107Purchase and repayment of shares

107 Purchase and repayment of shares

(1) The rules of a co-operative may authorise the co-operative:

(a) to purchase any share of a member in the co-operative at the request of the member; and

(b) to repay to a member, with the member’s consent, all or any part of the amount paid up on any share held by the member when the amount 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 be more than the total of:

(a) 5% of the nominal value of the issued share capital of the co-operative immediately before the start of the financial year; and

(b) the amount of any additional share capital of the co-operative subscribed for within that year.

(3) The members of a co-operative may, by special resolution, exempt a co-operative from the operation of subsection (2) in relation to 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 decided 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 business of the co-operative; or

(b) under the rules of the co-operative.

(5) A co-operative must not purchase 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.

(6) This section does not apply if the member has been expelled or has resigned from the co-operative or the member’s membership has been otherwise cancelled under Part 2.6.