Div 9Repurchase of shares

Division 9—Repurchase 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 Chapter 2 Part 6. 108—Deposits, debentures or CCUs instead of payment when share repurchased (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) for 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 if— (a) the board considers payment of the repurchase price would adversely affect the financial position of the co‑operative; or (b) the board and the member so agree. (3) The deposit, debenture or CCU bears interest during any period— (i) at the rate (or, if there is more than one rate, at the higher or highest rate) of dividend payable for that period on the share capital of the co‑operative; or (ii) if the rate of dividend payable for that period has not been decided—at the rate (or the higher or highest rate) payable for the immediately preceding period for which a rate has been decided; or (iii) if a rate of dividend has never been decided for the share capital of the co‑operative—at the rate the board of the co‑operative considers reasonable; or (b) for a co‑operative without share capital—at the rate the board of the co‑operative considers reasonable; or (c) if the rules of the co‑operative provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b)—at the 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 the rules of the co‑operative require) after the repurchase of the shares concerned. 109—Cancellation of shares A co‑operative must cancel any share purchased by or forfeited to the co‑operative under this Law or the rules of the co‑operative. Part 5—Membership Division 1—General 110—Becoming a member of co‑operative (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. (3) A minor may be admitted as a member of the co‑operative unless the rules of the co‑operative otherwise provide. (4) A corporation is not (merely because it is a corporation) disqualified from being a member of a co‑operative unless the rules of the co‑operative provide that corporations are disqualified from being members. (5) If 2 or more co‑operatives merge, 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 under its rules. 111—Members of co‑operative group (1) The members of a co‑operative group are— (a) the co‑operatives by which the co‑operative group is formed; and (b) any other co‑operative, admitted to membership in accordance with the rules of the co‑operative group; and (c) any other corporation or other body admitted to membership in accordance with subsection (2). (2) A corporation or other body, not being a co‑operative, may be admitted to membership of the co‑operative group if— (a) it is incorporated or registered under any other law, whether or not a law of this jurisdiction; and (b) in the opinion of the board of the co‑operative group, 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 co‑operative group. 112—Qualification for membership (1) A person is not qualified to be admitted to membership of a co‑operative unless— (a) there are reasonable grounds for believing the person will be an active member of the co‑operative; and (b) the person is otherwise eligible under the rules of the co‑operative. (2) The rules of a co‑operative must contain provisions that— (a) impose a duty on all persons who become members to be active members; and (b) set out the consequences of failing to be, or ceasing to be, an active member. 113—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. 114—Minors (1) A member of a co‑operative is not entitled to avoid any obligation or liability as a member under a contract, deed or other document entered into as a member on any ground relating to minority. (2) A minor is not competent to hold any office in a co‑operative. (3) A member of a co‑operative who is a minor is not entitled to vote, but this does not apply to joint membership of a co‑operative except where all the joint members are minors. (4) This section applies only to individuals. 115—Representatives of corporations (1) If a corporation is a member of a co‑operative, it may by instrument served on the co‑operative appoint a person to represent it in relation to its membership. (2) A corporation must not appoint a person to represent the corporation as a member of a co‑operative if the person is currently a member of the co‑operative or a representative of another corporation member. (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 corporation. (4) A person is not qualified to be appointed 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. 116—Notification of shareholders and shareholdings On the request of the board of a co‑operative, a corporation that is a member of the co‑operative must provide the board of the co‑operative with— (a) a list of the names of all the shareholders of the corporation and the number of shares held by each shareholder; or (b) in the case of a corporation without share capital—a list of the members of the corporation, within 7 days of the request. 117—Circumstances in which membership ceases—all co‑operatives (1) A person ceases to be a member of a co‑operative in each of the following circumstances and as otherwise provided by this Law: (a) if the member's membership is cancelled under Chapter 2 Part 6; (b) if the member is expelled or resigns under the rules of the co‑operative; (c) if— (i) the individual member becomes bankrupt or the corporate member becomes insolvent; 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 the death of the member; (e) if the contract of membership is rescinded on the ground of misrepresentation or mistake; (f) for a member that is a corporation—if the corporation 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. 118—Additional circumstances in which membership ceases—co‑operatives with share capital In the case of a co‑operative that has share capital, in addition to the circumstances in section 117, a member ceases to be a member if— (a) the member's total shareholding is transferred to another person under the rules of the co‑operative and the name of the transferee is entered in the register of members in respect of the shareholding; or (b) the member's total shareholding is forfeited under this Law or the rules of the co‑operative; or (c) the member's total shareholding is sold by the co‑operative under a power conferred by the rules of the co‑operative, and the name of the purchaser is entered in the register of members in respect of the shareholding; or (d) the member's total shareholding is purchased by the co‑operative under this Law; or (e) the amount paid up on the member's shares is repaid to the member under the rules of the co‑operative. 119—Carrying on business with too few members (1) A person who is a director of a co‑operative must not knowingly allow the co‑operative to continue to carry on business with fewer than the minimum number of members allowed (under subsection (3)) for more than 28 days after the number of members falls below that minimum number. (2) Each person who is found 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) in the case of a co‑operative group—2 co‑operatives; or (b) in the case of any other co‑operative— (i) if a lesser number than 5 is approved by the Registrar—that number of active members; or (ii) otherwise—5 active members. See section 20 for composite approvals. (4) The Registrar may, by written notice, 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 in the approved form before the period to be extended ends. Division 2—Rights and liabilities of members 120—Rights of membership not exercisable until registered etc (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 any payment to the co‑operative for membership or acquired any share or interest that is provided for in the rules of the co‑operative. (2) A co‑operative must ensure 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 (for subsection (2)): $2 000. 121—Liability of members to co‑operative (1) A member of a co‑operative is not, as a member, under any personal liability to the co‑operative, except as provided by this section. (2) A member of a co‑operative with 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 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. (4) This section does not affect a liability that a member of a co‑operative may have to the co‑operative in respect of— (a) any trade or other business conducted by the member with the co‑operative; or (b) any fines imposed on the member by the co‑operative. 122—Co‑operative to give information to person intending or applying to become a member (1) The board of a co‑operative must give each person intending or applying to become a member of the co‑operative— (a) a consolidated copy of the rules of the co‑operative; and (b) a copy of all special resolutions that would apply to the prospective member passed by the members of the co‑operative, except special resolutions providing for an amendment of the rules of the co‑operative; and (c) a copy of the most recent financial information reported to members of the co‑operative under Chapter 3 Part 3. (2) The board of a co‑operative may comply with subsection (1)— (a) by— (i) giving the person notice that the documents referred to in subsection (1) 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 this jurisdiction, including outside Australia; and (ii) making the documents available for inspection in person; or (b) if the person has elected to receive the documents as an electronic copy—by sending the person an electronic copy of the documents; or (c) if the person did not make the election—by directly notifying, in writing, that the documents are accessible on the website and specifying the direct address on the website where the documents may be accessed. A direct address may be specified, for example, by specifying the URL of the documents. 123—False copy of documents (1) A person who, in purported compliance with section 122— (a) gives a person intending or applying to become a member of a co‑operative a document as a copy of— Section 58 deals with false copies of rules. (2) A person who, in purported compliance with section 122— (a) makes available for inspection by a person intending or applying to become a member of a co‑operative a document as a copy of— 124—Entry fees and regular subscriptions (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 the fees and subscriptions on a person's ceasing to be a member. (2) The calculation of the amount of a particular member's regular subscription may be based on the value of business the member does with the co‑operative or on profits earned by the co‑operative on business done by the member with the co‑operative. (3) A co‑operative must give to any person intending or applying to become a member written notice of entry fees or regular subscriptions payable by a member to the co‑operative. (4) A person who becomes a member of the co‑operative is not liable to pay entry fees or regular subscriptions except— (a) the fees or subscriptions of which the person was given written notice before becoming a member; and (b) any regular subscriptions that are imposed in accordance with the rules of the co‑operative and of which the member has been given notice. 125—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 stated 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 stated dealings with the co‑operative for a fixed period. (3) In particular, the provisions of the rules of the co‑operative 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 a stated amount as liquidated damages for any failure to comply with a requirement authorised by this section. (4) Any amount required to be paid to the co‑operative as liquidated damages is, for the purposes of section 127, a debt payable by the member to the co‑operative and is accordingly subject to that section. (5) A contract authorised by this section is binding on the co‑operative and all other parties even though, apart from this Law, the contract would be invalid as being in restraint of trade. (6) Rules authorised by this section are authorised even though, apart from this section, the rules might be invalid as being in restraint of trade. 126—Fines payable by members (1) A co‑operative may impose a fine on a member for an infringement of the rules of the co‑operative if the rules so provide. (2) A fine imposed under subsection (1) must not be more than the maximum fine fixed by the rules of the co‑operative. (3) A fine must not be imposed unless— (a) 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, to show cause why the fine should not be imposed. (4) The co‑operative may set‑off the whole or any part of the fine against an amount payable to the member for produce delivered by the member to the co‑operative, but no part of the fine is to be set‑off against any advance payable to the member from the co‑operative under the rules of the co‑operative against produce so delivered. 127—Lien and set‑off (1) A co‑operative has, in relation to any debt payable by a member or former member to the co‑operative, a lien on each of the following: (a) the share or interest in the capital and the credit balance and deposits of the member or former member; (b) any rebate, bonus, dividend or interest payable to the member or former 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 former member, in or towards payment of the debt. (3) The lien created by this section may be enforced by the appropriation by the co‑operative of the thing that is subject to the lien, but only after at least 7 days notice has been given to the member or former member. (4) Any share in relation to which capital has been so appropriated must be cancelled. 128—Repayment of shares on expulsion or resignation (1) When a member is expelled or resigns from a co‑operative under its rules, the co‑operative must, within one year after the day of expulsion or resignation— (a) repay to the former member an amount (the repayable amount) made up of the amount paid up on the shares held by the member at the day of expulsion or resignation, less any amount owed by the member to the co‑operative at the day of expulsion or resignation under the rules of the co‑operative or any contract or otherwise; or (b) apply the repayable amount under subsection (2) if— (i) the board considers repayment would adversely affect the financial position of the co‑operative; or (ii) the board and the former member agree. (2) The repayable amount may be applied in one or more of the following ways: (a) 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; (b) 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; (c) the co‑operative may allot or issue debentures or CCUs of the co‑operative to the former member in satisfaction of the amount. (3) If the balance sheet of the co‑operative last issued before the expulsion or resignation of a member of the co‑operative disclosed a loss or deficiency, there must be a proportionate reduction in the capital to be repaid to the member. (4) That reduction must 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 or resignation of the member. (5) Shares for which capital has been repaid must be cancelled. Section 163deals with repayment of amounts owing because of cancelled membership. Section 164 and 165 deal with interest on, and repayment of, deposits, debentures and CCUs referred to in this section. Division 3—Disputes involving members 129—Grievance procedure (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 Division— member includes any person who was a member not more than 6 months before the dispute occurred. 130—Application to designated tribunal (1) The designated tribunal 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 designated tribunal 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 considers 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. Division 4—Oppressive conduct of affairs 131—Interpretation—extended meaning of member member, in relation to a co‑operative that has share capital, includes a person to whom a share in the co‑operative has been transmitted by will or by operation of law. 132—Application of Division This Division does not apply to anything done under Chapter 2 Part 6. 133—Application for order The following persons may apply to the Supreme Court for an order under this Division: (a) the Registrar; (b) a member who believes the affairs of the co‑operative are being conducted in a way that is— (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member; or (ii) contrary to the interests of the members as a whole; (c) a member who believes 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 members, was or would be— (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member; or (ii) contrary to the interests of the members as a whole. 134—Orders On application under this Division, the Supreme Court may make any order it considers appropriate 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 under the provisions of this Law 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 stated proceedings, or authorising a member or members of the co‑operative to institute, prosecute, defend or discontinue stated 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 stated conduct or from doing a stated act or thing; (i) an order directing a co‑operative to become registered as a company under the Corporations Act; (j) an order requiring a person to do a stated act or thing; (k) an order as to costs; (l) an order making amendments to the rules of the co‑operative. 135—Basis on which orders made The Supreme Court may make an order under this Division if it considers that— (a) the affairs of a co‑operative are being conducted in a way that is— (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member (an oppressed member), whether or not in the capacity of a member; or (ii) contrary to the interests of the members as a whole; or (b) 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 members, was or would be— (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member (an oppressed member), whether or not in the capacity of a member; or (ii) contrary to the interests of the members as a whole. 136—Winding up need not be ordered if members unfairly prejudiced by order The Supreme Court need not make an order under this Division for the winding up of a co‑operative if it considers the winding up of the co‑operative would unfairly prejudice an oppressed member or unfairly prejudice the members as a whole. 137—Application of winding up provisions If an order that a co‑operative be wound up is made under this Division, the provisions of this Law relating to the winding up of co‑operatives apply, with any modifications that are necessary, as if the order had been made on an application filed in the Supreme Court by the co‑operative. 138—Changes to rules (1) If an order under this Division makes any amendment of the rules of a co‑operative— (a) the amendment has effect as if it had been properly made by special resolution of the co‑operative; and (b) the co‑operative must not (despite any other provisions of this Law), without the leave of the Supreme Court, make any further amendment of the rules inconsistent with the provisions of the order. (2) On receiving a copy of an order amending the rules of a co‑operative the Registrar must register the amendment. 139—Copy of order to be filed with Registrar An applicant for an order under this Division must file an office copy of the order with the Registrar within 14 days after it is made. Division 5—Inspection of books 140—Order for inspection of books of co‑operative (cf Corporations Act section 247A) (1) On application by a member of a co‑operative, the Supreme Court may make an order— (a) authorising the applicant to inspect books of the co‑operative; or (b) authorising another person (whether a member or not) to inspect books of the co‑operative on the applicant's behalf. (2) A person authorised to inspect books may make copies of the books unless the Supreme Court orders otherwise. (3) A person who— (a) is granted leave under section 580; or (b) applies for leave under that section; or (c) is eligible to apply for leave under that section, may apply to the Supreme Court for an order under this section. (4) On application, the Supreme Court may make an order authorising— (a) the applicant to inspect books of the co‑operative; or (b) another person to inspect books of the co‑operative on the applicant's behalf. (5) The Supreme Court may make the order only if it is satisfied that— (a) the applicant is acting in good faith; and (b) the inspection is to be made for a purpose connected with— (i) applying for leave under section 580; or (ii) bringing or intervening in proceedings with leave under that section. (6) A person authorised to inspect books may make copies of the books unless the Supreme Court orders otherwise. 141—Ancillary orders (cf Corporations Act section 247B) If the Supreme Court makes an order under section 140, the court may make any other orders it considers appropriate, including either or both of the following: (a) an order limiting the use that a person who inspects books may make of information obtained during the inspection; (b) an order limiting the right of a person who inspects books to make copies in accordance with section 140(2). 142—Disclosure of information acquired in inspection (cf Corporations Act section 247C) (1) A person who inspects books on behalf of an applicant under section 140 must not disclose information obtained during the inspection. (2) Subsection (1) does not apply to the extent that the disclosure is to— (b) the applicant. (4) A defendant bears an evidential burden in relation to the matter in subsection (2). 143—Co‑operative or directors may allow member to inspect books (cf Corporations Act section 247D) The board of a co‑operative, or the co‑operative by a resolution passed at a general meeting, may authorise a member to inspect books of the co‑operative. Part 6—Active membership Division 1—Definitions 144—Meaning of primary activity 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. 145—Meaning of active member A member of a co‑operative is an active member of the co‑operative if the member— (a) uses or supports an activity of, or maintains a relationship or an arrangement with, the co‑operative, for carrying on a primary activity of the co‑operative, in the way and to the extent the rules of the co‑operative provide; or (b) maintains any other relationship or arrangement with the co‑operative for carrying on a primary activity of the co‑operative that the National Regulations provide. 146—Meaning of active membership provisions and resolutions (1) Active membership provisions in the rules of a co‑operative are provisions in the rules that state— (a) which of the activities of the co‑operative are the primary activities of the co‑operative; and (b) the way in which, and the extent to which, a member of the co‑operative must use or support an activity of, or maintain a relationship or arrangement with, the co‑operative, for carrying on a primary activity of the co‑operative, to establish active membership of the co‑operative. (2) An active membership resolution is a resolution that would, if given effect to, make or amend active membership provisions in the rules of a co‑operative. Division 2—Active membership provisions 147—Number of primary activities required A co‑operative must have at least one primary activity. 148—Rules to contain active membership provisions The board of a co‑operative must ensure the rules of the co‑operative contain active membership provisions under this Part. 149—Factors and considerations for deciding primary activities and other matters (1) The board of a co‑operative must ensure the relevant factors and considerations are taken into account in deciding— (a) which of the activities of a co‑operative are its primary activities; and (b) the way and extent to which a member is required to use or support an activity of, or maintain a relationship or arrangement with, a co‑operative, for carrying on a primary activity of the co‑operative, to establish active membership of the co‑operative. (2) The relevant factors and considerations are— (a) the primary activity or (if more than one) the primary activities taken together must form the basic purpose for which the co‑operative exists and a significant contribution to the business of the co‑operative; and (b) the way and extent of required utilisation, support, relationship or arrangement should be reasonable when considered in relation to the activities of the co‑operative as a whole; and (c) any other factors and considerations prescribed by the National Regulations. (3) The National Regulations may— (a) provide for the things to be taken into account in deciding whether an activity makes a significant contribution to the business of the co‑operative; and (b) state minimum percentages of turnover, minimum amounts of income or minimum amounts of business necessary to constitute that significant contribution. (4) Factors and considerations may be prescribed by the National Regulations so as to apply to co‑operatives generally or to a specified class of co‑operatives. (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. 150—Active membership provisions—distributing co‑operatives The only active membership provisions that may be contained in the rules of a distributing co‑operative are— (a) provisions requiring a member to use an activity of the co‑operative for carrying on a primary activity stated in the provisions to establish active membership; and (b) any other active membership provisions the Registrar may approve. 151—Active membership provisions—non‑distributing co‑operatives—regular subscriptions (1) Active membership provisions for a non‑distributing co‑operative may include a provision to the effect that the payment of a regular subscription by a member of the co‑operative, to be applied to a primary activity of the co‑operative, is sufficient to establish active membership of the co‑operative. (2) A member of a non‑distributing co‑operative who would, on payment of the subscription, be an active member of the co‑operative is taken to be an active member until the subscription is payable. Division 3—Active membership resolutions 152—Notice of meeting (1) At least 21 days 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 stated— (a) state whether the member is eligible to vote on the resolution; and (b) state the full text of the proposed resolution; and (c) contain a copy of section 156. (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 decision as to the member's eligibility. (4) The Registrar may decide the matter, on the information available to the Registrar, by direction in writing to the co‑operative and the member. (5) The Registrar's decision as to eligibility has effect but only if given before the meeting concerned is due to be held. 153—Eligibility to vote on active membership resolution The only members of a co‑operative who are eligible to vote on an active membership resolution when the rules of the co‑operative do not contain active membership provisions are the members who would be active members if the resolution had already taken effect. 154—Eligibility of directors to vote on proposal at board meeting 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, all the directors are eligible to vote on that proposal at the meeting of the board of directors. 155—Other entitlements of members not affected A provision of this Division that 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 of inactive members 156—Cancellation of membership of inactive member (1) Subject to section 159 and 160, 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 decided 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 for an order under section 162 in relation to 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 stated in the rules of the co‑operative—that period. 157—Shares to be forfeited if membership cancelled (1) If a co‑operative has share capital, the board of the co‑operative must declare the shares of a member to be forfeited at the same time as the member's membership is cancelled under section 156. (2) The board's declaration has the effect of forfeiting the shares concerned. (3) Nothing in this section affects the operation of section 163. 158—Failure to cancel membership—offence by director 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 the failure commits an offence. 159—Deferral of cancellation by board (1) The board of a co‑operative may by resolution defer cancellation of a member's membership for up to one year— (a) if the board has reasonable grounds to believe a member has ceased to be an active member because of unusual circumstances that prevent the member fulfilling his or her active membership obligations; or (b) if— (i) the board thinks that during the deferral 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 within the deferral period to decide if a further resolution should be made under subsection (1). 160—Cancellation of membership prohibited in certain circumstances (1) Unless the National Regulations otherwise provide, the board of a co‑operative must not declare the membership of a member to be cancelled under this Part— (a) if the co‑operative is insolvent; or (b) if the co‑operative is under administration under Part 5.3A of the Corporations Act as applying under this Law; or (c) if a compromise or an arrangement is being administered in relation to the co‑operative; or (d) if the co‑operative is in the course of being wound up; or (e) if an appointment of a receiver (whether or not a receiver and manager) of any property of the co‑operative is in force; or (f) if the co‑operative has, for the purpose of being registered as a company under the Corporations Act, filed with the Registrar a copy of the entry made in the minutes of the co‑operative. (2) The National Regulations may provide that the board of a co‑operative must not declare the membership of a member to be cancelled under this Part in other circumstances that may be prescribed. 161—Notice of intention to cancel membership (1) The board of a co‑operative must ensure that not less than 28 days notice of its intention to declare the membership of a member to be cancelled is given to the member. (2) Notice is not required to be given under this section if— (a) the member's whereabouts are unknown to the co‑operative; and (b) the amount required to be repaid to the member in relation to the cancelled membership (whether because of the cancellation of shares or otherwise) is not more than $100 (or any other amount prescribed by the National Regulations). (3) Notice may be given by publication of a notice in a newspaper in the district in which the registered office of the co‑operative is situated if— (a) the member's whereabouts are unknown to the co‑operative; and (b) the amount required to be repaid to the member in relation to the cancelled membership (whether because of the cancellation of shares or otherwise) is more than the applicable amount under subsection (2)(b). 162—Order against cancellation (1) If the designated tribunal is satisfied the cancellation of a member's membership under section 156 was or would be unreasonable, the tribunal may, on application by the member or former member, direct that the membership should not have been cancelled or should not be cancelled. (2) An application for an order may be made only within 6 months after— (a) notice of the board's intention to declare the membership to be cancelled is given to the member under section 161(1) or is first published under section 161(3); or (b) if notice was not required as referred to in section 161(2)—the cancellation takes effect. (3) While an order is in force under this section— (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. (4) Reinstatement of a member under this section is to be effected under the directions of the designated tribunal. 163—Repayment of amounts owing because of cancelled membership (1) If the membership of a member of a co‑operative is cancelled under this Part, the co‑operative must, within one year after the date of cancellation— (a) repay to the former member the amount owing to the member because of the cancellation; or (b) apply the amount under subsection (2) if— (i) the board considers repayment would adversely affect the financial position of the co‑operative; or (ii) the board and the former member so agree. (2) The amount payable 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 164 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 as a donation to the co‑operative, but only if the former member consents in writing to the donation. (3) The amount payable to a former member because of the cancellation of membership includes any amount paid up for shares forfeited because 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 asks, be applied towards the cost of readmission to membership (including any subscription for share capital). (5) The co‑operative may retain the amount otherwise payable to a former member under this section, if— (a) the former member cannot be found by the co‑operative, after reasonable efforts by the co‑operative to find the former member; and (b) the amount is less than $100 (or any other amount prescribed by the National Regulations). 164—Interest on deposits, debentures and CCUs (1) This section applies when the amount payable to a former member under section 128 or 163 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— (i) at the rate (or, if there is more than one rate, at the higher or highest rate) of dividend payable for that period on the share capital of the co‑operative; or (ii) if the rate of dividend payable for that period has not been decided—at the rate (or the higher or highest rate) payable for the immediately preceding period for which a rate has been decided; or (iii) if a rate of dividend has never been decided for the share capital of the co‑operative—at the rate the board of the co‑operative considers reasonable; or (b) for a co‑operative without share capital—at the rate the board of the co‑operative considers reasonable; or (c) if the rules of the co‑operative provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b)—at the higher rate. (3) A former member may agree to the rate of interest being lower 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 applying under section 337 of this Law, do not apply to an allotment or issue of debentures or CCUs under this section: (a) Chapter 2L; (b) Chapter 6D. 165—Repayment of deposits, debentures and CCUs (1) A deposit, debenture or CCU to which an amount payable to a former member is transferred under this Division or section 128(2) 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 any shorter period the rules of the co‑operative may require) after cancellation of the member's membership. 166—Register of cancelled memberships A co‑operative must keep a register stating the particulars prescribed by the National Regulations of persons whose membership has been cancelled under this Part. Division 5—Entitlements of former members of distributing co‑operatives 167—Application of Division This Division applies only to distributing co‑operatives. 168—Former shareholders to be taken to be shareholders for certain purposes (1) Even though a person's shares in a co‑operative have been forfeited under this Part, the person is to be taken to be the holder of shares in the co‑operative (the same in all respects as those that were forfeited) for the following purposes— (a) the entitlement of a shareholder in relation to the purchase of shares in the co‑operative under an offer described in section 373(1)(a), (b) or (c)or the purchase of all the shares in the co‑operative, if the offer or purchase occurs within 2 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 404 is passed within 2 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 starts within 2 years after the person's shares were forfeited. (2) Subsection (1)(a) does not apply to— (a) an offer described in section 373(1)(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. (3) Subsection (1)(c) does not apply if the winding up is for a merger under Chapter 4 Part 3. (4) The entitlement under subsection (1)(a) of a person whose shares have been forfeited does not include an entitlement to vote on any matter. (5) This section does not apply to a forfeited shareholding in a co‑operative if section 169 operates so as to require the forfeited shareholding to be regarded as a forfeited shareholding in another co‑operative. 169—Entitlements of former shareholders on mergers etc (1) This section applies when a person's shares in a co‑operative (the original co‑operative) are forfeited under this Part and within 2 years after the forfeiture— (a) another co‑operative (the new co‑operative) is created because of a merger under Chapter 4 Part 3 involving the original co‑operative; or (b) the engagements of the original co‑operative are transferred to another co‑operative (the new co‑operative) under Chapter 4 Part 3. (2) A person referred to in subsection (1) is, for the purposes of section 168 (and the further operation of this section), taken to have 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 decided as follows: (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 decision under subsection (3)(a) of the person's shareholding in the new co‑operative must 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 to the person) when the person was first taken to have 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 because of any bonus share issue or otherwise). 170—Set‑off of amounts repaid etc on forfeited shares (1) If a person has an entitlement because of section 169, the entitlement operates to end any liability of the co‑operative— (a) to repay to the person under section 163 any amount for the forfeited shares concerned; or (b) for a deposit held by the co‑operative, or debentures or CCUs allotted or issued to the person, under section 163 for the forfeited shares concerned (except a liability to pay interest that is payable but unpaid). (2) If an amount has been repaid to a person under section 163 or 165, the amount repaid is to be set‑off against any entitlement of the person under section 168 for 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 referred to in subsection (3) arise, the co‑operative concerned must— (a) give written notice of the matter by post to the person concerned at the person's address last known to the co‑operative, stating a period of not less than 28 days after the notice is given within which any amount repaid must be paid to the co‑operative; and (b) publish a general notice to that effect in a newspaper circulating generally in the district in which the registered office of the co‑operative is situated. 171—Exemption of co‑operatives from provisions (1) The Registrar may, by designated instrument, exempt a co‑operative or class of co‑operatives from any or all of the provisions of this Division. Chapter 3—Management and operation of co‑operatives Part 1—Management Division 1—The board 172—Board of directors (1) Subject to this Law and the rules of the co‑operative, the business of a co‑operative is to be managed by a board of directors. (2) The board must consist of at least 3 directors (not counting alternates of directors) and at least 2 of the directors must be ordinarily resident in Australia. (3) The board of directors may exercise all the powers of the co‑operative that are not, by this Law or the rules of the co‑operative, required to be exercised by the co‑operative in general meeting. (4) The acts of a director are valid despite any defect that may afterwards be discovered in his or her appointment or qualification. 173—Election of directors (1) Except as provided in subsections (2)—(4), the directors of a co‑operative are to be elected in the way specified in the rules of the co‑operative. (2) The first directors of— (a) a co‑operative formed under this Law are to be elected at its formation meeting; or (b) a co‑operative that was a corporation incorporated under another law are to be the directors in office at the date of registration under this Law. (3) If 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 2 or more persons for election as directors by a single resolution must not be made at a meeting of a co‑operative unless a resolution that it be 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 amending the rules of a co‑operative 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 give details of the qualifications and experience of the person nominated. (8) Unless this Law or the rules of a co‑operative otherwise provide, a director is eligible for re‑election at the end of his or her term of office. 174—Qualification of directors (1) A person is not qualified to be a director of a co‑operative unless he or she is— (a) a person who is an active member of the co‑operative or a representative of a corporation that is an active member of the co‑operative (a member director); or (b) a person who is qualified as provided by the rules of the co‑operative (a non‑member director) and who is not an active member of the co‑operative. A non‑member director either is not a member of the co‑operative or is an inactive member of the co‑operative. (2) The majority of directors must be member directors. (3) Subsection (2) does not prevent the rules of a co‑operative requiring that a greater number of directors than a majority must be member directors. (4) An employee of a co‑operative is not precluded from being a member director or non‑member director of the co‑operative if he or she is otherwise qualified. 175—Meeting of board of directors (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, and the consent may be a standing one. (4) A quorum of a meeting of the board of directors is 50% of the number of directors, or a greater number of directors specified in the rules of the co‑operative. (5) However, for a quorum, the member directors must outnumber the non‑member directors by at least one or, if a greater number is stated in the rules of the co‑operative, by that greater number. (6) 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. 176—Transaction of business outside meetings (1) The board of a co‑operative may, if it considers appropriate, 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 under this section. (7) Papers may be circulated among directors of the board for the purposes of this section by fax or other transmission of the information in the papers concerned. 177—Alternate directors (1) In the absence of a director from a meeting of the board, a person appointed by the board under the rules of the co‑operative concerned to act as an alternate for the director (an alternate director) may act in the place of the director. (2) The rules of the co‑operative may include provisions regulating the term of office, vacation of or removal from office, and remuneration of an alternate director. 178—Delegation by board If authorised by the rules of the co‑operative, the board may, by resolution, delegate the board's functions (other than this power of delegation) stated 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 form the majority of persons on the committee. 179—Removal from and vacation of office (1) The directors hold office, must retire, and may be removed from office, as provided by the rules of the co‑operative. (2) A director vacates office in the circumstances (if any) provided in the rules of the co‑operative and in any of the following cases: (a) if the director is a disqualified person under section 181; (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 written notice given by the director to the co‑operative; (d) if the person ceases to hold the qualification because of which the person was qualified to be a director; (e) if an administrator of the co‑operative's affairs is appointed under Chapter 4 Part 1; (f) if the director is removed from office under section 180. 180—Removal from office by resolution (cf Corporations Act section 203D) (1) A co‑operative may by ordinary resolution remove a director from office despite anything in— (a) the rules of the co‑operative; or (b) an agreement between the co‑operative and the director; or (c) an agreement between any or all members of the co‑operative and the director. (2) Notice of intention to move the resolution must be given to the co‑operative at least 2 months before the meeting is to be held. However, subject to subsection (3), if the co‑operative calls a meeting after the notice of intention is given under this subsection, the meeting may pass the resolution even though the meeting is held less than 2 months after the notice of intention is given. (3) At least 21 days notice must be given of a meeting of the members of the co‑operative at which a resolution will be moved— (a) to remove a director from office; or (b) to appoint a director in place of a director removed from office. (4) The co‑operative must give the director a copy of the notice as soon as practicable after it is received. (5) The director is entitled to put his or her case to members by— (a) giving the co‑operative a written statement for circulation to members (see subsections (6) and (7)); and (b) speaking to the motion at the meeting. (6) The written statement is to be circulated by the co‑operative to members by— (a) sending a copy to everyone to whom notice of the meeting is sent if there is time to do so; or (b) if there is not time to comply with paragraph (a)—having the statement distributed to members attending the meeting and read out at the meeting before the resolution is voted on. The co‑operative contravenes this subsection if it does not comply with this subsection. (7) The director's statement does not have to be circulated to members if it is more than 1 000 words long or defamatory. (8) If a person is appointed to replace a director removed under this section, the time at which— (a) the replacement director; or (b) any other director, is to retire is to be worked out as if the replacement director had become director on the day on which the replaced director was last appointed a director. (9) An offence based on subsection (4) or (6) is an offence of strict liability. Division 2—Disqualification from managing co‑operatives 181—Offence for disqualified person to manage co‑operative (1) A person is a disqualified person in relation to a co‑operative if the person— (a) is disqualified from managing corporations under Part 2D.6 of the Corporations Act; or (b) is disqualified from managing co‑operatives under this Division; or (c) is disqualified from managing co‑operatives under a corresponding co‑operatives law; or (d) is the auditor of the co‑operative or a business partner, employee or employer of the auditor. (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 is a disqualified person in relation to the co‑operative. (3) It is a defence to an offence arising under this section if the person had permission or leave— (a) in the case of an offence arising in relation to subsection (1)(a)—to manage corporations granted under section 206G of the Corporations Act and as referred to in section 206G(1)(a) of that Act; or (b) in any case—to manage co‑operatives given or granted under either section 188 or 189, and their conduct was within the terms of that permission or leave. 182—Automatic disqualification for offences (1) A person who has been convicted of an offence under this Law or a corresponding co‑operatives law is disqualified from managing co‑operatives during the period of 5 years after the conviction or, if sentenced to imprisonment, after his or her release from prison. (2) A person who has, whether before or after the commencement of this section in this jurisdiction, been convicted of an offence under a previous law of this or any other jurisdiction relating to co‑operatives is disqualified from managing co‑operatives during the period of 5 years after the conviction or, if sentenced to imprisonment, after his or her release from prison. (3) In proceedings for an offence arising under this Division in relation to this section, a certificate by an authority prescribed by the National Regulations for the purposes of this subsection stating that a person has been convicted of an offence under a stated law on a stated date is evidence the person was convicted of that offence on that date. (4) In proceedings for an offence arising under this Division in relation to this section, a certificate by an authority prescribed by the National Regulations for the purposes of this subsection stating that a person was released from prison on a stated date is evidence the person was released from prison on that date. 183—Extension of period of automatic disqualification (cf Corporations Act section 206BA) (1) This section applies if a person is disqualified from managing co‑operatives on being convicted of an offence under the Corporations Act, this Law, a corresponding co‑operatives law, or a previous law of this or any other jurisdiction relating to co‑operatives. (2) On application by the Registrar, the Supreme Court may extend the period of disqualification by up to an additional 15 years. (3) The Registrar must apply— (a) before the period of disqualification begins; or (b) before the end of the first year of the disqualification. (4) The Registrar may apply only once in relation to the disqualification. (5) In determining whether an extension is justified (and if so, for how long), the Supreme Court may have regard to any matters that the court considers appropriate. 184—Court's power of disqualification—contravention of civil penalty provision (cf Corporations Act section 206C) (1) On application by the Registrar, the Supreme Court may disqualify a person from managing co‑operatives for a period that the court considers appropriate if— (a) a declaration is made under section 554 that the person has contravened a civil penalty provision; and (b) the court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the court may have regard to— (a) the person's conduct in relation to the management, business or property of any corporation; and 185—Court's power of disqualification—insolvency and non‑payment of debts (cf Corporations Act section 206D) (1) On application by the Registrar, the Supreme Court may disqualify a person from managing co‑operatives for up to 20 years if— (a) within the last 7 years, the person has been an officer of 2 or more entities (being co‑operatives or other corporations) when they have failed; and (b) the court is satisfied that— (i) the manner in which the entity was managed was wholly or partly responsible for the entity failing; and (ii) the disqualification is justified. (2) For the purposes of subsection (1), an entity fails if— (a) a court orders the entity to be wound up because the court is satisfied that it is insolvent; or (b) the entity enters into voluntary liquidation and creditors are not fully paid or are unlikely to be fully paid; or (c) the entity executes a deed of arrangement and creditors are not fully paid or are unlikely to be fully paid; or (d) the entity ceases to carry on business and creditors are not fully paid or are unlikely to be fully paid; or (e) a levy of execution against the entity is not satisfied; or (f) a receiver, receiver and manager, or provisional liquidator is appointed in relation to the entity; or (g) the entity enters into a compromise or arrangement with its creditors; or (h) the entity is wound up and a liquidator lodges a report about the entity's inability to pay its debts. (3) In determining whether the disqualification is justified, the Supreme Court may have regard to— (a) the person's conduct in relation to the management, business or property of any entity; and Action may be able to be taken under section 206D of the Corporations Act in the circumstances to which this section applies, whether or not action is taken under this section. 186—Court's power of disqualification—repeated contraventions of Law (cf Corporations Act section 206E) (1) On application by the Registrar, the Supreme Court may disqualify a person from managing co‑operatives for the period that the court considers appropriate if— (a) the person— (i) has at least twice been an officer of a co‑operative that has contravened co‑operatives legislation while they were an officer of the co‑operative and each time the person has failed to take reasonable steps to prevent the contravention; or (ii) has at least twice contravened co‑operatives legislation while they were an officer of a co‑operative; or (iii) has been an officer of a body corporate and has done something that would have contravened section 192 or 193 if the body corporate had been a co‑operative; and (b) the court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Supreme Court may have regard to— (a) the person's conduct in relation to the management, business or property of any corporation; and co‑operatives legislation means this Law or a corresponding co‑operatives law. 187—Registrar's power of disqualification (cf Corporations Act section 206F(1)—4)) (1) The Registrar may disqualify a person from managing co‑operatives for up to 5 years if— (a) within 7 years immediately before the Registrar gives a notice under paragraph (b)(i)— (i) the person has been an officer of 2 or more co‑operatives; and (ii) while the person was an officer, or within 12 months after the person ceased to be an officer of those co‑operatives, each of the co‑operatives was wound up and a liquidator lodged a report about the co‑operative's inability to pay its debts; and (b) the Registrar has given the person— (i) a notice in the approved form requiring them to demonstrate why they should not be disqualified; and (ii) an opportunity to be heard on the question; and (c) the Registrar is satisfied that the disqualification is justified. (2) If the Registrar disqualifies a person from managing co‑operatives under this section, the Registrar must serve a notice on the person advising them of the disqualification. (3) The notice must be in the approved form. (4) The disqualification takes effect from the time when a notice referred to in subsection (2) is served on the person. 188—Registrar's power to give permission (cf Corporations Act section 206F(5)) (1) The Registrar may give a person whom the Registrar has disqualified from managing co‑operatives under this Division written permission to manage a particular co‑operative or co‑operatives. (2) The permission may be expressed to be subject to conditions and limitations determined by the Registrar. (3) A person must comply with any condition or limitation subject to which permission is given. Maximum penalty: $24 000 or imprisonment for 2 years, or both. 189—Court's power to grant leave (cf Corporations Act section 206G) (1) A person who is disqualified from managing co‑operatives may apply to the Supreme Court for leave to manage— (a) co‑operatives; or (b) a particular class of co‑operatives; or (c) a particular co‑operative; except where the person was disqualified by the Registrar under section 187. (2) The person must lodge a notice with the Registrar at least 21 days before commencing the proceedings. (3) The notice must be in the approved form. (4) The order granting leave may be expressed to be subject to conditions or limitations determined by the Supreme Court. (5) The person must lodge with the Registrar a copy of any order granting leave within 14 days after the order is made. (6) On application by the Registrar, the Supreme Court may revoke the leave. The order revoking leave does not take effect until it is served on the person. (7) A person must comply with any condition or limitation subject to which leave is granted. Maximum penalty: $24 000 or imprisonment for 2 years, or both. (8) This section does not apply to a person who is disqualified from managing co‑operatives because of section 181(1)(d). Division 3—Secretary 190—Secretary (1) A co‑operative must have a secretary. (2) The board of the co‑operative is to appoint the secretary. (3) The board may appoint a person to act as the secretary during the absence or incapacity of the secretary. (4) A person is not qualified to be appointed as, or to act as, the secretary unless the person is an adult who ordinarily resides in Australia. 191—Responsibility of secretary (cf Corporations Act section 188) (1) The secretary of a co‑operative contravenes this subsection if the co‑operative contravenes a provision of this Law specified in the National Regulations. (3) A person does not contravene subsection (1) if they show that they took all reasonable steps to ensure that the co‑operative complied with the section. Division 4—Duties and liabilities of directors, officers and employees 192—Care and diligence—civil obligation only (cf Corporations Act section 180) (1) Care and diligence—directors and other officers A director or other officer of a co‑operative must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they— (a) were a director or officer of a co‑operative in the co‑operative's circumstances; and (b) occupied the office held by, and had the same responsibilities within the co‑operative as, the director or officer. (2) Business judgment rule A director or other officer of a co‑operative who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity in respect of the judgment, if they— (a) make the judgment in good faith for a proper purpose (taking into account the co‑operative principles where relevant and other relevant matters); and (b) do not have a material personal interest in the subject matter of the judgment; and (c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and (d) rationally believe that the judgment is in the best interests of the co‑operative. The director's or officer's belief that the judgment is in the best interests of the co‑operative is a rational one unless the belief is one that no reasonable person in their position would hold. This subsection only operates in relation to duties under this section and their equivalent duties at common law or in equity (including the duty of care that arises under the common law principles governing liability for negligence)—it does not operate in relation to duties under any other provision of this Law or under any other laws. business judgment means any decision to take or not take action in respect of a matter relevant to the business operations of the co‑operative. 193—Good faith—civil obligations (cf Corporations Act section 181) (1) Good faith—directors and other officers A director or other officer of a co‑operative must exercise their powers and discharge their duties— (a) in good faith in the best interests of the co‑operative; and (b) for a proper purpose. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 194—Use of position—civil obligations(cf Corporations Act section 182) (1) Use of position—directors, other officers and employees A director, secretary, other officer or employee of a co‑operative must not improperly use their position to— (a) gain an advantage for themselves or someone else; or (b) cause detriment to the co‑operative. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 195—Use of information—civil obligations (cf Corporations Act section 183) (1) Use of information—directors, other officers and employees A person who obtains information because they are, or have been, a director or other officer or employee of a co‑operative must not improperly use the information to— (a) gain an advantage for themselves or someone else; or (b) cause detriment to the co‑operative. (2) The duty under subsection (1) continues after the person stops being a director or other officer or employee of the co‑operative. (3) A person who is involved in a contravention of subsection (1) contravenes this subsection. 196—Good faith, use of position and use of information—criminal offences (cf Corporations Act section 184) (1) Good faith—directors and other officer A director or other officer of a co‑operative commits an offence if they— (a) are reckless; or (b) are intentionally dishonest, and fail to exercise their powers and discharge their duties— (c) in good faith in the best interests of the co‑operative; or (d) for a proper purpose. (2) Use of position—directors, other officers and employees A director, other officer or employee of a co‑operative commits an offence if they use their position dishonestly— (a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the co‑operative; or (b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the co‑operative. (3) Use of information—directors, other officers and employees A person who obtains information because they are, or have been, a director or other officer or employee of a co‑operative commits an offence if they use the information dishonestly— (a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the co‑operative; or (b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the co‑operative. Maximum penalty: $200 000 or imprisonment for 5 years, or both. 197—Interaction of preceding sections with other laws (cf Corporations Act section 185) Sections 192—196— (a) have effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a co‑operative; and (b) do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability referred to in paragraph (a). This section does not apply to section 192(2) and (3) to the extent to which they operate on the duties at common law and in equity that are equivalent to the requirements of section 192(1). 198—Indemnification and exemption of officer or auditor (1) Exemptions not allowed (cf Corporations Act section 199A(1)) A co‑operative or a related corporation must not exempt a person (whether directly or through an interposed entity) from a liability to the co‑operative incurred as an officer or auditor of the co‑operative. (2) When indemnity for liability (other than for legal costs) not allowed (cf Corporations Act section 199A(2)) A co‑operative or a related corporation must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against any of the following liabilities incurred as an officer or auditor of the co‑operative— (a) a liability owed to the co‑operative or a related corporation; (b) a liability that is owed to someone other than the co‑operative or a related corporation and did not arise out of conduct in good faith. This subsection does not apply to a liability for legal costs. (3) When indemnity for legal costs not allowed (cf Corporations Act section 199A(3)) A co‑operative or related corporation must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against legal costs incurred in defending an action for a liability incurred as an officer or auditor of the co‑operative if the costs are incurred— (a) in defending or resisting proceedings in which the person is found to have a liability for which they could not be indemnified under subsection (2); or (b) in defending or resisting criminal proceedings in which the person is found guilty; or (c) in defending or resisting proceedings brought by the Registrar or a liquidator for a court order if the grounds for making the order are found by the court to have been established; or (d) in connection with proceedings for relief to the person under this Law in which the court denies the relief. Paragraph (c) does not apply to costs incurred in responding to actions taken by the Registrar or a liquidator as part of an investigation before commencing proceedings for the court order. (4) Meaning of outcome of proceedings (cf Corporations Act section 199A(4)) For the purposes of subsection (3), the outcome of proceedings is the outcome of the proceedings and any appeal in relation to the proceedings. 199—Insurance premiums for certain liabilities of director, secretary, other officer or auditor (cf Corporations Act section 199B) (1) A co‑operative or a related corporation must not pay, or agree to pay, a premium for a contract insuring a person who is, or has been, an officer or auditor of the co‑operative against a liability (other than one for legal costs) arising out of conduct involving a wilful breach of duty in relation to the co‑operative. (2) This section applies to a premium whether it is paid directly or through an interposed entity. 200—Certain indemnities, exemptions, payments and agreements not authorised and certain documents void (cf Corporations Act section 199C) (1) Sections 198 and 199 do not authorise anything that would otherwise be unlawful. (2) Anything that purports to indemnify or insure a person against a liability, or exempt them from a liability, is void to the extent that it contravenes section 198 or 199. 201—Application of Corporations Act—offences by officers of co‑operatives A co‑operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to Part 5.8 of the Corporations Act, subject to the following modifications: (a) section 589(2) and (3) of the Corporations Act are taken to be omitted; (b) the reference in section 592(1)(a) of the Corporations Act to 23 June 1993 is, if the Co‑operatives National Law Act of this jurisdiction so provides, to be read as a reference to a date specified in that Act of this jurisdiction for the purposes of this paragraph; 202—Application of Corporations Act—employee entitlements A co‑operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to Part 5.8A of the Corporations Act, subject to the modifications referred to in section 13(3) of this Law so far as they are relevant. 203—Directors' remuneration A director of a co‑operative must not receive remuneration for services as a director other than— (a) fees, concessions and other benefits approved at a general meeting of the co‑operative; and (b) director's travelling and other expenses that the director properly incurs— (i) in attending meetings of the board of directors of the co‑operative or any meetings of committees of directors of the co‑operative; and (ii) in attending any general meetings of the co‑operative. 204—Certain financial accommodation to officers prohibited (1) An officer of a co‑operative who is not a director of the co‑operative must not obtain financial accommodation from the co‑operative other than— (a) with the approval of a majority of the directors; or (b) under a scheme about providing financial accommodation to officers that has been approved by a majority of the directors. (2) For the purposes of this section, financial accommodation is taken to be obtained by an officer of a co‑operative if it is obtained by— (a) a proprietary company in which the officer is a shareholder or director; or (b) a trust of which the officer is a trustee or beneficiary; or (c) a trust of which a corporation is trustee if the officer is a director or other officer of the corporation. (3) A co‑operative must not give financial accommodation to an officer of the co‑operative if— (a) by giving the financial accommodation, the officer would contravene this section; and (b) the co‑operative knows or should reasonably know of the contravention. Maximum penalty (for subsection (3)): $50 000. 205—Financial accommodation to directors and associates (1) 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 (2); or (ii) given under a scheme approved under subsection (2); 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: $50 000. (2) For the purposes of subsection (1)(a)(i) and (ii), financial accommodation or a scheme is approved if— (a) it is approved by a resolution passed at a general meeting; and (b) the full details of the accommodation or scheme were made available to members at least 21 days before the meeting. (3) A director or an associate of a director must not obtain financial accommodation given in contravention of subsection (1). (4) 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. (5) 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. (6) 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. (7) In this section— associate of a director means— (a) the director's spouse or de facto partner; or (b) a person when acting in the capacity of trustee of a trust under which— (i) the director or director's spouse or de facto partner has a beneficial interest; or (ii) a corporation referred to in paragraph (c) has a beneficial interest; or (c) a corporation if— (i) the director or director's spouse or de facto partner has a material interest in shares in the corporation; and (ii) the nominal value of the shares is not less than 10% of the nominal value of the issued share capital of the corporation. (8) For the purposes of this section, a person has a material interest in a share in a corporation if— (a) the person has power to withdraw the share capital subscribed for the share or to exercise control over the withdrawal of the share capital; or (b) the person has power to dispose of the share 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. 206—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 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 under a special resolution of the co‑operative. 207—Management contracts (1) A co‑operative must not enter into a management contract unless the contract has first been approved by special resolution. (2) A management contract entered into in contravention of subsection (1) is void. 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 stated restrictions or conditions. Division 5—Declaration of interests 208—Declaration of interest (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. (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 stated entity; and (b) is to be regarded as interested in any contract that 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. (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 whichever is the later of the following: (i) the person becomes a director; (ii) the relevant facts as to holding the office or having the interest come to the person's knowledge; 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 decides, 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 purpose of the making of a decision 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 decision; or (b) take part in the making by the board of the decision. (9) Any vote cast in contravention of this section is not to be counted. 209—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. 210—Division does not affect other laws or rules Except as provided in section 211, this Division is in addition to, and does not limit, the operation of a rule of law or a provision in the rules of a co‑operative restricting a director from having an 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 director. 211—Certain interests need not be declared 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 a purchase of goods and services by the director from the co‑operative; or (b) a lease of land to the director by the co‑operative; or (c) a contract or proposed contract for the sale of agricultural products or livestock by the director to the co‑operative; or (d) a contract or proposed contract that, under the rules of the co‑operative, may be made between the co‑operative and a member; or (e) a contract or proposed contract of a class of contracts prescribed by the National Regulations 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 the terms that are usual and proper in similar dealings between the co‑operative and its members. Division 6—Co‑operative's registers, books and returns 212—Registers to be kept by co‑operatives (1) A co‑operative must keep the following registers under this section: (a) a register of directors; (b) a register of members (including their shareholding, if any); (c) a register of— (i) loans to, securities given by, debentures issued by, and deposits received by the co‑operative; and (ii) names of persons who have given loans or deposits to the co‑operative or hold securities or debentures given or issued by the co‑operative; (d) a register of loans made by or guaranteed by the co‑operative, and of securities taken by the co‑operative; (e) a register of CCUs issued by the co‑operative and their holders; (f) a register of memberships cancelled under Chapter 2 Part 6; (g) a register of notifiable interests under section 368; (h) other registers required by the National Regulations. (2) Registers kept by a co‑operative under this Law must be kept in the way, and contain the particulars, prescribed by this Law or the National Regulations. Other provisions of this Law require a co‑operative to keep other registers. 213—Location of registers (1) A register kept by a co‑operative under this Law 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 this jurisdiction. (3) The co‑operative must file 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. 214—Inspection of co‑operative's registers and other documents (1) A co‑operative must have at the office where the registers are kept and available during all reasonable hours for inspection by a member free of charge the following: (a) a copy of— (i) this Law; and (ii) the Co‑operatives National Law Act of this jurisdiction; and (iii) the National Regulations; and (iv) the local regulations; (b) a copy of the rules of the co‑operative and attachments to the rules required under section 421; (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; (e) the register of directors; (f) the register of members; (g) the register of names of persons who have given loans or deposits to the co‑operative or hold securities or debentures given or issued by the co‑operative; (h) the register of CCUs issued by the co‑operative and their holders; (i) other registers that the National Regulations may provide are to be open for inspection under this section. (2) If a register is not kept on a computer, the member may inspect the register itself. (3) If the register is kept on a computer, the member may inspect a hard copy of the information on the register unless the person and the co‑operative agree 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) free of charge unless the rules of the co‑operative require a fee to be paid, in which case the copy may be made on payment of the required fee. (5) The fee required by the rules of the co‑operative must not be more than the fee (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 the member may inspect or make under this section; and (b) give the member all reasonable help to inspect the document or make the copy. (7) The rules of a co‑operative may provide for the availability or non‑availability of minutes of board meetings and subcommittee meetings for inspection by members. (8) A co‑operative must have, at the place where the registers are kept and available during all reasonable hours for inspection by any person, the documents in relation to the co‑operative prescribed by the National Regulations. (9) Neither subsection (7) nor a rule referred to in that subsection affects access to minutes being obtained under section 143 or any other provision of this Law. 215—Use of information on registers (a) use information about a person obtained from a register kept by a co‑operative under this Law to contact or send material to the person; or (b) disclose information of that kind knowing the information is likely to be used to contact or send material to the person, unless the use or disclosure of the information is— (c) relevant to the holding of the directorship, membership, shares, CCUs, loans, securities, debentures or deposits concerned or the exercise of the rights attaching to them; or (d) approved by the board; or (e) necessary to comply with a requirement of this Law. (2) A person who contravenes subsection (1) is liable to compensate anyone else who suffers loss or damage because of the contravention. (3) A person who makes a profit from a contravention of subsection (1) owes a debt to the co‑operative. (4) The amount of the debt is the amount of the profit. (5) The use or disclosure of information referred to in subsection (1)(a) or (b) in the circumstances referred to in subsection (1)(c), (d) or (e) is authorised by this Law. Regarding subsection (5), item 2.1 of National Privacy Principle 2 in Schedule 3 to the Privacy Act 1988 of the Commonwealth provides: "An organisation must not use or disclose personal information about an individual for a purpose (the secondary purpose) other than the primary purpose of collection unless: [...] (g) the use or disclosure is required or authorised by or under law". 216—Notice of appointment or cessation of appointment of directors and officers to be lodged with Registrar (1) A co‑operative must give notice to the Registrar under this section of the appointment of a person as a director, chief executive officer or secretary of the co‑operative or a subsidiary of the co‑operative, and of the cessation of the appointment. (2) The notice must— (b) be given within 28 days after the appointment or cessation of appointment; and (c) state the particulars prescribed by the National Regulations of the appointment or cessation of appointment. 217—List of members to be lodged with Registrar at request of Registrar (1) A co‑operative must, at the written request of the Registrar, lodge with the Registrar, within the time and in the way the Registrar states, a full list of the members of the co‑operative and of each subsidiary of the co‑operative, together with the particulars about the members the Registrar states in the request. 218—Reports to be lodged with Registrar concerning prescribed particulars (1) A co‑operative must lodge with the Registrar, within the period or periods prescribed by, or determined in accordance with, the National Regulations, a report on any particulars prescribed by the National Regulations. 219—Special return to be lodged at request of Registrar (1) The Registrar may, by written direction, require a co‑operative to lodge with the Registrar a special return in the form, within the time, and relating to the subject matter, stated by the Registrar. (2) The co‑operative must comply with a direction under subsection (1). Chapter 3 Part 3 also requires reports to be lodged with the Registrar. Division 7—Name and registered office 220—Name to include certain matter (1) The name of a co‑operative may consist of words, numbers or a combination of both. (2) The name of the co‑operative must include the word Co‑operative or Cooperative or the abbreviation Co‑op or Coop. (3) The word Limited or the abbreviation Ltd must be the last word of the name. (4) A corporation that is formed or incorporated under an Act of this jurisdiction (but not this Law) must not register under that Act by a name including the word Co‑operative or Cooperative or the abbreviation Co‑op or Coop. (5) The Registrar must not register as the name of a co‑operative a name that contains anything the National Regulations declare is an unsuitable name. (6) However, the Registrar may register a name that contains a thing declared to be an unsuitable name, if the Registrar is satisfied the name is suitable for registration in the particular circumstances. (7) The local regulations may exempt or provide for the exemption of specified entities or kinds of entities from subsection (4). 221—Exception to requirement for using Limited in name (1) The Registrar may, by designated instrument, approve of the omission of the word Limited or the abbreviation Ltd from the name of a co‑operative, if its rules— (a) prohibit the co‑operative making distributions to its members and paying fees to its directors; and (b) require the directors to approve all other payments the co‑operative makes to directors. (2) The co‑operative must notify the Registrar as soon as practicable if any of those requirements or prohibitions in its rules are not complied with or if its rules are modified to remove any of those requirements or prohibitions. (3) 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. (4) 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. See section 62(1), which provides that rules may be amended by resolution passed by the board if the amendment does no more than give effect to a requirement, direction, restriction or prohibition imposed or given under the authority of this Law. (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 or the abbreviation Ltd form part of its name. 222—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 or Coop instead of the word Co‑operative or Cooperative in the co‑operative's name (see section 220(2)); (b) the use of the abbreviation Ltd instead of the word Limited in the co‑operative's name (see section 220(3)); (c) the use of the symbol & instead of the word and in the co‑operative's name; (d) the use of any of the 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. 223—Name to appear on seals, publications and business documents (1) A co‑operative must ensure its name appears in legible characters— (a) on each seal of the co‑operative; and (b) in all notices, advertisements and other official publications of the co‑operative; and (c) in all its business documents. (2) An officer of a co‑operative or a person on its behalf must not— (a) use any seal of the co‑operative; or (b) issue or authorise the issue of a notice, advertisement or other official publication of the co‑operative; or (c) sign or authorise to be signed on behalf of the co‑operative a business document of the co‑operative, in or on which the co‑operative's name does not appear in legible characters. (3) A director of a co‑operative must not knowingly authorise or permit a contravention of this section. business document of 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 National Regulations as a class of business documents. 224—Change of name of co‑operative (1) A co‑operative may by special resolution change its name to a name approved by the Registrar. (2) A change of name must be advertised as prescribed by the National Regulations. (3) A change of name does not take effect until— (a) the Registrar has noted the change on the certificate of registration of the co‑operative; or (b) the certificate of registration is surrendered to the Registrar and a replacement certificate of registration is issued in the new name. (4) A change of name by a co‑operative does not affect— (a) the identity of the co‑operative; or (b) the exercise of a right, or the enforcement of an obligation, by or against the co‑operative or a person; or (c) the continuation of legal proceedings by or against the co‑operative. (5) Legal proceedings that might have been continued or started by or against the co‑operative in its former name may be continued or started by or against the co‑operative in its new name. (6) The Registrar may refuse to approve a change of name if the Registrar thinks the new name is unsuitable. (7) The Registrar may direct a co‑operative to change its name if the Registrar considers the name is likely to be confused with the name of a corporation or a registered business name. The co‑operative must comply with the direction. (8) An offence based on subsection (7) is an offence of strict liability. 225—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 or Cooperative, the abbreviation Co‑op or Coop, or words importing a similar meaning. (2) The local regulations may exempt or provide for the exemption of specified entities or kinds of entities from subsection (1). 226—Registered office of co‑operative (1) A co‑operative must have a registered office. (2) A co‑operative is guilty of an offence if its registered office is not located in this jurisdiction. (3) 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. (4) Within 28 days after changing the address of its registered office, a co‑operative must give the Registrar written notice of the new address of its registered office. (5) A co‑operative's office is registered as the co‑operative's registered office while the address of the office is recorded in the register of co‑operatives by the Registrar and there specified as its registered office. (6) The Registrar may, by designated instrument, exempt a small co‑operative, a class of small co‑operatives or all small co‑operatives from subsection (3). (7) An exemption may be given unconditionally or subject to conditions. (8) An offence based on subsection (1), (2), (3) or (4) is an offence of strict liability. Part 2—Voting and meetings Division 1—Voting entitlements 227—Application of Part to voting The provisions of this Part apply to voting on all resolutions. 228—Voting (1) The right to vote attaches to membership and not shareholding. (2) Except as provided in subsections (3) and (4), each member has only one vote at a meeting of the co‑operative. (3) If its rules so provide, a member of a co‑operative group may have the number of votes (up to 5) at a general meeting that is stated in the rules. (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 decided under the rules. (6) In the case of shares held jointly by 2 or more members otherwise than by virtue of joint membership, each member holding the shares is entitled to vote in accordance with this section. See section 233 for the effect on a member's right to vote where a non‑member has a relevant interest in a share held by the member or in the member's right to vote. 229—Voting by proxy (1) If the rules of the co‑operative so provide, voting may be by proxy at a general meeting. (2) The instrument of proxy may state the way in which a proxy is to vote on a particular resolution. (3) The proxy must vote in the way 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 a co‑operative group—is entitled to represent a member of the group. (5) The rules of the co‑operative may limit the number of persons for whom a person may act as a proxy on the same question. 230—Inactive members not entitled to vote A member cannot vote if the member is not an active member of the co‑operative. 231—Control of right to vote (1) A person must not directly or indirectly control the exercise of the right to vote of a member. (2) If a person controls the exercise of the right of a member to vote at a meeting of a co‑operative— (a) the vote of the member is invalid; and (b) if the person is a member—the vote of the person is invalid. (3) Nothing in this section prevents— (a) the exercise of a vote by means of a proxy or power of attorney; or (b) a director controlling the vote of a corporate member; or (c) an agreed purchaser controlling a member's vote pending settlement. 232—Effect of disposal of shares on voting rights A member of a co‑operative cannot vote if the member has sold or transferred, or disposed of the beneficial interest in, all the member's shares, or agreed to do so. 233—Effect of relevant share and voting interests on voting rights (1) Subject to subsection (3) and section 228(5) and (6), a member of a co‑operative cannot 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 member's right to vote. (2) A member who cannot vote because of this section may apply to the Registrar to review the matter. (3) The Registrar may order that the member may vote if the Registrar is satisfied in the circumstances of the case that loss of the right to vote would be unjust or unreasonable, and the order of the Registrar has effect accordingly. 234—Rights of representatives to vote A person appointed under this Law to represent a member of a co‑operative or co‑operative group— (a) is entitled to receive notice of all meetings in the same way as the member represented; and (b) is entitled to exercise the same rights to vote as the member represented. 235—Other rights and duties of members not affected by ineligibility to vote A provision of this Law that 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. 236—Vote of disentitled member to be disregarded A vote cast by or on behalf of a member of a co‑operative when not entitled to vote under this Division or any other provision of this Law must be disregarded. Division 2—Resolutions 237—Decisions to be by ordinary resolution Unless this Law or the rules of the co‑operative otherwise provide, every question for decision by a co‑operative must be decided by ordinary resolution. 238—Ordinary resolutions An ordinary resolution is a resolution of a co‑operative that is passed by a simple majority at a general meeting of the co‑operative or in a postal ballot of members. 239—Special resolutions (1) A special resolution is a resolution of a co‑operative that is passed— (a) by a two‑thirds majority at a general meeting of the co‑operative; 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. A co‑operative may by its rules require a higher majority voting percentage on any matter or that specified matters must be passed by postal or special postal ballot. Section 250 enables 20% of members (or a lesser percentage specified in the rules) to require a postal ballot for a special resolution. (2) A special resolution may be passed by a postal ballot only if the rules of the co‑operative so permit or this Law requires the special resolution to be passed by postal ballot (including a special postal ballot). (3) A resolution must not 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 stating— (a) the intention to propose the special resolution; and (b) the reasons for proposing the special resolution; and (c) the effect of the special resolution being passed. 240—How majority is ascertained (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. 241—Declaration of passing of special resolution (1) At a meeting of a co‑operative for the purpose of passing a special resolution, a declaration by the chairperson of the meeting that the resolution has been passed as a special resolution is evidence of that fact. (2) A declaration by the returning officer for a postal ballot to pass a special resolution that the resolution has been passed as a special resolution is evidence of that fact. (3) Subsection (1) does not apply if a poll is taken at the meeting of the co‑operative. 242—Effect of special resolution (1) A special resolution has effect from the date it is passed. (2) However, a special resolution relating to anything for which a special resolution is required to be passed by special postal ballot has no effect until it is registered. Section 446 provides that a members' voluntary winding up of a co‑operative starts when the result of the special postal ballot is noted in the minutes by the secretary of the co‑operative. (3) Subsection (2) and sections 243 and 244 do not apply to a special resolution amending the rules of a co‑operative. Chapter 2 Part 3 deals with amendments to rules and when amendments take effect. 243—Registration of special resolution (1) A co‑operative must, in accordance with subsection (2), file 2 copies of each special resolution passed by the co‑operative with the Registrar for registration. (2) The copies must— (a) be filed within 28 days after the passing of a special resolution or the further period the Registrar allows; and (b) be signed by a director, the secretary of the co‑operative or another authorised representative of the co‑operative; and (c) be accompanied by the filing fee prescribed by— (i) the National Regulations, unless subparagraph (ii) applies; or (ii) the local regulations. See section 444(4)(a) regarding the period within which a special resolution must be filed with the Registrar in connection with the voluntary winding up of a co‑operative. (3) A co‑operative or an officer of the co‑operative must not knowingly fail to file the required copies under this section. 244—Decision of Registrar on application to register special resolution (1) If the Registrar is satisfied the co‑operative has complied with this Law and the special resolution is not contrary to this Law, the Registrar must register the special resolution and may issue a certificate of registration. (2) If the Registrar considers the effect of a special resolution filed for registration would be in contravention of this Law or any other law, the Registrar— (a) may refuse to register the special resolution; and (b) must give written notice to the co‑operative that the special resolution— (i) for a special resolution referred to in section 242(2)—has no effect; and (ii) in any other case—has no effect as from the date it was passed. (3) A certificate of registration of a special resolution issued by the Registrar is, in favour of any person advancing money to the co‑operative on the faith of the certificate or in favour of any guarantor of that advance, evidence that the resolution was properly passed. Division 3—Resolution by circulated document 245—Application of Division This Division applies to a resolution of a co‑operative, including a resolution appointing an officer or auditor or approving of or agreeing to any act, matter or thing, if— (a) the co‑operative has fewer than 50 members; and (b) the resolution is required or permitted under this Law or the rules of the co‑operative to be passed at a general meeting of the co‑operative. 246—Resolution by circulation of document—fewer than 50 members (1) If all the members of a co‑operative have signed a document that sets out the terms of a resolution and contains a statement that they are in favour of the resolution, the resolution is taken to have been passed at a general meeting of the co‑operative. (2) The meeting is taken to have been held— (a) if all the members signed the document on the one day—on the day the document was signed, at the time the document was signed by the last member to sign; or (b) if the members signed the document on different days—on the day, and at the time, the document was signed by the last member to sign. (3) The document need not exist as a single document, but may exist in the form of 2 or more documents in identical terms. (4) The document is taken to constitute a minute of the general meeting. (5) Anything attached to the document and signed by the members signing the document is taken to have been laid before the co‑operative at the general meeting. (6) The document is signed by all members of a co‑operative only if the document is signed by each person who was a member of the co‑operative at the time the document was signed by the last member to sign. (7) Nothing in this section affects or limits any rule of law about the effectiveness of the assent of members of a co‑operative given to a document, or to an act, matter or thing, otherwise than at a general meeting of the co‑operative. Division 4—Postal ballots 247—Postal ballots (1) A postal ballot may be held as provided by the rules of a co‑operative and must be conducted in the way prescribed by the National Regulations. (2) On the declaration by the returning officer of the result of the ballot, the secretary of the co‑operative must make an entry in the minutes 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. 248—Special postal ballots (1) A special postal ballot is a postal ballot that is conducted in accordance with this section. (2) The ballot must not be held less than 28 days after notice of the ballot is given to members. This period is intended to enable sufficient time for a meeting to be called (whether by the board or on the requisition of members) and held to discuss the proposal the subject of the ballot. (3) The co‑operative must send to each member (along with any other material required to be sent in relation to the postal ballot) a disclosure statement approved by the Registrar and containing information about— (a) the financial position of the co‑operative; and (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; and (c) any compensation or consideration to be paid to officers or members of the co‑operative in connection with the proposal; and (d) any other matters the Registrar directs. (4) If the Registrar so requires, the disclosure statement is to be accompanied by a report made by an independent person approved by the Registrar about any matters the Registrar directs. (5) A draft disclosure statement must be submitted to the Registrar at least 28 days (or the shorter period the Registrar may allow in a particular case) before the notice of the special postal ballot is to be given to members. (6) Section 25 (except subsections (1), (2) and (3)) applies to a disclosure statement under this section with any necessary modifications, and in particular as if a reference in that section to a formation meeting were a reference to the notice of the special postal ballot. Sections 380 and 445 provide for exemptions from this section in certain circumstances. 249—When special postal ballot is required The board of a co‑operative must conduct a special postal ballot when required by a provision of this Law. Voting by special postal ballot is provided for by this Law as follows: (a) conversion of— (i) a co‑operative with share capital to a co‑operative without share capital, or vice versa; or (ii) a distributing co‑operative to a non‑distributing co‑operative, or vice versa; (see section 35); (b) a special resolution to require members to take up or subscribe for additional shares and a special resolution to deduct amounts for additional shares (see section 82); (c) a special resolution on the requisition of members (see section 250); (d) a special resolution to require members to lend money to the co‑operative (see section 343); (e) an acquisition or disposal of certain assets (see section 359); (f) the maximum permissible level of share interest in a co‑operative (see section 363); (g) certain share offers (see section 374); (h) a merger (see sections 396 and 476); (i) a transfer of engagements (see sections 396 and 476); (j) a transfer of incorporation (see section 404); (k) a compromise or arrangement between a co‑operative and its members (see section 414); (l) a members' voluntary winding up (see section 445). 250—Holding of postal ballot on requisition (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 the number of members who together are able to cast at least 20% (or a 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 cannot 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 state— (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 of the requisitioning members); (c) it must be served on the co‑operative by being filed 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 payable to the co‑operative. 251—Expenses involved in postal ballots on requisition (1) All reasonable expenses incurred by a co‑operative in preparing for and holding a special postal ballot are taken to form the expenses of the postal ballot conducted for the purposes of section 250. (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 preparing for and holding the ballot; (c) the cost of producing, printing and posting the ballot papers and other material associated with the ballot. Division 5—Meetings 252—Annual general meetings (cf Corporations Act section 250N) (1) A co‑operative must hold its initial annual general meeting within 18 months after its registration. (2) A co‑operative must hold an annual general meeting at least once in each calendar year after its initial annual general meeting and within 5 months after the end of its financial year. (4) An annual general meeting is to be held in addition to any other meetings held by a co‑operative in the year. 253—Special general meetings A special general meeting of a co‑operative may be called at any time by the board. 254—Notice of meetings The board must give each member at least 14 days notice of each general meeting. Section 239 requires 21 days notice of each special resolution to be considered at a general meeting. 255—Quorum at meetings (1) The quorum for a meeting of a co‑operative must be stated in the rules of the co‑operative. (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. 256—Decision at meetings (1) A question for decision at a general meeting of a co‑operative is to be decided by a show of hands, unless a poll is required (see subsection (2)). (2) The question is to be decided by a poll if a poll is required by the chairperson of the meeting or by any 5 members present at the meeting or represented at the meeting by proxy. (3) A person who is a proxy for one or more members may cast only one vote on a question for decision by a show of hands. (4) A person who is a proxy for one or more members may cast more than one vote on a question for decision by a poll, unless the rules of the co‑operative restrict the number of votes that a proxy may cast. (5) In the case of an equality of votes, the chairperson of the meeting at which the show of hands takes place or at which the poll is demanded may cast a second vote if the rules of the co‑operative so provide. (6) This section has effect subject to section 229. Section 229 deals with voting by proxy. 257—Calling of general meeting on requisition (1) The board of a co‑operative must call a general meeting of the co‑operative on the written requisition of the number of members who together are able to cast at least 20% (or a 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 cannot 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 filed at the registered office of the co‑operative. (4) The meeting must be called and held as soon as practicable and in any case must be held within 63 days after the requisition is served. (5) If the board does not call 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 total voting rights) may call the meeting in the same way as nearly as possible as meetings are called by the board; (b) for that purpose, they may ask 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 called by the requisitioning members must be held within 91 days after the requisition is served; (e) any reasonable expenses incurred by the requisitioning members because of the board's failure to call the meeting must be paid by the co‑operative; (f) any amount required to be paid by the co‑operative under paragraph (e) must be retained by the co‑operative out of any money due from the co‑operative by way of fees or other remuneration for their services to any of the directors that were in default. 258—Minutes (1) Minutes of each general meeting, board meeting and committee meeting must be entered in the appropriate books within 28 days after the meeting. (2) A co‑operative must ensure that minutes of a meeting are signed within a reasonable time after the meeting by one of the following: (a) the chairperson of the meeting; (b) the chairperson of the next meeting. (3) Minutes must be kept in the English language. Section 214 makes provision regarding the availability of minutes for inspection. 259—Auditor entitled to notice and other communications (cf Corporations Act section 249K) (1) A co‑operative must give its auditor— (a) notice of a general meeting in the same way that a member of the co‑operative is entitled to receive notice; and (b) any other communications relating to the general meeting that a member of the co‑operative is entitled to receive. 260—Auditor's right to be heard at general meetings (cf Corporations Act section 249V) (1) A co‑operative's auditor is entitled to attend any general meeting of the co‑operative. (2) The auditor is entitled to be heard at the meeting on any part of the business of the meeting that concerns the auditor in the capacity of auditor. (3) The auditor is entitled to be heard even if— (a) the auditor retires at the meeting; or (b) the meeting passes a resolution to remove the auditor from office. (4) The auditor may authorise a person in writing as the auditor's representative for the purpose of attending and speaking at any general meeting. 261—Questions and comments by members on co‑operative management at annual general meeting (cf Corporations Act section 250S) (1) The chairperson of an annual general meeting of a co‑operative must allow a reasonable opportunity for the members as a whole at the meeting to ask questions about or make comments on the management of the co‑operative. 262—Questions by members of auditors at annual general meeting (cf Corporations Act section 250T) (1) If a co‑operative's auditor or their representative is at the meeting, the chairperson of an annual general meeting of the co‑operative must— (a) allow a reasonable opportunity for the members as a whole at the meeting to ask the auditor or the auditor's representative questions relevant to— (i) the conduct of the audit; and (ii) the preparation and content of the auditor's report; and (iii) the accounting policies adopted by the co‑operative in relation to the preparation of the financial statements; and (iv) the independence of the auditor in relation to the conduct of the audit; and (b) allow a reasonable opportunity for the auditor or their representative to answer written questions submitted to the auditor. (3) If— (a) the co‑operative's auditor or their representative is at the meeting; and (b) the auditor has prepared a written answer to a written question submitted to the auditor, the chairperson of the annual general meeting may permit the auditor or their representative to table the written answer to the written question. (4) The co‑operative must make the written answer tabled under subsection (3) reasonably available to members as soon as practicable after the annual general meeting. Maximum penalty (for subsection (4)): $500. Part 3—Financial reports and audit Columns 1 and 2 of the following Table set out the Division numbers and Division headings of this Part, and Columns 3 and 4 indicate (where relevant) provisions of Chapter 2M of the Corporations Act that generally correspond to each Division of this Part.