Subdiv 5Protection of auditors

Subdivision 5—Protection of auditors 313—Protection of auditors (1) An auditor of a co‑operative has qualified privilege in proceedings for defamation in relation to— (a) a statement the auditor makes, orally or in writing, in the course of his or her duties as auditor; or (b) the giving of notice, or the sending of a copy of financial reports or another report, to the Registrar under this Law. (2) A person has qualified privilege in proceedings for defamation in relation to— (a) the publishing of a document prepared by an auditor in the course of the auditor's duties and required under this Law to be filed with the Registrar, whether or not the document has been so filed; or (b) the publishing of a statement made by an auditor as referred to in subsection (1). (3) This section does not limit or affect a right, privilege or immunity an auditor or other person has, apart from this section, as defendant in proceedings for defamation. Division 13—Accounting and auditing standards 314—Accounting and auditing standards (1) A reference in this Part (including provisions of the Corporations Act as applying under this Part) to accounting or auditing standards is a reference to— (a) the accounting or auditing standards made for the purposes of the Corporations Act, except as provided by paragraphs (b) and (c); or (b) the accounting or auditing standards referred to in paragraph (a) but as modified by the National Regulations; or (c) the accounting or auditing standards prescribed by or determined under the National Regulations in substitution for all or any accounting or auditing standards referred to in paragraph (a). (2) If an accounting or auditing standard referred to in subsection (1)(a) applies for the purposes of a particular provision of the Corporations Act, the accounting or auditing standard is (subject to subsection (1)(b) and (c)) taken to apply for the purposes of the corresponding provision of this Law (if any). (3) The National Regulations may provide that an accounting or auditing standard referred to in subsection (1)(a) does not apply for the purposes of— (a) this Law; or (b) a particular provision of this Law; or (c) a particular aspect or application of this Law, and may do so without substituting another accounting or auditing standard. 315—Interpretation of accounting and auditing standards (cf Corporations Act section 337) In interpreting an accounting or auditing standard, unless the contrary intention appears— (a) expressions used in the standard have the same meanings as they have in this Part or in Chapter 2M of the Corporations Act, as the case requires; and (b) the provisions of Chapter 1 Part 2 of this Law or of Part 1.2 of the Corporations Act apply as if the standard's provisions were provisions of this Part or Chapter 2M of the Corporations Act, as the case requires. Division 14—Exemptions and modifications 316—Exemptions—individual co‑operatives (cf Corporations Act section 340) (1) On an application made in accordance with subsection (4) in relation to a co‑operative, the Registrar may, by designated instrument, exempt any of the following from compliance with all or specified requirements of the target provisions referred to in subsection (2): (a) the directors; (b) the co‑operative; (c) the auditor. For the criteria for granting exemptions under this section, see section 318. (2) The target provisions are— (a) Divisions 2—11 of this Part, including provisions of the Corporations Act (as applying under any of the provisions of those Divisions), but not including Division 4 of Part 2M.4 of the Corporations Act as so applying; and (b) sections 324BA, 324BB and 324BC of the Corporations Act (as applying under section 297 of this Law). The target provisions generally correspond to the provisions of the Corporations Act referred to in section 340 of that Act (being Parts 2M.2, 2M.3 and 2M.4 (other than Division 4)). (4) The application must be— (a) authorised by a resolution of the directors; and (b) in writing and signed by a director; and (c) lodged with the Registrar. (5) The Registrar must give the applicant written notice of the granting, revocation or suspension of the exemption. 317—Exemptions—classes of co‑operatives (cf Corporations Act section 341) (1) The Registrar may, by designated instrument in respect of a specified class of co‑operatives, exempt any of the following from compliance with all or specified requirements of the target provisions referred to in subsection (2): (a) directors; (b) the co‑operatives themselves; (c) auditors of the co‑operatives. For the criteria for granting exemptions under this section, see section 318. (2) The target provisions are— (a) Divisions 2—11 of this Part, including provisions of the Corporations Act (as applying under any of the provisions of those Divisions), but not including Division 4 of Part 2M.4 of the Corporations Act as so applying; and (b) sections 324BA, 324BB and 324BC of the Corporations Act (as applying under section 297 of this Law). The target provisions generally correspond to the provisions of the Corporations Act referred to in section 341 of that Act (being Parts 2M.2, 2M.3 and 2M.4 (other than Division 4)). 318—Exemptions—criteria for exemptions for individual co‑operatives or classes of co‑operatives (cf Corporations Act section 342) (1) To grant an exemption under section 316 or 317, the Registrar must be satisfied that complying with the relevant requirements of the target provisions would— (a) make the financial report or other reports misleading; or (b) be inappropriate in the circumstances; or (c) impose unreasonable burdens. (2) In deciding for the purposes of subsection (1) whether the audit requirements for a small co‑operative, or a class of small co‑operatives, would impose an unreasonable burden on the co‑operative or co‑operatives, the Registrar is to have regard to— (a) the expected costs of complying with the audit requirements; and (b) the expected benefits of having the co‑operative or co‑operatives comply with the audit requirements; and (c) any practical difficulties that the co‑operative or co‑operatives face in complying effectively with the audit requirements (in particular, any difficulties that arise because a financial year is the first one for which the audit requirements apply or because the co‑operative or co‑operatives are likely to move frequently between the small and large co‑operative categories from one financial year to another); and (d) any unusual aspects of the operation of the co‑operative or co‑operatives during the financial year concerned; and (e) any other matters that the Registrar considers relevant. (3) In assessing expected benefits under subsection (2), the Registrar is to take account of— (a) the number of creditors and potential creditors; and (b) the position of creditors and potential creditors (in particular, their ability to independently obtain financial information about the co‑operative or co‑operatives); and (c) the nature and extent of the liabilities of the co‑operative or co‑operatives. 319—Exemptions—non‑auditor members and former members of audit firms, and former employees of audit companies (cf Corporations Act section 342AA) (1) On an application made in accordance with subsection (4) by any of the following, the Registrar may, by designated instrument, exempt the applicant from all or specified requirements of the target provisions referred to in subsection (2): (a) a member of the firm who is not a registered company auditor; (b) a person who has ceased to be— (i) a member of an audit firm; or (ii) a director of an audit company; or (iii) a professional employee of an audit company. For the criteria for granting exemptions under this section, see section 321. (2) The target provisions are the provisions of Division 3 of Part 2M.4 of the Corporations Act (as applying under Division 12 of this Part). The target provisions correspond to the provisions of the Corporations Act referred to in section 342AA of that Act. (4) The application must be— (a) in writing and signed by the applicant; and (b) lodged with the Registrar. (5) The Registrar must give the applicant written notice of the granting, revocation or suspension of the exemption. 320—Exemptions—classes of non‑auditor members etc (cf Corporations Act section 342AB) (1) The Registrar may, by designated instrument in respect of a specified class of audit firms or audit companies, exempt any of the following from all or specified requirements of the target provisions referred to in subsection (2): (a) members of firms who are not registered company auditors; (b) persons who have ceased to be— (i) members of audit firms; or (ii) directors of audit companies; or (iii) professional employees of audit companies. For the criteria for granting exemptions under this section, see section 321. (2) The target provisions are the provisions of Division 3 of Part 2M.4 of the Corporations Act (as applying under Division 12 of this Part). The target provisions correspond to the provisions of the Corporations Act referred to in section 342AB of that Act. 321—Exemptions—criteria for exemptions for non‑auditor members etc (cf Corporations Act section 342AC) To grant an exemption under section 319 or 320, the Registrar must be satisfied that complying with the relevant requirements of the target provisions would— (a) make the financial report or other reports misleading; or (b) be inappropriate in the circumstances; or (c) impose unreasonable burdens. 322—Exemptions from National Regulations (1) The Registrar may, by designated instrument, exempt— (a) a specified co‑operative, a specified person or firm proposed to be appointed as an auditor, or a specified director or auditor of a co‑operative; or (b) a specified class of co‑operatives, a specified class of persons or firms proposed to be appointed as auditors, or a specified class of directors or auditors of co‑operatives, from compliance with a provision of the National Regulations made under this Part. (2) The exemption may— 323—Registrar's power to modify the operation of section 324DA of Corporations Act (cf Corporations Act section 342A) (1) On an application made in accordance with this section, the Registrar may— (a) declare that section 324DA(1) of the Corporations Act (as applying under Division 12 of this Part) applies to a registered company auditor, in relation to the audit of an audited body or a class of audited bodies, as if the references in that subsection to 5 successive financial years were references to— (i) 6 successive financial years; or (ii) 7 successive financial years; or (b) declare that section 324DA(2) of the Corporations Act (as applying under Division 12 of this Part) applies to a registered company auditor, in relation to the audit of an audited body or a class of audited bodies during a particular period of 7 successive financial years, as if the reference in that subsection to 5 out of 7 successive financial years were a reference to 6 out of 7 successive financial years. (2) The following persons may apply for the declaration: (a) the registered company auditor; (b) a firm or company on whose behalf the registered company auditor acts or would act in relation to the audit or audits, and if the application is made by a firm or company, the declaration has effect only in relation to activities undertaken by the registered company auditor on behalf of that firm or company. (3) The application must be— (a) in writing; and (b) signed by the applicant; and (c) lodged with the Registrar. (4) If the application is made by a registered company auditor who engages, or is to engage, in audit activities on behalf of a firm or company, the application must include the firm's or company's written consent to the application. (5) If the application is made by a firm or company in relation to a registered company auditor, the application must include the registered company auditor's written consent to the application. (6) To make a declaration under subsection (1), the Registrar must be satisfied that, without the modification, Division 4 of Part 2M.4 of the Corporations Act (as applying under Division 12 of this Part) would impose an unreasonable burden on— (a) a registered company auditor; or (b) a firm or company that is applying for the declaration; or (c) the audited body or bodies in relation to which the application was made. (7) In deciding for the purposes of subsection (6) whether, without the modification, Division 4 of Part 2M.4 of the Corporations Act (as applying under Division 12 of this Part) would impose an unreasonable burden on a person referred to in that subsection, the Registrar is to have regard to— (a) the nature of the audited body or bodies, including whether the activity in which the audited body or bodies engage is such that specialist knowledge about that activity is necessary to carry out the audit properly; and (b) the availability of other registered company auditors capable of providing satisfactory audit services for the audited body or bodies; and (c) any other matters which the Registrar considers relevant. (8) The Registrar must give the applicant written notice of the making, revocation or suspension of the declaration. 324—Auditor to notify co‑operative of declaration (cf Corporations Act section 342B) (1) If a registered company auditor plays a significant role in the audit of a co‑operative in reliance on a declaration by the Registrar under section 323, the auditor must give the co‑operative written notice of the declaration. (2) The notice must specify— (a) the name of the registered company auditor; and (b) the additional financial years for which the registered company auditor is, because of the declaration under section 323, eligible to play a significant role in the audit of the co‑operative. (3) The notice must be given— (a) as soon as practicable after the declaration is made if the auditor has been appointed before the declaration is made; or (b) before the auditor is appointed if the declaration is made before the auditor is appointed. 325—Modification by National Regulations (cf Corporations Act section 343) (1) The National Regulations may modify the operation of this Part in relation to— (a) a specified co‑operative; or (b) all co‑operatives of a specified kind. (2) This section does not affect the power to make National Regulations prescribing modifications to applied provisions. 326—Amendment, suspension or revocation of exemption (1) The Registrar may amend, suspend or revoke an exemption granted under this Division. (2) The power to amend, suspend or revoke an exemption granted under this Division is exercisable in the same way, and subject to the same conditions, as the power to grant the exemption. Division 15—Miscellaneous 327—Disclosure by directors The directors of a co‑operative must make the disclosures about the affairs of the co‑operative and of an entity the co‑operative controls that are required under the National Regulations. 328—Contravention by directors of provisions of this Part (cf Corporations Act section 344) (1) A director of a co‑operative contravenes this subsection if they fail to take all reasonable steps to comply with or to secure compliance with— (a) section 272, 284(1) or (2), 289, 290, 291, 292 or 293; or (b) section 315(1) of the Corporations Act as applying under section 285(2) of this Law; or (c) section 318 of the Corporations Act as applying under section 288 of this Law. (2) A person commits an offence if they contravene subsection (1) and the contravention is dishonest. Maximum penalty: $200 000 or imprisonment for 5 years, or both. 329—Submission of financial reports to Financial Reporting Panel Without limitation, the National Regulations may make provision for or with respect to requiring the submission of financial reports to the Financial Reporting Panel. The Financial Reporting Panel is established under the ASIC Act. 330—Notification of ASIC by Registrar of certain matters relating to auditor independence The Registrar may notify ASIC of any investigation or prosecution undertaken for a contravention, or an alleged or possible contravention, of section 324CA, 324CB, 324CC, 324CD, 324CE, 324CF or 324CG of the Corporations Act as applying under this Law. Part 4—Funds and property Division 1—Power to raise money 331—Meaning of obtaining of financial accommodation A reference in this Division to the obtaining of financial accommodation includes a reference to the obtaining of credit and the borrowing or raising of money by any means. 332—Fundraising to be in accordance with National Regulations The National Regulations may impose requirements and restrictions on the obtaining of financial accommodation and the giving of security for obtaining financial accommodation by a co‑operative. 333—Limits on deposit taking A co‑operative must not accept money on deposit unless— (a) the co‑operative is authorised by its rules to accept money on deposit and was authorised by its rules immediately before the commencement of this section in this jurisdiction to accept money on deposit; or (b) the co‑operative was a deposit‑taking corporation immediately before it became a co‑operative and it is authorised by its rules to accept money on deposit; or (c) for a merged co‑operative—one or more of the co‑operatives involved in the merger was a deposit‑taking co‑operative immediately before the registration of the merged co‑operative and the merged co‑operative is authorised by its rules to accept money on deposit. Paragraph (a) prevents a co‑operative from accepting money on deposit unless it was authorised to do so before the commencement of this section. Accordingly, co‑operatives registered before that commencement but not so authorised and all co‑operatives registered after that commencement are prevented from accepting money on deposit. Authorisation under previous legislation commenced at various times in the various jurisdictions. 334—Members and other persons not required to see to application of money A member or other person from whom a co‑operative obtains financial accommodation is not required to see to its application and is not affected or prejudiced by the fact that in doing so the co‑operative contravened a provision of this Law, the National Regulations or the rules of the co‑operative. 335—Registrar's directions about obtaining financial accommodation (1) The Registrar may, by written notice served on a co‑operative, give a direction to the co‑operative as to the way in which it is to exercise its functions in relation to the activities of the co‑operative in obtaining financial accommodation. (2) A direction under subsection (1) may make provision for one or more of the following matters: (a) requiring the co‑operative to stop obtaining financial accommodation or to stop obtaining financial accommodation in a particular way; (b) requiring the co‑operative to repay in accordance with the direction all or part of financial accommodation obtained; (c) requiring the co‑operative to refinance in a stated way financial accommodation repaid in accordance with the Registrar's direction; (d) the way in which the co‑operative is permitted to invest or use the proceeds of financial accommodation it obtains. (3) The co‑operative may, within 28 days after the direction is given, apply to the designated tribunal for a review of the direction, and the designated tribunal may confirm, modify or rescind the direction or substitute another direction. 336—Subordinated debt (1) A co‑operative may incur subordinated debt. (2) Subordinated debt is debt incurred under an agreement under which, in the event of the winding up of the co‑operative, a claim of the creditor against the co‑operative for the debt is to rank in priority— (a) equally with the claim of another creditor who is a party to a similar agreement; and (b) except as provided by paragraph (a)—after the claims of another creditor of the co‑operative and before the claims of members to repayment of share capital in the co‑operative. (3) An agreement referred to in subsection (2) has effect despite the provisions of Division 6 of Part 5.6 of the Corporations Act as applying under this Law. 337—Application of Corporations Act—issues of debentures (1) The debentures of a co‑operative are declared to be applied Corporations legislation matters for the purposes of the Corporations application legislation of this jurisdiction in relation to Part 1.2A, Chapters 2L, 6CA and 6D, and Part 7.10 of the Corporations Act, subject to the following modifications: (a) sections 111AS and 283I of the Corporations Act are taken to be omitted; (b) the modifications referred to in section 13(3) of this Law so far as they are relevant. (2) However, the provisions of the Corporations Act applying to debentures of a co‑operative by this section do not apply to— (a) a loan to which section 343 applies; or (b) an issue of debentures of a co‑operative that is made— (i) solely to members of the co‑operative; or (ii) solely to members and employees of the co‑operative; or (iii) to a person who on becoming an inactive member of the co‑operative has had his or her share capital converted to debt. (3) The following provisions of the Corporations Act as applying under this section are civil penalty provisions under this Law (see section 554) and are not civil penalty provisions under that Act: (a) section 674(2) and (2A); (b) section 675(2) and (2A); (c) section 1041A; (d) section 1041B(1); (e) section 1041C(1); (f) section 1041D; (g) section 1043A(1) and (2). (4) Words used in subsection (2) that are not defined in this Law have the same meanings as they have in the Corporations Act. 338—Disclosure statement (1) This section applies to the issue of debentures of a co‑operative if the issue is made— (a) solely to members; or (b) solely to members and employees of the co‑operative, but does not apply to the issue of debentures under section 108(1), 128(2) or 163(2). (2) Before issuing to a person debentures to which this section applies, a co‑operative must— (a) inform the person in writing that the person is entitled to receive a disclosure statement on request to the co‑operative; and (b) give the person a disclosure statement if the person requests it. (3) The disclosure statement is a statement, approved by the Registrar, and containing the information that is reasonably necessary to enable a person to make an informed assessment of the financial prospects of the co‑operative, including— (a) the purpose for which the money raised by the co‑operative by the issue of debentures is to be used; and (b) the rights and liabilities attaching to the debentures; and (c) the financial position of the co‑operative; and (d) the interests of the directors of the co‑operative in the issue of the debentures; and (e) compensation or consideration to be paid to officers or members of the co‑operative in connection with the issue of debentures; and (f) other matters the Registrar directs. (4) 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 issue of debentures. (5) 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 issue of debentures. (6) The Registrar may, by designated instrument, exempt a co‑operative or class of co‑operatives from complying with this section. (7) An exemption may be given unconditionally or subject to conditions. 339—Restrictions on advertising and publicity an offer, or intended offer, of debentures in a co‑operative unless a disclosure statement relating to the debentures is approved by the Registrar under section 338. (2) A person does not contravene subsection (1) by publishing an advertisement or statement if they publish it in the ordinary course of a business of— and the person did not know and had no reason to suspect that its publication would amount to a contravention of a provision of that subsection. 340—Application money to be held on trust (cf Corporations Act section 722) (1) If a person offers debentures for issue under a disclosure statement, the person must hold— (a) all application money received from people applying for debentures under the disclosure statement; and (b) all other money paid by them on account of the debentures before they are issued, in trust under this section for the applicants until— (c) the debentures are issued; or (d) the money is returned to the applicants. (2) If the application money needs to be returned to an applicant, the person must return the money as soon as practicable. 341—Approval of board for transfer of debentures A debenture of a co‑operative cannot be sold or transferred except with the consent of the board and under the rules of the co‑operative. 342—Application of Corporations Act—reissue of redeemed debentures Debentures issued by a co‑operative to any of its members or employees are declared to be applied Corporations legislation matters for the purposes of the Corporations application legislation of this jurisdiction in relation to section 563AAA of the Corporations Act, subject to the following modifications: (a) the section applies as if a co‑operative were a company; (b) the modifications referred to in section 13(3) of this Law so far as they are relevant. 343—Compulsory loan by member to co‑operative (1) A co‑operative may, by levy, require its members to lend money, with or without security, to the co‑operative, in accordance with a proposal approved by special resolution of the co‑operative passed by a special postal ballot. (2) The term of the loan cannot be for more than 7 years or any shorter period prescribed in the National Regulations. (3) The proposal must— (a) be accompanied by a disclosure statement, approved by the Registrar, explaining the purpose for which the money raised by the co‑operative under the proposal is to be used and including the other information the Registrar directs; and (b) clearly show the total amount of the loan to be raised by the co‑operative and the basis on which the money required to be lent by each member is to be calculated; and (c) be accompanied by a statement informing the member that the member may inform the board by notice on or before the date of closing of the ballot for the special postal ballot that the member resigns on the registration of the special resolution. (4) If the proposal allows, the board of the co‑operative may, under the terms of the proposal, deduct the money required to be lent by a member to the co‑operative from money payable from the co‑operative to the member for his or her dealings with the co‑operative. (5) A proposal to deduct money referred to in subsection (4) must, in addition, clearly show— (a) the basis on which the money is to be deducted; and (b) the time and way of making the deductions. (6) When the special resolution is registered, the proposal is binding on— (a) all members of the co‑operative at the date of passing of the special resolution, other than a member who has given a notice of resignation under subsection (3)(c); and (b) all persons who become members of the co‑operative after the date and before the total amount of the loan to be raised under the proposal has been raised. (7) A draft disclosure statement must be submitted to the Registrar before notice of the ballot is given to members. (8) 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 the holding of a formation meeting were a reference to the giving of notice of the ballot to members. (9) The National Regulations may prescribe the maximum amount that may be levied in any period of 12 months on either or both of the following: (a) an individual member of the co‑operative; (b) all members of the co‑operative or all members of a class of members. (10) The Registrar may, by designated instrument, exempt a co‑operative or class of co‑operatives from complying with all or specified provisions of this section. (11) An exemption may be given unconditionally or subject to conditions. 344—Interest payable on compulsory loan (1) The rate of interest payable by a co‑operative for a loan under section 343 during a period is— (i) the rate (or, if there is more than one rate, the higher or highest rate) of dividend payable for the period on the share capital of the co‑operative; or (ii) if the rate of dividend payable for the period has not been decided—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—the rate the board of the co‑operative considers reasonable; or (b) for a co‑operative without share capital—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)—the higher rate. (2) A member may agree to the rate of interest being less than what would otherwise be payable under this section and may agree to no interest being paid. Division 2—Co‑operative capital units (CCUs) 345—General nature of CCU (1) A co‑operative capital unit (in this Law referred to as a CCU) is an interest issued by a co‑operative conferring an interest in the capital (but not the share capital) of the co‑operative. (2) A CCU— (a) is personal property; and (b) is transferable or transmissible as provided by this Law and the rules of the co‑operative, subject to the terms of issue of the CCU; and (c) is, subject to the rules of the co‑operative, capable of devolution by will or by operation of law. (3) Subject to subsection (2)— (a) the laws applicable to ownership of and dealing with personal property apply to a CCU in the same way as they apply to other property; and (b) equitable interests in respect of a CCU may be created, dealt with and enforced as in the case of other personal property. (4) A transferor of a CCU remains the holder of the CCU until the transfer is registered and the name of the transferee is entered in the register of CCUs and their holders (referred to in section 212(1)(e)) in respect of the CCU. (5) Despite any rule of law or equity to the contrary, a condition subject to which a CCU is issued is not invalid merely because the CCU is, by the condition, made irredeemable or redeemable only on the happening of a contingency however remote or at the end of a period however long. 346—Priority of CCUs on winding up (1) On a winding up of a co‑operative, a debt owed to a person as the holder or former holder of a CCU issued by the co‑operative is to rank for priority of payment in accordance with the terms of issue of the CCU. (2) Such a debt may rank as a secured debt if it is secured but if it is unsecured may not rank in priority to other unsecured debts. (3) Such a debt may rank equally with or behind unsecured debts and (if the debt ranks behind unsecured debts) may rank in priority to, equally with or behind debts due to contributories. 347—Financial accommodation provisions apply to issue of CCUs (1) The issuing of CCUs is to be considered to be the obtaining of financial accommodation and accordingly Division 1 applies to the issue of CCUs. (2) For the purpose of that Division, a CCU is to be considered to be a debenture. 348—CCUs can be issued to non‑members CCUs may be issued to persons whether or not they are members of the co‑operative. 349—Minimum requirements for rules concerning CCUs The rules of a co‑operative that permit the co‑operative to issue CCUs must contain provision to the effect of the following provisions and must not contain provisions that are inconsistent with the following provisions: (a) either (as specified in the rules)— (i) each holder of a CCU is entitled to one vote only at a meeting of the holders of CCUs; or (ii) each holder of a CCU is entitled to one vote per CCU held at a meeting of the holders of CCUs; (b) the rights of the holders of CCUs may be varied only in the manner and to the extent provided by their terms of issue and only with the consent of at least 75% of the holders of CCUs given in writing or at a meeting; (c) the holder of a CCU has, in the person's capacity as a holder, none of the rights or entitlements of a member of the co‑operative; (d) the holder of a CCU is entitled to receive notice of all meetings of the co‑operative and all other documents in the same manner as the holder of a debenture of the co‑operative. 350—CCUs not to be issued unless terms of issue approved by Registrar (1) A co‑operative is not to issue CCUs unless— (a) the terms of issue have been approved by a special resolution of the co‑operative; and (b) the issue is made pursuant to an offer accompanied by a copy of a statement approved by the Registrar for the purposes of the issue; and (c) the Registrar approves of the terms of the issue. (2) The terms of issue must specify the following (but this subsection does not limit the contents of the terms of issue): (a) details of entitlement to repayment of capital; (b) details of entitlement to participate in surplus assets and profits; (c) details of entitlement to interest on capital (whether cumulative or non‑cumulative interest); (d) details of how capital and interest on capital are to rank for priority of payment on a winding up; (e) whether there is a limit on the total holding of CCUs that may be acquired by persons who are not members of the co‑operative and, if there is a limit, what the limit is. (3) The statement approved by the Registrar for the purposes of the issue is to set out the terms of the issue, the rights of the holders of CCUs, the terms of redemption and the manner of transferability of CCUs. (4) The Registrar is not to approve of the terms of issue unless satisfied that they will not result in a failure to comply with co‑operative principles and are not contrary to the rules of the co‑operative or this Law. 351—Directors' duties concerning CCUs In discharging their duties, it is proper for the directors of a co‑operative to take into account that the holders of CCUs, in their capacity as holders of CCUs, have none of the rights and entitlements of, and are not entitled to be regarded as, members of the co‑operative. 352—Redemption of CCUs (1) The redemption of CCUs is not to be considered to be a reduction in the share capital of the co‑operative. (2) A co‑operative may redeem CCUs but only on the terms and in the way that are provided by the terms of their issue and only if they are fully paid up. (3) CCUs may not be redeemed except out of— (a) profits; or (b) the proceeds of a fresh issue of shares, or an approved issue of CCUs, made for the purpose of the redemption. (4) An issue of CCUs is an approved issue for the purposes of subsection (3) if there is the same entitlement to priority of payment of capital and dividend in relation to shares in the co‑operative as there was for the redeemed CCUs. (5) Any premium payable on redemption is to be provided for out of profits or out of the share premium account or an account created for that purpose. 353—Capital redemption reserve (1) This section applies if CCUs are redeemed out of profits. (2) Out of profits there is to be transferred to a reserve called the capital redemption reserve a sum equal to the nominal amount of the CCUs redeemed. (3) Subject to subsection (5), the provisions of this Law relating to the reduction of share capital of a co‑operative apply as if the capital redemption reserve were paid up share capital of the co‑operative. (4) Subject to subsection (5), the capital redemption reserve may be applied in paying up unissued shares of the co‑operative to be issued to members of the co‑operative as fully paid bonus shares. (5) Subsections (3) and (4) do not apply to a non‑distributing co‑operative. Section 448 provides that, on a winding up of a non‑distributing co‑operative, the surplus property of the co‑operative must be distributed as required by the rules of the co‑operative. 354—Issue of shares in substitution for redemption (1) If a co‑operative has redeemed or is about to redeem CCUs held by an active member of the co‑operative, it may— (a) issue shares to the member up to the sum of the nominal value of the CCUs redeemed or to be redeemed, as if those CCUs had never been issued; or (b) pay up amounts unpaid on shares held by the member up to the sum of the nominal value of the CCUs redeemed or to be redeemed, as if those CCUs had never been issued. (2) This section applies only if the terms of issue of the CCUs provide for the conversion of CCUs held by an active member of the co‑operative into shares of the co‑operative. Division 3—Disposal of surplus from activities 355—Retention of surplus for benefit of co‑operative The board of a co‑operative may resolve to retain all or part of the surplus arising in a year from the business of the co‑operative to be applied for the benefit of the co‑operative. 356—Application for charitable purposes or approved activities (1) A co‑operative may apply a part of the surplus arising in a year from the business of the co‑operative for any charitable purpose. (2) A distributing co‑operative may apply a part of the surplus arising in a year from the business of the co‑operative for supporting an activity approved by the co‑operative. (3) The rules of a co‑operative must limit the amount that may be applied under subsection (1) or (2) to a stated proportion of the surplus. 357—Distribution of surplus or reserves to members (1) A distributing co‑operative may apply a part of the surplus arising in a year from the business of the co‑operative or a part of the reserves of the co‑operative by— (a) distribution to members as a rebate in proportion to— (i) the value of business done by each member with the co‑operative; or (ii) profits earned by the co‑operative on business done by each member with the co‑operative; or (b) the issue to members of bonus shares in proportion to— (i) the value of business done by each member with the co‑operative; or (ii) profits earned by the co‑operative on business done by each member with the co‑operative; or (iii) shares held by each member; or (c) the issue to members of a limited dividend for shares held by each member. (2) The amount of a rebate payable to a member under subsection (1)(a) may be applied— (a) in payment for the issue to the member of bonus shares, with the consent of the member; or (b) as a loan to the co‑operative— (i) with the consent of the member; or (ii) if the rules of the co‑operative authorise the amount of a rebate payable to a member under subsection (1)(a) to be applied as a loan to the co‑operative. (3) The amount of a dividend payable to a member under subsection (1)(c) may be applied— (a) in payment for the issue to the member of bonus shares, with the consent of the member; or (b) as a loan to the co‑operative— (i) with the consent of the member; or (ii) if the rules of the co‑operative authorise the amount of a dividend payable to a member under subsection (1)(c) to be applied as a loan to the co‑operative. (4) A loan to the co‑operative authorised by the rules (as referred to in subsection (2)(b)(ii) or (3)(b)(ii)) is repayable at call and must bear interest at a rate not lower than the rate prescribed by the National Regulations. limited dividend means a dividend that is not more than the amount prescribed by the National Regulations. 358—Application of surplus to other persons (1) Part of the surplus arising in a year from the business of a distributing co‑operative may be credited to a person who is not a member, but is qualified to be a member, by way of rebate in proportion to the value of business done by the person with the co‑operative or to the profit earned by the co‑operative, if— (a) the person was a member when the business was done and the membership has lapsed; or (b) the person has applied for membership after the business was done. (2) Nothing in this section precludes the payment of a bonus to an employee under the terms of his or her employment. Division 4—Acquisition and disposal of assets 359—Acquisition and disposal of assets (1) A co‑operative must not do any of the following things except as approved by special resolution by a special postal ballot: (a) sell or lease the undertaking of the co‑operative as a going concern; (b) sell or lease a part of the undertaking of the co‑operative that relates to its primary activities and the value of which represents a percentage prescribed by the National Regulations or more of the total book value of the undertaking; (c) acquire from or dispose of to— (i) a director or employee of the co‑operative; or (ii) a relative (within the meaning of the Corporations Act) of a director or employee of the co‑operative or of the spouse or de facto partner of a director or employee of the co‑operative, property the value of which represents a percentage prescribed by the National Regulations or more of the total book value of all the assets of the co‑operative relating to its primary activities; (d) acquire an asset the value of which represents a percentage prescribed by the National Regulations or more of the total book value of the undertaking of the co‑operative, if the acquisition would result in the co‑operative commencing to carry on an activity that is not one of its primary activities; (e) dispose of an asset, if the disposal would result— (i) in the co‑operative ceasing to carry on a primary activity of the co‑operative; or (ii) in the ability of the co‑operative to carry on a primary activity of the co‑operative being substantially impaired. (2) If a co‑operative contravenes this section, each person who is a member of the board of the co‑operative is taken to have committed the offence, if the person— (a) was in a position to influence the conduct of the co‑operative in relation to the commission of the offence by it; and (b) did not use all due diligence to prevent the commission of the offence by it. (3) The Registrar may, by designated instrument, exempt a co‑operative from compliance with a provision of this section and section 248 in relation to a matter to which this section applies. (4) An exemption may be given unconditionally or subject to conditions. undertaking of a co‑operative means all the assets of the co‑operative. This section applies to non‑distributing co‑operatives as well as to distributing co‑operatives. Part 5—Restrictions on acquisition of interests in co‑operatives Division 1—Restrictions on share and voting interests 360—Notice required to be given of voting interest (1) A person (whether or not a member of the co‑operative) must give notice to a co‑operative within 5 business days after becoming aware the person has a relevant interest in the right to vote of a member of the co‑operative. (2) A person (whether or not a member of the co‑operative) who has ceased to have a relevant interest in the right to vote of a member of a co‑operative must give notice to the co‑operative within 5 business days after becoming aware of the fact. (3) Section 233 provides for the effect of a person having a relevant interest in the right to vote of a member of a co‑operative. See Schedule 2 Part 1 for the term relevant interest. 361—Notice required to be given of substantial share interest (1) A person must give notice to a co‑operative within 5 business days after becoming aware the person has a substantial share interest in the co‑operative. (2) A person who has a substantial share interest in a co‑operative must give notice to the co‑operative within 5 business days after becoming aware a substantial change has occurred in the share interest. (3) A person who has ceased to have a substantial share interest in a co‑operative must give notice to the co‑operative within 5 business days after becoming aware the person has ceased to have the interest. (4) A person has a substantial share interest in a co‑operative if the nominal value of the shares in the co‑operative in which the person has a relevant interest represents 5% or more of the nominal value of the issued share capital of the co‑operative. (5) A substantial change takes place in a person's share interest in a co‑operative if there is an increase or decrease in the number of shares in the co‑operative in which the person has a relevant interest and the increase or decrease represents at least 1% of the nominal value of the issued share capital of the co‑operative. 362—Requirements for notices A notice required under this Division must— (b) state the particulars prescribed by the National Regulations of the interest or change being notified. 363—Maximum permissible level of share interest (1) A person must not have a relevant interest in shares of a co‑operative the nominal value of which is more than a maximum of 20% of the nominal value of the issued share capital of the co‑operative. (2) The Registrar may, by designated instrument, state a maximum greater than 20% as the maximum for subsection (1) for a particular co‑operative or class of co‑operatives. For example, a co‑operative group may not have enough members to allow each member to comply with subsection (1). (3) The maximum of 20% stated by subsection (1) may be increased for a particular person by special resolution of the co‑operative concerned passed by a special postal ballot. (4) A resolution under subsection (3) does not have effect unless it is approved by the Registrar. (5) The Registrar's approval of the resolution may be given subject to conditions. 364—Shares to be forfeited to remedy contravention (1) If a person has a relevant interest in a share of a co‑operative in contravention of this Division that is not remedied within 14 days of a notice of that contravention being issued by the board, the board of the co‑operative must declare to be forfeited enough of the shares in which the person has a relevant interest to remedy the contravention. (2) The shares to be forfeited are— (a) the shares nominated by the person for the purpose; or (b) in the absence of that nomination, the shares in which the person has had a relevant interest for the shortest time. (3) A declaration of the board that shares are forfeited operates to forfeit the shares concerned. (4) Section 163, 164 and 165 apply to shares forfeited under this section as if the shares had been forfeited under Chapter 2 Part 6. 365—Powers of board in response to suspected contravention (1) If the board of a co‑operative is satisfied on reasonable grounds that a person has contravened section 361 in relation to the co‑operative, the board may do either or both of the following: (a) refuse to register a share transfer involving the person; (b) suspend a stated right or entitlement a person has as a member of the co‑operative or attaching to any shares of the co‑operative in which the person has a relevant interest. (2) The board may ask a person who it suspects has a relevant interest in shares of the co‑operative to give stated information to the board about the interest. (3) A failure by a person to comply with a request under subsection (2) is a reasonable ground for being satisfied the person has contravened section 361. 366—Powers of Supreme Court about contravention (1) If a person has contravened section 360 or 361 in relation to a co‑operative, the Supreme Court may, on the application of the co‑operative or the Registrar, make any order it considers appropriate. (2) Without limiting subsection (1), an order may include— (a) a remedial order; and (b) for securing compliance with any other order made under this section—an order directing the co‑operative or another person to do or refrain from doing a stated act. (3) An order may be made whether or not the contravention continues. (4) Proof to the satisfaction of the Supreme Court at the hearing of an application that— (a) a person has a relevant interest in a share of a co‑operative because an associate (within the meaning of Schedule 2 Part 2) of the person has a relevant interest in a share; and (b) the associate became entitled to the relevant interest within 6 months before the application was filed with the court, is evidence that the associate was an associate of the person from the time the person first had the relevant interest until the date of the hearing. 367—Co‑operative to inform Registrar of interest over 20% (1) A co‑operative must inform the Registrar in writing within 14 days after the board becomes aware that— (a) a particular person has a relevant interest in shares of the co‑operative the nominal value of which is more than 20% of the nominal value of the issued share capital of the co‑operative; or (b) there has been a change in the number of shares in which a person referred to in paragraph (a) holds a relevant interest. (2) The notification must give details of the relevant interest or change concerned. 368—Co‑operative to keep register (1) A co‑operative must keep a register of notifiable interests. (2) The co‑operative must enter in the register the names of persons from whom the co‑operative has received a notice under this Division together with the information contained in the notice. (3) The register must be open for inspection by a member of the co‑operative free of charge. 369—Unlisted companies to provide list of shareholders etc (1) This section applies to a company registered under the Corporations Act that is not a listed corporation (within the meaning of that Act). (2) The Registrar or the board of a co‑operative may at any time request a company to which this section applies that is a member of a co‑operative to give the Registrar and the board a list showing— (a) the name of each member of the company; and (b) if the company is limited by shares (or by shares and by guarantee)— (i) the number of shares in the company held by each member; and (ii) the name of each person who has a relevant interest in a share of the company together with details of the interest; and (c) the name of each person who is an associate (within the meaning of the Corporations Act) of the company. (3) A list under subsection (2) must be given within 28 days after a written request for the list is made to the company by the Registrar or board. (4) The details to be shown on the list are the details as at the date stated in the request. Section 91 provides that the board of a co‑operative may give directions about disclosure of relevant interests and instructions. 370—Excess share interest not to affect loan liability (1) This section applies if a co‑operative has made a loan to a member and the member had or has a relevant interest in shares of the co‑operative in contravention of this Division. (2) Until the amount lent to the member has been repaid to the co‑operative (with the interest payable), the member is liable to make to the co‑operative the payments the member would be liable to make if all the shares concerned were lawfully held by the member. (3) Security for the repayment of the loan is not affected by a contravention of this Division. 371—Extent of operation of this Division This Division— (a) applies to all individuals, whether resident in this jurisdiction or in Australia or not and whether Australian citizens or not, and to all bodies corporate or unincorporated, whether incorporated or carrying on business in this jurisdiction or in Australia or not; and (b) extends to acts done or omitted to be done outside this jurisdiction, whether in Australia or not. 372—Exemptions (1) The Registrar may, by designated instrument, exempt a person or class of persons from the operation of this Division. Division 2—Restrictions on certain share offers 373—Share offers to which this Division applies (1) This Division applies to the following offers to purchase shares in a co‑operative: (a) an offer made as part of a proposal for, or that is conditional on, the sale of the business or part of the business, as a going concern, of the co‑operative; (b) an offer made as part of a proposal for, or that is conditional on, the registration of the co‑operative as a company under the Corporations Act; (c) an offer made as part of a proposal for, or that is conditional on, the winding up of the co‑operative; (d) an offer that would result in a contravention of section 363 were the offerer to be registered (immediately after the offer is made) as the holder of the shares that are the subject of the offer; (e) an offer that would lead to the offerer having a substantial share interest in the co‑operative, or to a substantial change taking place in a substantial share interest the offerer has in the co‑operative, were the offerer to be registered (immediately after the offer is made) as the holder of the shares that are the subject of the offer. (2) In subsection (1)(e), substantial share interest and substantial change have the same meanings as they have in section 361. 374—Requirements to be satisfied before offer can be made (1) A person must not make an offer to which this Division applies unless the making of the offer has been approved— (a) by special resolution by a special postal ballot; and (b) by the Registrar. (2) Despite subsection (1), an offer referred to in section 373(1)(e) can be made even if it has not been approved as referred to in subsection (1) if it is made in circumstances stated in, and in accordance with the requirements of, the National Regulations. 375—Some offers totally prohibited if they discriminate An offer referred to in section 373(1)(a)—(d) must not be made at all if it operates or would operate to discriminate between members who are active members and members who are not active members. 376—Offers to be submitted to board first (1) A proposal to make an offer to which this Division applies must in the first instance be submitted to the board of the co‑operative. (2) The board may decline to put a proposed offer to a special postal ballot unless arrangements satisfactory to the board have been made for payment to the co‑operative of the expenses involved in holding the ballot. (3) The board may require payment under subsection (2) in advance. (4) A requisition for a special postal ballot for this Division cannot be served unless the board has had a reasonable opportunity to consider the proposed offer concerned. (5) A period of 28 days is a reasonable opportunity for considering a proposed offer but the Registrar may extend the period in a particular case, whether before or after the end of the 28 days, by written notice to the co‑operative. 377—Announcements of proposed takeovers about proposed company (1) This section applies to an offer to purchase shares in a co‑operative made as part of a proposal for, or that is conditional on, the registration of the co‑operative as a company (the proposed company) under the Corporations Act. (2) A person must not make a public announcement to the effect the person proposes, or the person and another person or other persons together propose, to make takeover offers, or to cause a takeover announcement to be made, in relation to the proposed company if— (a) the person knows the announcement is false or is recklessly indifferent as to whether it is true or false; or (b) the person has no reasonable grounds for believing the person, or the person and the other person or persons, will be able to perform obligations arising under the scheme or announcement or under the Corporations Act in relation to the scheme or announcement if a substantial proportion of the offers or the offers made under the announcement are accepted. Maximum penalty: $20 000 or imprisonment for 5 years, or both. (3) If a person makes a public announcement to the effect the person proposes, or the person and another person or other persons together propose, to make a takeover bid in relation to the proposed company, the person must proceed to make a takeover bid in relation to shares in the company in accordance with the public announcement within 2 months after the day on which the company is incorporated. (4) A person is not liable to be convicted of more than one offence under subsection (3) for any one public announcement. (5) A person who contravenes this section (whether or not the person is convicted of an offence for the contravention) is liable to pay compensation to a person who suffered loss because of entering into a share transaction in reliance on the public announcement concerned. (6) The amount of the compensation is the difference between the price of the shares at which the transaction was entered into and the price of the shares at which the transaction would have been likely to have been entered into if the person had not made the public announcement. (7) A person does not contravene subsection (3) and is not liable to pay compensation for the contravention if it is proved the person could not reasonably have been expected to make the takeover bid concerned— (a) because of circumstances that existed when the public announcement was made but of which the person had no knowledge and could not reasonably have been expected to have knowledge; or (b) because of a change in circumstances after the announcement was made, other than a change in circumstances caused directly or indirectly by the person. (8) Expressions used in this section have the same meanings as they had in section 746 of the Corporations Law as applying on 12 March 2000. 378—Additional disclosure requirements for offers involving conversion to company If an offer is part of a proposal for, or is conditional on, the registration of the co‑operative as a company under the Corporations Act, the disclosure statement required to be sent to members for the special postal ballot must contain the following additional information: (a) full particulars of any proposal by which a director will acquire a relevant interest in a share of the company to be formed; (b) other information that— (i) is material to the making of a decision by a member whether or not to agree to the making of the offer; and (ii) is within the knowledge of the directors; and (iii) has not previously been disclosed to the members; (c) other information the Registrar directs. 379—Consequences of prohibited offer (1) If a person makes an offer to purchase shares in a co‑operative in contravention of this Division— (a) the person cannot be registered as the holder of the shares concerned; and (b) if the transfer of the shares is registered—the person cannot vote at a meeting of the co‑operative. (2) A vote cast by or for a member when the member cannot vote because of this section must be disregarded. 380—Exemptions (1) The Registrar may, by designated instrument, exempt a co‑operative from compliance with a provision of this Division and section 248 in relation to a matter to which this Division applies. Chapter 4—Structural and other events for co‑operatives Part 1—Appointment of administrator Division 1—Introductory 381—Operation of this Part This Part provides 2 methods for the administration of a co‑operative, as follows: (a) administration under the Corporations Act as applying under Division 2; (b) administration under Division 3. Division 2—Administration under Corporations Act 382—Application of Corporations Act—administration of co‑operative 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 5.3A and Division 3 of Part 5.9 of the Corporations Act, subject to the following modifications: (a) a reference in the provisions to sections 128 and 129 of the Corporations Act is to be read as a reference to Division 3 of Chapter 2 Part 2 of this Law; (b) a reference in section 436D of the Corporations Act to "section 436A, 436B or 436C" is to be read as including a reference to section 385 of this Law; (c) a reference in section 436E(4)(a) or 448B of the Corporations Act to an administrator is to be read as not including a reference to an administrator appointed under section 385 of this Law; (d) a reference in section 440D(2)(b) of the Corporations Act to prescribed proceedings is to be read as a reference to proceedings prescribed by the local regulations; (e) section 444GA of the Corporations Act is taken to include a provision to the effect that the section has effect subject to Divisions 7 and 8 of Chapter 2 Part 4 of this Law; (f) section 446B of the Corporations Act is taken to be omitted; (g) the reference in section 600H(2) of the Corporations Act to "a compromise or arrangement under part 5.1" is to be read as a reference to a compromise or arrangement under Chapter 4 Part 4 of this Law; (h) the modifications referred to in section 13(3) of this Law so far as they are relevant. 383—Appointment of administrator by Registrar in the case of insolvency (1) The Registrar may appoint a person as an administrator for the purposes of Part 5.3A of the Corporations Act (as applying under this Division) if the Registrar is of the opinion that the co‑operative is insolvent or likely to become insolvent at some future time. (2) The person appointed by the Registrar must be a registered liquidator within the meaning of the Corporations Act, but the Registrar may appoint a person who is not a registered liquidator if the Registrar forms the view that the likely costs of administration by a registered liquidator are excessive taking into account the known assets of the co‑operative and the expected extent of debt of the co‑operative. Division 3—Administration—alternative procedure 384—Operation of this Division (1) The provisions of the Corporations Act as applying under Division 2 do not apply to the appointment of an administrator under this Division or to an administrator so appointed. (2) This Division does not apply to the appointment of an administrator under section 383 or to an administrator so appointed. 385—Appointment of administrator by Registrar (1) The Registrar may, by written notice, appoint an administrator to conduct the affairs of a co‑operative. (2) A notice of appointment must state— (a) the date of appointment; and (b) the appointee's name; and (c) the appointee's business address. (3) If the appointee's name or business address changes, the appointee must immediately give written notice of the change to the Registrar. (4) The Registrar must not appoint an administrator unless the necessary grounds for taking the action exist, as referred to in section 455. 386—Effect of appointment of administrator (1) On the appointment of an administrator of a co‑operative— (a) the directors of the co‑operative cease to hold office; and (b) all contracts for the provision of secretarial or administrative services for the co‑operative are terminated; and (c) the administrator may terminate any contract of employment with the co‑operative or any contract for providing other services to the co‑operative. (2) An administrator of a co‑operative has the functions of the board of the co‑operative, including the board's powers of delegation. (3) A director of a co‑operative must not be appointed or elected while the administrator is in office except as provided by this Division. 387—Revocation of appointment (1) An administrator holds office until the administrator's appointment is revoked. (2) The Registrar may, by written notice, revoke the appointment of an administrator. (3) When a liquidator of a co‑operative is appointed, the appointment of an administrator of the co‑operative is automatically revoked. (4) Immediately on the revocation of an administrator's appointment, the administrator must prepare and give to the Registrar a report showing how the administration was carried out, and for that purpose an administrator has access to the co‑operative's books. (5) On giving the report and accounting fully for the administration of the co‑operative to the satisfaction of the Registrar, the administrator is released from any further duty to account for the administration of the co‑operative other than because of fraud, dishonesty, negligence or wilful failure to comply with this Law. (6) Before revoking the appointment of an administrator of a co‑operative, the Registrar must— (a) appoint another administrator; or (b) appoint a liquidator; or (c) ensure directors of the co‑operative have been elected under the rules of the co‑operative at a meeting called by the administrator under the rules of the co‑operative; or (d) appoint directors of the co‑operative. (7) Directors elected or appointed under subsection (6)— (a) take office on revocation of the administrator's appointment; and (b) in the case of directors appointed under subsection (6)—hold office until the next annual general meeting of the co‑operative after the revocation of the administrator's appointment. (8) This section has effect subject to section 390. 388—Expenses of administration (1) The expenses of and incidental to the conduct of a co‑operative's affairs by an administrator are payable from the co‑operative's funds. (2) The expenses of conducting a co‑operative's affairs include— (a) if the administrator is not a public sector official—remuneration of the administrator at a rate approved by the Registrar; or (b) if the administrator is a public sector official—the amount the Registrar certifies should be paid to the Registrar as repayment of the administrator's remuneration. (3) An amount certified under subsection (2)(b) may be recovered by the Registrar in a court of competent jurisdiction. (4) An administrator has, in relation to the expenses referred to in subsection (1), the same priority on the winding up of a co‑operative as a liquidator appointed under the Corporations Act as applying under this Law has. Subdivision D of Division 6 of Part 5.6 of the Corporations Act contains provisions relating to the priority of payments. 389—Liabilities arising from administration (1) If a co‑operative incurs loss because of fraud, dishonesty, negligence or wilful failure to comply with this Law or the rules of the co‑operative by an administrator, the administrator is liable for the loss. (2) An administrator is not liable for a loss that is not a loss to which subsection (1) applies but must account for the loss in a report given under section 387. 390—Additional powers of Registrar (1) If the Registrar appoints directors of a co‑operative under section 387, the Registrar may, by written notice given to the co‑operative, state— (a) a time during which this section is to apply to the co‑operative; and (b) the terms on which all or any of the directors hold office; and (c) the rules that are to be the rules of the co‑operative. (2) While this section applies to a co‑operative, the Registrar may— (a) remove and appoint directors; and (b) vary, revoke or state new terms in place of all or any of the terms stated under subsection (1); and (c) amend all or any of the rules stated under subsection (1). (3) The Registrar may, by written notice given to the co‑operative, extend the time for which this section is to apply to a co‑operative. (4) A rule stated by the Registrar under this section to be a rule of a co‑operative— (a) must not to be amended other than in the way set out in this section; and (b) if it is inconsistent with another rule of the co‑operative—prevails over the other rule (and the other rule is inoperative to the extent of the inconsistency); and (c) has the same evidentiary value as is by this Law accorded to the rules of the co‑operative and to copies of them. 391—Stay of proceedings (1) If the Registrar appoints an administrator to conduct a co‑operative's affairs, a person must not begin or continue proceedings in a court against the co‑operative until the administrator's appointment is revoked other than with the leave of the designated tribunal and, if the tribunal gives leave, in accordance with any terms the tribunal imposes. (2) A person intending to apply for leave of the designated tribunal under subsection (1) must give the Registrar at least 10 days notice of intention to apply. (3) On the hearing of an application under subsection (1), the Registrar may be represented and may oppose the application. 392—Administrator to report to Registrar On receipt of a request from the Registrar, the administrator of a co‑operative must, without delay, prepare and give to the Registrar a report showing how the administration is being carried out. Part 2—Receivers and other controllers of property 393—Application of Corporations Act—receivers and other controllers of property 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 5.2 of the Corporations Act, subject to the following modifications: (a) section 416 of the applied provisions is to be read as including the following definitions: administrator means an administrator of a deed of arrangement appointed under Part 5.3A of the Corporations Act, as applying under section 382 of the Co‑operatives National Law. senior manager— (a) of a co‑operative—means a person referred to in paragraph (b) of the definition of officer in section 4 of the Co‑operatives National Law; or (b) of a corporation other than a co‑operative—means a senior manager within the meaning of the Corporations Act. (b) section 416 of the applied provisions is to be read as if the following definition were substituted for the definition of officer: officer of a co‑operative has the meaning given by section 4 of the Co‑operatives National Law and, in relation to a participating co‑operative, includes a local agent of the participating co‑operative. (c) section 417 of the applied provisions is taken to be omitted and the following section substituted: 417—Application of Part Except so far as the contrary intention appears, this Part applies in relation to a receiver of property of a co‑operative who is appointed after the commencement of section 393 of the Co‑operatives National Law in this jurisdiction, even if the appointment arose out of a transaction entered into, or an act or thing done, before that commencement. (d) section 418A (1) of the applied provisions is to be read as if "23 June 1993" wherever occurring were omitted and "the commencement of section 393 of the Co‑operatives National Law in this jurisdiction" were substituted; (e) section 429 (1) of the applied provisions is to be read as if the following definition were substituted for the definition of reporting officer: reporting officer, in relation to a co‑operative for property of which a person is controller, means a person who was on the control day— (a) for a co‑operative—a director or secretary of the co‑operative; or (b) for a participating co‑operative—a local agent of the participating co‑operative. (f) a reference in section 432 of the applied provisions to ASIC is to be read as a reference to the Registrar, but this paragraph does not limit the operation of section 15 of this Law; (g) the modifications referred to in section 13(3) of this Law so far as they are relevant. Part 3—Mergers and transfers of engagements Division 1—Merger or transfer of engagements 394—Application of this Division This Division does not apply to a merger or transfer of engagements to which Chapter 5 applies. 395—Mergers and transfers of engagements of local co‑operatives Any 2 or more co‑operatives may consolidate all or any of their assets, liabilities and undertakings by way of merger or transfer of engagements approved under this Division. 396—Requirements before application can be made (1) Before co‑operatives can apply for approval under this Division of a merger or transfer of engagements, the proposed merger or transfer must have been approved by each of the co‑operatives by— (a) a special resolution passed by a special postal ballot; or (b) if permitted by subsection (2)—a resolution of the board of the co‑operative. (2) The proposed merger or transfer of engagements may be approved by resolution of the board of a co‑operative if the Registrar consents to the procedure applying in the particular case. 397—Disclosure statement required (1) A resolution of a co‑operative is not effective for the purposes of this Division unless this section has been complied with. (2) Each co‑operative must send to each of its members a disclosure statement approved by the Registrar stating— (a) the financial position of each co‑operative concerned in the proposed merger or transfer of engagements as shown in financial statements prepared as at a date not more than 6 months before the date of the statement; and (b) any interest any officer of each co‑operative has in the proposed merger or transfer of engagements; and (c) compensation or other consideration proposed to be paid, or other incentive proposed to be given, to any officer or member of each co‑operative in relation to the proposed merger or transfer of engagements; and (d) whether the proposal is a merger or transfer of engagements and the reason for the merger or transfer of engagements; and (e) for a transfer of engagements—whether it is a total or partial transfer of engagements; and (f) other information the Registrar directs. (3) The disclosure statement must be sent to the members of each co‑operative so that it will, in the ordinary course of post, reach each member who is entitled to vote on the special resolution no later than 21 days before the day on or before which the ballot papers must be returned by members voting in the special postal ballot. (4) The Registrar may, by designated instrument, exempt a co‑operative from complying with this section. (5) The Registrar may give an approval or an exemption under this section unconditionally or subject to conditions. 398—Making an application (1) An application for approval of a merger or transfer of engagements under this Division must be made to the Registrar in the approved form. (2) An application for approval of a merger must be accompanied by 2 copies of the proposed rules of the merged co‑operative and other particulars required by the Registrar. 399—Approval of merger (1) The Registrar must approve a merger under an application under this Division if satisfied— (a) this Division and the National Regulations have been complied with in relation to the application; and (b) the proposed rules of the merged co‑operative are consistent with this Law and may reasonably be approved; and (c) the certificates of registration of the co‑operatives have been surrendered to the Registrar; and (d) there is no good reason why the merged co‑operative and its rules should not be registered. (2) On approving an application for merger, the Registrar must— (a) cancel the registration of the co‑operatives involved in the merger; and (b) register the merged co‑operative and its rules; and (c) issue to the merged co‑operative a certificate of registration under this Law. (3) A merger takes effect on the issue of the certificate of registration for the merged co‑operative. 400—Approval of transfer of engagements (1) The Registrar must approve a transfer of engagements under an application under this Division if satisfied— (a) this Division has been complied with in relation to the application; and (b) the rules or proposed rules of the transferee co‑operative are adequate; and (c) for a total transfer of engagements from a co‑operative—the certificate of registration of the co‑operative has been surrendered to the Registrar; and (d) there is no good reason why the transfer of engagements should not take effect. (2) A transfer of engagements takes effect on the day stated in the approval of the Registrar. 401—Transfer of engagements by direction of Registrar (1) The Registrar may, with the approval of the Minister, direct a co‑operative— (a) to transfer its engagements to a co‑operative approved by the Registrar; and (b) within a period fixed by the Registrar when giving the direction, or the further period the Registrar allows, to enter into an agreement approved by the Registrar to give effect to the transfer of engagements directed. (2) The Registrar must not give the direction to a co‑operative unless the necessary grounds exist for giving the direction, as referred to in section 455. (3) The transfer of engagements must make provision in a way approved by the Registrar for the members of the transferor co‑operative who wish to do so to become members of the transferee co‑operative. (4) If a co‑operative fails to comply with a direction under this section, the Registrar may elect to treat the failure as the necessary grounds— (a) for winding up the co‑operative on a certificate of the Registrar; or (b) for appointing an administrator of the co‑operative. (5) The Registrar must notify the co‑operative of the Registrar's decision under subsection (4). (6) The Registrar may revoke a direction under this section at any time up until the co‑operative has agreed under the direction to transfer its engagements. (7) A transfer of engagements directed under this section takes effect on a day notified by the Registrar by designated instrument. (8) An officer of a co‑operative must not— (a) fail to take all reasonable steps to secure compliance by the co‑operative with a direction given under this section; or (b) by a wilful act or omission be the cause of a failure by the co‑operative to comply with a direction given under this section. Maximum penalty (for subsection (8)): $2 000. Division 2—Transfer of incorporation 402—Meaning of new body and transfer The registration or incorporation of a co‑operative as a corporation because of an application under this Division is referred to in this Division as its transfer and the corporation concerned is referred to in this Division as the new body. 403—Application for transfer A co‑operative may, subject to obtaining any necessary approvals under this Division, apply to become registered, incorporated or otherwise established as one of the following: (a) a company under the Corporations Act; (b) a corporation under legislation of this or any other jurisdiction that is prescribed by the National Regulations or the local regulations. 404—Requirements before application can be made (1) Before an application is made under section 403, the co‑operative must, by special resolution passed by a special postal ballot— (a) approve the proposed application; and (b) decide under what name the co‑operative is to apply to be registered, incorporated or otherwise established; and (c) adopt constituent documents that may be necessary or considered desirable. (2) An application cannot be made under section 403 in respect of a co‑operative without share capital unless— (a) the application is made at least 2 weeks after a notice has been published in a newspaper circulating generally in the district in which the registered office of the co‑operative is situated advising of the proposal to submit the proposed special resolution to members of the co‑operative; and (b) either— (i) in a case where the new body will have share capital—all the members of the co‑operative will have an equal shareholding; or (ii) in any case—the Registrar approves in writing of the making of the application. (3) The name applied for need not be the same as that of the co‑operative and must not include the word "Co‑operative" or another word or abbreviation importing a similar meaning. (4) The Registrar may, by designated instrument, exempt a co‑operative from compliance with a provision of this section and section 248 in relation to a matter to which this section applies. (5) An exemption may be given unconditionally or subject to conditions. 405—New body ceases to be registered as co‑operative On the transfer of a co‑operative under this Division, it ceases to be registered as a co‑operative under this Law. 406—Transfer not to impose greater liability etc (1) The constituent documents adopted in the transfer must not— (a) impose on the members of the new body who were members of the co‑operative at the date of transfer any greater or different liability to contribute to the assets of the new body than the liability to which they were subject as members of the co‑operative; or (b) deprive a member of the new body of preferential rights to dividends or capital to which the member was entitled as a member of the co‑operative at the date of transfer. (2) The transfer must result in all persons who were members of the co‑operative at the date of transfer becoming members of the new body. (3) In the case of a transfer of a co‑operative having share capital to a new body having share capital, the transfer must result in every member of the co‑operative at the date of transfer who held shares in the co‑operative being the holder of shares in the capital of the new body equal in number and nominal value to the shares held by the member as a member of the co‑operative. Section 168(1) provides that "Even though a person's shares in a co‑operative have been forfeited under [Chapter 2 Part 6], 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: [...] (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". 407—Effect of new certificate A certificate of registration, incorporation or establishment as the new body issued by the appropriate officer under the law applicable to the new body is evidence that all requirements of this Division about the registration, incorporation or establishment have been complied with. 408—Copy of new certificate to be given to Registrar On the transfer of a co‑operative under this Division, the new body must immediately give the Registrar a copy of its new certificate of registration, incorporation or establishment. 409—New body is a continuation of the co‑operative (1) When a co‑operative transfers to a new body, the corporation constituted by the new body is taken to be the same entity as the corporation constituted by the co‑operative. Division 3 also applies to a transfer of incorporation under this Division—see section 412. (2) If the new body is a company under the Corporations Act, subsection (1) and Division 3 have effect subject to the provisions of section 601BM of that Act. Section 601BM of the Corporations Act provides that the registration of a body as a company under Part 5B.1 of that Act does not— (a) create a new legal entity; or (b) affect the body's existing property, rights or obligations (except as against the members of the body in their capacity as members); or (c) render defective any legal proceedings by or against the body or its members. Division 3—Effect of merger or transfer on assets and liabilities 410—How this Division applies to a merger (1) This Division applies to a merger of co‑operatives under Division 1. (2) In the application of this Division to the merger— new body means the co‑operative resulting from the merger; original body means each co‑operative that is a party to the merger; relevant day means the day on which the merged co‑operative is registered under this Law. 411—How this Division applies to a transfer of engagements (1) This Division applies to a transfer of engagements of a co‑operative to another co‑operative under Division 1. (2) In the application of this Division to the transfer of engagements— new body means the co‑operative to which the engagements are transferred; original body means the co‑operative that transfers its engagements; relevant day means the day on which the transfer of engagements takes effect. 412—How this Division applies to a transfer of incorporation (1) This Division applies to a transfer of incorporation under Division 2. (2) In the application of this Division to the transfer of incorporation— new body means the corporation resulting from the transfer; original body means the co‑operative transferring its incorporation; relevant day means the day on which the transfer takes effect. 413—Effect of merger or transfer on assets and liabilities assets means a legal or equitable estate or interest (whether present or future, whether vested or contingent and whether personal or assignable) in real or personal property of any description (including money), and includes securities, choses in action and documents; instrument means an instrument (other than this Law) that creates, changes or extinguishes rights or liabilities (or would do so if filed or registered under any law), and includes a judgment, order and process of a court; liabilities means liabilities, debts and obligations (whether present or future, whether vested or contingent and whether personal or assignable); rights means any rights, powers, privileges or immunities (whether present or future, whether vested or contingent and whether personal or assignable). (2) On and from the relevant day for an event to which this Division applies— (a) the assets of the original body vest in the new body without the need for a conveyance, transfer, assignment or assurance; and (b) the rights and liabilities of the original body become the rights and liabilities of the new body; and (c) all proceedings by or against the original body pending immediately before the relevant day are taken to be proceedings pending by or against the new body; and (d) an act, matter or thing done or omitted to be done by, to or in relation to the original body before the relevant day is (to the extent to which the act, matter or thing has any force or effect) taken to have been done or omitted by, to or in relation to the new body; and (e) a reference in an instrument or in a document of any kind to the original body is to be read as, or as including, a reference to the new body. (3) The operation of this section is not to be regarded— (a) as a breach of contract or confidence or otherwise as a civil wrong; or (b) as a breach of a contractual provision prohibiting, restricting or regulating the assignment or transfer of assets, rights or liabilities; or (c) as giving rise to a remedy by a party to an instrument, or as causing or permitting the termination of an instrument, because of a change in the beneficial or legal ownership of an asset, right or liability. Part 4—Compromises and arrangements Division 1—General requirements 414—Requirements for binding compromise or arrangement (1) A compromise or arrangement is binding only if it is approved by order of the Supreme Court and it is agreed to— (a) if the compromise or arrangement is between the co‑operative and any of its creditors—at a court ordered meeting by a majority in number of the creditors concerned who are present and voting (in person or by proxy), being a majority whose debts or claims against the co‑operative amount to at least 75% of the total of the debts and claims of all creditors who are present and voting (in person or by proxy); or (b) if the compromise or arrangement is between the co‑operative and any of its members—by the members concerned, by special resolution passed by a special postal ballot. (2) The court ordered meeting referred to in subsection (1)(a) is a meeting called in accordance with an order of the Supreme Court under this Part. (3) The Supreme Court may give its approval to a compromise or arrangement subject to the amendments or conditions it considers appropriate. (4) An order of the Supreme Court approving a compromise or arrangement does not have effect until an office copy of the order is filed with the Registrar. (5) On the copy being filed, the order takes effect from the date of filing or the earlier date the Supreme Court states in the order. 415—Court ordered meeting of creditors (1) If a compromise or arrangement is proposed between a co‑operative and any of its creditors, the Supreme Court may, on application by an appropriate person, order a meeting or meetings of the creditors concerned. (2) An appropriate person to apply for an order is— (a) the co‑operative; or (b) a member of the co‑operative; or (c) one of the creditors concerned; or (d) for a co‑operative being wound up—the liquidator. (3) The meeting must be called in the way and be held in the place or places (in this jurisdiction or elsewhere) the Supreme Court directs. (4) In considering whether to make an order for a meeting to be held in another jurisdiction, the Supreme Court may have regard to where creditors concerned reside. 416—Registrar to be given notice and opportunity to make submissions (1) The Supreme Court may make an order under this Division if the court is satisfied— (a) at least 14 days notice of the hearing of the application for the order, or a shorter period of notice the court or the Registrar permits, has been given to the Registrar; and (b) the Registrar has had a reasonable opportunity to examine the terms of, and make submissions to the court in relation to, the proposed compromise or arrangement concerned and a draft explanatory statement relating to it. (2) In this section— draft explanatory statement means a statement— (a) explaining the effect of the proposed compromise or arrangement and, in particular, stating— (i) material interests of the directors of the co‑operative, whether as directors, as members or creditors of the co‑operative or otherwise; and (ii) the effect on the interests of the proposed compromise or arrangement in so far as the effect is different from the effect on the like interests of other persons; and (b) setting out information prescribed by the National Regulations; and (c) setting out other information that— (i) is material to the making of a decision by a creditor or member of the co‑operative whether or not to agree to the proposed compromise or arrangement; and (ii) is within the knowledge of the directors of the co‑operative; and (iii) has not previously been disclosed to the creditors or members of the co‑operative. 417—Results of 2 or more meetings If the Supreme Court orders 2 or more meetings of creditors to be held in relation to a proposed compromise or arrangement— (a) the meetings are taken to form a single meeting; and (b) the votes in favour of the proposed compromise or arrangement cast at each of the meetings are to be totalled; and (c) the votes against the proposed compromise or arrangement cast at each of the meetings are to be totalled. 418—Persons disqualified from administering compromise or arrangement (1) Except with the leave of the Supreme Court, a person must not be appointed to administer, and must not administer, a compromise or arrangement approved under this Law between a co‑operative and any of its creditors or members, whether by the terms of the compromise or arrangement or under a power given by the terms of a compromise or arrangement, if the person— (a) is a mortgagee of a property of the co‑operative; or (b) is an auditor or an officer of the co‑operative; or (c) is an officer of a corporation that is a mortgagee of property of the co‑operative; or (d) is not a registered liquidator, unless the person is a corporation authorised under a law of this jurisdiction to administer the compromise or arrangement concerned; or (e) is an officer of a corporation related to the co‑operative; or (f) unless the Registrar directs in writing that this paragraph does not apply in relation to the person and the co‑operative—has within the last year been an officer or promoter of the co‑operative or of a related corporation. (2) This section does not disqualify a person from administering a compromise or arrangement under an appointment validly made before the commencement of this section in this jurisdiction. 419—Application of Corporations Act to person appointed to administer compromise or arrangement The provisions of sections 425, 427(1A) and (2), 428, 432 and 434 of the Corporations Act as applying under this Law apply to a person appointed to administer a compromise or arrangement in relation to a co‑operative, as if— (a) the appointment were an appointment of the person as a receiver and manager of property of the co‑operative; and (b) a reference in those sections to a receiver were a reference to the person. 420—Application of Corporations Act—person appointed to administer compromise or arrangement A person appointed to administer a compromise or arrangement is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to section 536 of the Corporations Act, subject to the following modifications: (a) that section applies as if the appointment were an appointment of the person as a liquidator of the co‑operative; (b) a reference in that section to a liquidator is taken to be a reference to the person; 421—Copy of order to be attached to rules (1) A co‑operative must ensure a copy of an order of the Supreme Court approving a compromise or arrangement is attached to each copy of the rules of the co‑operative issued after the order is made. (2) The Supreme Court may, by order, exempt a co‑operative from compliance with this section or decide the period during which the co‑operative must comply. 422—Directors to arrange for reports (1) When a compromise or arrangement (whether or not for a scheme for the reconstruction of a co‑operative or the merger of 2 or more co‑operatives) has been proposed, the directors of the co‑operative must— (a) if a meeting of the members of the co‑operative by resolution directs—instruct the accountants or Australian legal practitioners or both named in the resolution to report on the proposals and send their report or reports to the directors as soon as practicable; and (b) make the report or reports available at the registered office of the co‑operative for inspection by the members and creditors of the co‑operative at least 7 days before the day of the meeting ordered by the Supreme Court or the holding of the special postal ballot, as appropriate. (2) If this section is not complied with, each director of the co‑operative commits an offence. 423—Power of Court to restrain further proceedings (1) If a proposed compromise or arrangement is made between a co‑operative and any of its creditors and no order has been made or resolution passed for the winding up of the co‑operative, the Supreme Court may restrain further proceedings in an action or other civil proceedings against the co‑operative except by leave of the court and on the terms the court imposes. (2) The Supreme Court's power under this section is in addition to any of its other powers and must not be exercised except on application by the co‑operative or a creditor or member of the co‑operative. 424—Court need not approve compromise or arrangement takeovers (1) The Supreme Court need not approve a compromise or arrangement unless— (a) it is satisfied the compromise or arrangement has not been proposed for enabling a person to avoid the operation of any provision of Division 2 of Chapter 3 Part 5; and (b) there is produced to the court a written statement by the Registrar stating the Registrar has no objection to the compromise or arrangement. (2) The Supreme Court need not approve a compromise or arrangement merely because a statement by the Registrar stating the Registrar has no objection to the compromise or arrangement has been produced to the court. 425—Provisions for facilitating reconstructions and mergers (1) This section applies if an application is made to the Supreme Court under this Division for the approval of a compromise or arrangement and it is shown to the court that— (a) the compromise or arrangement has been proposed for a scheme for the reconstruction of a co‑operative or the merger of a co‑operative with another co‑operative or another corporation; and (b) under the scheme all or part of the business or of the property of a co‑operative concerned in the scheme (the transferor) is to be transferred to another corporation (the transferee), except a company within the meaning of the Corporations Act. (2) If this section applies, the Supreme Court may, either by the order approving the compromise or arrangement or by a later order, provide for any one or more of the following: (a) the transfer to the transferee of all or part of the business and the property or liabilities of the transferor; (b) the allotting or appropriation by the transferee of shares, debentures, policies or other interests in the transferee that, under the compromise or arrangement, are to be allotted or appropriated by the transferee to or for a person; (c) the continuation by or against the transferee of legal proceedings pending by or against the transferor; (d) the deregistration, without winding up, of the transferor; (e) provision to be made for persons who, within the time and in the way the court directs, dissent from the compromise or arrangement; (f) the transfer or allotment of an interest in property to a person concerned in the compromise or arrangement; (g) the incidental, consequential and supplemental matters necessary to ensure the reconstruction or merger is fully and effectively carried out. (3) If an order made under this section provides for the transfer of property or liabilities, then, by virtue of the order— (a) the property is transferred to and vests in the transferee free, for a particular property if the order so directs, from a security interest that is under the compromise or arrangement to cease to have effect; and (b) the liabilities are transferred to and become the liabilities of the transferee. (4) If an order is made under this section, each body to which the order relates must, within 14 days after the making of the order, file with the Registrar an office copy of the order. co‑operative includes a participating co‑operative registered, formed or incorporated under a law of another jurisdiction; liabilities includes duties of any description, including duties that are of a personal character or are incapable under the general law of being assigned or performed vicariously; property includes rights and powers of any description, including rights and powers that are of a personal character and are incapable under the general law of being assigned or performed vicariously. 426—Costs for Registrar Without limiting any power of the Supreme Court to award costs, the court may make an order as to costs in favour of the Registrar in connection with an appearance by or on behalf of the Registrar in proceedings under this Division. Division 2—Explanatory statements 427—Explanatory statement required to accompany notice of meeting etc (1) An explanatory statement must accompany every notice sent— (a) to a creditor of a co‑operative calling the court ordered meeting to obtain agreement to the compromise or arrangement; or (b) to a member of a co‑operative for the conduct of the special postal ballot to obtain agreement to the compromise or arrangement. (2) In every notice of a meeting referred to in subsection (1) given by advertisement, there must be included either a copy of the explanatory statement or notification of the place at which and the way in which creditors entitled to attend the meeting may obtain copies of the explanatory statement. (3) The explanatory statement must— (a) explain the effect of the compromise or arrangement and, in particular, state— (i) material interests of the directors, whether as directors, as members or creditors of the co‑operative or otherwise; and (ii) the effect on the interests of the compromise or arrangement in so far as the effect is different from the effect on the like interests of other persons; and (b) state the information prescribed by the National Regulations; and (c) state other information that— (i) is material to the making of a decision by a creditor or member whether or not to agree to the compromise or arrangement; and (ii) is within the knowledge of the directors; and (iii) has not previously been disclosed to the creditors or members. (4) Subsection (1)(a) does not apply to a creditor whose debt is not more than $200 (or another amount prescribed by the National Regulations) unless the Supreme Court otherwise orders. (5) The notice calling the meeting sent to a creditor referred to in subsection (1)(a) must state a place at which a copy of the explanatory statement can be obtained on request. (6) The co‑operative must comply with a request under subsection (5) as soon as practicable. 428—Requirements for explanatory statement (1) An explanatory statement must be as approved by the Registrar. (2) If the compromise or arrangement affects the rights of debenture holders, the explanatory statement must state— (a) material interests of the trustees for the debenture holders, whether as trustees for the debenture holders, as members or creditors of the co‑operative or otherwise; and (b) the effect on the interests of the compromise or arrangement to the extent that the effect is different from the effect on the like interests of other persons. (3) If a notice given by advertisement includes a notification that copies of the explanatory statement can be obtained in a particular way, the co‑operative must give a copy of the statement free of charge to each creditor or member entitled to attend the meeting or vote in the ballot who applies for it in the appropriate way. (4) Each person who is a director or trustee for debenture holders must give notice to the co‑operative of the matters relating to the person required to be included in the explanatory statement. 429—Contravention of this Division—offence by co‑operative (1) If a provision of this Division is contravened, the co‑operative concerned and any other person involved in the contravention commits an offence. Section 9 defines involved in a contravention. (2) It is a defence to a prosecution for an offence under subsection (1) if it is proved the contravention was because of the failure of a person (other than the defendant), who is a director of the co‑operative or a trustee for debenture holders of the co‑operative, to supply for the explanatory statement particulars of the person's interests. Division 3—Acquisition of shares of dissenting shareholders 430—Definitions dissenting shareholder, in relation to a scheme or contract, means a shareholder who has not assented to the scheme or contract or who has failed to transfer the shareholder's shares under the scheme or contract; excluded shares, in relation to a scheme or contract involving a transfer to a person of shares in a class of shares in a co‑operative, means shares in the class that, when the offer relating to the scheme or contract is made, are held by— (a) in any case—the person or a nominee of the person; or (b) if the person is a corporation—a subsidiary of the corporation. 431—Schemes and contracts to which this Division applies (1) This Division applies to a scheme or contract involving a transfer of shares in a co‑operative (the transferor) to a person (the transferee) that has, within 4 months after the making of the offer relating to the scheme or contract by the transferee, been approved by the holders of at least 90% in nominal value of all the shares concerned (other than excluded shares). (2) This Division does not apply to a scheme or contract arising out of the making of an offer to which Division 2 of Chapter 3 Part 5 applies. 432—Acquisition of shares pursuant to notice to dissenting shareholder (1) The transferee under the scheme or contract may, within 2 months after the offer is approved, give notice as prescribed by the National Regulations (a compulsory acquisition notice) to a dissenting shareholder that the transferee wishes to acquire the shares held by the shareholder. (2) If a compulsory acquisition notice is given, the dissenting shareholder may, by written notice given to the transferee within one month after the day the compulsory acquisition notice was given, ask for a statement in writing of the names and addresses of all other dissenting shareholders as shown in the register of members and the transferee must give the statement. (3) Having given the compulsory acquisition notice, the transferee is, unless the Supreme Court orders to the contrary, entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee. (4) The Supreme Court may give an order to the contrary only on the application of the dissenting shareholder made within the later of 28 days after the compulsory acquisition notice was given or 14 days after any statement asked for under subsection (2) was given. (5) If alternative terms are offered to the approving shareholders— (a) the dissenting shareholder is entitled to elect which of the terms are preferred but must make the election within the time allowed for making an application to the Supreme Court under subsection (4); and (b) if the dissenting shareholder fails to make the election within the time—the transferee may, unless the Supreme Court otherwise orders, decide which of the terms is to apply to the acquisition of the shares of the dissenting shareholder. 433—Restrictions when excluded shares are more than 10% If the nominal value of excluded shares is more than 10% of the total nominal value of all the shares (including excluded shares) to be transferred under the scheme or contract, section 432 does not apply unless— (a) the transferee offers the same terms to all holders of the shares (other than excluded shares) to be transferred under the scheme or contract; and (b) the holders who approve the scheme or contract together hold at least 90% in nominal value of the shares (other than excluded shares) to be transferred under the scheme or contract and are also at least 75% in number of the holders of the shares (with joint owners of shares being counted as one person). 434—Remaining shareholders may require acquisition (1) If, under a scheme or contract to which this Division applies, the transferee becomes beneficially entitled to shares in the transferor that, together with other shares in the transferor to which the transferee or a corporation related to the transferee is beneficially entitled, comprise or include 90% in nominal value of the shares concerned— (a) the transferee must, within 28 days after becoming beneficially entitled to the shares, give notice of the fact as prescribed by the National Regulations to the holders of the remaining shares concerned who, when the notice was given, had not— (i) assented to the scheme or contract; or (ii) been given a compulsory acquisition notice by the transferee under this Division; and (b) a holder referred to in paragraph (a) may, within 3 months after being given the notice, by notice to the transferee require the transferee to acquire the holder's shares and, if alternative terms were offered to the approving shareholders, elect which of the terms the holder will accept. (2) If a shareholder gives notice under this section in relation to the shareholder's shares, the transferee is entitled and bound to acquire them— (a) on the terms on which under the scheme or contract the shares of the approving shareholders were transferred to the transferee and, if alternative terms were offered to the shareholders, on the terms for which the shareholder has elected, or, if no election is made, for whichever of the terms the transferee decides; or (b) on other terms that may be agreed or as the Supreme Court, on the application of the transferee or of the shareholder, considers appropriate to order. 435—Transfer of shares pursuant to compulsory acquisition (1) A transferee who has given a compulsory acquisition notice must— (a) send a copy of the notice to the transferor together with an instrument of transfer for the shares the transferee is entitled to acquire under this Division and executed, on the shareholder's behalf, by a person appointed by the transferee and, on the transferee's own behalf, by the transferee; and (b) pay, allot or transfer to the transferor the consideration for the shares. (2) The transferee must do so within 14 days after whichever of the following happens last: (a) the period of 28 days after the day on which the compulsory acquisition notice was given ends; (b) the period of 14 days after a statement of the names and addresses of dissenting shareholders is supplied under this Division ends; (c) if an application has been made to the Supreme Court by a dissenting shareholder—the application is disposed of. (3) When the transferee has complied with this section, the transferor must register the transferee as the holder of the shares. (4) This section does not apply if the Supreme Court, on the application of the dissenting shareholder, orders to the contrary. 436—Disposal of consideration for shares compulsorily acquired (1) Amounts received to be paid to ADI account and held in trust Amounts received by the transferor under this Division must be paid into a separate authorised deposit‑taking institution account and the amounts, and any other consideration received, are to be held by the transferor in trust for the persons entitled to the shares in relation to which they were respectively received. (2) Transfer of amounts or property to Registrar after 2 years If an amount or other property received by the transferor under this Division has been held in trust by the transferor for a person for at least 2 years, the transferor must pay the amount or transfer the consideration, and any accretions to it and any property that may become substituted for it or for part of it, to the Registrar. (3) Application of Corporations Act Anything paid or transferred to the Registrar under subsection (2) is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to Part 9.7 of the Corporations Act, subject to the following modifications: (a) a reference in the provisions to unclaimed property is to be read as a reference to whatever was paid or transferred to the Registrar under subsection (2); (b) if the Co‑operatives National Law Act of this jurisdiction or the local regulations so provide— (i) references in section 1339 of the Corporations Act to crediting an amount to the Companies and Unclaimed Moneys Special Account are to be read as references to dealing with the amount in a manner specified in the Co‑operatives National Law Act of this jurisdiction or the local regulations for the purposes of this subparagraph; or (ii) section 1341 (1) and (2) of the Corporations Act are taken to be omitted and replaced by provisions specified in the Co‑operatives National Law Act of this jurisdiction or the local regulations for the purposes of this subparagraph, or both; (4) Timing for transfer to Registrar The transferor must comply with subsection (2) before the end of 10 years after the day on which the amount was paid, or the consideration was allotted or transferred, to the transferor. Division 4—Miscellaneous 437—Notification of appointment of scheme manager Within 14 days after being appointed to administer a compromise or arrangement approved under this Part, a person must file with the Registrar a written notice of the appointment. 438—Power of Supreme Court to require reports If an application is made to the Supreme Court under this Part in relation to a proposed compromise or arrangement, the court may— (a) before making an order on the application, require the Registrar or another person to give to the court a report as to— (i) the terms of the compromise or arrangement or of the scheme for, or in relation to, which the compromise or arrangement has been proposed; and (ii) the conduct of the officers of the body or bodies concerned; and (iii) any other matters that, in the opinion of the Registrar or the person, ought to be brought to the attention of the court; and (b) in deciding the application, have regard to anything contained in the report; and (c) make any order as to the payment of the costs of preparing and giving the report as the court considers appropriate. 439—Effect of out‑of‑jurisdiction compromise or arrangement (1) A compromise or arrangement that is binding on any creditors of a participating co‑operative because of a provision of the law of another jurisdiction that corresponds to this Part is also binding on the creditors of the participating co‑operative whose debts are recoverable by action in a court of this jurisdiction. (2) If a court of another jurisdiction makes an order under a provision of the law of that jurisdiction that corresponds to a provision of this Part, the order is taken to have been made by the Supreme Court of this jurisdiction under the corresponding provision of this Law, and has effect and may be enforced accordingly. 440—Jurisdiction to be exercised in harmony with Corporations Act jurisdiction The jurisdiction of the Supreme Court under this Part is intended to complement the Supreme Court's jurisdiction under the Corporations Act (as applying under this Law) and should be exercised in harmony with the jurisdiction. 441—Registrar may appear and be heard In proceedings before the Supreme Court under this Part, the Registrar is entitled to appear and be heard, either in person or by the Registrar's properly appointed representative. Part 5—Winding up 442—Methods of winding up A co‑operative may be wound up— (a) on a certificate of the Registrar; or (b) voluntarily; or (c) by the Supreme Court. 443—Winding up on Registrar's certificate (1) A co‑operative may be wound up on a certificate of the Registrar only if the necessary grounds for taking the action exist, as referred to in section 455. (2) A winding up on a certificate of the Registrar starts when the certificate is given. (3) On the giving of a certificate, the Registrar may appoint a person to be the liquidator of the co‑operative. (4) The person appointed by the Registrar must be a registered liquidator within the meaning of the Corporations Act, but the Registrar may appoint a person who is not a registered liquidator if the Registrar forms the view that the likely costs of administration by a registered liquidator are excessive taking into account the known assets of the co‑operative and the expected extent of debt of the co‑operative. (5) The liquidator must, within 10 days after appointment, give notice of his or her appointment by designated instrument. (6) A vacancy occurring in the office of liquidator is to be filled by a person appointed by the Registrar. (7) The Registrar may fix— (a) the security to be given by a liquidator; and (b) the fees payable to a liquidator. 444—Application of Corporations Act—voluntary winding up and court‑ordered winding up (1) Application of this section This section applies to the winding up of a co‑operative— (a) voluntarily; or (b) by the Supreme Court. (2) Winding up of co‑operatives A co‑operative may be wound up in the same way and in the same circumstances as a company under the Corporations Act may be wound up. (3) Application of Corporations Act The winding up of 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 Parts 5.4, 5.4A, 5.4B, 5.5 and 5.6 of the Corporations Act, subject to the following modifications: (a) a reference in section 459B or 459C of the Corporations Act to section 234 of that Act is to be read as a reference to section 133 of this Law; (b) section 462(2)(h) of the Corporations Act is taken to be omitted; (c) the reference in section 464 of the Corporations Act to an investigation under Division 1 of Part 3 of the ASIC Act is to be read as a reference or an investigation or inquiry under this Law; (d) a reference in section 467B of the Corporations Act to section 233 is to be read as a reference to section 134 of this Law; (e) section 470(3) of the Corporations Act is to be read as if the words ", and subsection 1274(2) applies in relation to the document containing those particulars and to the office copy as if they were documents lodged with ASIC" were omitted; (f) section 495 of the Corporations Act is to be read as being subject to section 445 of this Law; (g) section 513B of the Corporations Act is to be read as if it were amended by inserting after paragraph (d): (da) if, when the resolution was passed, a winding up of the co‑operative on the certificate of the Registrar was already in progress—on the date that the certificate was given; or (h) section 516 of the Corporations Act is to be read as if it were amended by inserting after "past member", "together with any charges payable by him or her to the co‑operative in accordance with the rules of the co‑operative"; (i) section 521 of the Corporations Act is to be read as being subject to section 450 of this Law; (j) references in section 544 of the Corporations Act to dealing with money under Part 9.7 of that Act are to be read as references to dealing with the money under Part 9.7 of that Act as applying under section 436 of this Law; (k) references in sections 565—567 of the Corporations Act to 23 June 1993 are, if the Co‑operatives National Law Act of this jurisdiction so provides, to be read as references to a date specified in that Act of this jurisdiction for the purposes of this paragraph; (l) the definition of external administration matter in section 580 of the Corporations Act is taken to be omitted and the following definition substituted: external administration matter means a matter relating to a winding up of a co‑operative or participating co‑operative under Part 4.5 of the Co‑operatives National Law. (m) section 15(2)(g) of this Law does not apply to the definition of prescribed country in section 580 of the Corporations Act; The meaning of the term "prescribed country" accordingly is determined by regulations under the Corporations Act. (n) a reference in the provisions to a registered liquidator is to be read as including a reference to a person approved by the Registrar as a liquidator of a co‑operative; (o) a reference in the provisions to any provision of Part 2F.1 of the Corporations Act is to be read as a reference to the appropriate provision of Division 4 of Chapter 2 Part 5 of this Law; (p) for the purposes of the application of the provisions to a winding up on the certificate of the Registrar, the winding up is to be considered to be a voluntary winding up (but section 490 of the Corporations Act does not apply); (q) the provisions are to be read subject to sections 121 and 450 of this Law for the purposes of determining the liability of members and former members to contribute on a winding up of a co‑operative; (r) the modifications referred to in section 13(3) of this Law so far as they are relevant. (4) Where applied provisions of Corporations Act prevail over other provisions of this Law Despite any other provisions of this Law— (a) a copy of a special resolution for the voluntary winding up of a co‑operative referred to in section 491(2)(a) of the Corporations Act as applying under this section is to be filed with the Registrar— (i) within the period referred to in that paragraph (and not the period of 28 days referred to in section 243(2) of this Law); or (ii) within a longer period approved by the Registrar; and (b) the form of a notice or account required to be given or lodged by a liquidator under section 496, 497, 537 or 539 of the Corporations Act as applying under this section is the form required under the section concerned but with any necessary modifications (and not a form approved under this Law); and (c) the quorum for a meeting referred to in section 509 of the Corporations Act as applying under this section is the quorum referred to in that section (and not a quorum determined under section 255 of this Law); and (d) the time when a voluntary winding up is taken to commence is to be determined under section 513B of the Corporations Act as applying under this section and is not affected by section 242 of this Law. (5) Where other provisions of this Law prevail over applied provisions of Corporations Act The provisions of the Corporations Act applying under this section have effect subject to any other sections of this Part. 445—Voluntary winding up—restrictions (1) A co‑operative may be wound up voluntarily only— (a) by a creditors' voluntary winding up; or (b) if a special resolution is passed by a special postal ballot in favour of voluntary winding up. (2) When a special postal ballot is held, the members may, by means of the same ballot, by simple majority— (a) appoint one or more liquidators to wind up the affairs and distribute the assets of the co‑operative; and (b) fix the remuneration to be paid to the liquidator. (3) The Registrar may, by designated instrument, exempt a co‑operative or class of co‑operatives from compliance with a provision of this section or section 248. (4) An exemption may be given unconditionally or subject to conditions. 446—Voluntary winding up—start of members' voluntary winding up 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. 447—Voluntary winding up—liquidator vacancy may be filled by Registrar If a co‑operative is being wound up voluntarily, a vacancy occurring in the office of liquidator is to be filled by a person appointed by the Registrar. 448—Distribution of surplus—non‑distributing co‑operatives (1) On a winding up of a non‑distributing co‑operative, the surplus property of the co‑operative must be distributed as required by the rules of the co‑operative. (2) The rules of a non‑distributing co‑operative must make provision for the way in which the surplus property of the co‑operative is to be distributed in a winding up. surplus property means property of the co‑operative remaining after satisfaction of the debts and liabilities of the co‑operative and the costs, charges and expenses of the winding up. 449—Review of liquidator's remuneration (1) A member or creditor of a co‑operative or the liquidator may, at any time before the completion of the winding up of the co‑operative, apply to— (a) the Supreme Court, except where paragraph (b) applies; or (b) the Registrar, where the liquidator was appointed by the Registrar, to review the amount of the remuneration of the liquidator. (2) The Supreme Court or the Registrar, respectively, may review the remuneration and (if thought fit) vary the amount of the remuneration. 450—Liability of member to contribute in a winding up if shares forfeited etc (1) If a person's membership of a co‑operative is cancelled under Chapter 2 Part 6 within 2 years before the start of the winding up of the co‑operative, the person is liable on the winding up to contribute to the property of the co‑operative the nominal value of shares forfeited under that cancellation (being their nominal value immediately before cancellation). (2) If, under section 107, a co‑operative— (a) purchases a share of a member in the co‑operative; or (b) repays to a member the whole or part of the amount paid up on a share held by a member, within 2 years before the start of the winding up of the co‑operative, the member or former member is liable on the winding up to contribute to the property of the co‑operative the amount paid by the co‑operative to the member or former member for the purchase or repayment, together with any amount unpaid on the shares immediately before the purchase or repayment. (3) If a person contributes to the property of a co‑operative under a liability under this section, the amount contributed is, for the purposes of the winding up, to be treated as having been paid up by the person on shares of the co‑operative. (4) The liability of a member or former member of a co‑operative under this section is in addition to any other liability of the member or former member to contribute to the property of the co‑operative on a winding up of the co‑operative. Part 6—Insolvency 451—Application of Corporations Act—insolvent co‑operatives (1) 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 5.7B of the Corporations Act, subject to the following modifications: (a) a reference in the provisions to any provision of sections 286—290 of the Corporations Act is to be read as a reference to the appropriate provision of Division 2 of Chapter 3 Part 3 (sections 265—269) of this Law; (b) section 588G of the Corporations Act is to be read as if item 2 of the table to section 588G(1A) of that Act were omitted; (c) section 588G of the Corporations Act is to be read as if item 3 of the table to section 588G(1A) of that Act read as follows: