in respect of a particular resolution.

(3)  The proxy must vote in the manner authorised by an instrument of proxy referred to in subsection (2).

(4)  A person must not act as a proxy unless he or she:

(a)  is an active member of the co-operative, or

(b)  in the case of an association or a federation, is entitled to represent a component co-operative or association of the association or federation on the association or federation.

(5)  A person must not act as proxy for more than 10 persons (or any lesser number of persons specified in the rules of the co-operative) on any one occasion.

(6)  Subsection (5) does not apply if the proxy acts under an instrument of proxy referred to in subsection (2).

180   Effect of unpaid borrowings

A member who has borrowed from a co-operative any money which is still unpaid is not entitled to vote on any question in respect of which the member’s right to vote is excluded by the rules of the co-operative as in force immediately before the date of assent to the Statute Law (Miscellaneous Provisions) Act (No 2) 1997.

181   Inactive members not entitled to vote

A member is not entitled to vote if the member is not an active member of the co-operative.

181A   Control of the right to vote

(cf Vic Act s 185)

(1)  A person must not directly or indirectly control the exercise of the right to vote of a member.

Maximum penalty: 60 penalty units or imprisonment for 6 months, or both.

(2)  If a person controls the exercise of the right to vote of a member at a meeting of a co-operative:

(a)  the vote of that member, and

(b)  the vote of that person, if that person is a member,

      are invalid.

(3)  Nothing in this section prevents the exercise of a vote by means of a proxy or power of attorney.

182   Effect of sale etc of shares

A member of a co-operative who has sold or transferred, or disposed of the beneficial interest in, the member’s shares, or agreed to do any of those things, is not entitled to vote.

183   Restriction on voting entitlement under power of attorney

A person is not entitled to exercise, under a power of attorney, the power of a member of a co-operative to vote if the person has that power in respect of another member of the co-operative under another power of attorney.

183A   Restriction on voting by representatives of bodies corporate

(cf Vic Act s 183)

A person is not entitled to exercise, as the representative of a body corporate, the power of a body corporate member of the co-operative to vote if the person has that power as the representative of another body corporate member of the co-operative.

184   Rights of representatives to vote etc

A person appointed as provided by this Act to represent a member of a co-operative, association or federation:

(a)  is entitled to receive notice of all meetings in the same manner as the member represented, and

(b)  is entitled to exercise the same rights to vote as the member represented, and

(c)  is eligible to be elected to the board of directors if the member represented holds such qualifications as may be required for holding office as a director (other than any relating to age).

185   Other entitlements etc of members unaffected by ineligibility to vote

A provision of this Act which disentitles a member of a co-operative to vote (either generally or in relation to a particular matter) does not affect any other right, entitlement, obligation or duty of the member as a member.

186   Vote of disentitled member to be disregarded

Any vote cast by or on behalf of a member of a co-operative when not entitled to vote is to be disregarded.

Division 2 Resolutions

187   Decisions of co-operative usually to be by ordinary resolution

Except as otherwise provided in this Act or by the rules of the co-operative, every question for decision by a co-operative is to be determined by ordinary resolution.

188   Ordinary resolutions

An ordinary resolution is a resolution of a co-operative which is passed by a simple majority at a general meeting of the co-operative or in a postal ballot of members.

189   Special resolutions

(cf Vic Act s 192)

(1)  A special resolution is a resolution of a co-operative which is passed:

(a)  by a two-thirds majority at a general meeting of members, or

(b)  by a two-thirds majority in a postal ballot (other than a special postal ballot) of members, or

(c)  by a three-quarters majority in a special postal ballot of members.

(2)  A special resolution may be passed by a postal ballot only if the rules of the co-operative so permit or this Act requires the special resolution to be passed by postal ballot (including a special postal ballot).

(3)  A resolution is not to be considered to have been passed as a special resolution unless not less than 21 days’ notice has been given to the members of the co-operative specifying:

(a)  the intention to propose the special resolution, and

(b)  the reasons for the making of the special resolution, and

(c)  the effect of the special resolution being passed.

(4)  (Repealed)

190   How majority obtained is ascertained

(cf Vic Act s 193)

(1)  A resolution is passed by a particular majority at a meeting if that majority of the members of the co-operative who, being entitled to do so, vote in person or (if proxies are allowed) by proxy at the meeting vote in favour of the resolution.

(2)  A resolution is passed by a particular majority in a postal ballot if that majority of the members of the co-operative who, being entitled to do so, cast formal votes in the postal ballot vote in favour of the resolution.

(3)  (Repealed)

190A   Disallowance by Registrar

(cf Vic Act s 194)

The Registrar may disallow a proposed special resolution before it is passed by written notice to the co-operative if the Registrar is of the opinion that the effect of the special resolution if passed would be in contravention of this Act or the regulations or any other law.

190B   Effect of special resolution

(cf Vic Act s 196)

(1)  Subject to subsection (2), a special resolution has effect from the date that it is passed.

(2)  A special resolution relating to any of the following has no effect until it is registered:

(a)  the removal of an auditor,

(b)  the expulsion of a member,

(c)  any matter for which a special resolution is required to be passed by special postal ballot (other than a special postal ballot in favour of a voluntary winding up).

191   Declaration of passing of special resolution

(1)  At any meeting for the purpose of passing a resolution as a special resolution, unless a poll is demanded, a declaration by the chairperson of the meeting that the resolution has been carried as a special resolution is conclusive evidence of the fact.

(2)  A declaration by the returning officer for a postal ballot to pass a resolution as a special resolution that the resolution has been carried as a special resolution is conclusive evidence of the fact.

192   Lodgment of special resolution

(cf Vic Act s 197)

(1)  A co-operative must lodge 2 copies of each special resolution passed by the co-operative with the Registrar in accordance with this section for registration.

(2)  The copies must:

(a)  be lodged within 28 days after the passing of a special resolution or such further period as the Registrar allows, and

(b)  be signed by a director and the secretary of the co-operative, and

(c)  be accompanied by the lodgment fee prescribed by the regulations.

(3)  A co-operative and any officer of the co-operative that knowingly fails to lodge the required copies in accordance with this section is guilty of an offence.

Maximum penalty: 20 penalty units.

(4)  This section and section 192A do not apply to a special resolution altering the rules of a co-operative.

192A   Decision of Registrar on application to register special resolution

(cf Vic Act s 198)

(1)  If the Registrar is satisfied that the co-operative has complied with the provisions of this Act and the regulations, and that the resolution is not contrary to this Act or the regulations, the Registrar must register the resolution.

(2)  If the Registrar is of the opinion that the effect of a special resolution lodged for registration would be in contravention of this Act or the regulations or any other law, the Registrar may:

(a)  refuse to register the special resolution, and

(b)  give written notice to the co-operative that the special resolution:

(i)  has no effect, in the case of a special resolution referred to in section 190B (2), and

(ii)  has no effect as from the date that it was passed, in any other case.

(3)  A certificate of registration of a special resolution given by the Registrar is, in favour of any person giving financial accommodation to the co-operative on the faith of the certificate or in favour of any guarantor of that advance, conclusive evidence that the resolution was duly passed.

193   Postal ballots

(1)  A postal ballot may be held as provided by the rules of a co-operative and is to be conducted in accordance with the regulations.

(2)  On the declaration by the returning officer of the result of the ballot, the secretary of the co-operative is to make an entry in the minute book of the co-operative showing:

(a)  the number of formal votes cast in favour of the proposal concerned, and

(b)  the number of formal votes cast against the proposal, and

(c)  the number of informal votes cast.

194   Special postal ballots

(cf Vic Act s 200)

(1)  A special postal ballot is a postal ballot that is conducted as required by this section.

(2)  The ballot must not be held less than 21 days after notice of the ballot is given to members so as to enable sufficient time for a meeting to discuss the proposal that is the subject of the ballot to be convened and held (whether by the board or on the requisition of members).

(3)  The co-operative must send to each member (along with any other material required to be sent in connection with the postal ballot) a disclosure statement approved by the Registrar and containing information concerning:

(a)  the financial position of the co-operative,

(b)  the interests of the directors of the co-operative in the proposal with which the ballot is concerned, including any interests of the directors in another organisation concerned in the proposal,

(c)  any compensation or consideration to be paid to officers or members of the co-operative in connection with the proposal, and

(d)  such other matters as the Registrar directs.

(4)  If the Registrar so requires, the statement is to be accompanied by a report made by an independent person approved by the Registrar concerning such matters as the Registrar directs.

(5)  Sections 17 (except subsections (2), (4) and (11)) and 28A apply to the approval of a disclosure statement under this section with any necessary modifications and in particular as if any reference in section 17 to a formation meeting were a reference to the notice of the special postal ballot.

194A   When is a special postal ballot required?

(cf Vic Act s 201)

In addition to any requirement of this Act, the rules of a co-operative must require a special postal ballot to be conducted for the purpose of passing a special resolution in relation to any of the following matters relating to a co-operative:

(a)  a conversion of a trading co-operative to a non-trading co-operative,

(b)  transfer of incorporation,

(c)  an acquisition or disposal of assets referred to in section 285,

(d)  the maximum permissible level of share interest in the co-operative,

(e)  takeover,

(f)  merger,

(g)  transfer of engagements,

(h)  members’ voluntary winding up.

195   Holding of postal ballot on requisition

(cf Vic Act s 202)

(1)  The board of a co-operative must conduct a postal ballot (including a special postal ballot) for the passing of a special resolution on the written requisition of such number of members who together are able to cast at least 20% (or any lesser percentage specified in the rules of the co-operative) of the total number of votes able to be cast at a meeting of the co-operative.

(2)  A member is not entitled to be a requisitioning member unless the member is an active member.

(3)  The following provisions apply to a requisition for a postal ballot:

(a)  it must specify:

(i)  the proposed special resolution to be voted on, and

(ii)  the reasons for the making of the special resolution, and

(iii)  the effect of the special resolution being passed,

(b)  it must be signed by the requisitioning members (and may consist of several documents in like form each signed by one or more requisitioning members),

(c)  it must be served on the co-operative by being lodged at the registered office of the co-operative.

(4)  The postal ballot must be conducted as soon as practicable and in any case must be conducted within 2 months after the requisition is served.

(5)  If the special resolution for which the requisitioned postal ballot is conducted is not passed, the co-operative may recover the expenses of the postal ballot from the members who requisitioned the postal ballot as a debt due to the co-operative.

195A   Expenses involved in postal ballots on requisition

(cf Vic Act s 203)

(1)  All reasonable expenses incurred by a co-operative in and in connection with preparing for and holding a special postal ballot are to be considered to constitute the expenses of the postal ballot for the purposes of section 195.

(2)  Those expenses include (but are not limited to) the following expenses:

(a)  the cost of obtaining expert advice (including legal and financial advice) and of commissioning expert reports,

(b)  costs attributable to the use of staff of the co-operative in connection with preparing for and holding the ballot,

(c)  the cost of producing, printing and posting the ballot papers and other material associated with the ballot.

196   Resolution by circulation of document—fewer than 50 members

(1)  This section applies to a resolution that is required or permitted by this Act or the rules of the co-operative to be passed at a general meeting of a co-operative and includes a resolution appointing an officer or auditor or approving of or agreeing to any act, matter or thing but does not include a resolution of which special notice is required or that is required to be passed by a majority other than a simple majority.

(2)  If all the members of a co-operative that has fewer than 50 members have signed a document containing a statement that they are in favour of a resolution to which this section applies in terms set out in the document, a resolution in those terms is to be considered to have been passed at a general meeting of the co-operative held on the day on which the document was signed and at the time at which the document was last signed by a member or, if the members signed the document on different days, on the day on which, and at the time at which, the document was last signed by a member.

(3)  The co-operative is to be considered to have held a general meeting at that time on that day and the document is to be considered to constitute a minute of that meeting.

(4)  This section does not apply in relation to a document unless the document has been signed by each person who was a member of the co-operative at the time the document was last signed.

(5)  For the purposes of this section, 2 or more separate documents containing statements in identical terms each of which is signed by 1 or more members are together to be taken to constitute 1 document containing a statement in those terms signed by those members on the respective days on which they signed the separate documents.

(6)  Any document that is attached to a document signed as mentioned in subsection (2) and is signed by the member or members who signed the last-mentioned document is, for the purposes of this Act, to be considered to have been laid before the co-operative at the general meeting referred to in that subsection.

(7)  Nothing in this section affects or limits any rule of law relating to the effectiveness of the assent of members of a co-operative given to a document, or to any act, matter or thing, otherwise than at a general meeting of the co-operative.

197   Circulation of members resolutions etc

(1)  A co-operative must, on the requisition in writing of at least 10 members or of members who together are able to cast at least 5% of the total number of votes able to be cast at a meeting of the co-operative:

(a)  give to members of the co-operative entitled to have notice of the next annual general meeting sent to them notice of any resolution that may properly be moved and is intended to be moved at that meeting, and

(b)  circulate to members of the co-operative entitled to have notice of any general meeting sent to them any statement of not more than 1,000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting.

(2)  Unless the co-operative otherwise resolves, the cost of doing so is to be paid by the requisitioning members.

(3)  Notice of such a resolution is to be given to each member of the co-operative:

(a)  in the case of a member entitled to be sent notice of the meeting—by serving a copy of the resolution on the member in any manner permitted for service on the member of notice of the meeting, and

(b)  in the case of any other member—by giving notice of the general effect of the resolution in any manner permitted for giving the member notice of meetings of the co-operative.

(4)  A statement referred to in subsection (1) is to be circulated, to each member of the co-operative entitled to be sent notice of the meeting, by serving a copy of the statement on the member in any manner permitted for service on the member of notice of the meeting.

(5)  A copy or notice that subsection (3) or (4) requires to be served or given is to be served or given in the same manner and, so far as practicable, at the same time as notice of the meeting and, if it is not practicable for it to be served or given at that time, it is to be served or given as soon as practicable after that time.

(6)  A co-operative is not bound under this section to give notice of any resolution or to circulate any statement unless:

(a)  a copy of the requisition signed by the requisitioning member or members (or, if there are 2 or more requisitioning members, 2 or more copies that between them contain the signatures of all the requisitioning members) is deposited at the registered office of the co-operative:

(i)  in the case of a requisition requiring notice of a resolution—not less than 6 weeks before the meeting, and

(ii)  in the case of any other requisition—not less than 1 week before the meeting, and

(b)  there is deposited or tendered with the requisition a sum reasonably sufficient to meet the co-operative’s expenses in giving effect to the requisition.

(7)  If, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the co-operative, an annual general meeting is called for a date 6 weeks or less after the copy has been deposited, the copy though not deposited within the time required by this subsection is to be considered to have been properly deposited for the purposes of this section.

(8)  A co-operative is not bound under this section to circulate any statement if, on the application either of the co-operative or of any other person who claims to be aggrieved, the Court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter.

(9)  The Court may order the costs of the co-operative or of the other person on an application under subsection (8) to be paid in whole or in part by the requisitioning member or members, even though they are not parties to the application.

(10)  Despite anything in the co-operative’s rules, the business that may be dealt with at an annual general meeting includes any resolution of which notice is given in accordance with this section, and, for the purposes of this subsection, notice is to be considered to have been so given despite the accidental failure to give notice to a member or members.

(11)  If this section is contravened, the co-operative and any officer of the co-operative who is involved in the contravention are each guilty of an offence.

Maximum penalty: 10 penalty units.

(12)  A member is not entitled to be a requisitioning member unless the member is an active member.

Division 3 Meetings

198   Annual general meetings

(cf Vic Act s 204)

(1)  The first annual general meeting of a co-operative must be held at any time within 18 months after the incorporation of the co-operative.

(2)  The second or any subsequent annual general meeting of a co-operative must be held within:

(a)  5 months after the close of the financial year of the co-operative, or

(b)  any further time that may be allowed by the Registrar or is prescribed by the regulations.

199   Special general meetings

(cf Vic Act s 205)

A special general meeting of a co-operative may be convened at any time by the board of directors.

199A   Notice of meetings

(cf Vic Act s 206)

The board must give each member at least 14 days notice of each general meeting.

199B   Quorum at meetings

(cf Vic Act s 207)

(1)  The quorum for a meeting of a co-operative must be specified in the rules.

(2)  An item of business must not be transacted at a meeting of a co-operative unless a quorum of members entitled to vote is present during the transaction of that item.

200   No entitlement to be present at meetings where membership required to be cancelled

At any meeting of a co-operative, a member whose membership is required to be cancelled under Part 6 (Active membership requirements) is not entitled to be present.

201   Decision at meetings

(1)  Every question for decision by a meeting of a co-operative is to be determined by a majority of members present in person at the meeting and voting, but this is subject to the other provisions of this Act and to the rules of the co-operative.

(2)  Unless a poll is demanded by at least 5 members, the question is to be determined by a show of hands.

(3)  In the case of an equality of votes, whether on a show of hands or on a poll, the chairperson of the meeting at which the show of hands takes place or at which the poll is demanded is entitled to a casting vote, if the rules of the co-operative so provide.

202   Convening of general meeting on requisition

(cf Vic Act s 209)

(1)  The board of a co-operative must convene a general meeting of the co-operative on the written requisition of such number of members who together are able to cast at least 20% (or any lesser percentage specified in the rules of the co-operative) of the total number of votes able to be cast at a meeting of the co-operative.

(2)  A member is not entitled to be a requisitioning member unless the member is an active member.

(3)  The following provisions apply to a requisition for a general meeting:

(a)  it must state the objects of the meeting,

(b)  it must be signed by the requisitioning members (and may consist of several documents in like form each signed by one or more of the requisitioning members),

(c)  it must be served on the co-operative by being lodged at the registered office of the co-operative.

(4)  The meeting must be convened and held as soon as practicable and in any case must be held within 2 months after the requisition is served.

(5)  If the board does not convene the meeting within 21 days after the requisition is served, the following provisions apply:

(a)  the requisitioning members (or any of them representing at least half their aggregate voting rights) may convene the meeting in the same manner as nearly as possible as meetings are convened by the board,

(b)  for that purpose they may request the co-operative to supply a written statement setting out the names and addresses of the persons entitled when the requisition was served to receive notice of general meetings of the co-operative,

(c)  the board must send the requested statement to the requisitioning members within 7 days after the request for the statement is made,

(d)  the meeting convened by the requisitioning members must be held not later than 3 months after the requisition is served,

(e)  any reasonable expenses incurred by the requisitioning members because of the board’s failure to convene the meeting must be paid by the co-operative,

(f)  any such amount required to be paid by the co-operative is to be retained by the co-operative out of any money due from the co-operative by way of fees or other remuneration in respect of their services to such of the directors as were in default.

203   Minutes

(cf Vic Act s 210)

(1)  Minutes of each general meeting, board meeting and sub-committee meeting must be entered in the appropriate records within 28 days after the meeting and confirmed at and signed by the chairperson of the next succeeding meeting.

(2)  The minutes of each general meeting must be available for inspection by members.

(3)  The rules may provide that the minutes of board meetings and sub-committee meetings be available for inspection by members.

(4)  Minutes must be kept in the English language.

Part 9 Management and administration of co-operatives

Division 1 The Board

204   Board of directors

(cf Vic Act s 211)

(1)  Subject to this Act and the rules of a co-operative, the business of a co-operative is to be managed by a board of directors.

(2)  The board of directors may exercise all the powers of the co-operative that are not, by this Act or the rules of the co-operative, required to be exercised by the co-operative in general meeting.

(3)  The acts of a director are valid despite any defect that may afterwards be discovered in his or her appointment or qualification.

(4)  If a person who vacates office as director purports to do an act as director, that act is valid, in relation to a person dealing with the co-operative in good faith and for value and without actual knowledge of the circumstance because of which the vacation of office occurred, as if that office had not been vacated.

(5)  This section does not affect the operation of Division 3 (Persons having dealings with co-operatives) of Part 3.

205   Election of directors

(cf Vic Act s 212)

(1)  Except as provided in subsections (2), (3) and (4), the directors of a co-operative are to be elected in the manner specified in the rules of the co-operative.

(2)  The first directors of:

(a)  a co-operative formed under this Act are to be elected at its formation meeting, and

(b)  a co-operative which was a body corporate incorporated under another Act are to be the directors in office at the date of registration under this Act.

(3)  If so authorised by the rules of the co-operative, a board of directors may appoint a person to fill a casual vacancy in the office of a director until the next annual general meeting.

(4)  A motion approving or nominating for election 2 or more persons as directors by a single resolution must not be made at a meeting of a co-operative unless a resolution that it be so made has first been agreed to by the meeting without any vote being given against it.

(5)  If a resolution is passed following a motion in contravention of subsection (4):

(a)  the resolution is void, and

(b)  there is no provision for the automatic re-election of retiring directors in default of another election.

(6)  This section does not apply to a resolution altering the rules to prevent the election of 2 or more directors by ballot.

(7)  A nomination for election or appointment to the office of a director must provide details of the qualifications and experience of the person nominated.

(8)  Except as specified in this Act or in the rules of a co-operative, a director is eligible for re-election at the expiration of his or her term of office.

(9)  The Registrar is not to register a rule that specifies the manner of election of directors or any alteration of such a rule unless the Registrar approves of the manner of electing directors that will result from the rule or alteration.

206   Qualification of directors

(cf Vic Act s 213)

(1)  A person is not qualified to be a director of a co-operative unless he or she is:

(a)  an active member of the co-operative or a representative of a body corporate which is an active member of the co-operative (active member director), or

(b)  an employee of the co-operative or a person qualified as provided by the rules (independent director).

(2)  (Repealed)

(3)  A simple majority of directors must be active member directors. However, this subsection does not prevent the rules of a co-operative from requiring that a greater number of directors than a simple majority be active member directors.

(4)  A director who is an active member director of the co-operative is to be counted as an active member director for the purposes of determining how many directors are active member directors of the co-operative even though he or she was elected as provided by section 216 (Election of employees as directors).

(5)  (Repealed)

206A   (Repealed)

207   Qualifications for directors of associations and federations

(1)  A person is not eligible to be elected as a director of an association unless the person is a member of a component co-operative of the association or is otherwise qualified under the rules of the association to be a director.

(2)  A person is not eligible to be elected as a director of a federation unless the person is a member of a component co-operative of an association which is a member of the federation or is otherwise qualified under the rules of the federation to be a director.

208   Disqualified persons

(cf Vic Act s 214)

(1)  A person must not act as a director or directly or indirectly take part in or be concerned with the management of a co-operative if the person:

(a)  is the auditor of the co-operative or a partner, employee or employer of the auditor, or

(b)  has been convicted, whether before or after the commencement of this section, within or outside New South Wales:

(i)  on indictment of an offence in connection with the promotion, formation or management of a body corporate, or

(ii)  of an offence involving fraud or dishonesty punishable on conviction by imprisonment for a period of not less than 3 months, or

(iii)  of any offence under section 184, 344, 590, 592, 670A or 728 of the Corporations Act, or

(iv)  of any offence under any provision of a previous law of New South Wales or of another State or Territory, with which any of the provisions referred to in subparagraph (iii) corresponds,

      within a period of 5 years after the conviction or, if sentenced to imprisonment, after his or her release from prison, except with the leave of the Court.

Maximum penalty: 240 penalty units or imprisonment for 2 years, or both.

(2)  A person must not act as a director or directly or indirectly take part in or be concerned with the management of a co-operative if the person:

(a)  has been convicted of any offence under this Act, within a period of 5 years after the conviction, except with the leave of the Court, or

(b)  is prohibited from being a director of a company under Part 2D.6 (Disqualification from managing corporations) of the Corporations Act, or

(c)  is an insolvent under administration (as defined in the Corporations Act), or

(d)  has been convicted of a contravention of section 181, 182 or 183 of the Corporations Act (as applied under this Act).

Maximum penalty: 240 penalty units or imprisonment for 2 years, or both.

(3)  In any proceeding for an offence against subsection (1), a certificate by an authority prescribed by the regulations stating that a person was released from prison on a specified date, is in the absence of evidence to the contrary, proof that that person was released from prison on that date.

(4)  A person who intends to apply for leave of the Court must give the Registrar at least 21 days notice of his or her intention.

(5)  The Court may grant leave subject to any condition or limitation it considers appropriate.

(6)  A person must comply with any condition or limitation subject to which leave is granted.

Maximum penalty: 240 penalty units or imprisonment for 2 years, or both.

(7)  On the application of the Registrar, the Court may revoke its leave.

(8)  Subject to this section, a co-operative is declared to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to the provisions of Part 2D.6 of the Corporations Act, subject to the following modifications:

(a)  a reference in those provisions to corporations is to be read as a reference to co-operatives,

(b)  such other modifications (within the meaning of Part 3 of the Corporations (Ancillary Provisions) Act 2001) as may be prescribed by the regulations.

Note. See the note to section 10 (1).

209   Meeting of the board of directors

(cf Vic Act s 215)

(1)  Meetings of the board of directors must be held at least once every 3 months and may be held as often as may be necessary.

(2)  A meeting of the board of directors may be called by a director giving notice individually to every other director.

(3)  A meeting of the board of directors may be called or held using any technology consented to by the board. The consent may be a standing one.

(4)  A quorum of a meeting of the board of directors is 50 per cent of the number of directors or such greater number of the directors as is specified in the rules.

(4A)  However, for a quorum to exist the number of active member directors present must exceed the number of independent directors present by at least one or by any greater number specified in the rules of the co-operative.

(5)  The chairperson of the board may be elected either by the board or at a general meeting of the co-operative, and is to be elected, hold office, and retire, and may be removed from office, as provided by the rules of the co-operative.

210   Transaction of business outside meetings

(cf Vic Act s 216)

(1)  The board of a co-operative may, if it thinks fit, transact any of its business by the circulation of papers among all of the directors of the board.

(2)  A resolution in writing approved in writing by a majority of the directors of the board is to be taken to be a decision of the board.

(3)  Separate copies of a resolution may be distributed for signing by the directors if the wording of the resolution and approval is identical in each copy.

(4)  For the purpose of the approval of a resolution under this section, the chairperson of the board and each director of the board have the same voting rights as they have at an ordinary meeting of the board.

(5)  The resolution is approved when the last director required for the majority signs.

(6)  A resolution approved under this section must be recorded in the minutes of the meetings of the board within 28 days after the resolution is approved.

(7)  Papers may be circulated among directors of the board for the purposes of this section by facsimile or other transmission of the information in the papers concerned.

211   Deputy directors

(1)  In the absence of a director from a meeting of the board, a person appointed by the board in accordance with the rules of the co-operative, association or federation concerned to act as a deputy for that director may act in the place of that director.

(2)  The rules of the co-operative, association or federation may include provisions regulating the term of office, vacation of or removal from office, and remuneration of a deputy.

212   Filling of vacancies on board

(1)  A casual vacancy on the board of a co-operative (being a vacancy under section 218) is to be filled:

(a)  by election by the members held:

(i)  at a meeting of the co-operative, or

(ii)  by means of a postal ballot, or

(iii)  in the manner specified in the rules of the co-operative for the ordinary election of directors, or

(b)  as provided for by section 205 (3), or

(c)  in such other manner as the Registrar may approve in a particular case.

(2)  If at any time the number of directors of a co-operative is the same as or less than the number of directors required to constitute a quorum of the board:

(a)  the board may appoint sufficient directors so that the number of directors is 1 more than a quorum, and

(b)  for the purpose only of enabling the board to make such an appointment, the number of directors required to constitute a quorum is the number of directors at that time.

(3)  Subsection (2) does not affect the requirement that a casual vacancy on the board be filled.

(4)  The term of office of a director appointed by the board to fill a vacancy under this section is until the next annual general meeting of the co-operative.

213   Delegation by board

(cf Vic Act s 218)

(1)  If the rules of a co-operative so provide, the board may, by resolution, delegate the exercise of such of the board’s functions (other than this power of delegation) as are specified in the resolution:

(a)  to a director, or

(b)  to a committee of 2 or more directors, or

(c)  to a committee of members of the co-operative, or

(d)  to a committee of members of the co-operative and other persons if members comprise the majority of persons on the committee.

(2)  The co-operative or the board may, by resolution, revoke wholly or in part any such delegation.

(3)  A function, the exercise of which has been delegated under this section, may be exercised from time to time in accordance with the terms of the delegation while the delegation remains unrevoked.

(4)  A delegation under this section may be made subject to conditions or limitations as to the exercise of any of the powers delegated, or as to time or circumstance.

(5)  Despite any delegation under this section, the board may continue to exercise all or any of the functions delegated.

214   Exercise of functions on behalf of board

(1)  If a function is exercised by a director either alone or with another director or other directors and the exercise of the function is evidenced in writing, signed by the director in the name of the board or in his or her own name on behalf of the board, the function is to be considered to have been exercised by the board.

(2)  This applies whether or not a resolution delegating the exercise of the function to the director was, when the power was exercised, in force and whether or not any conditions or limitations on the delegation were observed by the director exercising the function.

(3)  An instrument purporting to be signed by a director as referred to in subsection (1) is in all courts and before all persons acting judicially to be received in evidence as if it were an instrument executed by the co-operative under seal.

(4)  Until the contrary is proved, the instrument is to be taken to be an instrument signed by a delegate of the board under this section.

215   Minister may appoint director

(1)  The Minister may, from time to time, by notification published in the Gazette, appoint a person to be a director of any co-operative which is indebted to the Crown in respect of a loan or grant of money.

(2)  The provisions of this Act (other than this section) and of the rules of the co-operative relating to the qualification, disqualification, remuneration, removal from office and term of office of directors and to the vacation of office by directors do not apply to or in respect of a director appointed under this section.

(3)  A director appointed under this section holds office as an additional director and is not to be counted in ascertaining the number of directors for the election of whom provision is made in the rules of the co-operative or in ascertaining whether a quorum is present at any meeting of the board.

(4)  A director appointed under this section has all the powers, rights, authorities, functions, privileges, immunities, duties, obligations and liabilities of a director elected in accordance with the rules of the co-operative, except as provided by subsection (2).

(5)  A director appointed under this section is, unless he or she is an officer of the Public Service or a member of the Legislative Council or of the Legislative Assembly of New South Wales, to be paid such fees, allowances and expenses as the Governor may, either generally or in any particular case, approve.

(6)  Those fees, allowances and expenses are to be paid by the co-operative unless the Minister otherwise directs in a particular case.

216   Election of employees as directors

(1)  An employee of a co-operative may be elected as a director of the co-operative as provided by this section even if he or she is not a member of the co-operative.

(2)  The rules of a co-operative may provide for 1 employee of the co-operative to be nominated by the directors of the co-operative for election by the members of the co-operative as a director of the co-operative and, if so nominated, to be so elected.

(3)  The rules of:

(a)  a co-operative the primary activity of which is or includes the provision of employment for its members within any business, trade or industry carried on by the co-operative, or

(b)  a co-operative approved by the Council,

      may provide that all directors of the co-operative or such number of those directors as may be specified in or determined in accordance with the rules are to be or, as may be determined by the rules, may be employees of the co-operative.

(4)  The rules of a co-operative to which subsection (3) applies may make provision as referred to in subsection (3) or as referred to in subsection (2), or both.

(5)  If the rules of a co-operative to which subsection (3) (a) applies provide for the election of employees of the co-operative as directors of the co-operative, any member of the co-operative may, in accordance with the rules, nominate an employee of the co-operative for election as a director of the co-operative.

(6)  An employee of a co-operative approved by the Council as referred to in subsection (3) (b) is not to be elected as a director of the co-operative except in such manner, if any, and in accordance with such conditions, if any, as may be determined from time to time by the Council and of which notice in writing has been served on the co-operative.

(7)  In this section, employee, in relation to a co-operative, includes a person, or the employee of a person, who provides the co-operative with secretarial and administrative services.

(8)  The removal of a director elected as provided by this section does not operate to terminate or otherwise affect the person’s employment on which qualification for election was based, unless the conditions of the person’s employment otherwise provide.

217   Revocation of approval etc

(1)  If the Registrar is of the opinion that a co-operative has ceased to have as a primary activity the provision of employment for its members within any business, trade or industry carried on by the co-operative, the Registrar is to serve notice in writing on the co-operative accordingly.

(2)  The Registrar’s notice is to specify the date on which each director of the co-operative who is an employee of the co-operative elected otherwise than in accordance with the rules of the co-operative referred to in section 216 (2) is to vacate office as a director.

(3)  The Council may revoke an approval under section 216 (3) at any time by notice in writing served on the co-operative and if the Council does so an employee of the co-operative must not (except in accordance with rules of the co-operative referred to in section 216 (2)) be elected as a director of the co-operative.

(4)  The office of a director of a co-operative on which a notice under subsection (1) or (3) has been served is, if the director is an employee of the co-operative elected otherwise than in accordance with rules of the co-operative referred to in section 216 (2), vacated on the date specified in the notice unless (before that date) the Council has approved the co-operative under section 216 (3).

(5)  The office of a director of a co-operative elected in accordance with section 216 (2) is vacated if the director ceases to hold the qualification by virtue of which the director was elected.

(6)  In this section, employee, in relation to a co-operative, has the same meaning as in section 216.

218   Removal from and vacation of office

(1)  The directors hold office and must retire, and may be removed from office, as provided by the rules of the co-operative.

(2)  A director vacates office in such circumstances (if any) as are provided in the rules of the co-operative and in any of the following cases:

(a)  if the director is disqualified from being a director as provided by section 208,

(b)  if the director absents himself or herself from 3 consecutive ordinary meetings of the board without its leave,

(c)  if the director resigns the office of director by notice in writing given by the director to the co-operative,

(d)  if the director is removed from office by ordinary resolution of the co-operative,

(e)  if the person ceases to hold the qualification by reason of which the person was qualified to be a director,

(f)  if the director becomes an employee of the co-operative (unless elected under section 216),

(g)  if an administrator of the co-operative’s affairs is appointed under Division 6 of Part 12,

(h)  as provided by section 217.

Division 1A Secretary of a co-operative

219   Secretary

(1)  A co-operative must have a secretary, who is to be appointed by the board.

(2)  The board may appoint a person to act as the secretary during the absence or incapacity of the secretary.

(3)  A person is not qualified to be appointed as, or to act as, a secretary unless the person is an adult who is ordinarily resident in Australia.

(4)  A person who was acting as a secretary of a co-operative immediately before the commencement of this section is taken to have been appointed, and to be qualified, in accordance with this section.

Division 2 Duties and liabilities of directors, officers and employees

220   Meaning of “officer”

In this Division:

officer, in relation to a co-operative, means:

(a)  a director or secretary of the co-operative, or

(b)  a person who is concerned, or takes part, in the management of the co-operative, whether or not as a director, or

(c)  a receiver, or receiver and manager, of property of the co-operative, or any other authorised person who enters into possession or assumes control of property of the co-operative for the purpose of enforcing any charge, or

(d)  an administrator of a deed of arrangement executed by the co-operative, or

(e)  a liquidator or provisional liquidator appointed in a voluntary winding up of the co-operative, or

(f)  an administrator of the co-operative appointed under Part 5.3A of the Corporations Act as applying under this Act, or

(g)  a trustee or other person administering a compromise or arrangement made between the co-operative and another person or other persons.

221   Officers must act honestly

(cf Vic Act s 221)

(1)  An officer of a co-operative must at all times act honestly in the exercise of his or her powers and the discharge of the duties of his or her office, both in the State and elsewhere.

(2)  The penalty applicable to a contravention of this section is:

(a)  if the contravention was committed with intent to deceive or defraud the co-operative, members or creditors of the co-operative or creditors of any other person or for any other fraudulent purpose—240 penalty units or imprisonment for 5 years, or both, or

(b)  otherwise—60 penalty units.

222   Standard of care and diligence required

(cf Vic Act s 222)

(1)  In the exercise of his or her powers and the discharge of his or her duties, an officer of a co-operative must exercise the degree of care and diligence that a reasonable person in a like position in a co-operative would exercise in the co-operative’s circumstances.

Maximum penalty: 20 penalty units.

(2)  An officer is not liable to be convicted for a contravention of this section if the co-operative has resolved by ordinary resolution to forgive the contravention.

223   Improper use of information or position

(cf Vic Act s 223)

(1)  An officer or employee or former officer or former employee of a co-operative or a member of a committee referred to in section 213 (1) must not make improper use of information acquired by reason of his or her position as such an officer or employee or member to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the co-operative.

(2)  An officer or employee of a co-operative or a member of a committee referred to in section 213 (1) must not make improper use of his or her position as an officer or employee or member, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the co-operative.

(3)  The penalty applicable to a contravention of this section is:

(a)  if the contravention was committed with intent to deceive or defraud the co-operative, members or creditors of the co-operative or creditors of any other person or for any other fraudulent purpose—a penalty not exceeding 240 penalty units or imprisonment for 2 years, or both, or

(b)  in any other case—a penalty not exceeding 60 penalty units.

224   Court may order payment of compensation

(1)  If the court that convicts a person for a contravention of a provision of this Division is satisfied that a co-operative has suffered loss or damage as a result of the act or omission that constituted the offence, the court may (in addition to imposing a penalty) order the convicted person to pay a specified amount of compensation to the co-operative.

(2)  Any such order may be enforced as if it were a judgment of that court.

225   Recovery of damages by co-operative

(1)  If a person contravenes a provision of this Division in relation to a co-operative, the co-operative may, whether or not the person has been convicted of an offence in respect of that contravention, recover an amount from the person as a debt due to the co-operative.

(2)  The amount that the co-operative is entitled to recover from the person is:

(a)  if the person or any other person made a profit as a result of the contravention—an amount equal to that profit, and

(b)  if the co-operative has suffered loss or damage as a result of the contravention—an amount equal to that loss or damage.

226   Other duties and liabilities not affected

This Division has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person by reason of the person’s office or employment in relation to a co-operative and does not prevent the institution of any civil proceedings in respect of a breach of such a duty or in respect of such a liability.

227   (Repealed)

228   Indemnification of officers and auditors

(1)  Any provision, whether contained in the rules or in a contract with a co-operative or elsewhere, for exempting any officer or auditor of the co-operative from, or indemnifying the officer or auditor against, any liability that by law would otherwise attach to the officer or auditor in respect of any negligence, default, breach of duty or breach of trust of which the officer or auditor may be guilty in relation to the co-operative is void.

(2)  Subsection (1) does not apply in relation to a contract of insurance.

(3)  Despite subsection (1), a co-operative may, pursuant to its rules or otherwise, indemnify an officer or auditor against any liability incurred by the officer or auditor in defending any proceedings, whether civil or criminal, in which judgment is given in the officer’s or auditor’s favour or in which the officer or auditor is acquitted or in connection with any application in relation to any such proceedings in which relief is under this section granted to the officer or auditor by the court.

(4)  If in proceedings for negligence, default or breach of duty against an officer or auditor of a co-operative it appears to the court that the person is or may be liable in respect of the negligence, default or breach of duty but acted honestly and reasonably and that, having regard to all the circumstances of the case (including those connected with the person’s appointment), the person ought fairly to be excused for the negligence, default or breach of duty, the court may relieve the person, either wholly or partly, from the person’s liability on such terms as the court thinks fit.

(5)  If an officer or auditor of a co-operative has reason to believe that any claim will or might be made against him or her in respect of any negligence, default or breach of duty in relation to the co-operative, the person may apply to the Court for relief, and the Court then has the same power to relieve the person as it would have under this section if it had been a court before which proceedings against the officer or auditor for negligence, default or breach of duty had been brought.

(6)  If any case to which subsection (4) applies is being tried by a judge with a jury, the judge, after hearing the evidence, may, if satisfied that the defendant should in pursuance of that subsection be relieved either wholly or partly from the liability sought to be enforced against him or her, withdraw the case in whole or in part from the jury and direct judgment to be entered for the defendant on such terms as to costs or otherwise as the judge thinks proper.

(7)  In this section, officer includes an employee of a co-operative and any other person empowered under the rules of the co-operative to give directions in regard to the business of the co-operative.

229   Application of Corporations Act provisions concerning officers of co-operatives

(cf Vic Act s 228)

A co-operative is declared to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to sections 589–598 and 1307 of the Corporations Act, subject to the following modifications:

(a)  a reference in those sections to a company is to be read as a reference to a co-operative,

(b)  a reference in those sections to ASIC is to be read as a reference to the Registrar,

(c)  section 592 (1) (a) is to be read as if the reference to 23 June 1993 were a reference to 15 December 1995,

(d)  such other modifications (within the meaning of Part 3 of the Corporations (Ancillary Provisions) Act 2001) as may be prescribed by the regulations.

Note. See the note to section 10 (1).

Division 3 Restrictions on directors and officers

230   Directors’ remuneration

(cf Vic Act s 229)

A director of a co-operative must not be paid any remuneration for services as a director other than fees, concessions and other benefits that are approved at a general meeting of the co-operative.

231   (Repealed)

232   Financial accommodation to directors and associates

(cf Vic Act s 231)

(1)  In this section:

associate of a director means:

(a)  the director’s spouse, or

(b)  a person when acting in the capacity of trustee of a trust under which:

(i)  the director or director’s spouse has a beneficial interest, or

(ii)  a body corporate mentioned in paragraph (c) has a beneficial interest, or

(c)  a body corporate if:

(i)  the director or director’s spouse has a material interest in shares in the body corporate, and

(ii)  the nominal value of the shares is not less than 10% of the nominal value of the issued share capital of the body corporate.

(2)  For the purposes of this section, a person has a material interest in a share in a body corporate if:

(a)  the person has power to withdraw the share capital subscribed for the share or to exercise control over the withdrawal of that share capital, or

(b)  the person has power to dispose of or to exercise control over the disposal of the share, or

(c)  the person has power to exercise or to control the exercise of any right to vote conferred on the holder of the share.

(3)  A co-operative must not provide financial accommodation to a director, or to a person the co-operative knows or should reasonably know is an associate of a director, unless:

(a)  the accommodation is:

(i)  approved under subsection (4), or

(ii)  given under a scheme approved under subsection (4), or

(iii)  provided on terms no more favourable to the director or associate than the terms on which it is reasonable to expect the co-operative would give if dealing with the director or associate at arm’s length in the same circumstances, and

(b)  the directors have approved the accommodation, at a meeting of the board at which a quorum was present, by a majority of at least two-thirds of the directors present and voting on the matter.

Maximum penalty: 500 penalty units.

(4)  For the purposes of subsection (3) (a) (i) and (ii), financial accommodation or a scheme is approved if:

(a)  it is approved by a resolution passed at a general meeting,

(b)  the full details of the accommodation or scheme were made available to members at least 21 days before the meeting.

(5)  A director or an associate of a director who obtains financial accommodation given in contravention of subsection (3) is guilty of an offence.

Maximum penalty: 240 penalty units or 2 years imprisonment, or both.

(6)  For the purposes of this section, a concessional rate of interest for a borrower from a co-operative is a normal term only if the borrower is entitled to the concession by being a member of a class of borrowers from the co-operative specified in its rules as being entitled to the concession.

(7)  If a director of a co-operative or an associate of a director accepts in payment of a debt owed by a member of the co-operative to the director or associate, any proceeds of financial accommodation provided to the member by the co-operative, this section has effect as if the financial accommodation has been provided to the director or associate.

(8)  In this section, a reference to:

(a)  the provision of financial accommodation to a director or an associate of a director, or

(b)  the obtaining of financial accommodation by a director or an associate of a director, or

(c)  a debt owed to a director or an associate of a director,

      includes a reference to a provision of financial accommodation to, or an obtaining of financial accommodation by, the director or associate, or a debt owed to the director or associate, jointly with another person.

233   Restriction on directors of certain co-operatives selling land to co-operative

A director of a co-operative the primary activity of which is or includes the acquisition of land in order to settle or retain people on the land and of providing any community service or benefit must not sell land to the co-operative except pursuant to and in accordance with a special resolution of the co-operative.

233A   Management contracts

(cf Vic Act s 233)

(1)  In this section, management contract means a contract or other arrangement under which:

(a)  a person who is not an officer of the co-operative agrees to perform the whole, or a substantial part, of the functions of the co-operative, whether under the control of the co-operative or not, or

(b)  a co-operative agrees to perform the whole or a substantial part of its functions:

(i)  in a particular way, or

(ii)  in accordance with the directions of any person, or

(iii)  subject to specified restrictions or conditions.

(2)  A co-operative must not enter into a management contract unless that contract has first been approved by special resolution.

(3)  A management contract entered into in contravention of subsection (2) is void.

Division 4 Directors’ interests in contracts etc

234   Declaration of interest

(cf Vic Act s 234)

(1)  A director of a co-operative who is or becomes in any way (whether directly or indirectly) interested in a contract, or proposed contract with the co-operative must declare the nature and extent of the interest to the board of directors under this section.

Maximum penalty: 240 penalty units or imprisonment for 2 years, or both.

(2)  In the case of a proposed contract, the declaration must be made:

(a)  at the meeting of the board at which the question of entering into the contract is first considered, or

(b)  if the director was not at that time interested in the proposed contract, at the next meeting of the board held after the director becomes interested in the proposed contract.

(3)  If a director becomes interested in a contract with the co-operative after it is made, the declaration must be made at the next meeting of the board held after the director becomes interested in the contract.

(4)  For the purposes of this section, a general written notice given to the board by a director to the effect that the director:

(a)  is a member of a specified entity, and

(b)  is to be regarded as interested in any contract which may, after the giving of the notice, be made with the entity,

      is a sufficient declaration.

(5)  A director of a co-operative who holds an office or has an interest in property whereby, whether directly or indirectly, duties or interests might be created that could conflict with the director’s duties or interests as director must, under subsection (6), declare at a meeting of the board of directors the fact and the nature, character and extent of the conflict.

Maximum penalty: 240 penalty units or imprisonment for 2 years, or both.

(6)  A declaration required by subsection (5) in relation to holding an office or having an interest must be made by a person:

(a)  if the person holds the office or has the interest when he or she becomes a director, at the first meeting of the board held after:

(i)  the person becomes a director, or

(ii)  the relevant facts as to holding the office or having the interest come to the person’s knowledge,

      whichever is the later, or

(b)  if the person starts to hold the office or acquires the interest after the person becomes a director, at the first meeting of the board held after the relevant facts as to holding the office or having the interest come to the person’s knowledge.

(7)  If a director has made a declaration under this section, then unless the board otherwise determines, the director must not:

(a)  be present during any deliberation of the board in relation to the matter, or

(b)  take part in any decision of the board in relation to the matter.

(8)  For the purposes of the making of a determination of the board under subsection (7) in relation to a director who has made a declaration under this section, the director must not:

(a)  be present during any deliberation of the board for the purpose of making the determination, or

(b)  take part in the making by the board of the determination.

(9)  This section does not extend to or in respect of a vote relating to a transaction referred to in section 241.

(10)  Any vote cast in contravention of this section is not to be counted.

235–237   (Repealed)

238   Declarations to be recorded in minutes

Every declaration under this Division is to be recorded in the minutes of the meeting at which it was made.

239   Division does not affect other laws or rules

Except as provided in section 241, this Division is in addition to, and not in derogation of, the operation of any rule of law or any provision in the rules of the co-operative restricting a director from having any interest in contracts with the co-operative or from holding offices or possessing properties involving duties or interests in conflict with his or her duties or interests as a director.

240   (Repealed)

241   Certain interests need not be declared

(cf Vic Act s 237)

The interest in a contract or proposed contract that a director is required by this Division to declare does not include an interest in:

(a)  a contract or proposed contract for the purchase of goods by the director from the co-operative, or

(a1)  a lease of land to the director by the co-operative, or

(b)  a contract or proposed contract for the sale of agricultural products or live stock by the director to the co-operative, or

(c)  a contract or proposed contract that, pursuant to the rules of the co-operative, may be made between the co-operative and a member, or

(d)  a contract or proposed contract of a class of contracts prescribed for the purposes of this section,

but only if the contract is made in good faith, in the ordinary course of the business of the co-operative, and on such terms as are usual and proper in similar dealings between the co-operative and its members.

242   (Repealed)

Division 5 Financial statements, reports and audits

243   Requirements for financial records, statements and reports

(1)  A co-operative must:

(a)  keep financial records and prepare financial statements and financial reports as required by the regulations, and

(b)  ensure that those financial statements and financial reports are audited in accordance with the regulations.

Maximum penalty: 20 penalty units.

(2)  Without limiting the matters for which regulations under this section may make provision, the regulations may make provision for or with respect to the following:

(a)  any matter for which provision is made by or under Part 2F.3, sections 249K and 249V and Chapter 2M of the Corporations Act (including the conferring of jurisdiction on a court of this State),

(b)  requiring financial statements to be prepared in accordance with any accounting standards in force for the purposes of Chapter 2M of the Corporations Act (with or without modifications specified in the regulations),

(c)  requiring the submission of financial statements and financial reports to the Australian Accounting Standards Board,

(d)  requiring the adoption by a co-operative of the same financial year for each entity that the co-operative controls,

(e)  prescribing the qualifications and the functions of auditors of the financial statements and financial reports of a co-operative and providing for the appointment, the holding of office by, the remuneration of and the removal of auditors,

(f)  the duties of directors of a co-operative in relation to the preparation, the auditing and the laying before meetings of members of financial statements and financial reports, including the reports to be prepared by directors in relation to those financial statements and financial reports,

(g)  the sending of copies of financial statements and financial reports to members.

(3)  (Repealed)

244   Power of Registrar to grant exemptions

(1)  The Registrar may, by order in writing, exempt a co-operative or any class of co-operatives, any person or firm appointed or proposed to be appointed as an auditor or any other person from compliance with all or specified provisions of the regulations made for the purposes of this Part.

(2)  Any such exemption:

(a)  may be given subject to conditions, and

(b)  may be limited as to time, and

(c)  may be varied, suspended or revoked by the Registrar by a further order in writing.

(3)  An order under this section takes effect:

(a)  if it applies to a particular co-operative—when the order is served on the co-operative, or

(b)  if it applies to a class of co-operatives—when the order is published in the Gazette, or

(c)  if it applies to a person or firm—when the order is served on the person or firm.

245   Meaning of “entity” and “control”

In this Division, the terms entity and control have the same meanings in relation to a co-operative as they have under the Corporations Act in relation to a corporation.

246   Disclosure by directors

The directors of a co-operative must make such disclosures in relation to the affairs of the co-operative and of any entity that the co-operative controls as may be required by the regulations.

Maximum penalty: 20 penalty units.

247   Protection of auditors etc

(1)  An auditor of a co-operative has qualified privilege in proceedings for defamation in respect of:

(a)  any statement that the auditor makes, orally or in writing, in the course of his or her duties as auditor, or

(b)  the giving of any notice, or the sending of any copy of financial statements, financial reports or a report, to the Registrar under this Act.

(2)  A person has qualified privilege in proceedings for defamation:

(a)  in respect of the publishing of any document prepared by an auditor in the course of the auditor’s duties and required by or under this Act to be lodged with the Registrar, whether or not the document has been so lodged, or

(b)  in respect of the publishing of any statement made by an auditor as mentioned in subsection (1).

(3)  This section does not limit or affect any right, privilege or immunity that an auditor or other person has, apart from this section, as defendant in proceedings for defamation.

248   Financial year

(1)  The financial year of a co-operative is to end on such day in each calendar year as is provided for by the rules of the co-operative.

(2)  The first financial year of a co-operative may extend from the date of its registration to a date not later than 18 months from the date of its registration.

(3)  On an alteration of the rules of a co-operative altering its financial year, the alteration may provide either that the financial year current at the date of alteration is to be extended for a period not exceeding 6 months or that the financial year next following the financial year that is so current is to be a period exceeding 12 months but not exceeding 18 months.

Division 6 Registers, records and returns

249   Registers to be kept by co-operatives

(cf Vic Act s 244)

(1)  A co-operative must keep the following registers in the English language:

(a)  a register of members, directors and shares (if any),

(b)  a register of any loans to, securities given by, debentures issued by and deposits received by the co-operative,

(c)  a register of any loans made by or guaranteed by the co-operative, and of any securities taken by the co-operative,

(d)  a register of CCUs issued by the co-operative,

(e)  a register of memberships cancelled under Part 6 (Active membership requirements),

(f)  a register of fixed assets of the co-operative,

(f1)  a register of notifiable interests in accordance with section 294,

(g)  such other registers as the regulations may require.

(2)  The registers must be kept in such manner and contain such particulars as may be prescribed.

Maximum penalty: 20 penalty units.

250   Location of registers

(cf Vic Act s 245)

(1)  A register kept under this Division must be kept at:

(a)  the co-operative’s registered office, or

(b)  an office at the co-operative’s principal place of business, or

(c)  an office (whether of the co-operative or of someone else) where the work involved in maintaining the register is done, or

(d)  another office approved by the Registrar.

(2)  The office must be in New South Wales.

(3)  The co-operative must lodge with the Registrar a notice of the address at which the register is kept within 28 days after the register is:

(a)  established at an office that is not the co-operative’s registered office, or

(b)  moved from one office to another.

Maximum penalty: 10 penalty units or imprisonment for 3 months, or both.

251   Inspection of registers etc

(cf Vic Act s 246)

(1)  A co-operative must have at the office where the registers are kept and available during all reasonable hours for inspection by any member free of charge the following:

(a)  a copy of this Act and the regulations,

(b)  a copy of the rules of the co-operative,

(c)  a copy of the minutes of each general meeting of the co-operative,

(d)  a copy of the last annual report of the co-operative under section 252,

(e)  the register of directors, members and shares,

(f)  the register of names of persons who have given loans or deposits to or hold securities or debentures given or issued by the co-operative,

(g)  such other registers as the regulations provide are to be open for inspection under this section.

Maximum penalty: 20 penalty units.

(2)  If a register is not kept on a computer, the person inspects the register itself.

(3)  If the register is kept on a computer, the person inspects a hard copy of the information on the register unless the person and the co-operative agree that the person can access the information by computer.

(4)  A member is entitled to make a copy of entries in a register specified in subsection (1) and to do so free of charge unless the rules of the co-operative require a fee to be paid, in which case on payment of the required fee.

(5)  The fee required by the rules must not exceed the fee prescribed by the regulations for a copy of any entry in the Register.

(6)  A co-operative must:

(a)  permit a member to inspect a document or make a copy of a document that the member is entitled to inspect or make under this section, and

(b)  give the member all reasonable assistance to inspect the document or make the copy.

Maximum penalty: 20 penalty units.

(7)  A co-operative must have at the place where the registers are kept and available during all reasonable hours for inspection by any person such documents in relation to the co-operative as are prescribed by the regulations.

Maximum penalty: 20 penalty units.

251A   Use of information on registers

(cf Vic Act s 247)

(1)  A person must not:

(a)  use information about a person obtained from a register kept under this Division to contact or send material to the person, or

(b)  disclose information of that kind knowing that the information is likely to be used to contact or send material to the person,

      unless the requirements of subsection (2) are met.

Maximum penalty: 50 penalty units or imprisonment for one year, or both.

(2)  The requirements of this section for use or disclosure of the information are that the use or disclosure of the information is:

(a)  relevant to the holding of the directorship, membership, shares, loans, securities, debentures or deposits concerned or the exercise of the rights attaching to them, or

(b)  approved by the board, or

(c)  necessary to comply with a requirement of this Act.

(3)  A person who contravenes subsection (1) is liable to compensate anyone else who suffers loss or damage because of the contravention.

(4)  A person who makes a profit from a contravention of subsection (1) owes a debt to the co-operative. The amount of the debt is the amount of the profit.

251B   Notice of appointment etc of directors and officers

(cf Vic Act s 248)

(1)  A co-operative must give notice to the Registrar in accordance with this section of the appointment of a person as a director, principal executive officer or secretary of the co-operative or any subsidiary of the co-operative, and of the cessation of any such appointment.

(2)  The notice must:

(a)  be in the form approved by the Registrar, and

(b)  be given within 28 days after the appointment or cessation of appointment, and

(c)  specify the particulars prescribed by the regulations of the appointment or cessation of appointment.

Maximum penalty: 20 penalty units.

252   Annual report

(cf Vic Act s 249)

(1)  A co-operative must send to the Registrar within the required period in each year an annual report containing each of the following:

(a)  a list in the form approved by the Registrar specifying the secretary, directors and the principal executive officers of the co-operative and of each of its subsidiaries, as at the date the annual report is filed with the Registrar,

(b)  if the co-operative is required under section 243 to prepare a financial report of the co-operative for its most recently ended financial year—a copy of the financial report,

(c)  a copy of the financial report of each subsidiary of the co-operative for the most recently ended financial year of the subsidiary (unless the legislation under which the subsidiary is incorporated does not require an annual report to be prepared by that subsidiary),

(d)  a copy of any report by the auditor or the directors of the co-operative or subsidiary:

(i)  prepared under section 243, or

(ii)  on a financial report mentioned in paragraph (b) or (c),

(e)  a return in the form prescribed by the regulations containing such other particulars as may be so prescribed.

Maximum penalty: 20 penalty units.

(2)  For the purposes of subsection (1) the required period is:

(a)  28 days after the annual general meeting of the co-operative, or

(b)  if the annual general meeting of the co-operative is not held within the period specified in section 198 (2) (a), 28 days after the end of that period.

253   List of members to be furnished at request of Registrar

A co-operative must at the request in writing of the Registrar send to the Registrar within such time and in such manner as the Registrar specifies a full list of the members of the co-operative and of each subsidiary of the co-operative, together with such particulars with regard to those members as the Registrar specifies in the request.

Maximum penalty: 20 penalty units.

254   Special return to be furnished at request of Registrar

The Registrar may by direction in writing require a co-operative to furnish to the Registrar a special return in the form, within the time, and relating to the subject-matter, specified by the Registrar, and the co-operative must comply with the direction.

Maximum penalty: 20 penalty units.

Division 7 Name and registered office

255   Name to include certain matter

(cf Vic Act s 252)

(1)  The name of a co-operative may consist of words, numbers or a combination of both.

(2)  The name of a co-operative must include the word “Co-operative” or the abbreviation “Co-op.”.

(3)  The word “Limited” or the abbreviation “Ltd.” must be the last word of the name.

(4)  A body corporate which is formed or incorporated under any Act other than this Act must not register under that other Act by any name which includes the word “Co-operative” or the abbreviation “Co-op.” or any word or words importing a similar meaning.

Maximum penalty: 20 penalty units.

(5)  Subsection (4) does not apply to:

(a)  a co-operative housing society within the meaning of the Co-operation Act 1923, or

(b)  a credit union or foreign society within the meaning of the Financial Institutions (NSW) Code, or

(c)  a company or society formed or incorporated under any other Act before the commencement of the Co-operation Act 1923, or

(d)  the Farmers and Settlers Co-operative Insurance Company of Australia Limited, or

(e)  a foreign co-operative registered under Part 13A, or

(f)  a co-operative exempted by the regulations from the operation of that subsection and that complies with any conditions to which the exemption is made subject, or

(g)  a co-operative exempted by the Registrar in writing from the operation of that subsection and that complies with any conditions to which the exemption is made subject, or

(h)  a corporation that is allowed under another Act to use the word “co-operative” or the abbreviation “co-op” in its name.

(6)  The Registrar is not to grant an exemption under this section unless satisfied that the body or organisation concerned is trading or carrying on business for the purpose of promoting the economic interests of its members in accordance with co-operative principles or for any charitable purpose. The expression charitable purpose includes any benevolent, philanthropic or patriotic purpose.

(7)  An exemption granted by the Registrar may be limited as to time.

(8)  The Registrar may vary the conditions of an exemption or revoke an exemption by giving notice in writing of the variation or revocation to the body or any member of the controlling body of the organisation.

256   Approval for omission of “Limited”

(1)  In the case of a co-operative the rules of which prohibit the payment of dividends or the distribution of assets to members, the Registrar may by order in writing, approve of the omission from the name of the word “Limited”.

(2)  Such an approval may be granted subject to conditions and the conditions to which an approval is subject may be varied from time to time by the Registrar by notice in writing to the co-operative.

(3)  Any conditions to which the Registrar’s approval is subject are binding on the co-operative and must, if the Registrar so directs, be inserted in the rules of the co-operative.

(4)  The rules of the co-operative may be altered by special resolution to give effect to any such direction.

(5)  The Registrar may at any time by notice in writing to the co-operative revoke an approval under this section but only after giving the co-operative an opportunity to make submissions to the Registrar on the matter.

(6)  An approval under this section operates to exempt the co-operative from the requirement that the word “Limited” form part of its name.

257   Use of abbreviations

A description of a co-operative is not inadequate or incorrect merely because of one or more of the following:

(a)  the use of the abbreviation “Co-op.” instead of the word “Co-operative” in the co-operative’s name,

(b)  the use of the abbreviation “Ltd.” instead of the word “Limited” in the co-operative’s name,

(c)  the use of the symbol “&” instead of the word “and” in the co-operative’s name,

(d)  the use of any of those words instead of the corresponding abbreviation or symbol in the co-operative’s name,

(e)  the use of any abbreviation or elaboration of the name of the co-operative that is approved in a particular case or for a particular purpose by the Registrar in writing.

258   Name to appear on business documents etc

(cf Vic Act s 254)

(1)  The name of a co-operative must appear in legible characters:

(a)  on its seal, and

(b)  in all notices, advertisements and other official publications of the co-operative, and

(c)  in all its business documents.

(2)  If subsection (1) is contravened, the co-operative is guilty of an offence.

Maximum penalty: 20 penalty units.

(3)  If an officer of a co-operative or a person on its behalf:

(a)  uses any seal of the co-operative, or

(b)  issues or authorises the issue of any notice, advertisement or other official publication of the co-operative, or

(c)  signs or authorises to be signed on behalf of the co-operative any business document of the co-operative,

      in or on which the co-operative’s name does not appear in legible characters is guilty of an offence.

Maximum penalty: 20 penalty units.

(4)  Any officer or person who so signs or authorises to be signed any such business document that is a bill of exchange, cheque, promissory note or order for money or goods is also to be personally liable for the amount to the holder thereof, unless the amount is duly paid by the co-operative.

(5)  A director of a co-operative who knowingly authorises or permits a contravention of this section is guilty of an offence.

Maximum penalty: 20 penalty units.

(6)  In this section:

business document, in relation to a co-operative, means a document that is issued, signed or endorsed by or on behalf of the co-operative and is:

(a)  a business letter, statement of account, invoice or order for goods or services, or

(b)  a bill of exchange, promissory note, cheque or other negotiable instrument, or

(c)  a receipt or letter of credit issued by the co-operative, or

(d)  a document of a class prescribed by the regulations as a class of business documents.

259   Change of name of co-operative

(cf Vic Act s 255)

(1)  A co-operative may by special resolution change its name to a name approved by the Registrar. A change of name must be advertised as prescribed.

(2)  A change of name does not take effect until:

(a)  the Registrar has noted the change on the certificate of incorporation of the co-operative, or

(b)  the certificate of incorporation is surrendered to the Registrar and a replacement certificate of incorporation is issued in the new name.

(3)  A change of name by a co-operative does not affect:

(a)  the identity of the co-operative, or

(b)  the exercise of any rights, or the enforcement of any obligations, by or against the co-operative or any person, or

(c)  the continuation of any legal proceedings by or against the co-operative.

(4)  Any legal proceedings that might have been continued or commenced by or against the co-operative in its former name may be continued or commenced by or against the co-operative in its new name.

(5)  The Registrar may refuse to approve a change of name if the Registrar thinks the new name is undesirable.

(6)  The Registrar may direct a co-operative to change its name if the Registrar is of the opinion that the name is such as is likely to be confused with the name of a body corporate or a registered business name.

260   Restriction on use of word “co-operative” or similar words

(1)  A person, other than a co-operative, must not trade, or carry on business, under a name or title containing the word “co-operative”, the abbreviation “co-op” or words importing a similar meaning.

(2)  Subsection (1) does not apply to:

(a)  an entity mentioned in section 255 (5), or

(b)  a person or body exempted by the Registrar under this section.

(3)  A person or body may apply to the Registrar for exemption from subsection (1).

(4)  The Registrar may, by written notice given to the person or body, grant an exemption for such time and on such terms and conditions as the Registrar determines. An exemption can provide that specified provisions of this Act apply to the person or body as if the person or body were a co-operative, and the specified provisions then apply accordingly (as if a reference in those provisions to a co-operative included a reference to the person or body).

(5)  The Registrar may, at any time:

(a)  revoke an exemption, or

(b)  vary or revoke the terms or conditions of an exemption.

(6)  A person who contravenes this section or a condition of an exemption under this section, and every director or other person having the control and management of a body contravening this section or the condition, is guilty of an offence.

Maximum penalty: 20 penalty units.

261   Registered office of co-operative

(cf Vic Act s 256)

(1)  A co-operative must have a registered office.

(2)  A co-operative must, at the premises of its registered office, publicly and conspicuously display a notice stating the name of the co-operative and identifying the premises as its registered office.

(3)  Not later than 28 days after changing the address of its registered office, a co-operative must give the Registrar written notice of the new address.

Maximum penalty: 20 penalty units.

Part 10 Funds, property etc

Division 1 Power to raise money etc

262   Meaning of obtaining financial accommodation

(cf Vic Act s 257)

A reference in this Division to the obtaining of financial accommodation includes a reference to the obtaining of credit and the borrowing or raising of money by any means.

263   Fund raising to be in accordance with Act and regulations

(cf Vic Act s 258)

(1)  The regulations may impose requirements and restrictions on the obtaining of financial accommodation and the giving of security in connection with the obtaining of financial accommodation by a co-operative.

(2), (3)  (Repealed)

263A   Limits on deposit taking

(cf Vic Act s 259)

A co-operative must not accept money on deposit unless:

(a)  the co-operative was authorised by its rules (in whatever terms made or adopted) immediately before 1 December 1997 to accept money on deposit, or

(b)  the co-operative was a deposit-taking body corporate immediately before it became a co-operative and it is authorised by its rules to accept money on deposit, or

(c)  in the case of a merged co-operative, one or more of the co-operatives involved in the merger was a deposit-taking co-operative immediately before the registration of the merged co-operative and the merged co-operative is authorised by its rules to accept money on deposit.

263B   Members etc not required to see to application of money

(cf Vic Act s 260)

A member or other person from whom a co-operative obtains financial accommodation is not required to see to its application and is not affected or prejudiced by the fact that in doing so the co-operative contravened any provision of this Act or the regulations or the rules of the co-operative.

264   Registrar’s directions concerning fund raising

(1)  The Registrar may by written notice served on a co-operative give a direction to the co-operative as to the manner in which it is to exercise its functions in connection with the activities of the co-operative in obtaining financial accommodation.

(2)  Such a direction may make provision for any one or more of the following matters:

(a)  requiring the co-operative to cease obtaining financial accommodation or to cease obtaining financial accommodation in a particular way,

(b)  requiring the co-operative to repay in accordance with the direction all or part of financial accommodation obtained,

(c)  requiring the co-operative to re-finance in a specified manner financial accommodation repaid in accordance with the Registrar’s direction,

(d)  the manner in which the co-operative is permitted to invest or utilise the proceeds of financial accommodation it obtains.

265   Subordinated debt

(1)  A co-operative has power to incur subordinated debt.

(2)  Subordinated debt is debt incurred under an agreement whereby, in the event of the winding up of the co-operative, any claim of the creditor against the co-operative in respect of the debt is to rank in priority:

(a)  equally with the claim of any other creditor who is a party to a similar agreement, and

(b)  except as provided by paragraph (a), after the claims of any other creditor of the co-operative and before the claims of members to repayment of any share capital in the co-operative.

(3)  Any such agreement has effect despite the provisions of Division 6 (Proof and ranking of claims) of Part 5.6 of the Corporations Act (as applying under Division 4 of Part 12 of this Act).

266   Application of Corporations Act to issues of debentures

(cf Vic Act s 263)

(1)  Subject to subsection (2), the debentures of a co-operative are declared to be applied Corporations legislation matters for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to the provisions of Part 1.2A (Disclosing entities), Chapter 2L (Debentures), Chapter 6D (Fundraising) and Part 7.10 (Market misconduct and other prohibited conduct relating to financial products and financial services) of the Corporations Act, subject to the following modifications:

(a)  the provisions apply as if a co-operative were a company,

(b)  a reference in those provisions to a corporation includes a reference to a co-operative,

(c)  a reference in those provisions to ASIC is a reference to the Registrar.

Note. See the note to section 10 (1).

(2)  The provisions of the Corporations Act made applicable to the debentures of a co-operative by this section do not apply to the following:

(a)  a loan to which section 268 of this Act applies,

(b)  an issue of debentures of a co-operative that is made:

(i)  solely to members, or

(ii)  solely to members and employees of the co-operative, or

(iii)  to a person who on becoming an inactive member of the co-operative has had his or her share capital converted to debt.

(3)  Expressions used in this section that are not defined in this Act have the same meaning as in the Corporations Act.

(4)  The Registrar may exempt a co-operative from any of the requirements of the Corporations Act applied by this section.

(5)  An exemption may be granted unconditionally or subject to conditions. A co-operative that contravenes a condition of an exemption is taken not to be exempt from the requirements of the Corporations Act applied by this section.

266A   Disclosure statement

(cf Vic Act s 264)

(1)  This section applies to the issue of debentures of a co-operative where the issue is made:

(a)  solely to members, or

(b)  solely to members and employees of the co-operative.

(2)  Before issuing to the person debentures to which this section applies, a co-operative must provide a person with a disclosure statement, approved by the Registrar, and containing such information as is reasonably necessary to enable a person to make an informed assessment of the financial prospects of the co-operative, including:

(a)  the purpose for which the money raised by the co-operative by the issue of debentures is to be used, and

(b)  the rights and liabilities attaching to the debentures, and

(c)  the financial position of the co-operative, and

(d)  the interests of the directors of the co-operative in the issue of the debentures, and

(e)  any compensation or consideration to be paid to officers or members of the co-operative in connection with the issue of debentures, and

(f)  such other matters as the Registrar directs.

(3)  Sections 17 (except subsections (2), (4) and (11)) and 28A apply to the approval of a disclosure statement under this section with any necessary modifications and in particular as if any reference in section 17 to a formation meeting were a reference to the issue of debentures.

266B   Approval of board for transfer of debentures

(cf Vic Act s 265)

A debenture of a co-operative cannot be sold or transferred except with the consent of the board and in accordance with the rules of the co-operative.

267   Application of Corporations Act—re-issue of redeemed debentures

Debentures issued by a co-operative to any of its members are declared to be applied Corporations legislation matters for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to section 563AAA of the Corporations Act as if a co-operative were a company.

268   Compulsory loan by member to co-operative

(cf Vic Act s 267)

(1)  If the rules of the co-operative so provide, the co-operative may require its members to lend money, with or without security, to the co-operative, in accordance with a proposal approved by special resolution of the co-operative.

(2)  The proposal must not require a loan to be for a term exceeding 7 years or such other term as is prescribed by the regulations.

(3)  The proposal must:

(a)  be accompanied by a disclosure statement, approved by the Registrar, that explains the purpose for which the money raised by the co-operative pursuant to the proposal is to be used and includes any other information that the Registrar directs, and

(b)  clearly show the total amount of the loan to be raised by the co-operative and the basis on which the money required to be lent by each member is to be calculated, and

(c)  be accompanied by a statement informing the member that the member may inform the board by notice on or before the date specified in the statement (being a date before the passing of the special resolution) that the member resigns on the passing of the special resolution.

(4)  If the proposal so allows, the board of the co-operative may, in accordance with the terms of the proposal, deduct the money required to be lent by a member to the co-operative from money due from the co-operative to the member in respect of his or her dealings with the co-operative.

(5)  A proposal to deduct money referred to in subsection (4) must, in addition, clearly show:

(a)  the basis on which the money is to be deducted, and

(b)  the time and manner of making the deductions.

(6)  When approved, the proposal is binding on:

(a)  all members of the co-operative at the date of passing of the special resolution other than a member who has given a notice of resignation in accordance with subsection (3) (c), and

(b)  all persons who become members of the co-operative after that date and before the total amount of the loan to be raised pursuant to the proposal has been raised.

(7)  Sections 17 (except subsections (2), (4) and (11)) and 28A apply to the approval of a disclosure statement under this section with any necessary modifications and in particular as if any reference in section 17 to a formation meeting were a reference to the special resolution.

268A   Interest payable on compulsory loan

(cf Vic Act s 268)

(1)  The rate of interest payable by a co-operative in respect of a loan under section 268 during any period is:

(a)  in the case of a co-operative with share capital:

(i)  the rate (or, if there is more than one rate, at the higher or highest rate) of dividend payable in respect of that period on the share capital of the co-operative, or

(ii)  if the rate of dividend payable in respect of that period has not been determined, at the rate (or the higher or highest rate) payable in respect of the immediately preceding period for which a rate has been determined, or

(iii)  if a rate of dividend has never been determined in respect of the share capital of the co-operative, at the rate that the board of the co-operative considers reasonable, or

(b)  in the case of a co-operative without share capital, at the rate that the board of the co-operative considers reasonable, or

(c)  if the rules provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b), at that higher rate.

(2)  A member may agree to the rate of interest being less than that which would otherwise be payable under this section and may agree to no interest being paid.

Division 2 Co-operative capital units (CCUs)

269   General nature of CCU

(1)  A co-operative capital unit is an interest issued by a co-operative conferring an interest in the capital (but not the share capital) of the co-operative.

(2)  A CCU:

(a)  is personal property,

(b)  is transferable or transmissible as provided by this Act and the rules of the co-operative, subject to the terms of issue of the CCU,

(c)  is, subject to the rules of the co-operative, capable of devolution by will or by operation of law.

(3)  Subject to subsection (2):

(a)  the laws applicable to ownership of and dealing with personal property apply to a CCU as they apply to other property, and

(b)  equitable interests in respect of a CCU may be created, dealt with and enforced as in the case of other personal property.

(4)  A transferor of a CCU remains the holder of the CCU until the transfer is registered and the name of the transferee is entered in the register of CCU holders in respect of the CCU.

(5)  Despite any rule of law or equity to the contrary, a condition subject to which a CCU is issued, whether the CCU is issued before or after the commencement of this subsection, is not invalid merely because the CCU is, by the condition, made irredeemable or redeemable only on the happening of a contingency however remote or at the end of a period however long.

269A   Priority of CCUs on winding up

(1)  On a winding up of a co-operative, a debt owed to a person as the holder or former holder of a CCU issued by the co-operative is to rank for priority of payment in accordance with the terms of issue of the CCU.

(2)  Such a debt may rank as a secured debt if it is secured but if it is unsecured may not rank in priority to other unsecured debts. It may rank equally with or behind unsecured debts and (if the debt ranks behind unsecured debts) may rank in priority to, equally with or behind debts due to contributories.

270   Division 1 applies to issue of CCUs

(1)  The issuing of CCUs is to be considered to be the obtaining of financial accommodation and accordingly Division 1 applies to the issue of CCUs.

(2)  For the purpose of Division 1, a CCU is to be considered to be a debenture.

271   CCUs can be issued to non-members

CCUs may be issued to persons whether or not they are members of the co-operative.

272   Minimum requirements for rules concerning CCUs

The rules of a co-operative that permit the co-operative to issue CCUs must contain provision to the effect of the following provisions and must not contain provisions that are inconsistent with the following provisions:

•  each holder of a CCU is entitled to one vote only at a meeting of the holders of CCUs,

•  the rights of the holders of CCUs may be varied only in the manner and to the extent provided by their terms of issue and only with the consent of at least 75% of the holders of CCUs given in writing or at a meeting,

•  the holder of a CCU has, in the person’s capacity as such a holder, none of the rights or entitlements of a member of the co-operative,

•  the holder of a CCU is entitled to receive notice of all meetings of the co-operative and all other documents in the same manner as the holder of a debenture of the co-operative.

273   CCUs not to be issued unless terms of issue approved by Registrar

(1)  A co-operative is not to issue CCUs unless:

(a)  the terms of issue have been approved by a special resolution of the co-operative, and

(b)  the issue is made pursuant to an offer accompanied by a copy of a statement approved by the Registrar for the purposes of the issue, and

(c)  the Registrar approves of the terms of the issue.

(2)  The terms of issue must specify the following (but this subsection does not limit the contents of the terms of issue):

(a)  details of entitlement to repayment of capital,

(b)  details of entitlement to participate in surplus assets and profits,

(c)  details of entitlement to interest on capital (whether cumulative or non-cumulative interest),

(d)  details of how capital and interest on capital are to rank for priority of payment on a winding up.

(3)  The statement approved by the Registrar for the purposes of the issue is to set out the terms of the issue, the rights of the holders of CCUs, the terms of redemption and the manner of transferability of CCUs.

(4)  The Registrar is not to approve of the terms of issue unless satisfied that they will not result in a failure to comply with co-operative principles and are not contrary to the rules of the co-operative or this Act.

274   Directors’ duties concerning CCUs

In discharging their duties, it is proper for the directors of a co-operative to take into account that the holders of CCUs have none of the rights and entitlements of, and are not entitled to be regarded as, members of the co-operative.

275   Redemption of CCUs

(1)  The redemption of CCUs is not to be considered to be a reduction in the share capital of the co-operative.

(2)  A co-operative may redeem CCUs but only on such terms and in such manner as is provided by the terms of their issue and only if they are fully paid up.

(3)  CCUs may not be redeemed except out of profits that would otherwise be available for dividends or out of the proceeds of a fresh issue of shares, or an approved issue of CCUs, made for the purpose of the redemption.

(4)  An issue of CCUs is an “approved issue” for the purposes of subsection (3) if there is the same entitlement to priority of payment of capital and dividend in relation to shares in the co-operative as there was for the redeemed CCUs.

(5)  Any premium payable on redemption is to be provided for out of profits or out of the CCU premium account or share premium account.

276   Capital redemption reserve

(1)  This section applies if CCUs are redeemed otherwise than out of proceeds of a fresh issue of shares.

(2)  Out of profits that would otherwise have been available for dividends there is to be transferred to a reserve called the capital redemption reserve a sum equal to the nominal amount of the CCUs redeemed and the provisions of this Act relating to the reduction of share capital of a co-operative apply as if the capital redemption reserve were paid-up share capital of the co-operative.

(3)  The capital redemption reserve may be applied in paying up unissued shares of the co-operative to be issued to members of the co-operative as fully-paid bonus shares.

277   Issue of shares in substitution for redemption

(1)  If a co-operative has redeemed or is about to redeem CCUs held by an active member of the co-operative, it may:

(a)  issue shares to the member up to the sum of the nominal value of the CCUs redeemed or to be redeemed, as if those CCUs had never been issued, or

(b)  pay up amounts unpaid on shares held by the member up to the sum of the nominal value of the CCUs redeemed or to be redeemed, as if those CCUs had never been issued.

(2)  This section applies only if the terms of issue of the CCUs provide for the conversion of CCUs held by an active member of the co-operative into shares of the co-operative.

Division 3 Receivers and managers

278   (Repealed)

279   Receivers and managers

Schedule 4 has effect.

Division 4 Disposal of surplus from activities

280   Retention of surplus for benefit of co-operative

(cf Vic Act s 271)

The board of a co-operative may resolve to retain all or any part of the surplus arising in any year from the business of the co-operative to be applied for the benefit of the co-operative.

281   Application for charitable purposes or members’ purposes

(cf Vic Act s 272)

(1)  The rules of a co-operative may authorise the co-operative to apply a part of the surplus arising in any year from the business of the co-operative for any charitable purpose. The expression charitable purpose includes any benevolent, philanthropic or patriotic purpose.

(2)  The rules of a trading co-operative may authorise the co-operative to apply a part of the surplus arising in any year from the business of the co-operative for supporting any activity approved by the co-operative.

(3)  The rules must limit the amount that may be applied under subsection (1) or (2) to a specified proportion of the surplus.

(4)  A co-operative may apply part of the surplus for a purpose and to the extent authorised by rules under subsection (1) or (2).

282   Distribution of surplus or reserves to members

(cf Vic Act s 273)

(1)  The rules of a trading co-operative may authorise the co-operative to apply a part of the surplus arising in any year from the business of the co-operative or a part of the reserves of the co-operative by:

(a)  distribution to members as a rebate on the basis of business done with the co-operative, or

(b)  the issue of bonus shares to members on the basis of the members’ dealings with the co-operative or on the basis of shares held by the members, or

(c)  the issue to members of a limited dividend for shares held by the members.

(2)  The amount of any rebate or dividend payable to a member under subsection (1) may, with the consent of the member, be applied:

(a)  in payment for the issue to the member of bonus shares, or

(b)  as a loan to the co-operative.

(3)  In this section limited dividend means a dividend that does not exceed the amount prescribed by the regulations or such other amount or rate as the Registrar may approve in any particular case.

283   Application of surplus to other persons

(cf Vic Act s 274)

(1)  If authorised by its rules, any part of the surplus arising in any year from the business of a trading co-operative may be credited to any person who is not a member, but is qualified to be a member, by way of rebate in proportion to the business done by him or her with the co-operative, if:

(a)  the person was a member at the time the business was done and the membership has lapsed, or

(b)  the person has applied for membership after the business was done.

(2)  Nothing in this section precludes the payment of a bonus to an employee in accordance with the terms of his or her employment.

Division 5 Prudential standards etc

284   Prudential standards may be prescribed

(1)  Regulations may be made for or with respect to the following matters:

(a)  the value of unencumbered assets, or values of specified classes of unencumbered assets, that a co-operative is required to have,

(b)  the value of liabilities, or values of specified classes of liabilities, that a co-operative is permitted to have,

(c)  the ratio of assets to capital and reserves that a co-operative is required to maintain,

(d)  requiring assets of a co-operative to be held as liquid assets,

(e)  the value or kind of assets of a co-operative that are required to be held as liquid assets,

(f)  other matters relating to liquid assets of a co-operative,

(g)  the imposition of other prudential requirements on co-operatives for the protection of members or creditors of co-operatives.

(2)  Without affecting the generality of subsection (1), regulations under this section may be made by reference to any of the following:

(a)  different classes of assets or liabilities,

(b)  proportions of assets or liabilities,

(c)  when a liability falls due,

(d)  the activities of the co-operative,

(e)  any other relevant factors.

(3)  Regulations for the purposes of this section may provide for the following:

(a)  the classification of assets of a co-operative as unencumbered assets or liquid assets, or otherwise,

(b)  the determination of the value of the assets and liabilities of a co-operative,

(c)  the adjustment of the value of assets of a co-operative in order to determine their value at a later time,

(d)  weightings to be given to assets for the purpose of calculating the ratio of assets to capital and reserves.

(4)  A co-operative must:

(a)  comply with regulations made under this section, and

(b)  take all reasonable steps to remedy any contravention of those regulations by the co-operative.

Maximum penalty: 100 penalty units.

(5)  If a co-operative contravenes subsection (4), a director of the co-operative who:

(a)  failed to take all reasonable steps to prevent the contravention, or

(b)  by a wilful act or omission caused the contravention,

      is guilty of an offence.

Maximum penalty: 50 penalty units.

285   Acquisition and disposal of assets

(cf Vic Act s 275)

(1)  A co-operative must not do any of the following things except as approved by special resolution by means of a special postal ballot:

(a)  sell or lease as a going concern, the undertaking of the co-operative or a part of the undertaking that relates to its primary activities the value of which represents 5% or more of the total value of the undertaking,

(b)  acquire from or dispose to a director or employee of the co-operative, or a relative (within the meaning of the Corporations Act) of such a director or employee or of the spouse of such a director or employee, of any property the value of which represents 5% or more of the total value of all the assets of the co-operative that relate to its primary activities,

(c)  acquire an asset the value of which exceeds 5% or more of the assets of the co-operative if the acquisition would result in the co-operative commencing to carry on an activity that is not one of its primary activities,

(d)  dispose of an asset if the disposal would result in the co-operative ceasing to carry on any primary activity of the co-operative, or in the ability of the co-operative to carry on any primary activity of the co-operative being substantially impaired either generally or in a particular geographical region.

(2)  The Council may by order in writing exempt a co-operative from compliance with all or specified provisions of this section and section 194 (Speci