Co-operatives (Adoption of National Law) Act 2012 No 29



An Act relating to the formation, registration and management of co-operatives; and for related purposes.
Part 1 Preliminary
1   Name of Act
This Act is the Co-operatives (Adoption of National Law) Act 2012.
2   Commencement
(1)  This Act commences on a day or days to be appointed by proclamation.
(2)  Different days may be appointed under subsection (1) for the commencement of different provisions of the Co-operatives National Law.
3   Definitions
(1)  For the purposes of this Act, the local application provisions of this Act are the provisions of this Act other than the Co-operatives National Law.
(2)  In the local application provisions of this Act—
Co-operatives National Law (NSW) means the provisions applying in relation to this jurisdiction because of section 4 (1).
Co-operatives National Regulations or National Regulations means the Co-operatives National Regulations made under the Co-operatives National Law.
Co-operatives National Regulations (NSW) means the provisions applying in relation to this jurisdiction because of section 4 (2).
instrument includes a document.
local regulations means regulations made under section 18, but does not include the Co-operatives National Regulations and the Co-operatives National Regulations (NSW).
Secretary means—
(a)  the Commissioner for Fair Trading, Department of Finance, Services and Innovation, or
(b)  if there is no person employed as Commissioner for Fair Trading—the Secretary of the Department of Finance, Services and Innovation.
this jurisdiction means the State of New South Wales.
(3)  Terms used in the local application provisions of this Act and also in the Co-operatives National Law have the same meanings in those provisions as they have in that Law.
(4)  The Appendix forms part of this Act but notes included in this Act (other than in the Appendix) do not form part of this Act.
s 3: Am 2015 No 58, Sch 3.25 [1].
Part 2 Application of Co-operatives National Law and Co-operatives National Regulations
4   Adoption of Co-operatives National Law and Co-operatives National Regulations
(1)  The Co-operatives National Law, as in force from time to time, set out in the Appendix to this Act—
(a)  applies as a law of this jurisdiction, and
(b)  as so applying may be referred to as the Co-operatives National Law (NSW), and
(c)  so applies as if it were an Act.
(2)  The Co-operatives National Regulations, as in force from time to time—
(a)  apply as National Regulations in force for the purposes of the Co-operatives National Law (NSW), subject to modifications prescribed by the local regulations, and
(b)  as so applying may be referred to as the Co-operatives National Regulations (NSW).
Note—
The Co-operatives National Regulations as in force from time to time apply by virtue of this provision as National Regulations for the purposes of the Co-operatives National Law (NSW). The regulations as so applying and referred to as the Co-operatives National Regulations (NSW) are interpreted in accordance with that Law (and see in particular clauses 15 and 37 of Schedule 4 to that Law).
5   Meaning of certain terms in Co-operatives National Law for purposes of this jurisdiction
In the Co-operatives National Law (NSW)
police officer means a member of the NSW Police Force who is a police officer within the meaning of the Police Act 1990.
public sector official means a person employed in the Public Service.
Registrar means the Secretary, who is designated by section 24 as the Registrar of Co-operatives.
this jurisdiction means the State of New South Wales.
s 5: Am 2015 No 58, Sch 3.25 [2] [3].
6   Exclusion of legislation of this jurisdiction
The following Acts of this jurisdiction do not apply to the Co-operatives National Law (NSW), the Co-operatives National Regulations (NSW), the Co-operatives National Regulations or other instruments (excluding local regulations) made under that Law—
Part 3 Some matters referred to in Co-operatives National Law (NSW)
7   Designated authority, designated instrument and designated tribunal (Co-operatives National Law s 4)
(1)  With respect to the definition of designated authority in the Co-operatives National Law (NSW)
(a)  the Registrar is specified for the purposes of sections 15, 601 and 622 of that Law, and
(b)  the Secretary is specified for the purposes of sections 492, 494 and 520 of that Law, and
(c)  an authorised officer within the meaning of the Law Enforcement (Powers and Responsibilities) Act 2002 is specified for the purposes of sections 504 and 505 of that Law.
(2)  With respect to the definition of designated instrument in the Co-operatives National Law (NSW)
(a)  an order in writing in the approved form is specified for the purposes of the provisions of that Law referred to in Column 2 of the table to this subsection and for the person or class (if any) or in the circumstances (if any) specified in that Column, and
(b)  a Gazette notice in the approved form is specified for the purposes of the provisions of that Law referred to in Column 3 of the table to this subsection and for the person or class (if any) or in the circumstances (if any) specified in that Column, and
(c)  a written notice in the approved form is specified for the purposes of section 443 (5) of that Law.
Table
Column 1
Column 2
Column 3
Item
Designated instrument is an order in writing
Designated instrument is a Gazette notice
1
Section 33 (1) (certificate of registration)
2
Section 35 (5) (a) (exemption from special postal ballot for amendment of rules for conversion)—for individual co-operative
Section 35 (5) (b) (exemption from special postal ballot for amendment of rules for conversion)—for class of co-operatives
3
Section 60 (2) (specifying rule amendments requiring prior approval by Registrar)
4
Section 71 (1) (exemption from requirements of Division 2 of Part 2.4)—for individual co-operative
Section 71 (1) (exemption from requirements of Division 2 of Part 2.4)—for class of co-operatives
5
Section 92 (6) (exemption from complying with disclosure direction)
6
Section 171 (1) (exemption from requirements of Division 5 of Part 2.6)—for individual co-operative
Section 171 (1) (exemption from requirements of Division 5 of Part 2.6)—for class of co-operatives
7
Section 221 (1) (approval of omission of “Limited” or “Ltd” from name)
8
Section 226 (6) (exemption from requirement to display location notice)—for individual small co-operative
Section 226 (6) (exemption from requirement to display location notice)—for class of or all small co-operatives)
9
Section 316 (1) (exemption for individual co-operative from accounting and auditing provisions)
10
Section 317 (1) (exemption for class of co-operatives from accounting and auditing provisions)
11
Section 319 (1) (exemption for non-auditor members and former members of audit firms, and former employees of audit companies from accounting and auditing provisions)
12
Section 320 (1) (exemption for classes of non-auditor members etc from accounting and auditing provisions)
13
Section 322 (1) (exemption from National Regulations made under Part 3.3)
14
Section 338 (6) (exemption from compliance with section 338)—for individual co-operative
Section 338 (6) (exemption from compliance with section 338)—for class of co-operatives
15
Section 343 (10) (exemption from compliance with section 343)—for individual co-operative
Section 343 (10) (exemption from compliance with section 343)—for class of co-operatives
16
Section 359 (3) (exemption from compliance with section 359 or 248)
17
Section 363 (2) (stating maximum greater than 20% of nominal value of issued share capital)—for individual co-operative
Section 363 (2) (stating maximum greater than 20% of nominal value of issued share capital)—for class of co-operatives
18
Section 372 (1) (exemption of person or class of persons from the operation of Division 1 of Part 3.5)
19
Section 380 (1) (exemption from compliance with Division 2 of Part 3.5 or section 248)
20
Section 397 (4) (exemption from compliance with section 397)
21
Section 401 (7) (notification by Registrar of date of effect of transfer of engagements between co-operatives)
22
Section 404 (4) (exemption from compliance with section 404 or 248)
23
Section 445 (3) (exemption from compliance with section 445 or 248)—for individual co-operative
Section 445 (3) (exemption from compliance with section 445 or 248)—for class of co-operatives
24
Section 607 (3) (Registrar’s approval)—for individual co-operative or person
Section 607 (3) (Registrar’s approval)—for class of co-operatives or persons
(3)  The following provisions have effect with respect to the definition of designated tribunal in the Co-operatives National Law (NSW)
(a)  the Supreme Court is specified for the purposes of the provisions of that Law in which the term is used, except Part 7.3 of that Law,
(b)  the Civil and Administrative Tribunal is specified for the purposes of Part 7.3 of that Law.
s 7: Am 2013 No 95, Sch 2.39; 2015 No 58, Sch 3.25 [3].
8   Adjustment of date referred to in Corporations Act as applied (Co-operatives National Law ss 201, 444 and 451)
For the purposes of sections 201 (b), 444 (3) (k) and 451 (1) (f) of the Co-operatives National Law (NSW), the reference to 23 June 1993 is to be read as a reference to 15 December 1995.
9   Disposal of consideration for shares compulsorily acquired (Co-operatives National Law s 436)
(1)  For the purposes of section 436 (3) (b) (i) of the Co-operatives National Law (NSW), 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 as unclaimed money in accordance with the Unclaimed Money Act 1995.
(2)  For the purposes of section 436 (3) (b) (ii) of the Co-operatives National Law (NSW), section 1341 (1) and (2) of the Corporations Act are taken to be replaced by subsection (3) of this section.
(3)  The amount is to be dealt with in accordance with the Unclaimed Money Act 1995, and accordingly applications for the payment of the amount may be made under that Act to the Chief Commissioner of State Revenue.
10   Deregistration (Co-operatives National Law s 453—sections 601AD, 601AE and 601AF of Corporations Act as applied)
(1)  For the purposes of section 453 (d) of the Co-operatives National Law (NSW), references in sections 601AD–601AF of the Corporations Act to the Commonwealth are to be read as references to the State of New South Wales.
(2)  For the purposes of section 453 (e) of the Co-operatives National Law (NSW), references in section 601AE of the Corporations Act to crediting an amount to a Special Account (within the meaning of the Financial Management and Accountability Act 1997 of the Commonwealth) are to be read as references to crediting the amount to the Special Deposits Account (within the meaning of the Government Sector Finance Act 2018).
s 10: Am 2018 No 70, Sch 4.18.
11   Warrants (Co-operatives National Law ss 483 and 518)
(1)  Division 4 of Part 5 of the Law Enforcement (Powers and Responsibilities) Act 2002 applies to warrants under Part 6.4 of the Co-operatives National Law (NSW).
(2)  Part 6.4 of the Co-operatives National Law (NSW) does not apply to the extent of any inconsistency with that Division.
Note 1—
Section 7 (1) (c) of this Act provides for authorised officers within the meaning of the Law Enforcement (Powers and Responsibilities) Act 2002 to be designated authorities for the issue of warrants under the Law.
Note 2—
Section 518 of the Law contemplates that the Co-operatives National Law Act of a jurisdiction may contain machinery and other provisions for applications for, the issue of, and the execution of, warrants.
Note 3—
Section 483 of the Law provides that Part 6.4 (which includes section 518) applies to a jurisdiction except to the extent (if any) that the Co-operatives National Law Act of a jurisdiction provides otherwise, and with the modifications (if any) made by that Act.
12   Costs of inquiry (Co-operatives National Law s 530)
For the purposes of section 530 (3) (b) of the Co-operatives National Law (NSW), the prescribed entity is the State of New South Wales.
13   Secrecy (Co-operatives National Law s 537)
(1)  For the purposes of section 537 (4) (c) of the Co-operatives National Law (NSW), information may be divulged to—
(a)  the Treasurer, or
(b)  the Chief Commissioner of State Revenue, or
(c)  the Auditor-General, or
(d)  the Independent Commission Against Corruption, or
(e)  any special commission (within the meaning of the Special Commissions of Inquiry Act 1983) if—
(i)  the Registrar has received a written request for information from the special commission, and
(ii)  the Minister has given written approval to the Registrar of the communication of that information, and
(iii)  the Registrar has given to the special commission written approval of the communication of that information.
(2)  For the purposes of the definition of former Act in section 537 (6) of the Co-operatives National Law (NSW), the Co-operatives Act 1992 is specified.
14   Pecuniary penalty orders (Co-operatives National Law s 556)
(1)  For the purposes of section 556 (2) of the Co-operatives National Law (NSW), a pecuniary penalty ordered to be paid in this jurisdiction is to be paid and treated in accordance with this section.
(2)  The penalty is a civil debt payable to the Registrar on behalf of the State.
(3)  The Registrar or the State may enforce the order as if it were an order made in civil proceedings against the person to recover a debt due by the person.
(4)  The debt arising from the order is taken to be a judgment debt.
15   Stamp duty (Co-operatives National Law s 620)
(1)  No duty is payable in respect of any of the following instruments—
(a)  in the case of a co-operative that—
(i)  has as its primary activity the providing of any community service or benefit, and
(ii)  was, before it was incorporated under the Co-operatives National Law (NSW), an unincorporated club, association or body operating to provide sporting or recreational facilities for its members and not carried on for the pecuniary benefit of its members,
an instrument transferring to the co-operative any property that was, immediately before the co-operative was so incorporated, held by or on behalf of the unincorporated club, association or body,
(b)  an instrument executed or registered for or with respect to a transfer of any property to give effect to section 413 or 481 of the Co-operatives National Law (NSW) in respect of—
(i)  a merger of co-operatives, or
(ii)  a transfer of engagements,
(c)  a share certificate or any other instrument issued or executed in connection with the capital of a co-operative.
(2)  If—
(a)  a co-operative that transfers its incorporation under Division 2 of Part 4.3 of the Co-operatives National Law (NSW) was before its registration as a co-operative under that Law a company under the Corporations Act or any corresponding previous law of this jurisdiction, and
(b)  stamp duty had been paid on its incorporation as such a company in respect of the amount of the nominal capital of the company (or if subsequently increased on the amount of its nominal capital as so increased),
any stamp duty so paid is to be taken into account and included in assessing the stamp duty payable on its incorporation or registration pursuant to the transfer.
(3)  An instrument issued or executed in connection with a CCU of a co-operative is not exempt under subsection (2).
16   Registration fees (Co-operatives National Law s 620)
No fee is chargeable under any Act for registration of an instrument executed or registered for or with respect to a transfer of any property to give effect to section 413 or 481 of the Co-operatives National Law (NSW) in respect of—
(a)  a merger of co-operatives, or
(b)  a transfer of engagements, or
(c)  a transfer of incorporation.
Part 4 Regulations
17   National Regulations
(1)  The Governor is authorised to exercise the power to make Co-operatives National Regulations conferred by the Co-operatives National Law as applied by an Act of any jurisdiction.
(2)  The Executive Council of the State is authorised to advise the Governor in the exercise of the power referred to in subsection (1).
(3)  This section does not limit the power of the Governor to make local regulations conferred under the Co-operatives National Law (NSW).
18   Local regulations
(1)  The Governor may make regulations (the local regulations), not inconsistent with the local application provisions of this Act or the Co-operatives National Law (NSW), for or with respect to any matter—
(a)  that by the local application provisions of this Act is required or permitted to be prescribed by the local regulations or that is necessary or convenient to be prescribed by the local regulations for carrying out or giving effect to the local application provisions of this Act, or
(b)  that by the Co-operatives National Law (NSW) is required or permitted to be prescribed by the local regulations.
(2)  Without limitation, the local regulations may make provision for or with respect to—
(a)  the administration of the Co-operatives National Law (NSW), and
(b)  procedural matters relating to any aspects of the Co-operatives National Law (NSW), and
(c)  without limiting paragraphs (a) and (b), administrative matters relating to the supervision and inspection of co-operatives, and
(d)  the fees to be paid in respect of matters arising under this Act, the Co-operatives National Law (NSW) or the Co-operatives National Regulations (NSW), and
(e)  the waiver, reduction, postponement or refund by the Registrar of Co-operatives of fees payable or paid under—
(i)  this Act, or
(ii)  the Co-operatives National Law (NSW), or
(iii)  the Co-operatives National Regulations (NSW), or
(iv)  the local regulations.
(3)  The local regulations may create offences and impose penalties for an offence of not more than the amount specified in section 612 (5) of the Co-operatives National Law (NSW).
s 18: Am 2019 No 14, Sch 1.5; 2020 No 3, Sch 1.10[1].
Part 5 Miscellaneous
19   Non-application of Co-operatives National Law to co-operative housing societies and other bodies
Except as provided by the local regulations, the Co-operatives National Law (NSW) does not apply to or in respect of—
(a)  a co-operative housing body under the Co-operative Housing and Starr-Bowkett Societies Act 1998, or
(b)  a body that is of the same nature as such a co-operative housing body but that is not registered under that Act.
20   Orders and other instruments published in Gazette
A copy of an order, notice, exemption or other instrument published in the Gazette purporting to have been given or issued under this Act, the Co-operatives National Law (NSW), the Co-operatives National Regulations (NSW) or the local regulations is evidence of the giving or issuing of the order, notice, exemption or other instrument of which it purports to be a copy.
21   Proceedings for offences
(1)  In this section—
offence means an offence under the local application provisions of this Act, the local regulations, the Co-operatives National Law (NSW) or the Co-operatives National Regulations (NSW).
(2)  Proceedings for an offence are to be disposed of summarily before—
(a)  the Local Court, or
(b)  the Supreme Court in its summary jurisdiction.
(3)  The maximum penalty that may be imposed by the Local Court for an offence is 50 penalty units or imprisonment for 12 months, or both.
(4)  Proceedings for an offence under the local application provisions of this Act or the local regulations may be—
(a)  started no later than 5 years after the alleged commission of the offence, and
(b)  started only by the Registrar or a person authorised in writing by the Registrar to start the proceedings.
Note—
See sections 551 and 552 of the Co-operatives National Law about starting proceedings for an offence under that Law or the National Regulations.
(5)  Nothing in this section affects the operation of the Director of Public Prosecutions Act 1986.
22   Proceedings for recovery of fines or penalties under co-operative’s rules
(1)  Proceedings for the recovery of any fine or penalty imposed by the rules of a co-operative are to be disposed of summarily before the Local Court.
(2)  Proceedings for the recovery of a fine or penalty imposed by the rules of a co-operative may be instituted only by the co-operative.
23   Particular officials protected from liability
(1)  In this section—
official means—
(a)  the Minister, or
(b)  the Registrar, or
(c)  a public sector official (within the meaning of section 5) engaged in the administration of the local application provisions of this Act or the Co-operatives National Law (NSW).
(2)  An official does not incur civil liability for an act done, or omission made, honestly and without negligence under the local application provisions of this Act, the local regulations, the Co-operatives National Law (NSW) or the Co-operatives National Regulations (NSW).
(3)  If subsection (2) prevents a civil liability attaching to an official, the liability attaches instead to the State.
24   Registrar of Co-operatives
(1)  The Secretary is designated as the Registrar of Co-operatives and may exercise the functions of the Registrar of Co-operatives expressed to be conferred or imposed on the Registrar by or under the local application provisions of this Act, the local regulations, the Co-operatives National Law (NSW) or the Co-operatives National Regulations (NSW).
(2)  For that purpose, a reference in the local application provisions of this Act, the local regulations, the Co-operatives National Law (NSW) or the Co-operatives National Regulations (NSW) to the Registrar is to be read as a reference to the Secretary, but those functions are to be exercised under the title of the Registrar of Co-operatives.
s 24: Am 2015 No 58, Sch 3.25 [3].
25   Investigators under Fair Trading Act 1987 taken to be inspectors
A person appointed as an investigator under section 18 of the Fair Trading Act 1987 is taken to have been appointed as an inspector under section 492 of the Co-operatives National Law (NSW).
s 25: Rep 1987 No 15, sec 30C. Ins 2020 No 30, Sch 1.12.
Schedule 1 Savings and transitional provisions
Part 1 Preliminary
1   Local regulations for savings or transitional matters
(1)  The local regulations may contain provisions of a savings or transitional nature consequent on the enactment of this Act or any Act that amends this Act.
(2)  Any such provision may, if the local regulations so provide, take effect from the date of assent to the Act concerned or a later date.
(3)  To the extent to which any such provision takes effect from a date that is earlier than the date of its publication on the NSW legislation website, the provision does not operate so as—
(a)  to affect, in a manner prejudicial to any person (other than the State or an authority of the State), the rights of that person existing before the date of its publication, or
(b)  to impose liabilities on any person (other than the State or an authority of the State) in respect of anything done or omitted to be done before the date of its publication.
Part 2 Provisions consequent on enactment of this Act
2   Definition
In this Part—
repealed Act means the Co-operatives Act 1992.
3   General savings
Subject to the local application provisions of this Act and the Co-operatives National Law (NSW), each person, thing and circumstance appointed or created under the repealed Act or existing or continuing under that Act immediately before the commencement of relevant provisions of the Co-operatives National Law (NSW) continues to have the same status, operation and effect as it would have had if this Act had not been enacted.
4   Registration of co-operatives
(1)  A co-operative whose registration under the repealed Act is in force immediately before the commencement of this clause is taken to be registered under the Co-operatives National Law (NSW).
(2)  A co-operative referred to in subclause (1) that was a trading co-operative immediately before the commencement of this clause is taken to be a distributing co-operative.
(3)  A co-operative referred to in subclause (1) that was a non-trading co-operative immediately before the commencement of this clause is taken to be a non-distributing co-operative.
5   Rules of certain co-operatives formed to carry on club may restrict voting rights
(1)  The rules of a co-operative that has as a primary activity the operation, maintenance or carrying on of a club may provide for different classes of membership and restrict the voting rights attaching to membership of those different classes, but only if—
(a)  the Registrar approves of the provisions concerned, and
(b)  the membership of the class or classes entitled to full voting rights constitutes at least 40% of the total membership of the co-operative.
(2)  Any such provision in the rules of a co-operative must not be amended except with the prior approval of the Registrar.
(3)  An approval that was given under section 177 of the repealed Act by the Co-operatives Council constituted under that Act, and that was operative immediately before the commencement of this clause, has effect as if given by the Registrar.
(4)  This clause applies only to—
(a)  a co-operative that holds a club licence under the Liquor Act 2007 (regardless of when it was registered as a co-operative), or
(b)  a co-operative that was registered under the repealed Act before 17 December 1997 (being the date of assent to the Statute Law (Miscellaneous Provisions) Act (No 2) 1997).
6   Entitlements of former members of trading co-operatives (Co-operatives National Law Sch 3, clause 1)
A reference in Division 5 of Part 2.6 of the Co-operatives National Law (NSW) to the period of 2 years is taken to be a reference to a period of 5 years in a case where the cancellation of membership occurred before the commencement of that Division.
7   Entitlement to distribution from business or reserves of co-operative
Any entitlement that a member or former member of a co-operative had immediately before the commencement of this clause in relation to a surplus arising from the business of the co-operative or a part of the reserves of the co-operative continues in force until satisfied.
8   Minimum paid up amount of shares (Co-operatives National Law s 78 (4))
Section 78 of the Co-operatives National Law (NSW) does not affect shares issued before the commencement of that section.
9   Personal property security interests
The repeal of the Co-operatives Act 1992 does not affect the operation of Part 6 of Schedule 6 to that Act on and after the date of the repeal, and that Part so operates as if that Act had not been repealed.
10   Definitions
In this Part—
relevant period means the period—
(a)  starting on 18 July 2019, and
(b)  ending immediately before the commencement of the amendment Act.
11   Waiver, reduction, postponement or refund of fees before commencement
(1)  This clause applies if, during the relevant period, the Registrar of Co-operatives waived, reduced, postponed or refunded, in whole or part, a fee payable or paid by a person under this Act or the regulations on the ground the Registrar was satisfied it was appropriate because—
(a)  the person was suffering financial hardship, or
(b)  special circumstances existed.
(2)  The waiver, reduction, postponement or refund is taken to have been as valid as if it had happened after the commencement of the amendment Act.
12   Power to waive, reduce, postpone or refund fees applies to events before commencement
To remove any doubt, the power of the Registrar of Co-operatives to waive, reduce, postpone or refund, in whole or part, a fee payable or paid under this Act or the regulations applies in relation to—
(a)  a person who was suffering financial hardship—
(i)  during the relevant period, or
(ii)  because of events that happened during the relevant period, or
(b)  special circumstances—
(i)  that existed during the relevant period, or
(ii)  that exist because of events that happened during the relevant period.
sch 1: Am 2020 No 3, Sch 1.10[2].
Appendix Co-operatives National Law
(Section 4)
Chapter 1 Preliminary
Part 1.1 Introductory
1   Citation
This Law may be cited as the Co-operatives National Law.
2   Commencement
This Law commences in a jurisdiction as provided by the Co-operatives National Law Act of that jurisdiction.
3   Objects
The objects of this Law are—
(a)  to enable the formation, registration and operation of co-operatives; and
(b)  to promote co-operative philosophy, principles, practices and objectives; and
(c)  to protect the interests of co-operatives, their members and the public in the operations and activities of co-operatives; and
(d)  to ensure directors of co-operatives are accountable for their actions and decisions to the members of co-operatives; and
(e)  to encourage and facilitate self-management by co-operatives at all levels; and
(f)  to encourage the development, integration and strengthening of co-operatives at local, regional, national and international levels by supporting and fostering State, Territory and national peak organisations and co-operative instrumentalities.
Part 1.2 Interpretation
4   Definitions
In this Law—
active member—see section 145.
active membership provisions—see section 146 (1).
active membership resolution—see section 146 (2).
agreement means an agreement, arrangement or understanding—
(a)  whether formal or informal or partly formal and partly informal; or
(b)  whether written or oral or partly written and partly oral; or
(c)  whether or not having legal or equitable force and whether or not based on legal or equitable rights.
another jurisdiction means a State or Territory other than this jurisdiction.
approved form means a form approved under section 622.
ASIC means the Australian Securities and Investments Commission.
ASIC Act means the Australian Securities and Investments Commission Act 2001 of the Commonwealth.
Australian legal practitioner means a person who—
(a)  is admitted to the legal profession under the law of a jurisdiction; and
(b)  holds a current practising certificate under a law of a jurisdiction authorising the person to engage in legal practice.
authorised deposit-taking institution means an authorised deposit-taking institution within the meaning of the Banking Act 1959 of the Commonwealth.
board means the board of directors of a co-operative, and includes a person or committee exercising a power of the board delegated to the person or committee under the rules of the co-operative.
books includes—
(a)  a register; and
(b)  minutes; and
(c)  any other record of information; and
(d)  financial reports or financial records, however compiled, recorded or stored; and
(e)  a document.
carry on business has the same meaning in relation to a co-operative or participating co-operative as it has under the Corporations Act in relation to a company.
Note—
Division 3 of Part 1.2 of the Corporations Act contains provisions relating to carrying on business.
CCU means a co-operative capital unit, as provided for by Division 2 of Part 3.4 (see section 345).
chief executive officer of a co-operative or a subsidiary of a co-operative means the chief executive officer of the co-operative or subsidiary for the time being (by whatever name called), and whether or not the officer is a director or the secretary.
civil penalty provision—see section 553.
compensation order—see section 553.
constituent documents of a corporation means the constitution of the corporation or any rules or other document constituting the corporation or governing its activities, and includes a memorandum or articles of association and replaceable rules or other rules.
co-operative means a body registered under this Law as applying under the Co-operatives National Law Act of this jurisdiction as a co-operative (including a co-operative group).
co-operative group means a co-operative that has a membership as described in section 111.
co-operative principles—see section 10.
Co-operatives National Law Act of a jurisdiction means the Act of that jurisdiction that applies this Law (whether with or without modification) as a law of that jurisdiction.
corporation includes—
(a)  a company; and
(b)  any body corporate (whether incorporated in this jurisdiction or elsewhere); and
(c)  an unincorporated body that, under the law of its place of origin, may—
(i)  sue or be sued; or
(ii)  hold property in the name of its secretary or of an office holder of the body duly appointed for that purpose;
but does not include—
(d)  an exempt public authority (within the meaning of the Corporations Act); or
(e)  a corporation sole.
Note—
A co-operative is a corporation within this definition.
Corporations Act means the Corporations Act 2001 of the Commonwealth or, where appropriate, that Act as applying under this Law as a law of this jurisdiction.
Corporations application legislation means—
(a)  for a State—Part 3 of the Corporations (Ancillary Provisions) Act 2001 of that State; or
(b)  for the Northern Territory—Part 4 of the Corporations Reform (Northern Territory) Act of that Territory; or
(c)  for the Australian Capital Territory—the provisions of a law of that Territory that are declared by the Co-operatives National Law Act of that Territory to be the Corporations application legislation of that Territory;
unless a law of the State or Territory concerned provides otherwise.
Corporations legislation means the Corporations legislation to which Part 1.1A of the Corporations Act applies.
corresponding co-operatives law of another jurisdiction—see section 7.
de facto partner has the meaning given by the Acts Interpretation Act 1901 of the Commonwealth in relation to an Act of the Commonwealth.
debenture of a co-operative means a chose in action that includes an undertaking by the co-operative to repay as a debt money deposited with or lent to the co-operative. The chose in action may (but need not) include a security interest in property of the co-operative to secure repayment of the money. However, a debenture does not include—
(a)  an undertaking to repay money deposited with or lent to the co-operative by a person if—
(i)  the person deposits or lends the money in the ordinary course of a business carried on by the person; and
(ii)  the co-operative receives the money in the ordinary course of carrying on a business that neither comprises nor forms part of a business of borrowing money and providing finance; or
(b)  an undertaking by an Australian authorised deposit-taking institution to repay money deposited with it, or lent to it, in the ordinary course of its banking business; or
(c)  an undertaking to pay money under—
(i)  a cheque; or
(ii)  an order for the payment of money; or
(iii)  a bill of exchange; or
(d)  an undertaking by a co-operative to pay money to a related corporation; or
(e)  an undertaking to repay money that is prescribed by the regulations under the Corporations Act; or
(f)  another document of a class prescribed by the National Regulations as exempt from this definition.
For the purposes of this definition, if a chose in action that includes an undertaking by a co-operative to pay money as a debt is offered as consideration for the acquisition of securities under an off-market takeover bid, or is issued under a compromise or arrangement under Part 4.4, the undertaking is taken to be an undertaking to repay as a debt money deposited with or lent to the co-operative.
deed of arrangement means a deed of arrangement executed by a co-operative under Part 5.3A of the Corporations Act as applying under this Law (see section 382 of this Law) or a deed of that type as varied and in force from time to time.
deposit-taking co-operative means a co-operative permitted under section 333 to accept money on deposit.
designated authority means (except in section 612) the person or body specified or described in the Co-operatives National Law Act of this jurisdiction for the purposes of the provision in which the term is used.
designated instrument means an instrument or document—
(a)  of the kind; and
(b)  made, served or published in the manner (if any);
specified or described in the Co-operatives National Law Act of this jurisdiction for the purposes of the provision in which the term is used.
Note—
Examples are an order in writing served on a person and a notice published in the Gazette.
designated tribunal means the court or tribunal specified or described in the Co-operatives National Law Act of this jurisdiction for the purposes of the provision in which the term is used.
director of a co-operative includes—
(a)  a person who occupies or acts in the position of a director or member of the board of a co-operative, whether or not the person is called a director and whether or not the person is validly appointed or properly authorised to act in the position; and
(b)  a person under whose directions or instructions the directors or members of the board of directors of the co-operative are accustomed to act.
distributing co-operative—see section 18.
entity includes a person and an unincorporated body.
evidential burden, in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist.
file includes lodge.
financial records includes—
(a)  invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and
(b)  documents of prime entry; and
(c)  working papers and other documents needed to explain—
(i)  the methods by which financial statements are made up; and
(ii)  adjustments to be made in preparing financial statements.
half-year—see section 296.
inactive member of a co-operative is a member of the co-operative who is not an active member of the co-operative.
inspector means a person appointed as an inspector under Part 6.4.
investigator means a person appointed under section 520 to hold an inquiry into the affairs of a co-operative.
involved in a contravention—see section 9.
jurisdiction means a State or Territory.
large co-operative means a co-operative that is not a small co-operative.
local Registrar means the Registrar for this jurisdiction.
local regulations means regulations made under the Co-operatives National Law Act of this jurisdiction, but does not include the National Regulations.
Ministerial Council means the MCCA as defined in the Australian Uniform Co-operative Laws Agreement, the parties to which are the States and Territories, and which came into force on 21 January 2012 (being the date when it has been executed by all the parties).
Note—
The Agreement includes the following definition—
“MCCA” means the Ministerial Council on Consumer Affairs which for the purposes of this Agreement comprises the members in accordance with Part VIII of this Agreement or such body as succeeds it or for the time being performs the functions carried out by the Ministerial Council on Consumer Affairs as set out in this Agreement.
model rules means model rules under Division 2 of Part 2.3.
modification, in relation to an applied Corporations legislation matter, means a modification or change (as the case may be) within the meaning of the Corporations application legislation of this jurisdiction.
mortgage includes a lien, charge or other security over property.
National Regulations means the Co-operatives National Regulations made under this Law, as referred to in section 612.
Note—
Jurisdictional legislation may provide for the application of the National Regulations in individual jurisdictions. Section 6 of this Law deals with the case where the National Regulations are not applied in a jurisdiction in that manner but are separately made for that jurisdiction.
non-distributing co-operative—see section 19.
NSW legislation website means the website with the URL of www.legislation.nsw.gov.au, or any other website, used by the Parliamentary Counsel of New South Wales to provide public access to the legislation of New South Wales.
officer of a co-operative or participating co-operative means—
(a)  a director or secretary of the co-operative; or
(b)  a person—
(i)  who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the co-operative; or
(ii)  who has the capacity to affect significantly the co-operative’s financial standing; or
(iii)  in accordance with whose instructions or wishes the directors of the co-operative are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the co-operative); or
(c)  a receiver, or receiver and manager, of property of the co-operative; or
(d)  an administrator of the co-operative; or
(e)  an administrator of a deed of arrangement executed by the co-operative; or
(f)  a liquidator of the co-operative; or
(g)  a trustee or other person administering a compromise or arrangement made between the co-operative and someone else.
ordinary resolution—see section 238.
participating co-operative means a body that is registered and incorporated under, and is subject to, a corresponding co-operatives law of another jurisdiction.
participating jurisdiction means a jurisdiction in which a corresponding co-operatives law is in force.
participating Registrar means a person exercising the functions of a Registrar under a corresponding co-operatives law of another jurisdiction.
pecuniary penalty order—see section 553.
PPSA security interest (short for Personal Property Securities Act security interest) means a security interest within the meaning of the Personal Property Securities Act 2009 of the Commonwealth and to which that Act applies, other than a transitional security interest within the meaning of that Act.
Note 1—
The Personal Property Securities Act 2009 of the Commonwealth applies to certain security interests in personal property. See the following provisions of that Act—
(a)  section 8 (Interests to which this Act does not apply);
(b)  section 12 (Meaning of security interest);
(c)  Chapter 9 (Transitional provisions).
Note 2—
For the meaning of transitional security interest, see section 308 of the Personal Property Securities Act 2009 of the Commonwealth.
primary activity—see section 144.
prison includes a correctional centre or correctional complex.
public sector official has the meaning given by the Co-operatives National Law Act of this jurisdiction.
quoted security means a security that is quoted on a prescribed financial market (within the meaning of the Corporations Act).
receiver includes a receiver and manager.
Registrar for this jurisdiction has the meaning given by the Co-operatives National Law Act of this jurisdiction.
related (in the context of related corporations)—see Part 3 of Schedule 2.
relevant interest—see Part 1 of Schedule 2.
rules of a co-operative (otherwise than in the context of proposed rules or model rules) means the registered rules of the co-operative in force for the time being.
secretary of a co-operative means the person appointed under section 190 to be, or to act as, the secretary of the co-operative.
security interest means—
(a)  a PPSA security interest; or
(b)  a charge, lien or pledge.
serve includes give, send and similar terms.
small co-operative means a co-operative of a class or description prescribed by the National Regulations.
special postal ballot—see section 248.
special resolution—see section 239.
strict liability—see section 550.
subsidiary has the same meaning as it has in the Corporations Act.
Supreme Court means the Supreme Court of this jurisdiction.
surplus, in relation to a co-operative, means the excess of income over expenditure after making adequate allowance for taxation expense, for depreciation in value of the property of the co-operative and for future contingencies.
the Minister means—
(a)  the Minister administering the Co-operatives National Law Act of this jurisdiction; or
(b)  if different Ministers are administering that Act in different respects—the Minister administering the Act in the relevant respect; or
(c)  if different Ministers are administering different portions of that Act—the Minister administering the relevant portion of the Act; or
(d)  if paragraphs (b) and (c) do not apply and 2 or more Ministers are administering that Act or a portion of that Act—any one of the Ministers administering the Act or portion of the Act.
this jurisdiction—see the definition of that term in the Co-operatives National Law Act of each jurisdiction that adopts this Law.
5   Miscellaneous provisions relating to the interpretation of this Law (Schedule 4)
Schedule 4 contains miscellaneous provisions relating to the interpretation of this Law.
6   References to regulations where National Regulations are not applied
(1)  This section applies where the Co-operatives National Law Act of a jurisdiction does not provide that the National Regulations apply as regulations for the purposes of this Law as applying in that jurisdiction.
(2)  A reference in this Law as applying in that jurisdiction to National Regulations is taken to be a reference to regulations made under that Act that are the same or substantially the same as the National Regulations.
7   Corresponding co-operatives law
(1)  This section determines what (if any) law of another jurisdiction is a corresponding co-operatives law for the purposes of this Law.
(2)  If this Law applies as a law of the other jurisdiction (whether with or without modification), this Law as so applying is a corresponding co-operatives law for the purposes of this Law.
(3)  If this Law does not apply as a law of the other jurisdiction, a law of the other jurisdiction is a corresponding co-operatives law for the purposes of this Law if the National Regulations declare that the law substantially corresponds to the provisions of this Law.
8   Co-operatives National Law Act of this jurisdiction
(1)  It is intended that this Law will or may be supplemented by provisions of the Co-operatives National Law Act of this jurisdiction where an intention of supplementation (however expressed) is indicated in this Law, including provisions designating—
(a)  a person or body to be a designated authority; or
(b)  an instrument or document to be a designated instrument; or
(c)  a court or tribunal to be a designated tribunal;
for the purposes of particular provisions of this Law.
Note—
Other provisions of this Law express the intention that the Co-operatives National Law Act of this jurisdiction will or may provide for particular matters.
(2)  It is also intended that the National Regulations will or may be supplemented by provisions of the local regulations where an intention of supplementation is indicated in the National Regulations.
9   Involvement in contraventions
(cf Corporations Act s 79)
A person is involved in a contravention if, and only if, the person—
(a)  has aided, abetted, counselled or procured the contravention; or
(b)  has induced, whether by threats or promises or otherwise, the contravention; or
(c)  has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d)  has conspired with others to effect the contravention.
Part 1.3 The co-operative principles
10   Co-operative principles
The co-operative principles are the following principles—
1  Voluntary and open membership
Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
2  Democratic member control
Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (1 member, 1 vote) and co-operatives at other levels are organised in a democratic way.
3  Member economic participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of the capital is usually the common property of the co-operative. They usually receive limited compensation (if any) on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes—
(a)  developing the co-operative, possibly by setting up reserves, part of which at least would be indivisible;
(b)  benefiting members in proportion to their transactions with the co-operative;
(c)  supporting other activities approved by the membership.
4  Autonomy and independence
Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
5  Education, training and information
Co-operatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their co-operatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of co-operation.
6  Co-operation among co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
7  Concern for the community
While focusing on member needs, co-operatives work for the sustainable development of their communities through policies accepted by their members.
Note—
The co-operative principles are those adopted by the International Co-operative Alliance.
11   Interpretation to promote co-operative principles
In the interpretation of a provision of this Law, a construction that would promote the co-operative principles is to be preferred to a construction that would not promote the co-operative principles.
Part 1.4 The Corporations legislation
Division 1 Exclusion of matters from the Corporations legislation
12   Excluded matter—co-operatives and participating co-operatives
(1)  A co-operative and a participating co-operative are each declared to be an excluded matter for the purposes of section 5F of the Corporations Act in relation to the whole of the Corporations legislation other than to the extent specified in this section.
Note—
This section ensures that neither the Corporations Act nor Part 3 of the ASIC Act will apply in relation to a co-operative or participating co-operative, other than to the extent specified in this section. Section 5F of the Corporations Act provides that if a State or Territory law declares a matter to be an excluded matter in relation to the whole of the Corporations legislation other than to a specified extent, then that legislation will not apply, except to the specified extent, in relation to that matter in the State or Territory concerned. However, other provisions of this Part provide for the application of provisions of the Corporations legislation to co-operatives or participating co-operatives as laws of this jurisdiction.
(2)  Subsection (1) does not exclude the application of the following provisions of the Corporations legislation to co-operatives or participating co-operatives to the extent that the provisions would otherwise be applicable to them—
(a)  provisions relating to a matter that the National Regulations provide is not to be excluded from the operation of the Corporations legislation;
(b)  provisions relating to the role of a co-operative or participating co-operative in the formation of a company;
(c)  provisions relating to the registration of a co-operative as a company under Chapter 5B of the Corporations Act;
(d)  provisions relating to substantial shareholdings, by or involving a co-operative or participating co-operative, in a company;
(e)  provisions conferring or imposing functions on a co-operative or participating co-operative as a member, or former member, of a corporation;
(f)  provisions relating to dealings by a co-operative or participating co-operative in financial products of a corporation, other than financial products of the co-operative or participating co-operative itself;
(g)  provisions conferring or imposing functions on a co-operative or participating co-operative in its dealings with a corporation, not being dealings in financial products of the co-operative or participating co-operative;
(h)  provisions relating to financial products of a co-operative, other than shares in, CCUs of, debentures of, or deposits with, a co-operative or participating co-operative;
(i)  provisions relating to financial markets and participants in financial markets;
(j)  provisions relating to financial services licensees whose licence covers dealing in, or providing advice about, financial products;
(k)  provisions relating to carrying on a financial services business;
(l)  provisions relating to financial statements, and audits of financial statements, of financial services licensees whose licence covers dealing in, or providing advice about, financial products;
(m)  provisions relating to clients of financial services licensees whose licence covers dealing in, or providing advice about, financial products;
(n)  provisions relating to registers of interests in financial products;
(o)  provisions relating to powers of a court to cure procedural irregularities and to make other orders.
(3)  To avoid doubt, it is declared that subsection (1) does not operate so as to exclude the operation of the following provisions of the Corporations Act, except in relation to shares in, CCUs issued by, debentures of, or deposits with, a co-operative or participating co-operative—
(a)  Part 1.2A;
(b)  Chapter 2L;
(c)  Chapter 6CA;
(d)  Chapter 6D;
(e)  Part 7.10.
Division 2 Applied matters (applied Corporations legislation matters)
13   Applied Corporations legislation matters under this Law
(1)  Other provisions of this Law declare matters to be applied Corporations legislation matters for the purposes of the Corporations application legislation of this jurisdiction in relation to provisions of the Corporations Act specified in those provisions.
(2)  A declaration is made subject to any modifications specified in or in connection with the provision in which the declaration is made.
(3)  Additionally, a declaration is also made subject to—
(a)  any modifications applying under section 15; and
(b)  any modifications prescribed by the National Regulations; and
(c)  any necessary modifications.
Note 1—
The Corporations application legislation of this jurisdiction provides for the application of provisions of the Corporations Act and Part 3 of the ASIC Act as laws of this jurisdiction in respect of any matter declared by a law of this jurisdiction (whether with or without modification) to be an applied Corporations legislation matter for the purposes of the Corporations application legislation in relation to those Commonwealth provisions. The Corporations application legislation ensures that a declaration made for the purposes of that legislation only operates so as to apply a provision of the Corporations legislation to a matter as a law of this jurisdiction if that provision does not already apply to the matter as a law of the Commonwealth. If a provision referred to in a declaration already applies as a law of the Commonwealth, nothing in the declaration will affect its continued operation as a law of the Commonwealth.
Note 2—
The following Table indicates the location and subject matter of declarations made under other provisions of this Law.
Table
Applied provisions of Corporations Act
Location of applied provisions in Corporations Act
Matter to which applied provision applies
Provision of this Law that makes the declaration
Sections 111AA–111AX
Part 1.2A (Disclosing entities)
Debentures (and CCUs) of a co-operative
Section 337
Sections 283AA–283HB
Chapter 2L (Debentures)
Debentures (and CCUs) of a co-operative
Section 337
Section 295A
Part 2M.3, Division 1 (Annual financial reports and directors’ reports)
A co-operative with quoted securities
Section 277
Sections 299A–300A
Part 2M.3, Division 1 (Annual financial reports and directors’ reports)
A co-operative with quoted securities
Section 281
Sections 302–306
Part 2M.3, Division 2 (Half-year financial report and directors’ report)
A co-operative that is a disclosing entity
Section 282
Sections 307–313
Part 2M.3, Division 3 (Audit and auditor’s report)
A co-operative
Section 283
Section 315 (1)
Part 2M.3, Division 4 (Annual financial reporting to members)
A co-operative that is a disclosing entity
Section 285
Section 318
Part 2M.3, Division 4 (Annual financial reporting to members)
A co-operative
Section 288
Sections 323–323C
Part 2M.3, Division 6 (Special provisions about consolidated financial statements)
A co-operative
Section 294
Sections 324AA–324DD (except section 324BD)
Part 2M.4 (Appointment and removal of auditors), Divisions 1–5
A co-operative
Section 297
Sections 416–434G
Part 5.2 (Receivers, and other controllers, of property of corporations)
A co-operative
Section 393
Sections 435A–451D (except section 446B)
Part 5.3A (Administration of a company’s affairs with a view to executing a deed of company arrangement)
A co-operative
Section 382
Sections 459A–581
Part 5.4 (Winding up in insolvency)
Part 5.4A (Winding up by the court on other grounds)
Part 5.4B (Winding up in insolvency or by the court)
Part 5.5 (Voluntary winding up)
Part 5.6 (Winding up generally)
The winding up of a co-operative
Section 444
Sections 465–489E
Part 5.4B (Winding up in insolvency or by the court)
The winding up or deregistration of participating co-operatives
Section 472
Sections 513–581
Part 5.6 (Winding up generally)
The winding up or deregistration of participating co-operatives
Section 472
Section 536
Part 5.6, Division 3 (Liquidators)
A person appointed to administer a compromise or arrangement
Section 420
Section 563AAA
Part 5.6, Division 6 (Proof and ranking of claims)
Debentures (and CCUs) issued by a co-operative to any of its members or employees
Section 342
Sections 588C–588Z
Part 5.7B (Recovering property or compensation for the benefit of creditors of insolvent company)
A co-operative
Section 451
Sections 589–596
Part 5.8 (Offences)
A co-operative
Section 201
Sections 596AA–596AI
Part 5.8A (Employee entitlements)
A co-operative
Section 202
Sections 596A–597B
Part 5.9, Division 1 (Examining a person about a corporation)
A co-operative
Section 489
Sections 600A–600H
Part 5.9, Division 3 (Provisions applying to various kinds of external administration)
A co-operative
Section 382
Sections 601AA–601AH
Part 5A.1 (Deregistration)
The deregistration of a co-operative and a deregistered co-operative
Section 453
Sections 674–678
Chapter 6CA (Continuous disclosure)
Debentures (and CCUs) of a co-operative
Section 337
Sections 700–742
Chapter 6D (Fundraising)
Debentures (and CCUs) of a co-operative
Section 337
Sections 1040A–1045A
Part 7.10 (Market misconduct and other prohibited conduct relating to financial products and financial services)
Debentures (and CCUs) of a co-operative
Section 337
Sections 1339–1343A
Part 9.7 (Unclaimed property)
Anything paid or transferred to the Registrar under section 436 (2)
Section 436 (3)
14   Applied Corporations legislation matters under the National Regulations
(1)  The National Regulations may declare any matter relating to co-operatives or participating co-operatives to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to any provision of the Corporations legislation that does not apply of its own force to co-operatives or participating co-operatives (as the case may be).
(2)  The declaration is made subject to any modifications specified in the provision in which the declaration is made.
(3)  Additionally, the declaration is also made subject to—
(a)  any modifications applying under section 15; and
(b)  any modifications prescribed by the National Regulations; and
(c)  any necessary modifications.
(4)  The National Regulations may also provide that a specified provision of the Corporations legislation (with any applicable modifications) that is the subject of the declaration—
(a)  operates to the exclusion of a specified provision of this Law; or
(b)  prevails over a specified provision of this Law to the extent of any inconsistency.
15   Modifications to applied provisions
(1)  This section applies in relation to any provisions of the Corporations legislation (the applied provisions) that are the subject of—
(a)  a declaration under this Law, as referred to in section 13; or
(b)  a declaration under the National Regulations, as referred to in section 14.
(2)  For the purposes of sections 13 and 14, the following modifications apply—
(a)  a reference in the applied provisions to a corporation, company or public company is to be read as a reference to a co-operative;
(b)  a reference in the applied provisions to ASIC is to be read as a reference to the Registrar;
(c)  a reference in the applied provisions to the court is to be read as a reference to the Supreme Court;
(d)  a reference in the applied provisions to the Commonwealth is to be read as a reference to this jurisdiction;
(e)  a reference in the applied provisions to articles or memorandum of association or constitution or replaceable rules is to be read as a reference to rules;
(f)  a reference in the applied provisions to the Gazette is to be read as a reference to the Government Gazette of this jurisdiction;
(g)  a reference in the applied provisions to “prescribed” is to be read as a reference to “approved by the designated authority”, and (without limitation) a reference to a prescribed form is to be read as a reference to an approved form within the meaning of this Law;
(h)  a reference in the applied provisions to a special resolution is to be read as a reference to a special resolution referred to in section 239 of this Law;
(i)  a cross-reference in the applied provisions to another provision of the Corporations Act is, if that cross-reference is not appropriate (because, for example, the provision cross-referred to is not among the applied provisions), to be read as a cross-reference to the equivalent provision of this Law;
(j)  a reference in the applied provisions (including section 311 of the Corporations Act) to a “contravention of this Act” is to be read as including a reference to a contravention of this Law;
(k)  a reference in the applied provisions to the regulations is to be read as a reference to the National Regulations or local regulations, as the case requires;
(l)  all notes in the applied provisions are to be ignored;
(m)  any of the applied provisions that are not relevant to co-operatives or that are incapable of application to co-operatives or participating co-operatives are to be ignored.
(3)  Subsection (2) does not apply to the extent to which this Law or the National Regulations provide otherwise, whether expressly or by implication.
Division 3 Prescription by National Regulations of other matters dealt with by Corporations legislation
16   National Regulations may provide for matters dealt with by Corporations legislation
(1)  The National Regulations may make provision, in relation to co-operatives, participating co-operatives or associated matters, for or with respect to any matter for which a provision of the Corporations legislation has effect in relation to companies or associated matters.
(2)  A National Regulation made under subsection (1) may deal with a matter in a similar way as, or in a different way from, that in which the provision of the Corporations legislation has effect.
(3)  Subsection (1) does not apply in relation to a provision of the Corporations legislation that applies of its own force or by operation of other provisions of this Law.
(4)  Without limiting subsection (1) or (2), the National Regulations may confer jurisdiction on a court or tribunal to exercise any function conferred by the National Regulations made under subsection (1).
Note—
This section authorises the National Regulations to deal with a matter dealt with by Corporations legislation (with certain limitations) in a manner that does not involve the declaration of the matter to be an applied Corporations legislation matter. This procedure is contemplated by the Corporations application legislation of the various jurisdictions.
Chapter 2 Formation, powers and constitution of co-operatives
Part 2.1 Formation
Division 1 Types of co-operatives
17   Types of co-operatives
(1)  A body may be registered under this Law as a co-operative.
(2)  A co-operative may be either—
(a)  a distributing co-operative; or
(b)  a non-distributing co-operative.
18   Distributing co-operatives
(1)  A distributing co-operative is a co-operative that is not prohibited from giving returns or distributions on surplus or share capital.
(2)  A distributing co-operative must have share capital.
(3)  A distributing co-operative must have a membership of—
(a)  in the case of a co-operative group—2 or more co-operatives; or
(b)  in the case of any other distributing co-operative—
(i)  if a lesser number than 5 is approved by the Registrar—at least that number of active members; or
(ii)  otherwise—5 or more active members.
(4)  An approval under subsection (3) may be given in relation to a particular co-operative or class of co-operatives.
19   Non-distributing co-operatives
(1)  A non-distributing co-operative is a co-operative that is prohibited from giving returns or distributions on surplus or share capital to members, other than the nominal value of shares (if any) at winding up.
(2)  A non-distributing co-operative may or may not have share capital.
(3)  A non-distributing co-operative must have a membership of—
(a)  in the case of a co-operative group—2 or more co-operatives; or
(b)  in the case of any other non-distributing co-operative—
(i)  if a lesser number than 5 is approved by the Registrar—at least that number of active members; or
(ii)  otherwise—5 or more active members.
(4)  An approval under subsection (3) may be given in relation to a particular co-operative or class of co-operatives.
20   Provisions regarding Registrar’s approvals about numbers
(1)  The Registrar may give one composite approval that operates as more than one of the following—
(a)  an approval concerning the number of active members of a co-operative required under section 18 (3) or 19 (3);
(b)  an approval concerning the number of persons required to hold the formation meeting of a co-operative under section 22 (2);
(c)  an approval concerning the number of members required to sign the application for registration of a proposed co-operative under section 26 (1);
(d)  an approval concerning the minimum number of members for a co-operative to continue to carry on business under section 119.
(2)  A composite approval may be given in relation to—
(a)  a particular co-operative or proposed co-operative; or
(b)  a particular class of co-operatives or proposed co-operatives; or
(c)  all co-operatives or proposed co-operatives.
(3)  This section does not limit the power of the Registrar to give separate approvals under any of the relevant sections.
Division 2 Formation meeting
21   Formation meeting
(1)  Before a proposed co-operative (other than an existing corporation) can be registered, a formation meeting must be held under this Division.
(2)  Before a formation meeting can be held for a proposed co-operative, a draft of the proposed rules and a draft of the proposed formation disclosure statement must be approved by the Registrar in accordance with Division 3.
22   Requirements regarding formation meeting
(1)  At the formation meeting for a proposed co-operative—
(a)  the proposed rules of the co-operative approved under section 24 for the proposed co-operative, including active membership provisions, must be passed by two-thirds of the proposed members of the proposed co-operative attending the meeting; and
(b)  in the case of—
(i)  a proposed distributing co-operative; or
(ii)  a proposed non-distributing co-operative that is the subject of a direction under section 23 (2) (a);
a formation disclosure statement approved under section 25 must be presented to the meeting; and
(c)  the proposed members of the proposed co-operative must sign the application for membership; and
(d)  the proposed members must elect the first directors of the proposed co-operative under the proposed rules; and
(e)  the proposed members must authorise a person—
(i)  to apply to the Registrar for registration of the proposed co-operative; and
(ii)  to do anything necessary to have the proposed co-operative registered.
(2)  The formation meeting must be held by—
(a)  in the case of a co-operative group—not less than 2 co-operatives suitably qualified to be members of the proposed co-operative group; or
(b)  in the case of any other co-operative—not less than 5 persons, or if a lesser number than 5 is approved by the Registrar not less than the approved number of persons, suitably qualified to be members of the proposed co-operative.
(3)  For the purposes of subsection (2), a person (including a co-operative) is suitably qualified to be a member if—
(a)  there are reasonable grounds to believe the person will be an active member of the proposed co-operative; and
(b)  in the case of an individual—the person is an adult; and
(c)  the person satisfies any other requirements for membership in the proposed rules.
(4)  Each co-operative forming a proposed co-operative group may be represented at the formation meeting by one person.
(5)  An approval under subsection (2) may be given in relation to a particular co-operative or class of co-operatives or to all co-operatives.
Division 3 Initial approval of rules and formation disclosure statement
23   Submission of draft rules and draft formation disclosure statement
(1)  The following documents must be submitted to the Registrar before the formation meeting—
(a)  a draft of the rules proposed for the co-operative (including active membership provisions);
(b)  in the case of—
(i)  a distributing co-operative—a draft formation disclosure statement for the co-operative; or
(ii)  a non-distributing co-operative—a draft formation disclosure statement for the co-operative if the Registrar so directs under subsection (2) (a);
(c)  a written notice of intention to apply for registration as a co-operative.
(2)  The Registrar may by written notice direct that—
(a)  a draft formation disclosure statement for a proposed non-distributing co-operative must be submitted to the Registrar; and
(b)  a formation disclosure statement approved under section 25 must be presented to the formation meeting for the co-operative.
(3)  The notice under subsection (2) is to be given to the person who submitted notice of intention to apply for registration as a co-operative and must specify the time by which the draft formation disclosure statement must be submitted to the Registrar.
24   Provisions relating to and approval of rules
(1)  This section applies to draft rules for a co-operative required to be submitted to the Registrar under section 23.
(2)  The rules must—
(a)  be in accordance with section 56; and
(b)  be in a form that may reasonably be approved.
(3)  If the rules do not make provision for any matter required by Schedule 1, the Registrar may approve the relevant provisions of the model rules as rules of the co-operative.
(4)  The Registrar may—
(a)  approve the rules as submitted; or
(b)  approve different rules to those submitted; or
(c)  refuse to approve the rules; or
(d)  require the person submitting the draft rules to give the Registrar any additional information the Registrar reasonably requires, and then act under paragraph (a), (b) or (c).
(5)  Subject to subsection (6), the Registrar approves of the rules by giving written notice of the approval of the rules to the person who submitted the draft rules to the Registrar.
(6)  The Registrar is taken to have approved the proposed rules (as submitted to the Registrar) at the end of the period of 28 days after they were submitted, unless before the end of that period the Registrar gives written notice to the person who submitted them that the Registrar—
(a)  has approved different rules to those submitted; or
(b)  is still considering the matter; or
(c)  refuses to approve the proposed rules.
(7)  The Registrar must give the person who submitted the proposed rules to the Registrar written notice of the reasons for acting under subsection (6) (a) or (c).
25   Provisions relating to and approval of formation disclosure statement
(1)  This section applies to a draft formation disclosure statement for a co-operative required to be submitted to the Registrar under section 23.
(2)  The draft formation disclosure statement for a distributing co-operative must contain the information necessary to ensure prospective members are adequately informed of the nature and extent of a person’s financial involvement or liability as a member of the co-operative including so far as applicable—
(a)  the estimated costs of formation; and
(b)  the active membership provisions of the proposed co-operative; and
(c)  the rights and liabilities attaching to shares in the proposed co-operative; and
(d)  the capital required for the co-operative at the time of formation; and
(e)  the projected income and expenditure of the co-operative for its first year of operation; and
(f)  information about any contracts required to be entered into by the co-operative; and
(g)  any other information that the Registrar directs to be included.
(3)  The draft formation disclosure statement for a non-distributing co-operative must contain the information that the Registrar directs to be included.
(4)  The Registrar may—
(a)  approve the draft statement as submitted; or
(b)  amend the draft, or require a specified amendment of the draft, and then approve the amended statement; or
(c)  approve a different statement to that submitted; or
(d)  refuse to approve the draft statement; or
(e)  require the person submitting the draft statement to give the Registrar any additional information the Registrar reasonably requires, and then act under paragraph (a), (b), (c) or (d).
(5)  Approval may be given at any time before the formation meeting is held.
(6)  Approval may be given with or without conditions.
(7)  Subject to subsection (8), the Registrar approves of a formation disclosure statement by giving written notice of the approval of the statement to the person who submitted the draft statement to the Registrar.
(8)  The Registrar is taken to have approved the formation disclosure statement (as submitted to the Registrar) at the end of the period of 28 days after the day it was submitted to the Registrar, unless before the end of that period the Registrar gives written notice to the person who submitted the draft statement that the Registrar—
(a)  has approved a different formation disclosure statement to that submitted; or
(b)  is still considering the matter; or
(c)  refuses to approve the formation disclosure statement.
(9)  The Registrar must give the person who submitted the draft statement to the Registrar written notice of the reasons for acting under subsection (8) (a) or (c).
Note—
Section 69 contains restrictions on advertising or publishing statements about an offer, or intended offer, of shares in a distributing co-operative unless a current formation disclosure statement relating to the shares is registered with or approved by the Registrar.
Division 4 Registration of proposed co-operative
26   Application for registration of proposed co-operative
(1)  An application for registration of a proposed co-operative (other than an existing corporation) must—
(a)  be made in the approved form; and
(b)  be accompanied by the fee—
(i)  prescribed by the National Regulations, unless subparagraph (ii) applies; or
(ii)  prescribed by the local regulations; and
(c)  be signed by—
(i)  in the case of a co-operative group—at least 2 directors; and
(ii)  in the case of any other proposed co-operative—at least 5, or if a lesser number than 5 is approved by the Registrar at least the approved number of, suitably qualified members, including 2 directors elected at the formation meeting; and
(d)  be accompanied by—
(i)  2 copies of the proposed rules signed and certified by the persons who acted as chairperson and secretary at the formation meeting; and
(ii)  in the case of—
(A)  a proposed distributing co-operative; or
(B)  a proposed non-distributing co-operative that is subject to a direction under section 23 (2);
a copy of the formation disclosure statement presented to the formation meeting signed and certified by the persons who acted as chairperson and secretary at the formation meeting; and
(iii)  a statement listing the name, address, occupation and place and date of birth of each director; and
(iv)  a statement of the address (located in this jurisdiction) of the co-operative’s registered office or proposed registered office; and
(v)  any other particulars the Registrar may require in a particular case.
(2)  The application must be filed with the Registrar within 2 months after closure of the formation meeting for the proposed co-operative or within the extended period that the Registrar may allow.
27   Registration of proposed co-operative
(1)  If an application is made under this Division for registration of a proposed co-operative, the Registrar must register the co-operative and its rules if the Registrar is satisfied that the requirements for registration of the co-operative have been met.
(2)  The requirements for registration of a co-operative under this Division are as follows—
(a)  the proposed rules of the proposed co-operative must be the rules approved by the Registrar under section 24;
(b)  the requirements of this Law must have been complied with in relation to the proposed co-operative;
(c)  the proposed co-operative must be designed to function under the co-operative principles or, if it is not designed to function entirely under the co-operative principles, the Registrar must be satisfied there are special reasons why the co-operative should be registered under this Law;
(d)  there must be no reasonable cause for refusing registration of the proposed co-operative.
(3)  If the Registrar is not satisfied that the requirements for registration of the co-operative have been met, the Registrar may refuse to register the co-operative and its rules.
(4)  The Registrar must give to the applicant written notice of the refusal and the reasons for the refusal.
28   Incorporation and certificate of registration
(1)  A co-operative becomes a corporation on being registered.
(2)  On the registration of the co-operative, the Registrar must issue a certificate of registration.
Division 5 Registration of existing corporation
29   Existing corporation can be registered
A corporation (other than a co-operative taken to be registered under this Law) may apply to the Registrar to be registered as a co-operative under this Law.
30   Formation meeting (existing corporation)
(1)  Before applying for registration as a co-operative, the corporation must, at the formation meeting, by a resolution approve of—
(a)  the proposed registration; and
(b)  any amendment of its existing constituent documents necessary to enable the corporation to comply with this Law; and
(c)  the proposed rules of the proposed co-operative approved under section 24, including active membership provisions.
(2)  The formation disclosure statement approved under section 25 must be presented to the formation meeting, in the case of—
(a)  a proposed distributing co-operative; or
(b)  a proposed non-distributing co-operative that is the subject of a direction under section 23 (2).
(3)  A resolution under this section must have been passed by a two-thirds majority of eligible members present at the formation meeting.
Note—
Section 32 (5) provides that, despite anything to the contrary in this Division, the registration of a corporation as a co-operative does not take effect until the corporation ceases to be registered under the law under which it was previously registered.
31   Application for registration of existing corporation
An application for the registration of an existing corporation must—
(a)  be in the approved form; and
(b)  be accompanied by the fee—
(i)  prescribed by the National Regulations, unless subparagraph (ii) applies; or
(ii)  prescribed by the local regulations; and
(c)  be accompanied by—
(i)  a written declaration, signed no more than 28 days before the application for registration by the directors or committee of management of the corporation, stating that at a meeting of the directors or committee they formed the opinion that the corporation will be able to pay its debts as they fall due; and
(ii)  a report in the approved form as to the affairs of the corporation and showing its assets and liabilities, made up to the latest practicable date before the application; and
(iii)  a copy of the constituent documents of the corporation in force at the date of the application; and
(iv)  2 copies of the proposed rules of the co-operative, as provided for by the special resolution; and
(v)  in the case of a proposed distributing co-operative or in the case of a proposed non-distributing co-operative that is subject to a direction under section 23 (2)—a copy of the formation disclosure statement presented to the meeting held under section 30, certified by the directors or committee of management of the corporation; and
(vi)  a list containing the name, address, occupation and place and date of birth of each director; and
(vii)  evidence to the satisfaction of the Registrar of the incorporation of the corporation; and
(viii)  a statement setting out the connection that the proposed co-operative would have to this jurisdiction; and
(ix)  a statement of the address (located in this jurisdiction) of the co-operative’s registered office or proposed registered office; and
(x)  any other particulars the Registrar may require in a particular case.
32   Requirements for registration
(1)  When an application is made for the registration of a corporation as a co-operative under this Division, the Registrar must register the corporation as a co-operative under this Law and register its rules under this Law if the Registrar is satisfied the requirements for the registration of the corporation as a co-operative have been met.
(2)  The requirements for the registration of a corporation as a co-operative under this Division are as follows—
(a)  the proposed rules of the proposed co-operative must be the rules approved by the Registrar under section 24;
(b)  the requirements of this Law must have been complied with in relation to the proposed co-operative;
(c)  there must be no reasonable cause for refusing registration of the proposed co-operative;
(d)  the proposed co-operative must have a sufficient connection with this jurisdiction.
(3)  If the Registrar is not satisfied the requirements for registration of the corporation as a co-operative have been met, the Registrar may refuse to register the proposed co-operative and its rules and must give to the applicant written notice of the refusal and the reasons for the refusal.
(4)  If the Registrar has decided under this section to register a corporation under this Law, the corporation must notify the authority responsible for registering the corporation under the law under which it was previously registered of that decision.
(5)  Despite anything to the contrary in this Division, the registration of a corporation as a co-operative does not take effect until the corporation ceases to be registered under the law under which it was previously registered.
(6)  The corporation must notify the Registrar in writing within 7 days after ceasing to be registered under that other law.
33   Certificate of registration
(1)  On the registration of the corporation as a co-operative, the Registrar must—
(a)  issue a certificate of registration; and
(b)  publish notice of the issue of the certificate by designated instrument.
(2)  The corporate name of a corporation registered as a co-operative is the name approved by the Registrar, as stated in the certificate of registration issued by the Registrar.
34   Effect of registration
(1)  The corporation is to be taken to be incorporated under this Law on its registration.
(2)  Except as expressly provided in this Law, the registration and incorporation of the corporation as a co-operative does not prejudice any right of a member in relation to any shares held at the time of registration and incorporation.
(3)  The change of registration and incorporation does not affect the identity of the corporation and it is taken to be the same body after registration as a co-operative as it was before and no act, matter or thing is affected by the change.
Division 6 Conversion of co-operative
35   Conversion of co-operative
(1)  A co-operative may, by amendment of its rules, convert from—
(a)  a co-operative with share capital to a co-operative without share capital, or vice versa; or
(b)  a distributing co-operative to a non-distributing co-operative, or vice versa.
(2)  An amendment of the rules for the conversion of a co-operative with share capital to a co-operative without share capital cannot be passed until at least 2 weeks after a notice has been published in a newspaper circulating generally in the district in which the registered office of the co-operative is situated advising of the proposal to submit the proposed amendment to members of the co-operative.
(3)  An amendment of the rules for the conversion of a non-distributing co-operative to a distributing co-operative does not have effect without the prior approval of the Registrar under section 60.
(4)  An amendment of the rules for the conversion of a co-operative must be approved by special resolution passed by a special postal ballot.
(5)  The Registrar may exempt—
(a)  a co-operative from subsection (4) by designated instrument; or
(b)  a class of co-operatives from subsection (4) by designated instrument.
(6)  An exemption may be given unconditionally or subject to conditions.
Division 7 General
36   Acceptance of money by proposed co-operative
(1)  A proposed co-operative or any person on its behalf or otherwise who accepts money for the proposed co-operative before the proposed co-operative is registered must hold that money on trust until the co-operative is registered.
(2)  If a co-operative is not registered within 3 months after the acceptance of money under subsection (1), the proposed co-operative or the person who accepted the money on its behalf must refund the money to the person who paid it.
Maximum penalty—$6,000.
37   Issue of duplicate certificate
The Registrar must issue a duplicate certificate of registration—
(a)  if the Registrar is satisfied the original certificate is lost or destroyed; and
(b)  on payment of the fee—
(i)  prescribed by the National Regulations, unless subparagraph (ii) applies; or
(ii)  prescribed by the local regulations.
Part 2.2 Legal capacity and powers
Division 1 General powers
38   Effect of incorporation
As a corporation, a co-operative—
(a)  has perpetual succession; and
(b)  may have a common seal; and
(c)  may sue and be sued in its corporate name; and
(d)  subject to this Law, is capable of taking, purchasing, leasing, holding, selling and disposing of real and personal property; and
(e)  may do and suffer all acts and things that corporations may by law do and suffer and that are necessary or expedient.
39   Power to form companies and enter into joint ventures
Without limiting any other provision of this Law, a co-operative has power—
(a)  to form or participate in the formation of a corporation or unit trust; and
(b)  to acquire interests in and sell or otherwise dispose of interests in corporations, unit trusts and joint ventures; and
(c)  to form or enter into a partnership, joint venture or other association with other persons or bodies.
Division 2 Doctrine of ultra vires not to apply
40   Interpretation
In this Division—
(a)  a reference to the doing of an act by a co-operative includes a reference to the making of an agreement by the co-operative and a reference to a transfer of property to or by the co-operative; and
(b)  a reference to legal capacity includes a reference to powers.
41   Doctrine of ultra vires not to apply
(1)  The objects of this Division are—
(a)  to provide that the doctrine of ultra vires does not apply to co-operatives; and
(b)  without affecting the validity of a co-operative’s dealings with others—to ensure the co-operative’s officers and members give effect to the provisions of the rules of the co-operative relating to the primary activities or powers of the co-operative.
(2)  This Division is to be construed and to have effect in accordance with subsection (1).
42   Legal capacity
(1)  A co-operative has, both within and outside this jurisdiction, the legal capacity of an individual.
(2)  Without limiting subsection (1), a co-operative has, both within and outside this jurisdiction, power—
(a)  to issue and allot fully or partly paid shares in the co-operative; and
(b)  to issue debentures and CCUs of the co-operative; and
(c)  to distribute any of the property of the co-operative among the members, in kind or otherwise; and
(d)  to give security by charging uncalled capital; and
(e)  to grant a security interest in property of the co-operative; and
(f)  to procure the co-operative to be registered or recognised as a corporation in any place outside this jurisdiction; and
(g)  to do any other act it is authorised to do by any other law (including a law of a place outside this jurisdiction).
(3)  The fact that the doing of an act by a co-operative would not be, or is not, in its best interests does not affect its legal capacity to do the act.
(4)  To avoid doubt, this section does not—
(a)  authorise a co-operative to do an act that is prohibited by a law of this jurisdiction; or
(b)  give a co-operative a right that a law of this jurisdiction denies the co-operative.
43   Rules may limit powers and set out objects
(cf Corporations Act s 125)
(1)  The rules of a co-operative may contain an express restriction on, or a prohibition of, the co-operative’s exercise of any of its powers, but the exercise of a power by the co-operative is not invalid merely because it is contrary to an express restriction or prohibition in the rules of the co-operative.
(2)  The rules of a co-operative may set out the co-operative’s objects, but an act of the co-operative is not invalid merely because it is contrary to or beyond any objects in the rules of the co-operative.
Division 3 Persons having dealings with co-operatives
44   Entitlement to make assumptions
(1)  A person may make the assumptions in section 45 in relation to—
(a)  dealings with a co-operative; or
(b)  dealings with a person who has, or purports to have, directly or indirectly acquired title to property from a co-operative.
(2)  If a person may assume a matter, the co-operative or anyone referred to in subsection (1) (b) cannot assert in proceedings in relation to the dealings that the matter is incorrect.
45   Assumptions
(cf Corporations Act s 129)
(1)  A person may assume that the rules of a co-operative have been complied with.
(2)  A person may assume that anyone who appears, from information provided by the co-operative that is available to the public from the Registrar, to be a director or secretary of the co-operative—
(a)  has been duly appointed; and
(b)  has authority to exercise the powers and perform the duties customarily exercised or performed by a director or secretary of a similar co-operative.
(3)  A person may assume that anyone who is held out by the co-operative to be an officer or agent of the co-operative—
(a)  has been duly appointed; and
(b)  has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar co-operative.
(4)  A person may assume that the officers and agents of the co-operative properly perform their duties to the co-operative.
(5)  A person may assume that a document has been properly executed by the co-operative if it is signed by 2 people, one of whom is, or may be assumed to be, a director of the co-operative, and the other is, or may be assumed to be, a director or secretary of the co-operative.
(6)  A person may assume that a document has been sealed by the co-operative if it bears what appears to be an impression of the co-operative’s common seal and the sealing of the document appears to be witnessed by 2 people, one of whom is, or may be assumed to be, a director of the co-operative, and the other is, or may be assumed to be, a director or secretary of the co-operative.
(7)  A person may assume that anyone who is, or may be assumed to be, an officer or agent of the co-operative who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy.
46   Person who knows or ought to know cannot make assumptions
This Division does not entitle a person to make an assumption, and does not prevent an assertion being made in relation to an assumption, if—
(a)  the person has actual knowledge that the assumption is not correct; or
(b)  the person ought to know that the assumption is not correct because of the nature of the person’s connection or relationship with the co-operative.
47   Filing of documents not to constitute constructive knowledge
(1)  A person is not considered to have knowledge of the rules of a co-operative, any of the contents of the rules of a co-operative, a document, the contents of a document, or any particulars, merely because of either or both of the following—
(a)  the rules, the document or the particulars have been filed with the Registrar;
(b)  the rules, the document or the particulars are mentioned in any other document that has been filed with the Registrar, or filed with a person under a previous law corresponding to a provision of this Law.
(2)  Despite subsection (1), a member of a co-operative is taken to have knowledge of the rules of the co-operative.
48   Effect of fraud
(1)  A person’s entitlement under this Division to make an assumption is not affected merely by the fact that any person—
(a)  has acted or is acting fraudulently in relation to the dealing, acquisition or purported acquisition of title to property to which the assumption relates; or
(b)  has forged a document that appears to have been sealed on behalf of a co-operative.
(2)  A person may not make an assumption if the person has actual knowledge of the fraudulent action or forgery referred to in subsection (1).
Division 4 Execution of documents
49   Execution of documents by co-operative
(cf Corporations Act s 127)
(1)  A co-operative may execute a document without using a common seal if the document is signed by—
(a)  2 directors of the co-operative; or
(b)  a director and the secretary of the co-operative.
(2)  A co-operative with a common seal may execute a document if the seal is fixed to the document and the fixing of the seal is witnessed by—
(a)  2 directors of the co-operative; or
(b)  a director and the secretary of the co-operative.
(3)  A co-operative may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2).
(4)  This section does not limit the ways in which a co-operative may execute a document (including a deed).
50   Agent exercising co-operative’s power to make contracts
(cf Corporations Act s 126)
(1)  A co-operative’s power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the co-operative’s express or implied authority and on behalf of the co-operative.
(2)  The power may be exercised without using a common seal.
(3)  This section does not affect the operation of a law that requires a particular procedure to be complied with in relation to the contract.
51   Other requirements as to consent or sanction not affected
This Division does not affect the operation of a law that requires some consent or sanction to be obtained, or some procedure to be complied with, in relation to the making, varying or discharging of a contract.
Division 5 Pre-registration contracts
52   Contracts before registration
(1)  If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a proposed co-operative (pre-registration contract), the co-operative becomes bound by the contract and entitled to its benefit if the co-operative, or a co-operative that is reasonably identifiable with it, is registered and ratifies the contract—
(a)  within a reasonable period after the contract is entered into; or
(b)  within any period agreed to by the parties to the contract.
(2)  The person is released from any liability under the pre-registration contract if the co-operative enters into another contract in substitution for it—
(a)  within a reasonable period after the pre-registration contract is entered into; or
(b)  within any period agreed to by the parties to the pre-registration contract.
(3)  The person is liable to pay damages to each other party to the pre-registration contract if a co-operative is not registered, or a co-operative is registered but does not ratify the contract or enter into a substitute for it—
(a)  within a reasonable period after the contract is entered into; or
(b)  within the period agreed to by the parties to the contract.
(4)  The maximum amount of damages the person is liable to pay to a party is the amount the co-operative would be liable to pay to the party if the co-operative had been registered and had ratified the contract and then completely failed to perform it.
(5)  If proceedings are brought to recover damages under subsection (3) because the co-operative is registered but does not ratify the pre-registration contract or enter into a substitute for it, the court may do anything it thinks just in the circumstances, including ordering the co-operative—
(a)  to pay all or part of the damages the person is liable to pay; or
(b)  to transfer property the co-operative received because of the contract to a party to the contract; or
(c)  to pay an amount to a party to the contract.
(6)  If the co-operative ratifies the pre-registration contract but fails to perform all or part of it, the court may order the person to pay all or part of the damages that the co-operative is ordered to pay.
53   Person may be released from liability but is not entitled to indemnity
(1)  Any of the parties to the pre-registration contract may release the person who entered into, or purported to enter into, the contract from any liability in relation to that contract.
(2)  The release must be in writing.
(3)  The party giving the release cannot recover damages under section 52 from the person.
(4)  Despite any rule of law or equity, the person does not have a right of indemnity against the co-operative in relation to the person’s liability under this Division even if the person was acting, or purporting to act, as trustee for the co-operative.
54   This Division replaces other rights and liabilities
This Division replaces any rights or liabilities anyone would otherwise have in relation to the pre-registration contract.
Part 2.3 Rules
Division 1 Rules of a co-operative
55   Effect of rules
(1)  The rules of a co-operative have the effect of a contract under seal—
(a)  between the co-operative and each member; and
(b)  between the co-operative and each director, the chief executive officer and the secretary of the co-operative; and
(c)  between a member and each other member.
(2)  Under the contract, each of those persons agrees to observe and perform the provisions of the rules as in force for the time being so far as those provisions apply to the person.
56   Content of rules
(1)  The rules of a co-operative must state or otherwise make provision for the matters included in Schedule 1.
(2)  The rules must be divided into consecutively numbered paragraphs.
(3)  The rules may state the objects of the co-operative.
(4)  The rules may adopt by reference all or any of the provisions of the model rules, as provided in Division 2.
(5)  The rules may provide for the imposition of a fine on a member for an infringement of the rules.
(6)  If the rules provide for the imposition of a fine, the rules must state the maximum fine that may be imposed on a member.
(7)  The maximum fine fixed by the rules must not be more than any amount prescribed by the National Regulations as the maximum fine.
(8)  The rules may contain other provisions not inconsistent with this Law.
57   Purchase and inspection of copy of rules
(1)  Any member is entitled to obtain from a co-operative a copy of its rules on payment of the amount required by the rules of the co-operative or, if the rules do not prescribe an amount, on payment of $5.
(2)  The amount required by the rules must not be more than the fee—
(a)  prescribed by the National Regulations, unless paragraph (b) applies; or
(b)  prescribed by the local regulations;
for obtaining a copy of the rules from the Registrar.
(3)  Any person is entitled to obtain from the Registrar a copy of the rules of a co-operative on payment of the fee—
(a)  prescribed by the National Regulations, unless paragraph (b) applies; or
(b)  prescribed by the local regulations.
58   False copies of rules
(1)  A person must not give to a member of a co-operative or to a person intending or applying to become a member of a co-operative a copy of any rules or any amendments of rules, other than those that have been registered, representing that they are binding on the members of the co-operative.
(2)  A person must not amend any of the rules of a co-operative after they have been registered and circulate the amended rules representing that they have been registered when they have not been.
Maximum penalty—$1,000.
59   Rules can only be amended under this Law
The rules of a co-operative cannot be amended except under this Law.
60   Approval of certain rule amendments
(1)  This section applies to—
(a)  an amendment of rules that is referred to in subsection (2); and
(b)  an amendment of rules that are referred to in section 35 (3) relating to the conversion of a non-distributing co-operative to a distributing co-operative.
(2)  The Registrar may, by designated instrument, specify for the purposes of this section classes of amendments that must not be made to the rules of a co-operative without the prior approval of the Registrar, and without limitation may do so by reference to classes or subclasses of matters referred to in Schedule 1.
(3)  A proposed amendment to which this section applies must be approved by the Registrar before the resolution amending the rules is passed by a co-operative or the board of a co-operative.
(4)  A draft of the proposed amendment must be submitted to the Registrar before—
(a)  the notice of the proposed special resolution amending the rules is given to the members by the co-operative; or
(b)  the resolution is passed by the board of the co-operative.
(5)  The proposed amendment must—
(a)  be in accordance with section 56; and
(b)  be in a form that may reasonably be approved; and
(c)  be accompanied by a statement stating the reasons for the amendment.
(6)  The Registrar may—
(a)  approve the amendment as submitted; or
(b)  approve a different amendment to that submitted; or
(c)  refuse to approve the amendment; or
(d)  require the person submitting the draft amendment to give the Registrar any additional information the Registrar reasonably requires, and then act under paragraph (a), (b) or (c).
(7)  Subject to subsection (8), the Registrar approves of the amendment by giving written notice of the approval of the amendment to the person who submitted the draft amendment to the Registrar.
(8)  The Registrar is taken to have approved the proposed amendment (as submitted to the Registrar) at the end of the period of 28 days after it was submitted, unless before the end of that period the Registrar gives written notice to the person who submitted it that the Registrar—
(a)  has approved a different amendment to that submitted; or
(b)  is still considering the matter; or
(c)  refuses to approve the proposed amendment.
(9)  The Registrar must give the person who submitted the draft amendment to the Registrar written notice of the reasons for acting under subsection (8) (a) or (c).
61   Amendment by special resolution
The rules of a co-operative may only be amended by special resolution unless this Law otherwise provides.
62   Amendment by resolution of board
(1)  The rules of a co-operative may be amended by a resolution passed by the board if the amendment does no more than give effect to a requirement, direction, restriction or prohibition imposed or given under the authority of this Law.
(2)  If the rules of a co-operative are amended under this section, the co-operative must cause the amendment to be notified in writing to its members as soon as practicable after the amendment takes effect and in any event no later than the day when notice of the next annual general meeting of the co-operative after the amendment takes effect is given to the members.
63   Amendment does not take effect until registered
(1)  An amendment of the rules of a co-operative does not take effect unless and until it is registered by the Registrar.
(2)  An application for registration of an amendment must—
(a)  be made in the approved form; and
(b)  be made within 28 days, or a shorter or longer time prescribed by the National Regulations, after the amendment is made; and
(c)  be accompanied by a consolidated copy of the rules of the co-operative, including the amendment.
(3)  The Registrar must register the amendment unless—
(a)  the Registrar is satisfied the amendment is contrary to this Law; or
(b)  the Registrar has other reasonable cause to refuse to register the amendment.
(4)  A certificate of registration of an amendment of the rules of a co-operative given by the Registrar is, in favour of any person advancing money to the co-operative on the faith of the certificate or a guarantor of that advance, evidence that the amendment in the rules was properly made.
Division 2 Model rules
64   Model rules
(1)  The National Regulations may prescribe model rules.
(2)  The model rules may make provision for anything for which the rules of a co-operative may make provision.
(3)  A model rule commences on—
(a)  the day occurring 28 days after the date of publication of the National Regulations containing the model rule; or
(b)  a later day specified in, or ascertained in accordance with, the model rule or the National Regulations.
(4)  A model rule may apply generally or be limited in its application to a specified class of co-operatives.
65   Adoption of model rules
The rules of a co-operative may adopt by reference all or any of the provisions of the model rules—
(a)  as in force from time to time, unless paragraph (b) applies; or
(b)  as in force at a particular time, if the rules so provide.
66   Relationship of this Division to Division 1
If the rules of a co-operative adopt a model rule as in force from time to time and the model rule is amended, Division 1 does not require the amendment (so far as it affects the rules of the co-operative) to be approved or registered before the amendment takes effect in relation to the co-operative.
Part 2.4 Shares
Division 1 Nature of share
67   Nature of share in co-operative
(1)  A share or other interest in a co-operative—
(a)  is personal property; and
(b)  is transferable or transmissible as provided by this Law and the rules of the co-operative; and
(c)  is, subject to the rules of the co-operative, capable of devolution by will or by operation of law.
(2)  Subject to subsection (1)—
(a)  the laws applying to ownership of and dealing with personal property apply to a share or other interest of a member in a co-operative as they apply to other property; and
(b)  equitable interests in a share or other interest of a member in a co-operative may be created, dealt with and enforced as in the case of other personal property.
Division 2 Disclosure requirements for distributing co-operatives
68   Registration of current disclosure statement
(1)  A distributing co-operative must take all reasonable steps to ensure that it has a current disclosure statement registered with the Registrar.
(2)  The disclosure statement must contain the information necessary to ensure prospective members are adequately informed of the nature and extent of a person’s financial involvement or liability as a member of the co-operative including so far as applicable—
(a)  the active membership provisions of the co-operative; and
(b)  the rights and liabilities attaching to shares in the co-operative; and
(c)  any other information that the Registrar directs to be included.
(3)  A formation disclosure statement approved by the Registrar under section 25 is taken to be registered with the Registrar for the purposes of this section until it stops being current under subsection (4).
(4)  A disclosure statement stops being current when—
(a)  a change occurs in the rights or liabilities attaching to any class of share in the co-operative; or
(b)  a significant change occurs in the financial position or prospects of the co-operative.
(5)  The co-operative must register a new disclosure statement with the Registrar when the currently registered disclosure statement stops being current, and must do so within 14 days (or a longer period approved by the Registrar) after it stops being current.
Maximum penalty—$1,000.
69   Restrictions on advertising and publicity
(cf Corporations Act s 734)
(1)  A person must not—
(a)  advertise; or
(b)  publish a statement that directly or indirectly refers to;
an offer, or intended offer, of shares in a distributing co-operative unless a current disclosure statement relating to the shares is—
(c)  registered with the Registrar under section 68; or
(d)  lodged with the Registrar for registration under section 68.
Maximum penalty—$1,000.
(2)  Subsection (1) applies in relation to shares in a distributing co-operative only if—
(a)  the shares are offered to persons who are not shareholders in the co-operative; or
(b)  the invitation is made to persons who are not shareholders in the co-operative.
(3)  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—
(a)  publishing a newspaper or magazine; or
(b)  broadcasting by radio or television;
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.
(4)  An offence based on subsection (1) is an offence of strict liability.
70   Disclosure to intending shareholders in distributing co-operative
(1)  The board of a distributing co-operative must give a person who intends to acquire shares in the co-operative and is not already a shareholder in the co-operative—
(a)  a current disclosure statement; and
(b)  any other information the Registrar directs.
(2)  The disclosure statement and any other information required under subsection (1) and Part 2.5 must be given before the person becomes bound to acquire the shares.
71   Exemptions from disclosure statements
(1)  The Registrar may, by designated instrument, exempt a co-operative or class of co-operatives from any or all of the provisions of this Division.
(2)  An exemption under subsection (1) may be given only if the Registrar is satisfied that compliance with the requirement would be inappropriate in the circumstances or would impose an unreasonable burden.
(3)  An exemption may be given unconditionally or subject to conditions.
Division 3 Compensation for defective disclosure
72   Contravention leading to right to recover for loss or damage
(cf Corporations Act s 728)
A co-operative contravenes this section if a disclosure statement is given to a person under section 70 and—
(a)  there is—
(i)  a misleading or deceptive statement in the disclosure statement or in any application form or document that accompanies the disclosure statement; or
(ii)  an omission from the disclosure statement of material or information required to be contained in the statement by or under this Law;
and the misleading or deceptive statement or the omission is materially adverse from the point of view of the person to whom it is given; or
(b)  the disclosure statement is not current (as referred to in section 70 (1)).
73   Right to recover for loss or damage resulting from contravention
(cf Corporations Act s 729)
(1)  A person who suffers loss or damage because of a contravention of section 72 in relation to a co-operative may recover the amount of the loss or damage from a person referred to in a following paragraph if the loss or damage is one that the paragraph makes the person liable for, even if the person did not commit, and was not involved in, the contravention—
(a)  the co-operative is liable for loss or damage caused by any contravention of section 72 in relation to the disclosure statement;
(b)  each director of the co-operative is liable for loss or damage caused by any contravention of section 72 in relation to the disclosure statement;
(c)  a person named in the disclosure statement with their consent as having made a statement (see section 615)—
(i)  that is included in the disclosure statement; or
(ii)  on which a statement made in the disclosure statement is based;
is liable for loss or damage caused by the inclusion of the statement in the disclosure statement;
(d)  a person who is involved in the contravention of section 72 is liable for loss or damage caused by that contravention.
(2)  An action under subsection (1) may begin at any time within 6 years after the day on which the cause of action arose.
(3)  This Division does not affect any liability that a person has under any other law.
Note—
Section 9 defines “involved” in a contravention.
74   Due diligence defence
(cf Corporations Act s 731)
(1)  A person is not liable under this Division in relation to a contravention of section 72 because of a misleading or deceptive statement if the person proves they—
(a)  made all inquiries (if any) that were reasonable in the circumstances; and
(b)  after doing so, believed on reasonable grounds that the statement was not misleading or deceptive.
(2)  A person is not liable under this Division in relation to a contravention of section 72 because of an omission from a disclosure statement in relation to a particular matter or particular information if the person proves they—
(a)  made all inquiries (if any) that were reasonable in the circumstances; and
(b)  after doing so, believed on reasonable grounds that there was no omission from the statement in relation to that matter or information.
(3)  A person is not liable under this Division in relation to a contravention of section 72 because a disclosure statement is not current if the person proves they—
(a)  made all inquiries (if any) that were reasonable in the circumstances; and
(b)  after doing so, believed on reasonable grounds that the statement was current.
75   General defences
(cf Corporations Act s 733)
(1)  A person is not liable under this Division in relation to a contravention of section 72 because of a misleading or deceptive statement in, or an omission from, a disclosure statement if the person proves that they placed reasonable reliance on information given to them by—
(a)  if the person is a body—someone other than a director, employee or agent of the body; or
(b)  if the person is an individual—someone other than an employee or agent of the individual.
(2)  For the purposes of subsection (1), a person is not the agent of a body or individual merely because they perform a particular professional or advisory function for the body or individual.
(3)  A person is not liable under this Division in relation to a contravention of section 72 because a disclosure statement is not current if the person proves that they were not aware of the circumstance or event that caused the statement to cease to be current.
Division 4 Issue of shares
76   Shares—general
(1)  The share capital of a co-operative varies in amount according to the nominal value of shares from time to time subscribed.
(2)  Shares are to be of a fixed amount that must be specified in the rules of the co-operative.
(3)  A co-operative may have more than one class of shares if the shareholding and the rights of shareholders comply with the co-operative principles.
(4)  Subject to this Part and Part 2.5, shares must not be issued to a non-member.
77   Minimum number of shares to be subscribed for
(1)  A member of a co-operative with share capital must subscribe for such minimum number of shares (if any) as may be required by the rules of the co-operative.
(2)  The minimum number may be determined by reference to the use made by the member of the co-operative or in any other manner specified in the rules of the co-operative.
(3)  An amendment of the rules of the co-operative as to the minimum number of shares to be subscribed for does not operate to require an existing member of the co-operative to subscribe for additional shares, but an existing member is not prevented from agreeing to subscribe for additional shares.
(4)  This section does not affect section 82.
78   Minimum paid up amount
(1)  A share must not be allotted unless at least 10% of the nominal value of the share has been paid.
(2)  Any balance unpaid for shares at the time of allotment must be paid in a way specified in the rules of the co-operative or permitted by this Law.
(3)  This section does not apply to a bonus share issued under section 83 or 357.
(4)  This section does not affect shares issued before the commencement of this section in this jurisdiction if the Co-operatives National Law Act of this jurisdiction so provides.
79   Shares not to be issued at a discount
A co-operative must not issue shares at a discount.
80   Issue of shares at a premium
(1)  A distributing co-operative may issue shares at a premium.
(2)  A premium may be in the form of cash or other valuable consideration.
(3)  If a distributing co-operative issues shares for which it receives a premium, an amount equal to the total amount or value of the premiums on the shares must be transferred to a share premium account.
(4)  The share premium account is to be treated as paid-up share capital of the distributing co-operative and may be applied in one or more of the following ways—
(a)  in paying up unissued shares to be issued to members of the co-operative as fully paid bonus shares;
(b)  in paying up, in whole or in part, the balance unpaid on shares previously issued to members of the co-operative;
(c)  in the payment of dividends, if the dividends are satisfied by the issue of shares to members of the co-operative;
(d)  in writing off the preliminary expenses of the co-operative;
(e)  in providing for the premium payable on redemption of shares, debentures or CCUs.
81   Joint ownership of shares
A share may be held by 2 or more persons jointly, unless the rules of the co-operative otherwise provide.
82   Members may be required to take up additional shares
(1)  The board of a distributing co-operative may require a member to take up or subscribe for additional shares under a proposal approved by a special resolution of the co-operative passed by a special postal ballot.
(2)  The board of a distributing co-operative may deduct amounts in payment for additional shares from money payable to members for dealings with the co-operative, under a proposal approved by a special resolution of the co-operative passed by a special postal ballot.
(3)  A proposal to require a member to take up or subscribe for additional shares must—
(a)  be accompanied by a disclosure statement, registered by the Registrar, that explains the purpose for which the funds raised by the issue of the additional shares are to be used; and
(b)  clearly show the total number of additional shares to be issued and the basis on which the shares are to be apportioned among members; and
(c)  be accompanied by a statement informing the member that the member may inform the board by notice on or before the date stated in the statement (being a date before the passing of the special resolution) that the member resigns on the passing of the special resolution.
(4)  A proposal to deduct amounts in payment for additional shares from amounts payable to members for their dealings with the distributing co-operative must clearly show—
(a)  the basis on which the deductions are to be made; and
(b)  the time and way of making those deductions.
(5)  A proposal approved under this section is binding on—
(a)  all members of the distributing co-operative at the date of the 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 distributing co-operative after that date and before the total number of shares to be issued under the proposal has been issued.
(6)  The requirements in respect of a proposal to take up additional shares under subsection (3) do not apply to the issue of bonus shares under section 80 (4) (a), 83 or 357.
83   Bonus share issues
(1)  A distributing co-operative may issue bonus shares to members of the co-operative if the assets of the co-operative—
(a)  have been sold at a profit; or
(b)  have been revalued at a greater value than that disclosed before the revaluation in the books of the co-operative.
(2)  This section does not apply if the assets were acquired for resale at a profit.
84   Restrictions on bonus shares
Bonus shares may be issued under section 83 subject to the following restrictions—
(a)  each issue must have been approved by a special resolution of the co-operative;
(b)  they are to be issued as fully paid-up shares with no payment required to be made by a member of the co-operative to whom they are issued;
(c)  they are to be issued only for shares of the same class of shares that are fully paid-up as at the date of issue of the bonus shares;
(d)  the total nominal value of bonus shares issued by a co-operative in any period of 12 months must not be more than 20%, or another percentage prescribed under the National Regulations, of the nominal value of the issued share capital of the co-operative immediately before the date of issue of the bonus shares.
85   Notice about bonus shares
Notice of the meeting or postal ballot at which a resolution is to be proposed as a special resolution to approve a bonus share issue under section 83 must be accompanied by—
(a)  a statement of the value of the assets concerned as disclosed in the books of the co-operative before the sale or revaluation; and
(b)  if the issue arises from, or partly from, a sale of assets—a statement of the price for which the assets were sold; and
(c)  if the issue arises from, or partly from, a revaluation of assets—a certificate of value of the assets, being a certificate given in relation to a valuation made not more than one year before the date of the notice by—
(i)  a person prescribed by the National Regulations; or
(ii)  a person having qualifications prescribed by the National Regulations; and
(d)  particulars of acquisitions of shares in the co-operative made within the 3 years immediately preceding the date of the notice by or on behalf of each of its directors and his or her spouse or de facto partner and the father, mother, children, brothers and sisters of each director and each spouse or de facto partner; and
(e)  a certificate signed by 2 directors of the co-operative stating that to the best of their knowledge and belief the issue of bonus shares would not be imprudent and no circumstances are known to them as to why the issue should not take place.
Division 5 Provisions applying to particular share subscriptions
86   Definition
In this Division—
disclosure statement means a disclosure statement, of any type, under this Law.
87   Application of this Division
This Division applies in relation to shares in a co-operative only if—
(a)  the shares are offered to persons who are not shareholders in the co-operative; or
(b)  the invitation is made to persons who are not shareholders in the co-operative.
88   Application money to be held on trust
(cf Corporations Act s 722)
(1)  If a person offers shares for issue or sale under a disclosure statement, the person must hold—
(a)  all application money received from people applying for shares under the disclosure statement; and
(b)  all other money paid by them on account of the shares before they are issued or transferred;
in trust under this section for the applicants until—
(c)  the shares are issued or transferred; or
(d)  the money is returned to the applicants.
Maximum penalty—$2,500 or imprisonment for 6 months, or both.
(2)  If the application money needs to be returned to an applicant, the person must return the money as soon as practicable.
Maximum penalty—$2,500 or imprisonment for 6 months, or both.
(3)  An offence based on subsection (1) or (2) is an offence of strict liability.
89   Minimum subscription condition must be fulfilled before issue or transfer
(cf Corporations Act s 723 (2))
If a disclosure statement for an offer of shares states that the shares will not be issued or transferred unless—
(a)  applications for a minimum number of the shares are received; or
(b)  a minimum amount is raised;
the person making the offer must not issue or transfer any of the shares until that condition is satisfied. For the purpose of working out whether the condition has been satisfied, a person who has agreed to take securities as underwriter is taken to have applied for those shares.
Note 1—
Under section 88, the application money must be held in trust until the issue or transfer of the shares.
Note 2—
This section prevents the issue or transfer of the shares not only to those who apply for them in response to the disclosure statement but also to those who do not need to apply for them (for example, because they are to take the securities under an underwriting agreement).
90   Repayment of money if disclosure statement condition not met
(cf Corporations Act s 724 (1) (a), (1A) and (2) (a))
(1)  If—
(a)  a person offers shares under a disclosure statement; and
(b)  the disclosure statement states (expressly or impliedly) that it is a condition that the shares will not be issued or transferred unless—
(i)  applications for a minimum number of the shares are received; or
(ii)  a minimum amount is raised; and
(c)  that condition is not satisfied within 4 months after the date of the disclosure statement;
the person must repay the money received by the person in respect of any applications for the shares made under the disclosure statement that have not resulted in an issue or transfer of the shares.
Maximum penalty—$2,500 or imprisonment for 6 months, or both.
(2)  For the purpose of working out whether a condition referred to in subsection (1) has been satisfied, a person who has agreed to take shares as underwriter is taken to have applied for those shares.
(3)  An offence based on subsection (1) is an offence of strict liability.
Division 6 Disclosure and registration of interests in shares
91   Direction to disclose
(cf Corporations Act s 672A (1))
The board of a co-operative may direct—
(a)  a member of the co-operative; or
(b)  a person named in a previous disclosure under section 92 as having a relevant interest in, or having given instructions about, shares in the co-operative;
to make the disclosure required by section 92.
92   Disclosure by member of relevant interests and instructions
(cf Corporations Act s 672B)
(1)  A person given a direction under section 91 must disclose in writing to the board of the co-operative giving the direction—
(a)  full details of their own relevant interest in the shares and of the circumstances that give rise to that interest; and
(b)  the name and address of each other person who has a relevant interest in any of the shares together with full details of—
(i)  the nature and extent of the interest; and
(ii)  the circumstances that give rise to the other person’s interest; and
(c)  the name and address of each person who has given the person instructions about—
(i)  the acquisition or disposal of the shares; or
(ii)  the exercise of any voting or other rights attached to the shares; or
(iii)  any other matter relating to the shares or interests;
together with full details of those instructions (including the date or dates on which they were given).
Maximum penalty—$1,000 or imprisonment for 3 months, or both.
(2)  However, a matter referred to in subsection (1) (b) or (c) need be disclosed only to the extent to which it is known to the person required to make the disclosure.
(3)  An offence based on subsection (1) is an offence of strict liability.
(4)  A defendant bears an evidential burden in relation to the matter in subsection (2).
(5)  The disclosure must be made within 5 business days after—
(a)  the person is given the direction; or
(b)  if the person applies for an exemption under subsection (6) from complying with the direction and the Registrar refuses to grant the exemption—the Registrar notifies the person of the Registrar’s decision on the application.
(6)  The Registrar may, by designated instrument, exempt a person from complying with a direction if the Registrar believes the direction is unjustified.
(7)  The person does not have to comply with a direction given by the co-operative if the person proves that the giving of the direction is vexatious.
(8)  A board that receives information from a person acting on a direction given to the person by the board must pay to the person the fee (if any)—
(a)  prescribed by the National Regulations, except to the extent paragraph (b) applies; or
(b)  prescribed by the local regulations.
93   Registration as trustee, executor or administrator on death of owner of shares
(1)  A trustee, executor or administrator of the estate of a dead person who was the registered holder of a share in a co-operative may be registered as the holder of the share as trustee, executor or administrator of the estate.
(2)  A trustee, executor or administrator of the estate of a dead person who was entitled in equity to a share in a co-operative may, with the consent of the co-operative and of the registered holder of the share, be registered as the holder of the share as trustee, executor or administrator of the estate.
94   Registration as administrator of estate on incapacity of shareholder
(1)  This section applies to a person (the appointed person) who is appointed under a law of a jurisdiction relating to the administration of the estates of persons who, through mental or physical infirmity, are incapable of managing their affairs, to administer the estate of another person (the incapable person).
(2)  If the incapable person is the registered holder of a share in a co-operative, the appointed person may be registered as the holder of the share as administrator of the estate of the incapable person.
(3)  If the incapable person is entitled in equity to a share in a co-operative, the appointed person may, with the consent of the co-operative and of the registered holder of the share, be registered as the holder of the share as administrator of the estate of the incapable person.
95   Registration as Official Trustee in Bankruptcy
(1)  This section applies when a share in a co-operative that is the property of a bankrupt vests by force of the Bankruptcy Act 1966 of the Commonwealth in the Official Trustee in Bankruptcy.
(2)  If the bankrupt is the registered holder of the share, the official trustee may be registered as the holder of the share as the Official Trustee in Bankruptcy.
(3)  If the bankrupt is entitled in equity to the share, the official trustee may, with the consent of the co-operative and of the registered holder of the share, be registered as the holder of the share as the Official Trustee in Bankruptcy.
96   Liabilities of person registered as trustee or administrator
(1)  A person registered under section 93, 94 or 95 is, while so registered, subject to the same liabilities in relation to the share as the liabilities to which the person would have been subject if the share had remained, or had been, registered in the name of the dead person, the incapable person or the bankrupt.
(2)  The person registered is subject to no other liabilities in relation to the share.
97   Notice of trusts in register of members
Shares held by a trustee under a particular trust may, with the consent of the co-operative, be marked in the register of members in a way that identifies the shares as being held under the trust.
98   No notice of trust except as provided by this Division
Except as provided in this Division—
(a)  no notice of a trust, whether express, implied or constructive, is to be entered on a register or be receivable by the Registrar; and
(b)  no liabilities are affected by anything done under this Division; and
(c)  nothing done under this Division affects a co-operative with notice of a trust.
Division 7 Sale or transfer of shares
99   Sale or transfer of shares
A share in a co-operative cannot be sold or transferred except—
(a)  on the death of a member—under Division 8; or
(b)  to a person appointed to administer the estate of a shareholder under a law relating to the administration of the estates of persons who, through mental or physical infirmity, are incapable of managing their affairs; or
(c)  with the consent of the board—to any person, if there are reasonable grounds for believing the person will be an active member of the co-operative.
100   Sale or transfer of shares to be subject to rules
(1)  A share in a co-operative cannot be sold or transferred except under the rules of the co-operative.
(2)  Without limiting subsection (1), a share in a co-operative cannot be sold or transferred to 2 or more persons jointly if the rules of the co-operative do not (either generally or in the circumstances of the particular case) allow the share to be held jointly.
101   Transfer not effective until registered
The transfer (by sale or otherwise) of a share in a co-operative is not effective until the transfer is registered and the name of the transferee is entered in the register of members in respect of the share.
Division 8 Transfer of shares and other interests on death of member
102   Meaning of “interest”
In this Division—
interest, of a deceased member, in a co-operative, includes—
(a)  the member’s membership; and
(b)  any credit balance payable to the member; and
(c)  any loan from or to, or deposit with, the co-operative; and
(d)  any surplus arising on the sale by the co-operative as mortgagee of any property mortgaged by the deceased to the co-operative.
103   Transfer of shares and other interests on death of member
(1)  On the death of a member of a co-operative, the board must transfer the deceased member’s share or interest in the co-operative to—
(a)  the personal representative of the deceased member; or
(b)  one or more persons that the deceased’s personal representative specifies in an application for transfer made to the co-operative within 3 months after the death of the member.
(2)  On the death of a member of a co-operative, the member’s share or interest in the co-operative cannot be transferred to a person other than the personal representative of the deceased member except with the consent of the board of the co-operative.
(3)  The board—
(a)  in the case of an application referred to in subsection (1) (b)—must give its consent under subsection (2) to the transfer of the deceased member’s share or interest in the co-operative, unless the board reasonably believes the only transferee or each transferee will not be an active member of the co-operative; or
(b)  in any other case—may give its consent under subsection (2) only if the board reasonably believes the only transferee or each transferee will be an active member of the co-operative.
(4)  The board must not give its consent under subsection (2) to the transfer of a share if, because of the transfer, the nominal value of the shares held by the transferee would be more than—
(a)  20% of the nominal value of the share capital of the co-operative; or
(b)  if a lower percentage is specified in the rules of the co-operative—that lower percentage of the nominal value of the share capital of the co-operative.
(5)  This section has effect subject to section 100.
104   Transfer of small shareholdings and interests on death
(1)  If the total value of a deceased member’s shares or interest in a co-operative is less than $10,000 (or a higher amount prescribed by the National Regulations), the board may, on the basis of evidence that it considers sufficient, transfer the shares or interest under whichever of the following paragraphs is appropriate—
(a)  if the member dies testate—to the person who appears to the board to be entitled to the shares or interest under the will of the deceased member;
(b)  if the member dies intestate—to any person who appears to the board to be entitled to obtain a grant of administration of the estate of the deceased, and that person must then hold the shares or interest on the same trusts as if he or she had obtained the grant.
(2)  A transfer must not be made under this section after evidence has been produced to the co-operative of the grant of letters of administration of the estate, or probate of the will, of the deceased member.
(3)  This section has effect subject to section 100.
(4)  In this section—
transfer of an interest includes the payment of money.
105   Value of shares and interests
The value of the shares or interest of a deceased member must be decided, for the purposes of this Division, under the rules of the co-operative.
106   Co-operative protected
Any transfer of property made by the board of a co-operative under this Division is valid and effectual against any demand made on the co-operative by any other person.
Division 9 Repurchase of shares
107   Purchase and repayment of shares
(1)  The rules of a co-operative may authorise the co-operative—
(a)  to purchase any share of a member in the co-operative at the request of the member; and
(b)  to repay to a member, with the member’s consent, all or any part of the amount paid up on any share held by the member when the amount repaid is not required for the activities of the co-operative.
(2)  The amount paid by a co-operative under this section in purchasing shares or repaying any amount paid up on shares, or both, in any financial year of the co-operative must not be more than the total of—
(a)  5% of the nominal value of the issued share capital of the co-operative immediately before the start of the financial year; and
(b)  the amount of any additional share capital of the co-operative subscribed for within that year.
(3)  The members of a co-operative may, by special resolution, exempt a co-operative from the operation of subsection (2) in relation to a particular financial year, either unconditionally or subject to conditions.
(4)  The amount paid for a share when it is repurchased may be an amount decided by the board that is less than the nominal value of the share but only—
(a)  if the books of the co-operative disclose that the amount paid is the net shareholder’s equity per share in the business of the co-operative; or
(b)  under the rules of the co-operative.
(5)  A co-operative must not purchase shares or repay amounts paid up on shares if—
(a)  the co-operative is likely to become insolvent because of the repurchase of the shares or because of the repayment of amounts paid up on the shares; or
(b)  the co-operative is insolvent.
(6)  This section does not apply if the member has been expelled or has resigned from the co-operative or the member’s membership has been otherwise cancelled under Part 2.6.
108   Deposits, debentures or CCUs instead of payment when share repurchased
(1)  If a co-operative repurchases a share of a member, the co-operative may instead of paying the purchase price to the member—
(a)  for a deposit-taking co-operative—apply the amount as an interest-bearing deposit by the member with the co-operative; or
(b)  allot or issue debentures or CCUs of the co-operative to the member in satisfaction of the amount.
(2)  Subsection (1) applies only if—
(a)  the board considers payment of the repurchase price would adversely affect the financial position of the co-operative; or
(b)  the board and the member so agree.
(3)  The deposit, debenture or CCU bears interest during any period—
(a)  for a co-operative with share capital—
(i)  at the rate (or, if there is more than one rate, at the higher or highest rate) of dividend payable for that period on the share capital of the co-operative; or
(ii)  if the rate of dividend payable for that period has not been decided—at the rate (or the higher or highest rate) payable for the immediately preceding period for which a rate has been decided; or
(iii)  if a rate of dividend has never been decided for the share capital of the co-operative—at the rate the board of the co-operative considers reasonable; or
(b)  for a co-operative without share capital—at the rate the board of the co-operative considers reasonable; or
(c)  if the rules of the co-operative provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b)—at the higher rate.
(4)  The deposit, debenture or CCU must be repaid to the member as soon as repayment would not, in the opinion of the board, adversely affect the financial position of the co-operative.
(5)  The deposit, debenture or CCU must in any case be repaid within 10 years (or within any shorter period the rules of the co-operative require) after the repurchase of the shares concerned.
109   Cancellation of shares
A co-operative must cancel any share purchased by or forfeited to the co-operative under this Law or the rules of the co-operative.
Part 2.5 Membership
Division 1 General
110   Becoming a member of co-operative
(1)  On the registration of a co-operative, the persons who signed the application for registration become members of the co-operative.
(2)  Other persons may be admitted as members of the co-operative as provided by its rules.
(3)  A minor may be admitted as a member of the co-operative unless the rules of the co-operative otherwise provide.
(4)  A corporation is not (merely because it is a corporation) disqualified from being a member of a co-operative unless the rules of the co-operative provide that corporations are disqualified from being members.
(5)  If 2 or more co-operatives merge, the members of the merged co-operative are—
(a)  the members of the merging co-operatives; and
(b)  other persons admitted as members of the merged co-operative under its rules.
111   Members of co-operative group
(1)  The members of a co-operative group are—
(a)  the co-operatives by which the co-operative group is formed; and
(b)  any other co-operative, admitted to membership in accordance with the rules of the co-operative group; and
(c)  any other corporation or other body admitted to membership in accordance with subsection (2).
(2)  A corporation or other body, not being a co-operative, may be admitted to membership of the co-operative group if—
(a)  it is incorporated or registered under any other law, whether or not a law of this jurisdiction; and
(b)  in the opinion of the board of the co-operative group, it is designed to function in accordance with co-operative principles; and
(c)  it is eligible to be admitted to membership in accordance with the rules of the co-operative group.
112   Qualification for membership
(1)  A person is not qualified to be admitted to membership of a co-operative unless—
(a)  there are reasonable grounds for believing the person will be an active member of the co-operative; and
(b)  the person is otherwise eligible under the rules of the co-operative.
(2)  The rules of a co-operative must contain provisions that—
(a)  impose a duty on all persons who become members to be active members; and
(b)  set out the consequences of failing to be, or ceasing to be, an active member.
113   Membership may be joint
Membership of a co-operative may be individual and, unless the rules of the co-operative provide otherwise, may be joint.
114   Minors
(1)  A member of a co-operative is not entitled to avoid any obligation or liability as a member under a contract, deed or other document entered into as a member on any ground relating to minority.
(2)  A minor is not competent to hold any office in a co-operative.
(3)  A member of a co-operative who is a minor is not entitled to vote, but this does not apply to joint membership of a co-operative except where all the joint members are minors.
(4)  This section applies only to individuals.
115   Representatives of corporations
(1)  If a corporation is a member of a co-operative, it may by instrument served on the co-operative appoint a person to represent it in relation to its membership.
(2)  A corporation must not appoint a person to represent the corporation as a member of a co-operative if the person is currently a member of the co-operative or a representative of another corporation member.
Maximum penalty—$1,000.
(3)  The power to appoint a representative is subject to any restriction imposed by the rules of the co-operative as to the entitlement of a person to represent a corporation.
(4)  A person is not qualified to be appointed the representative of a company that is not a listed corporation (within the meaning of the Corporations Act) unless the person is an officer, member or employee of the company.
116   Notification of shareholders and shareholdings
On the request of the board of a co-operative, a corporation that is a member of the co-operative must provide the board of the co-operative with—
(a)  a list of the names of all the shareholders of the corporation and the number of shares held by each shareholder; or
(b)  in the case of a corporation without share capital—a list of the members of the corporation;
within 7 days of the request.
Maximum penalty—$2,000.
117   Circumstances in which membership ceases—all co-operatives
(1)  A person ceases to be a member of a co-operative in each of the following circumstances and as otherwise provided by this Law—
(a)  if the member’s membership is cancelled under Part 2.6;
(b)  if the member is expelled or resigns under the rules of the co-operative;
(c)  if—
(i)  the individual member becomes bankrupt or the corporate member becomes insolvent; or
(ii)  the member’s property becomes subject to control under the law relating to bankruptcy;
unless provision is made to the contrary in the rules of the co-operative;
(d)  on the death of the member;
(e)  if the contract of membership is rescinded on the ground of misrepresentation or mistake;
(f)  for a member that is a corporation—if the corporation is deregistered.
(2)  On the death of a member, the member’s estate remains liable as the member until the member’s personal representative or some other person is registered in the member’s place.
118   Additional circumstances in which membership ceases—co-operatives with share capital
In the case of a co-operative that has share capital, in addition to the circumstances in section 117, a member ceases to be a member if—
(a)  the member’s total shareholding is transferred to another person under the rules of the co-operative and the name of the transferee is entered in the register of members in respect of the shareholding; or
(b)  the member’s total shareholding is forfeited under this Law or the rules of the co-operative; or
(c)  the member’s total shareholding is sold by the co-operative under a power conferred by the rules of the co-operative, and the name of the purchaser is entered in the register of members in respect of the shareholding; or
(d)  the member’s total shareholding is purchased by the co-operative under this Law; or
(e)  the amount paid up on the member’s shares is repaid to the member under the rules of the co-operative.
119   Carrying on business with too few members
(1)  A person who is a director of a co-operative must not knowingly allow the co-operative to continue to carry on business with fewer than the minimum number of members allowed (under subsection (3)) for more than 28 days after the number of members falls below that minimum number.
Maximum penalty—$2,000.
(2)  Each person who is found guilty of an offence under subsection (1) is also liable to satisfy all obligations of the co-operative incurred after the 28 days referred to in subsection (1), and may be sued without any other member being joined in the action.
(3)  The minimum number of members allowed is—
(a)  in the case of a co-operative group—2 co-operatives; or
(b)  in the case of any other co-operative—
(i)  if a lesser number than 5 is approved by the Registrar—that number of active members; or
(ii)  otherwise—5 active members.
Note—
See section 20 for composite approvals.
(4)  The Registrar may, by written notice, extend and further extend in a particular case the period of 28 days referred to in subsection (1).
(5)  An application for an extension must be made in the approved form before the period to be extended ends.
Division 2 Rights and liabilities of members
120   Rights of membership not exercisable until registered etc
(1)  A member of a co-operative is not entitled to exercise any rights of membership until—
(a)  the member’s name appears in the register of members; and
(b)  the member has made any payment to the co-operative for membership or acquired any share or interest that is provided for in the rules of the co-operative.
(2)  A co-operative must ensure the name of a person admitted to membership is recorded in the register of members within 28 days after the person is admitted to membership.
Maximum penalty (for subsection (2)): $2,000.
121   Liability of members to co-operative
(1)  A member of a co-operative is not, as a member, under any personal liability to the co-operative, except as provided by this section.
(2)  A member of a co-operative with share capital is liable to the co-operative for the amount (if any) unpaid on the shares held by the member together with any charges payable by the member to the co-operative as required by the rules of the co-operative.
(3)  A member of a co-operative without share capital is liable to the co-operative for any charges payable by the member to the co-operative as required by the rules of the co-operative.
(4)  This section does not affect a liability that a member of a co-operative may have to the co-operative in respect of—
(a)  any trade or other business conducted by the member with the co-operative; or
(b)  any fines imposed on the member by the co-operative.
122   Co-operative to give information to person intending or applying to become a member
(1)  The board of a co-operative must give each person intending or applying to become a member of the co-operative—
(a)  a consolidated copy of the rules of the co-operative; and
(b)  a copy of all special resolutions that would apply to the prospective member passed by the members of the co-operative, except special resolutions providing for an amendment of the rules of the co-operative; and
(c)  a copy of the most recent financial information reported to members of the co-operative under Part 3.3.
(2)  The board of a co-operative may comply with subsection (1)—
(a)  by—
(i)  giving the person notice that the documents referred to in subsection (1) may be inspected by the person at the registered office of the co-operative and at each other office of the co-operative in or outside this jurisdiction, including outside Australia; and
(ii)  making the documents available for inspection in person; or
(b)  if the person has elected to receive the documents as an electronic copy—by sending the person an electronic copy of the documents; or
(c)  if the person did not make the election—by directly notifying, in writing, that the documents are accessible on the website and specifying the direct address on the website where the documents may be accessed.
Note—
A direct address may be specified, for example, by specifying the URL of the documents.
123   False copy of documents
(1)  A person who, in purported compliance with section 122—
(a)  gives a person intending or applying to become a member of a co-operative a document as a copy of—
(i)  a special resolution of the co-operative; or
(ii)  the last annual report of the co-operative; and
(b)  knows or ought to know that, in a material respect, it is not a true copy of the resolution or report; and
(c)  does not indicate to that person that it is not a true copy;
is guilty of an offence.
Note—
Section 58 deals with false copies of rules.
(2)  A person who, in purported compliance with section 122—
(a)  makes available for inspection by a person intending or applying to become a member of a co-operative a document as a copy of—
(i)  a special resolution of the co-operative; or
(ii)  the last annual report of the co-operative; and
(b)  knows or ought to know that, in a material respect, it is not a true copy of the resolution or report; and
(c)  does not indicate to that person that it is not a true copy;
is guilty of an offence.
Maximum penalty—$1,000.
124   Entry fees and regular subscriptions
(1)  The rules of a co-operative may—
(a)  require the payment by members of entry fees and regular subscriptions; and
(b)  provide for the repayment of the fees and subscriptions on a person’s ceasing to be a member.
(2)  The calculation of the amount of a particular member’s regular subscription may be based on the value of business the member does with the co-operative or on profits earned by the co-operative on business done by the member with the co-operative.
(3)  A co-operative must give to any person intending or applying to become a member written notice of entry fees or regular subscriptions payable by a member to the co-operative.
(4)  A person who becomes a member of the co-operative is not liable to pay entry fees or regular subscriptions except—
(a)  the fees or subscriptions of which the person was given written notice before becoming a member; and
(b)  any regular subscriptions that are imposed in accordance with the rules of the co-operative and of which the member has been given notice.
125   Members etc may be required to deal with co-operative
(1)  The rules of a co-operative may contain provisions that require a member to have stated dealings with the co-operative for a fixed period and to enter into a contract for that purpose.
(2)  A co-operative may, if authorised by its rules, make a contract with a member containing provisions that require the member to have stated dealings with the co-operative for a fixed period.
(3)  In particular, the provisions of the rules of the co-operative or a contract may require a member—
(a)  to sell products through or to the co-operative; or
(b)  to obtain supplies or services through or from the co-operative; or
(c)  to pay to the co-operative a stated amount as liquidated damages for any failure to comply with a requirement authorised by this section.
(4)  Any amount required to be paid to the co-operative as liquidated damages is, for the purposes of section 127, a debt payable by the member to the co-operative and is accordingly subject to that section.
(5)  A contract authorised by this section is binding on the co-operative and all other parties even though, apart from this Law, the contract would be invalid as being in restraint of trade.
(6)  Rules authorised by this section are authorised even though, apart from this section, the rules might be invalid as being in restraint of trade.
126   Fines payable by members
(1)  A co-operative may impose a fine on a member for an infringement of the rules of the co-operative if the rules so provide.
(2)  A fine imposed under subsection (1) must not be more than the maximum fine fixed by the rules of the co-operative.
(3)  A fine must not be imposed unless—
(a)  notice of intention to impose the fine and the reason for it has been given to the member; and
(b)  the member has been given a reasonable opportunity to appear before the board in person (with or without witnesses), or to send to the board a written statement, to show cause why the fine should not be imposed.
(4)  The co-operative may set-off the whole or any part of the fine against an amount payable to the member for produce delivered by the member to the co-operative, but no part of the fine is to be set-off against any advance payable to the member from the co-operative under the rules of the co-operative against produce so delivered.
127   Lien and set-off
(1)  A co-operative has, in relation to any debt payable by a member or former member to the co-operative, a lien on each of the following—
(a)  the share or interest in the capital and the credit balance and deposits of the member or former member;
(b)  any rebate, bonus, dividend or interest payable to the member or former member;
(c)  any entry fees and regular subscriptions required to be repaid to a member when the member ceases to be a member.
(2)  The co-operative may set-off any amount paid on account of that share or other thing, or any amount credited or payable to the member or former member, in or towards payment of the debt.
(3)  The lien created by this section may be enforced by the appropriation by the co-operative of the thing that is subject to the lien, but only after at least 7 days notice has been given to the member or former member.
(4)  Any share in relation to which capital has been so appropriated must be cancelled.
128   Repayment of shares on expulsion or resignation
(1)  When a member is expelled or resigns from a co-operative under its rules, the co-operative must, within one year after the day of expulsion or resignation—
(a)  repay to the former member an amount (the repayable amount) made up of the amount paid up on the shares held by the member at the day of expulsion or resignation, less any amount owed by the member to the co-operative at the day of expulsion or resignation under the rules of the co-operative or any contract or otherwise; or
(b)  apply the repayable amount under subsection (2) if—
(i)  the board considers repayment would adversely affect the financial position of the co-operative; or
(ii)  the board and the former member agree.
(2)  The repayable amount may be applied in one or more of the following ways—
(a)  the co-operative may appropriate the amount as a donation to the co-operative, but only if the former member consents in writing to the donation;
(b)  if the co-operative is a deposit-taking co-operative—the co-operative may apply the amount as a deposit by the former member with the co-operative;
(c)  the co-operative may allot or issue debentures or CCUs of the co-operative to the former member in satisfaction of the amount.
(3)  If the balance sheet of the co-operative last issued before the expulsion or resignation of a member of the co-operative disclosed a loss or deficiency, there must be a proportionate reduction in the capital to be repaid to the member.
(4)  That reduction must be by an amount that bears to the amount of the loss or deficiency so disclosed the same proportion as the number of shares held by the member bore to the total number of shares held by all members of the co-operative as at the date of expulsion or resignation of the member.
(5)  Shares for which capital has been repaid must be cancelled.
Note—
Section 163 deals with repayment of amounts owing because of cancelled membership. Sections 164 and 165 deal with interest on, and repayment of, deposits, debentures and CCUs referred to in this section.
Division 3 Disputes involving members
129   Grievance procedure
(1)  The rules of a co-operative must set out a grievance procedure for dealing with any dispute under the rules between—
(a)  a member and another member; or
(b)  a member and the co-operative.
(2)  A member may appoint any person to act on behalf of the member in the grievance procedure.
(3)  The grievance procedure must allow for natural justice to be applied.
(4)  In this Division—
member includes any person who was a member not more than 6 months before the dispute occurred.
130   Application to designated tribunal
(1)  The designated tribunal may, on the application of a member or the co-operative, make an order declaring and enforcing—
(a)  the rights or obligations of members of the co-operative between themselves; or
(b)  the rights or obligations of the co-operative and any member between themselves.
(2)  An order may be made under this section whether or not a right of a proprietary nature is involved and whether or not the applicant has an interest in the property of the co-operative.
(3)  The designated tribunal may refuse to make an order on the application or may make an order for costs against a party, whether successful or not, if it considers that—
(a)  the issue raised in the application is trivial; or
(b)  having regard to the importance of the issue, the nature of the co-operative, any other available method of resolving the issue, the costs involved, lapse of time, acquiescence or any other relevant circumstance, it was unreasonable to make the application; or
(c)  the unreasonable or improper conduct of a party—
(i)  has been responsible for the making of the application; or
(ii)  has added to the cost of the proceedings.
Division 4 Oppressive conduct of affairs
131   Interpretation—extended meaning of “member”
In this Division—
member, in relation to a co-operative that has share capital, includes a person to whom a share in the co-operative has been transmitted by will or by operation of law.
132   Application of Division
This Division does not apply to anything done under Part 2.6.
133   Application for order
The following persons may apply to the Supreme Court for an order under this Division—
(a)  the Registrar;
(b)  a member who believes the affairs of the co-operative are being conducted in a way that is—
(i)  oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member; or
(ii)  contrary to the interests of the members as a whole;
(c)  a member who believes an act or omission, or a proposed act or omission, by or on behalf of the co-operative, or a resolution, or a proposed resolution, of members, was or would be—
(i)  oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member; or
(ii)  contrary to the interests of the members as a whole.
134   Orders
On application under this Division, the Supreme Court may make any order it considers appropriate including (without being limited to) one or more of the following orders—
(a)  an order that the Registrar appoint an administrator of the co-operative;
(b)  an order that the co-operative be wound up;
(c)  an order for regulating the conduct of affairs of the co-operative in the future;
(d)  an order for the repayment of the member’s shares under the provisions of this Law for repayment of share capital;
(e)  an order for the purchase of the shares of any member by the co-operative and for the reduction accordingly of the co-operative’s capital;
(f)  an order directing the co-operative to institute, prosecute, defend or discontinue stated proceedings, or authorising a member or members of the co-operative to institute, prosecute, defend or discontinue stated proceedings in the name and on behalf of the co-operative;
(g)  an order appointing a receiver or a receiver and manager of property of the co-operative;
(h)  an order restraining a person from engaging in stated conduct or from doing a stated act or thing;
(i)  an order directing a co-operative to become registered as a company under the Corporations Act;
(j)  an order requiring a person to do a stated act or thing;
(k)  an order as to costs;
(l)  an order making amendments to the rules of the co-operative.
135   Basis on which orders made
The Supreme Court may make an order under this Division if it considers that—
(a)  the affairs of a co-operative are being conducted in a way that is—
(i)  oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member (an oppressed member), whether or not in the capacity of a member; or
(ii)  contrary to the interests of the members as a whole; or
(b)  an act or omission, or a proposed act or omission, by or on behalf of a co-operative, or a resolution, or a proposed resolution, of members, was or would be—
(i)  oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member (an oppressed member), whether or not in the capacity of a member; or
(ii)  contrary to the interests of the members as a whole.
136   Winding up need not be ordered if members unfairly prejudiced by order
The Supreme Court need not make an order under this Division for the winding up of a co-operative if it considers the winding up of the co-operative would unfairly prejudice an oppressed member or unfairly prejudice the members as a whole.
137   Application of winding up provisions
If an order that a co-operative be wound up is made under this Division, the provisions of this Law relating to the winding up of co-operatives apply, with any modifications that are necessary, as if the order had been made on an application filed in the Supreme Court by the co-operative.
138   Changes to rules
(1)  If an order under this Division makes any amendment of the rules of a co-operative—
(a)  the amendment has effect as if it had been properly made by special resolution of the co-operative; and
(b)  the co-operative must not (despite any other provisions of this Law), without the leave of the Supreme Court, make any further amendment of the rules inconsistent with the provisions of the order.
(2)  On receiving a copy of an order amending the rules of a co-operative the Registrar must register the amendment.
139   Copy of order to be filed with Registrar
An applicant for an order under this Division must file an office copy of the order with the Registrar within 14 days after it is made.
Maximum penalty—$1,000.
Division 5 Inspection of books
140   Order for inspection of books of co-operative
(cf Corporations Act s 247A)
(1)  On application by a member of a co-operative, the Supreme Court may make an order—
(a)  authorising the applicant to inspect books of the co-operative; or
(b)  authorising another person (whether a member or not) to inspect books of the co-operative on the applicant’s behalf.
(2)  A person authorised to inspect books may make copies of the books unless the Supreme Court orders otherwise.
(3)  A person who—
(a)  is granted leave under section 580; or
(b)  applies for leave under that section; or
(c)  is eligible to apply for leave under that section;
may apply to the Supreme Court for an order under this section.
(4)  On application, the Supreme Court may make an order authorising—
(a)  the applicant to inspect books of the co-operative; or
(b)  another person to inspect books of the co-operative on the applicant’s behalf.
(5)  The Supreme Court may make the order only if it is satisfied that—
(a)  the applicant is acting in good faith; and
(b)  the inspection is to be made for a purpose connected with—
(i)  applying for leave under section 580; or
(ii)  bringing or intervening in proceedings with leave under that section.
(6)  A person authorised to inspect books may make copies of the books unless the Supreme Court orders otherwise.
141   Ancillary orders
(cf Corporations Act s 247B)
If the Supreme Court makes an order under section 140, the court may make any other orders it considers appropriate, including either or both of the following—
(a)  an order limiting the use that a person who inspects books may make of information obtained during the inspection;
(b)  an order limiting the right of a person who inspects books to make copies in accordance with section 140 (2).
142   Disclosure of information acquired in inspection
(cf Corporations Act s 247C)
(1)  A person who inspects books on behalf of an applicant under section 140 must not disclose information obtained during the inspection.
Maximum penalty—$500.
(2)  Subsection (1) does not apply to the extent that the disclosure is to—
(a)  the Registrar; or
(b)  the applicant.
(3)  An offence based on subsection (1) is an offence of strict liability.
(4)  A defendant bears an evidential burden in relation to the matter in subsection (2).
143   Co-operative or directors may allow member to inspect books
(cf Corporations Act s 247D)
The board of a co-operative, or the co-operative by a resolution passed at a general meeting, may authorise a member to inspect books of the co-operative.
Part 2.6 Active membership
Division 1 Definitions
144   Meaning of “primary activity”
A primary activity of a co-operative is an activity specified in the rules of the co-operative as a primary activity of the co-operative.
145   Meaning of “active member”
A member of a co-operative is an active member of the co-operative if the member—
(a)  uses or supports an activity of, or maintains a relationship or an arrangement with, the co-operative, for carrying on a primary activity of the co-operative, in the way and to the extent the rules of the co-operative provide; or
(b)  maintains any other relationship or arrangement with the co-operative for carrying on a primary activity of the co-operative that the National Regulations provide.
146   Meaning of “active membership provisions and resolutions”
(1)  Active membership provisions in the rules of a co-operative are provisions in the rules that state—
(a)  which of the activities of the co-operative are the primary activities of the co-operative; and
(b)  the way in which, and the extent to which, a member of the co-operative must use or support an activity of, or maintain a relationship or arrangement with, the co-operative, for carrying on a primary activity of the co-operative, to establish active membership of the co-operative.
(2)  An active membership resolution is a resolution that would, if given effect to, make or amend active membership provisions in the rules of a co-operative.
Division 2 Active membership provisions
147   Number of primary activities required
A co-operative must have at least one primary activity.
148   Rules to contain active membership provisions
The board of a co-operative must ensure the rules of the co-operative contain active membership provisions under this Part.
149   Factors and considerations for deciding primary activities and other matters
(1)  The board of a co-operative must ensure the relevant factors and considerations are taken into account in deciding—
(a)  which of the activities of a co-operative are its primary activities; and
(b)  the way and extent to which a member is required to use or support an activity of, or maintain a relationship or arrangement with, a co-operative, for carrying on a primary activity of the co-operative, to establish active membership of the co-operative.
(2)  The relevant factors and considerations are—
(a)  the primary activity or (if more than one) the primary activities taken together must form the basic purpose for which the co-operative exists and a significant contribution to the business of the co-operative; and
(b)  the way and extent of required utilisation, support, relationship or arrangement should be reasonable when considered in relation to the activities of the co-operative as a whole; and
(c)  any other factors and considerations prescribed by the National Regulations.
(3)  The National Regulations may—
(a)  provide for the things to be taken into account in deciding whether an activity makes a significant contribution to the business of the co-operative; and
(b)  state minimum percentages of turnover, minimum amounts of income or minimum amounts of business necessary to constitute that significant contribution.
(4)  Factors and considerations may be prescribed by the National Regulations so as to apply to co-operatives generally or to a specified class of co-operatives.
(5)  Nothing in this section limits the right of active members other than the board of the co-operative to propose an active membership resolution.
150   Active membership provisions—distributing co-operatives
The only active membership provisions that may be contained in the rules of a distributing co-operative are—
(a)  provisions requiring a member to use an activity of the co-operative for carrying on a primary activity stated in the provisions to establish active membership; and
(b)  any other active membership provisions the Registrar may approve.
151   Active membership provisions—non-distributing co-operatives—regular subscriptions
(1)  Active membership provisions for a non-distributing co-operative may include a provision to the effect that the payment of a regular subscription by a member of the co-operative, to be applied to a primary activity of the co-operative, is sufficient to establish active membership of the co-operative.
(2)  A member of a non-distributing co-operative who would, on payment of the subscription, be an active member of the co-operative is taken to be an active member until the subscription is payable.
Division 3 Active membership resolutions
152   Notice of meeting
(1)  At least 21 days notice must be given to members of a co-operative of a meeting at which an active membership resolution is to be proposed.
(2)  The notice must, in addition to the other matters required to be stated—
(a)  state whether the member is eligible to vote on the resolution; and
(b)  state the full text of the proposed resolution; and
(c)  contain a copy of section 156.
(3)  If the notice to a member states that he or she is not eligible to vote on a resolution, the member may, after endeavouring to settle the matter with the co-operative, apply to the Registrar for a decision as to the member’s eligibility.
(4)  The Registrar may decide the matter, on the information available to the Registrar, by direction in writing to the co-operative and the member.
(5)  The Registrar’s decision as to eligibility has effect but only if given before the meeting concerned is due to be held.
153   Eligibility to vote on active membership resolution
The only members of a co-operative who are eligible to vote on an active membership resolution when the rules of the co-operative do not contain active membership provisions are the members who would be active members if the resolution had already taken effect.
154   Eligibility of directors to vote on proposal at board meeting
If the board of a co-operative is meeting to consider a proposal to submit an active membership resolution to a meeting of the co-operative, all the directors are eligible to vote on that proposal at the meeting of the board of directors.
155   Other entitlements of members not affected
A provision of this Division that renders a member of a co-operative ineligible to vote on a resolution does not affect any other right, entitlement, obligation or duty of the member as a member.
Division 4 Cancellation of membership of inactive members
156   Cancellation of membership of inactive member
(1)  Subject to sections 159 and 160, the board of a co-operative must declare the membership of a member cancelled if—
(a)  the whereabouts of the member are not presently known to the co-operative and have not been known to the co-operative for at least the required period before that time; or
(b)  the member is not presently an active member of the co-operative and has not been an active member of the co-operative at any time during the required period immediately before that time.
(2)  This section applies to a member only if he or she was a member of the co-operative throughout the required period.
(3)  The question of whether a member was an active member at a particular time in the past is to be decided as if the active membership provisions concerned had been in force at that time.
(4)  The board’s declaration under this section has the effect of cancelling the membership concerned.
(5)  A person may apply for an order under section 162 in relation to the cancellation of the person’s membership under this section.
(6)  In this section—
the required period, in relation to a co-operative, means—
(a)  3 years; or
(b)  if a shorter period is stated in the rules of the co-operative—that period.
157   Shares to be forfeited if membership cancelled
(1)  If a co-operative has share capital, the board of the co-operative must declare the shares of a member to be forfeited at the same time as the member’s membership is cancelled under section 156.
(2)  The board’s declaration has the effect of forfeiting the shares concerned.
(3)  Nothing in this section affects the operation of section 163.
158   Failure to cancel membership—offence by director
If the board of a co-operative fails to cancel the membership of a member as required by this Part, a director of the co-operative who did not use all due diligence to prevent the failure commits an offence.
Maximum penalty—$2,000.
159   Deferral of cancellation by board
(1)  The board of a co-operative may by resolution defer cancellation of a member’s membership for up to one year—
(a)  if the board has reasonable grounds to believe a member has ceased to be an active member because of unusual circumstances that prevent the member fulfilling his or her active membership obligations; or
(b)  if—
(i)  the board thinks that during the deferral period an active membership resolution may be put to the members of the co-operative; and
(ii)  the effect of the resolution would be relevant to the question of whether the member is an active member.
(2)  The board of the co-operative must review the resolution to defer within the deferral period to decide if a further resolution should be made under subsection (1).
160   Cancellation of membership prohibited in certain circumstances
(1)  Unless the National Regulations otherwise provide, the board of a co-operative must not declare the membership of a member to be cancelled under this Part—
(a)  if the co-operative is insolvent; or
(b)  if the co-operative is under administration under Part 5.3A of the Corporations Act as applying under this Law; or
(c)  if a compromise or an arrangement is being administered in relation to the co-operative; or
(d)  if the co-operative is in the course of being wound up; or
(e)  if an appointment of a receiver (whether or not a receiver and manager) of any property of the co-operative is in force; or
(f)  if the co-operative has, for the purpose of being registered as a company under the Corporations Act, filed with the Registrar a copy of the entry made in the minutes of the co-operative.
(2)  The National Regulations may provide that the board of a co-operative must not declare the membership of a member to be cancelled under this Part in other circumstances that may be prescribed.
161   Notice of intention to cancel membership
(1)  The board of a co-operative must ensure that not less than 28 days notice of its intention to declare the membership of a member to be cancelled is given to the member.
(2)  Notice is not required to be given under this section if—
(a)  the member’s whereabouts are unknown to the co-operative; and
(b)  the amount required to be repaid to the member in relation to the cancelled membership (whether because of the cancellation of shares or otherwise) is not more than $100 (or any other amount prescribed by the National Regulations).
(3)  Notice may be given by publication of a notice in a newspaper in the district in which the registered office of the co-operative is situated if—
(a)  the member’s whereabouts are unknown to the co-operative; and
(b)  the amount required to be repaid to the member in relation to the cancelled membership (whether because of the cancellation of shares or otherwise) is more than the applicable amount under subsection (2) (b).
162   Order against cancellation
(1)  If the designated tribunal is satisfied the cancellation of a member’s membership under section 156 was or would be unreasonable, the tribunal may, on application by the member or former member, direct that the membership should not have been cancelled or should not be cancelled.
(2)  An application for an order may be made only within 6 months after—
(a)  notice of the board’s intention to declare the membership to be cancelled is given to the member under section 161 (1) or is first published under section 161 (3); or
(b)  if notice was not required as referred to in section 161 (2)—the cancellation takes effect.
(3)  While an order is in force under this section—
(a)  the membership concerned is not required to be cancelled and any shareholding of the member is not required to be forfeited; and
(b)  the person whose membership was cancelled is entitled to be reinstated as a member of the co-operative with all the rights and entitlements (including any shareholding) attaching to or arising from the former membership.
(4)  Reinstatement of a member under this section is to be effected under the directions of the designated tribunal.
163   Repayment of amounts owing because of cancelled membership
(1)  If the membership of a member of a co-operative is cancelled under this Part, the co-operative must, within one year after the date of cancellation—
(a)  repay to the former member the amount owing to the member because of the cancellation; or
(b)  apply the amount under subsection (2) if—
(i)  the board considers repayment would adversely affect the financial position of the co-operative; or
(ii)  the board and the former member so agree.
(2)  The amount payable may be applied as follows—
(a)  if the co-operative is a deposit-taking co-operative—the co-operative may apply the amount as a deposit by the former member with the co-operative (subject to the requirements of section 164 as to interest on the deposit);
(b)  the co-operative may allot or issue debentures or CCUs of the co-operative to the former member in satisfaction of the amount;
(c)  the co-operative may appropriate the amount as a donation to the co-operative, but only if the former member consents in writing to the donation.
(3)  The amount payable to a former member because of the cancellation of membership includes any amount paid up for shares forfeited because of the cancellation of membership.
(4)  If the former member is subsequently readmitted to membership, any amount held by the co-operative under this section must, if the member asks, be applied towards the cost of readmission to membership (including any subscription for share capital).
(5)  The co-operative may retain the amount otherwise payable to a former member under this section, if—
(a)  the former member cannot be found by the co-operative, after reasonable efforts by the co-operative to find the former member; and
(b)  the amount is less than $100 (or any other amount prescribed by the National Regulations).
164   Interest on deposits, debentures and CCUs
(1)  This section applies when the amount payable to a former member under section 128 or 163 is applied as a deposit with the co-operative or the co-operative allots or issues debentures or CCUs to the former member in satisfaction of the amount.
(2)  The deposit, debenture or CCU bears interest during any period—
(a)  for a co-operative with share capital—
(i)  at the rate (or, if there is more than one rate, at the higher or highest rate) of dividend payable for that period on the share capital of the co-operative; or
(ii)  if the rate of dividend payable for that period has not been decided—at the rate (or the higher or highest rate) payable for the immediately preceding period for which a rate has been decided; or
(iii)  if a rate of dividend has never been decided for the share capital of the co-operative—at the rate the board of the co-operative considers reasonable; or
(b)  for a co-operative without share capital—at the rate the board of the co-operative considers reasonable; or
(c)  if the rules of the co-operative provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b)—at the higher rate.
(3)  A former member may agree to the rate of interest being lower than that which would otherwise be payable under this section and may agree to no interest being paid.
(4)  The following provisions of the Corporations Act, as applying under section 337 of this Law, do not apply to an allotment or issue of debentures or CCUs under this section—
(a)  Chapter 2L;
(b)  Chapter 6D.
165   Repayment of deposits, debentures and CCUs
(1)  A deposit, debenture or CCU to which an amount payable to a former member is transferred under this Division or section 128 (2) is to be repaid to the former member as soon as repayment would not, in the opinion of the board, adversely affect the financial position of the co-operative.
(2)  The deposit, debenture or CCU must in any case be repaid within 10 years (or within any shorter period the rules of the co-operative may require) after cancellation of the member’s membership.
166   Register of cancelled memberships
A co-operative must keep a register stating the particulars prescribed by the National Regulations of persons whose membership has been cancelled under this Part.
Division 5 Entitlements of former members of distributing co-operatives
167   Application of Division
This Division applies only to distributing co-operatives.
168   Former shareholders to be taken to be shareholders for certain purposes
(1)  Even though a person’s shares in a co-operative have been forfeited under this Part, the person is to be taken to be the holder of shares in the co-operative (the same in all respects as those that were forfeited) for the following purposes—
(a)  the entitlement of a shareholder in relation to the purchase of shares in the co-operative under an offer described in section 373 (1) (a), (b) or (c) or the purchase of all the shares in the co-operative, if the offer or purchase occurs within 2 years after the person’s shares were forfeited;
(b)  the entitlement of a shareholder when the co-operative becomes registered as a company if the relevant special resolution under section 404 is passed within 2 years after the person’s shares were forfeited;
(c)  the entitlement of a shareholder to a distribution of surplus in a winding up of the co-operative that starts within 2 years after the person’s shares were forfeited.
(2)  Subsection (1) (a) does not apply to—
(a)  an offer described in section 373 (1) (a) or (c) that is made by another co-operative; or
(b)  the purchase of all the shares in the co-operative by another co-operative.
(3)  Subsection (1) (c) does not apply if the winding up is for a merger under Part 4.3.
(4)  The entitlement under subsection (1) (a) of a person whose shares have been forfeited does not include an entitlement to vote on any matter.
(5)  This section does not apply to a forfeited shareholding in a co-operative if section 169 operates so as to require the forfeited shareholding to be regarded as a forfeited shareholding in another co-operative.
169   Entitlements of former shareholders on mergers etc
(1)  This section applies when a person’s shares in a co-operative (the original co-operative) are forfeited under this Part and within 2 years after the forfeiture—
(a)  another co-operative (the new co-operative) is created because of a merger under Part 4.3 involving the original co-operative; or
(b)  the engagements of the original co-operative are transferred to another co-operative (the new co-operative) under Part 4.3.
(2)  A person referred to in subsection (1) is, for the purposes of section 168 (and the further operation of this section), taken to have held shares in the new co-operative and as having had those shares in the new co-operative forfeited under this Part when the person’s shares in the original co-operative were forfeited.
(3)  The extent of the forfeited shareholding in the new co-operative is decided as follows—
(a)  if the entitlement of active members of the original co-operative in the circumstances concerned is solely an entitlement to be allotted shares in the new co-operative—the forfeited shareholding in the new co-operative is the shareholding to which the person would have been entitled had the person’s shares in the original co-operative not been forfeited;
(b)  in any other case—the forfeited shareholding in the new co-operative is the shareholding that is the same in all respects as the forfeited shareholding in the original co-operative.
(4)  The decision under subsection (3) (a) of the person’s shareholding in the new co-operative must be made—
(a)  solely on the basis of the person’s shareholding in the original co-operative when the shares were forfeited or (in a further operation of this section to the person) when the person was first taken to have a forfeited shareholding in the original co-operative; and
(b)  without regard to any additional shareholding in the original co-operative to which the person would have become entitled had the shares not been forfeited (whether because of any bonus share issue or otherwise).
170   Set-off of amounts repaid etc on forfeited shares
(1)  If a person has an entitlement because of section 169, the entitlement operates to end any liability of the co-operative—
(a)  to repay to the person under section 163 any amount for the forfeited shares concerned; or
(b)  for a deposit held by the co-operative, or debentures or CCUs allotted or issued to the person, under section 163 for the forfeited shares concerned (except a liability to pay interest that is payable but unpaid).
(2)  If an amount has been repaid to a person under section 163 or 165, the amount repaid is to be set-off against any entitlement of the person under section 168 for the forfeited shares concerned.
(3)  If the amount repaid cannot be set-off against the entitlement because the entitlement is not, or is only partly, an entitlement to money, the entitlement is lost unless the person pays to the co-operative the amount repaid to the person and does so within the period required under subsection (4).
(4)  If the circumstances referred to in subsection (3) arise, the co-operative concerned must—
(a)  give written notice of the matter by post to the person concerned at the person’s address last known to the co-operative, stating a period of not less than 28 days after the notice is given within which any amount repaid must be paid to the co-operative; and
(b)  publish a general notice to that effect in a newspaper circulating generally in the district in which the registered office of the co-operative is situated.
171   Exemption of co-operatives from provisions
(1)  The Registrar may, by designated instrument, exempt a co-operative or class of co-operatives from any or all of the provisions of this Division.
(2)  An exemption may be given unconditionally or subject to conditions.
Chapter 3 Management and operation of co-operatives
Part 3.1 Management
Division 1 The board
172   Board of directors
(1)  Subject to this Law and the rules of the co-operative, the business of a co-operative is to be managed by a board of directors.
(2)  The board must consist of at least 3 directors (not counting alternates of directors) and at least 2 of the directors must be ordinarily resident in Australia.
(3)  The board of directors may exercise all the powers of the co-operative that are not, by this Law or the rules of the co-operative, required to be exercised by the co-operative in general meeting.
(4)  The acts of a director are valid despite any defect that may afterwards be discovered in his or her appointment or qualification.
173   Election of directors
(1)  Except as provided in subsections (2)–(4), the directors of a co-operative are to be elected in the way specified in the rules of the co-operative.
(2)  The first directors of—
(a)  a co-operative formed under this Law are to be elected at its formation meeting; or
(b)  a co-operative that was a corporation incorporated under another law are to be the directors in office at the date of registration under this Law.
(3)  If authorised by the rules of the co-operative, a board of directors may appoint a person to fill a casual vacancy in the office of a director until the next annual general meeting.
(4)  A motion approving or nominating 2 or more persons for election as directors by a single resolution must not be made at a meeting of a co-operative unless a resolution that it be made has first been agreed to by the meeting without any vote being given against it.
(5)  If a resolution is passed following a motion in contravention of subsection (4)—
(a)  the resolution is void; and
(b)  there is no provision for the automatic re-election of retiring directors in default of another election.
(6)  This section does not apply to a resolution amending the rules of a co-operative to prevent the election of 2 or more directors by ballot.
(7)  A nomination for election or appointment to the office of a director must give details of the qualifications and experience of the person nominated.
(8)  Unless this Law or the rules of a co-operative otherwise provide, a director is eligible for re-election at the end of his or her term of office.
174   Qualification of directors
(1)  A person is not qualified to be a director of a co-operative unless he or she is—
(a)  a person who is an active member of the co-operative or a representative of a corporation that is an active member of the co-operative (a member director); or
(b)  a person who is qualified as provided by the rules of the co-operative (a non-member director) and who is not an active member of the co-operative.
Note—
A non-member director either is not a member of the co-operative or is an inactive member of the co-operative.
(2)  The majority of directors must be member directors.
(3)  Subsection (2) does not prevent the rules of a co-operative requiring that a greater number of directors than a majority must be member directors.
(4)  An employee of a co-operative is not precluded from being a member director or non-member director of the co-operative if he or she is otherwise qualified.
175   Meeting of board of directors
(1)  Meetings of the board of directors must be held at least once every 3 months and may be held as often as may be necessary.
(2)  A meeting of the board of directors may be called by a director giving notice individually to every other director.
(3)  A meeting of the board of directors may be called or held using any technology consented to by the board, and the consent may be a standing one.
(4)  A quorum of a meeting of the board of directors is 50% of the number of directors, or a greater number of directors specified in the rules of the co-operative.
(5)  However, for a quorum, the member directors must outnumber the non-member directors by at least one or, if a greater number is stated in the rules of the co-operative, by that greater number.
(6)  The chairperson of the board may be elected either by the board or at a general meeting of the co-operative, and is to be elected, hold office, and retire, and may be removed from office, as provided by the rules of the co-operative.
176   Transaction of business outside meetings
(1)  The board of a co-operative may, if it considers appropriate, transact any of its business by the circulation of papers among all of the directors of the board.
(2)  A resolution in writing approved in writing by a majority of the directors of the board is to be taken to be a decision of the board.
(3)  Separate copies of a resolution may be distributed for signing by the directors if the wording of the resolution and approval is identical in each copy.
(4)  For the purpose of the approval of a resolution under this section, the chairperson of the board and each director of the board have the same voting rights as they have at an ordinary meeting of the board.
(5)  The resolution is approved when the last director required for the majority signs.
(6)  A resolution approved under this section must be recorded in the minutes of the meetings of the board within 28 days after the resolution is approved under this section.
(7)  Papers may be circulated among directors of the board for the purposes of this section by fax or other transmission of the information in the papers concerned.
177   Alternate directors
(1)  In the absence of a director from a meeting of the board, a person appointed by the board under the rules of the co-operative concerned to act as an alternate for the director (an alternate director) may act in the place of the director.
(2)  The rules of the co-operative may include provisions regulating the term of office, vacation of or removal from office, and remuneration of an alternate director.
178   Delegation by board
If authorised by the rules of the co-operative, the board may, by resolution, delegate the board’s functions (other than this power of delegation) stated in the resolution—
(a)  to a director; or
(b)  to a committee of 2 or more directors; or
(c)  to a committee of members of the co-operative; or
(d)  to a committee of members of the co-operative and other persons if members form the majority of persons on the committee.
179   Removal from and vacation of office
(1)  The directors hold office, must retire, and may be removed from office, as provided by the rules of the co-operative.
(2)  A director vacates office in the circumstances (if any) provided in the rules of the co-operative and in any of the following cases—
(a)  if the director is a disqualified person under section 181;
(b)  if the director absents himself or herself from 3 consecutive ordinary meetings of the board without its leave;
(c)  if the director resigns the office of director by written notice given by the director to the co-operative;
(d)  if the person ceases to hold the qualification because of which the person was qualified to be a director;
(e)  if an administrator of the co-operative’s affairs is appointed under Part 4.1;
(f)  if the director is removed from office under section 180.
180   Removal from office by resolution
(cf Corporations Act s 203D)
(1)  A co-operative may by ordinary resolution remove a director from office despite anything in—
(a)  the rules of the co-operative; or
(b)  an agreement between the co-operative and the director; or
(c)  an agreement between any or all members of the co-operative and the director.
(2)  Notice of intention to move the resolution must be given to the co-operative at least 2 months before the meeting is to be held. However, subject to subsection (3), if the co-operative calls a meeting after the notice of intention is given under this subsection, the meeting may pass the resolution even though the meeting is held less than 2 months after the notice of intention is given.
(3)  At least 21 days notice must be given of a meeting of the members of the co-operative at which a resolution will be moved—
(a)  to remove a director from office; or
(b)  to appoint a director in place of a director removed from office.
(4)  The co-operative must give the director a copy of the notice as soon as practicable after it is received.
Maximum penalty—$500.
(5)  The director is entitled to put his or her case to members by—
(a)  giving the co-operative a written statement for circulation to members (see subsections (6) and (7)); and
(b)  speaking to the motion at the meeting.
(6)  The written statement is to be circulated by the co-operative to members by—
(a)  sending a copy to everyone to whom notice of the meeting is sent if there is time to do so; or
(b)  if there is not time to comply with paragraph (a)—having the statement distributed to members attending the meeting and read out at the meeting before the resolution is voted on.
The co-operative contravenes this subsection if it does not comply with this subsection.
Maximum penalty—$500.
(7)  The director’s statement does not have to be circulated to members if it is more than 1,000 words long or defamatory.
(8)  If a person is appointed to replace a director removed under this section, the time at which—
(a)  the replacement director; or
(b)  any other director;
is to retire is to be worked out as if the replacement director had become director on the day on which the replaced director was last appointed a director.
(9)  An offence based on subsection (4) or (6) is an offence of strict liability.
Division 2 Disqualification from managing co-operatives
181   Offence for disqualified person to manage co-operative
(1)  A person is a disqualified person in relation to a co-operative if the person—
(a)  is disqualified from managing corporations under Part 2D.6 of the Corporations Act; or
(b)  is disqualified from managing co-operatives under this Division; or
(c)  is disqualified from managing co-operatives under a corresponding co-operatives law; or
(d)  is the auditor of the co-operative or a business partner, employee or employer of the auditor.
(2)  A person must not act as a director or directly or indirectly take part in, or be concerned with the management of, a co-operative if the person is a disqualified person in relation to the co-operative.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
(3)  It is a defence to an offence arising under this section if the person had permission or leave—
(a)  in the case of an offence arising in relation to subsection (1) (a)—to manage corporations granted under section 206G of the Corporations Act and as referred to in section 206G (1) (a) of that Act; or
(b)  in any case—to manage co-operatives given or granted under either section 188 or 189;
and their conduct was within the terms of that permission or leave.
182   Automatic disqualification for offences
(1)  A person who has been convicted of an offence under this Law or a corresponding co-operatives law is disqualified from managing co-operatives during the period of 5 years after the conviction or, if sentenced to imprisonment, after his or her release from prison.
(2)  A person who has, whether before or after the commencement of this section in this jurisdiction, been convicted of an offence under a previous law of this or any other jurisdiction relating to co-operatives is disqualified from managing co-operatives during the period of 5 years after the conviction or, if sentenced to imprisonment, after his or her release from prison.
(3)  In proceedings for an offence arising under this Division in relation to this section, a certificate by an authority prescribed by the National Regulations for the purposes of this subsection stating that a person has been convicted of an offence under a stated law on a stated date is evidence the person was convicted of that offence on that date.
(4)  In proceedings for an offence arising under this Division in relation to this section, a certificate by an authority prescribed by the National Regulations for the purposes of this subsection stating that a person was released from prison on a stated date is evidence the person was released from prison on that date.
183   Extension of period of automatic disqualification
(cf Corporations Act s 206BA)
(1)  This section applies if a person is disqualified from managing co-operatives on being convicted of an offence under the Corporations Act, this Law, a corresponding co-operatives law, or a previous law of this or any other jurisdiction relating to co-operatives.
(2)  On application by the Registrar, the Supreme Court may extend the period of disqualification by up to an additional 15 years.
(3)  The Registrar must apply—
(a)  before the period of disqualification begins; or
(b)  before the end of the first year of the disqualification.
(4)  The Registrar may apply only once in relation to the disqualification.
(5)  In determining whether an extension is justified (and if so, for how long), the Supreme Court may have regard to any matters that the court considers appropriate.
184   Court’s power of disqualification—contravention of civil penalty provision
(cf Corporations Act s 206C)
(1)  On application by the Registrar, the Supreme Court may disqualify a person from managing co-operatives for a period that the court considers appropriate if—
(a)  a declaration is made under section 554 that the person has contravened a civil penalty provision; and
(b)  the court is satisfied that the disqualification is justified.
(2)  In determining whether the disqualification is justified, the court may have regard to—
(a)  the person’s conduct in relation to the management, business or property of any corporation; and
(b)  any other matters that the court considers appropriate.
185   Court’s power of disqualification—insolvency and non-payment of debts
(cf Corporations Act s 206D)
(1)  On application by the Registrar, the Supreme Court may disqualify a person from managing co-operatives for up to 20 years if—
(a)  within the last 7 years, the person has been an officer of 2 or more entities (being co-operatives or other corporations) when they have failed; and
(b)  the court is satisfied that—
(i)  the manner in which the entity was managed was wholly or partly responsible for the entity failing; and
(ii)  the disqualification is justified.
(2)  For the purposes of subsection (1), an entity fails if—
(a)  a court orders the entity to be wound up because the court is satisfied that it is insolvent; or
(b)  the entity enters into voluntary liquidation and creditors are not fully paid or are unlikely to be fully paid; or
(c)  the entity executes a deed of arrangement and creditors are not fully paid or are unlikely to be fully paid; or
(d)  the entity ceases to carry on business and creditors are not fully paid or are unlikely to be fully paid; or
(e)  a levy of execution against the entity is not satisfied; or
(f)  a receiver, receiver and manager, or provisional liquidator is appointed in relation to the entity; or
(g)  the entity enters into a compromise or arrangement with its creditors; or
(h)  the entity is wound up and a liquidator lodges a report about the entity’s inability to pay its debts.
(3)  In determining whether the disqualification is justified, the Supreme Court may have regard to—
(a)  the person’s conduct in relation to the management, business or property of any entity; and
(b)  any other matters that the court considers appropriate.
Note—
Action may be able to be taken under section 206D of the Corporations Act in the circumstances to which this section applies, whether or not action is taken under this section.
186   Court’s power of disqualification—repeated contraventions of Law
(cf Corporations Act s 206E)
(1)  On application by the Registrar, the Supreme Court may disqualify a person from managing co-operatives for the period that the court considers appropriate if—
(a)  the person—
(i)  has at least twice been an officer of a co-operative that has contravened co-operatives legislation while they were an officer of the co-operative and each time the person has failed to take reasonable steps to prevent the contravention; or
(ii)  has at least twice contravened co-operatives legislation while they were an officer of a co-operative; or
(iii)  has been an officer of a body corporate and has done something that would have contravened section 192 or 193 if the body corporate had been a co-operative; and
(b)  the court is satisfied that the disqualification is justified.
(2)  In determining whether the disqualification is justified, the Supreme Court may have regard to—
(a)  the person’s conduct in relation to the management, business or property of any corporation; and
(b)  any other matters that the court considers appropriate.
(3)  In this section—
co-operatives legislation means this Law or a corresponding co-operatives law.
187   Registrar’s power of disqualification
(cf Corporations Act s 206F (1)–(4))
(1)  The Registrar may disqualify a person from managing co-operatives for up to 5 years if—
(a)  within 7 years immediately before the Registrar gives a notice under paragraph (b) (i)—
(i)  the person has been an officer of 2 or more co-operatives; and
(ii)  while the person was an officer, or within 12 months after the person ceased to be an officer of those co-operatives, each of the co-operatives was wound up and a liquidator lodged a report about the co-operative’s inability to pay its debts; and
(b)  the Registrar has given the person—
(i)  a notice in the approved form requiring them to demonstrate why they should not be disqualified; and
(ii)  an opportunity to be heard on the question; and
(c)  the Registrar is satisfied that the disqualification is justified.
(2)  If the Registrar disqualifies a person from managing co-operatives under this section, the Registrar must serve a notice on the person advising them of the disqualification.
(3)  The notice must be in the approved form.
(4)  The disqualification takes effect from the time when a notice referred to in subsection (2) is served on the person.
188   Registrar’s power to give permission
(cf Corporations Act s 206F (5))
(1)  The Registrar may give a person whom the Registrar has disqualified from managing co-operatives under this Division written permission to manage a particular co-operative or co-operatives.
(2)  The permission may be expressed to be subject to conditions and limitations determined by the Registrar.
(3)  A person must comply with any condition or limitation subject to which permission is given.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
189   Court’s power to grant leave
(cf Corporations Act s 206G)
(1)  A person who is disqualified from managing co-operatives may apply to the Supreme Court for leave to manage—
(a)  co-operatives; or
(b)  a particular class of co-operatives; or
(c)  a particular co-operative;
except where the person was disqualified by the Registrar under section 187.
(2)  The person must lodge a notice with the Registrar at least 21 days before commencing the proceedings.
(3)  The notice must be in the approved form.
(4)  The order granting leave may be expressed to be subject to conditions or limitations determined by the Supreme Court.
(5)  The person must lodge with the Registrar a copy of any order granting leave within 14 days after the order is made.
(6)  On application by the Registrar, the Supreme Court may revoke the leave. The order revoking leave does not take effect until it is served on the person.
(7)  A person must comply with any condition or limitation subject to which leave is granted.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
(8)  This section does not apply to a person who is disqualified from managing co-operatives because of section 181 (1) (d).
Division 3 Secretary
190   Secretary
(1)  A co-operative must have a secretary.
(2)  The board of the co-operative is to appoint the secretary.
(3)  The board may appoint a person to act as the secretary during the absence or incapacity of the secretary.
(4)  A person is not qualified to be appointed as, or to act as, the secretary unless the person is an adult who ordinarily resides in Australia.
191   Responsibility of secretary
(cf Corporations Act s 188)
(1)  The secretary of a co-operative contravenes this subsection if the co-operative contravenes a provision of this Law specified in the National Regulations.
Maximum penalty—$500.
(2)  An offence based on subsection (1) is an offence of strict liability.
(3)  A person does not contravene subsection (1) if they show that they took all reasonable steps to ensure that the co-operative complied with the section.
Division 4 Duties and liabilities of directors, officers and employees
192   Care and diligence—civil obligation only
(cf Corporations Act s 180)
(1) Care and diligence—directors and other officers A director or other officer of a co-operative must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they—
(a)  were a director or officer of a co-operative in the co-operative’s circumstances; and
(b)  occupied the office held by, and had the same responsibilities within the co-operative as, the director or officer.
Note—
This subsection is a civil penalty provision (see section 554).
(2) Business judgment rule A director or other officer of a co-operative who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity in respect of the judgment, if they—
(a)  make the judgment in good faith for a proper purpose (taking into account the co-operative principles where relevant and other relevant matters); and
(b)  do not have a material personal interest in the subject matter of the judgment; and
(c)  inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and
(d)  rationally believe that the judgment is in the best interests of the co-operative.
The director’s or officer’s belief that the judgment is in the best interests of the co-operative is a rational one unless the belief is one that no reasonable person in their position would hold.
Note—
This subsection only operates in relation to duties under this section and their equivalent duties at common law or in equity (including the duty of care that arises under the common law principles governing liability for negligence)—it does not operate in relation to duties under any other provision of this Law or under any other laws.
(3)  In this section—
business judgment means any decision to take or not take action in respect of a matter relevant to the business operations of the co-operative.
193   Good faith—civil obligations
(cf Corporations Act s 181)
(1) Good faith—directors and other officers A director or other officer of a co-operative must exercise their powers and discharge their duties—
(a)  in good faith in the best interests of the co-operative; and
(b)  for a proper purpose.
Note—
This subsection is a civil penalty provision (see section 554).
(2)  A person who is involved in a contravention of subsection (1) contravenes this subsection.
Note 1—
This subsection is a civil penalty provision (see section 554).
Note 2—
Section 9 defines “involved” in a contravention.
194   Use of position—civil obligations
(cf Corporations Act s 182)
(1) Use of position—directors, other officers and employees A director, secretary, other officer or employee of a co-operative must not improperly use their position to—
(a)  gain an advantage for themselves or someone else; or
(b)  cause detriment to the co-operative.
Note—
This subsection is a civil penalty provision (see section 554).
(2)  A person who is involved in a contravention of subsection (1) contravenes this subsection.
Note 1—
This subsection is a civil penalty provision (see section 554).
Note 2—
Section 9 defines “involved” in a contravention.
195   Use of information—civil obligations
(cf Corporations Act s 183)
(1) Use of information—directors, other officers and employees A person who obtains information because they are, or have been, a director or other officer or employee of a co-operative must not improperly use the information to—
(a)  gain an advantage for themselves or someone else; or
(b)  cause detriment to the co-operative.
Note—
This subsection is a civil penalty provision (see section 554).
(2)  The duty under subsection (1) continues after the person stops being a director or other officer or employee of the co-operative.
(3)  A person who is involved in a contravention of subsection (1) contravenes this subsection.
Note 1—
This subsection is a civil penalty provision (see section 554).
Note 2—
Section 9 defines “involved” in a contravention.
196   Good faith, use of position and use of information—criminal offences
(cf Corporations Act s 184)
(1) Good faith—directors and other officer A director or other officer of a co-operative commits an offence if they—
(a)  are reckless; or
(b)  are intentionally dishonest;
and fail to exercise their powers and discharge their duties—
(c)  in good faith in the best interests of the co-operative; or
(d)  for a proper purpose.
(2) Use of position—directors, other officers and employees A director, other officer or employee of a co-operative commits an offence if they use their position dishonestly—
(a)  with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the co-operative; or
(b)  recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the co-operative.
(3) Use of information—directors, other officers and employees A person who obtains information because they are, or have been, a director or other officer or employee of a co-operative commits an offence if they use the information dishonestly—
(a)  with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the co-operative; or
(b)  recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the co-operative.
Maximum penalty—$200,000 or imprisonment for 5 years, or both.
197   Interaction of preceding sections with other laws
(cf Corporations Act s 185)
Sections 192–196—
(a)  have effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a co-operative; and
(b)  do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability referred to in paragraph (a).
This section does not apply to section 192 (2) and (3) to the extent to which they operate on the duties at common law and in equity that are equivalent to the requirements of section 192 (1).
198   Indemnification and exemption of officer or auditor
(1) Exemptions not allowed
(cf Corporations Act s 199A (1))
A co-operative or a related corporation must not exempt a person (whether directly or through an interposed entity) from a liability to the co-operative incurred as an officer or auditor of the co-operative.
(2) When indemnity for liability (other than for legal costs) not allowed
(cf Corporations Act s 199A (2))
A co-operative or a related corporation must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against any of the following liabilities incurred as an officer or auditor of the co-operative—
(a)  a liability owed to the co-operative or a related corporation;
(b)  a liability that is owed to someone other than the co-operative or a related corporation and did not arise out of conduct in good faith.
This subsection does not apply to a liability for legal costs.
(3) When indemnity for legal costs not allowed
(cf Corporations Act s 199A (3))
A co-operative or related corporation must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against legal costs incurred in defending an action for a liability incurred as an officer or auditor of the co-operative if the costs are incurred—
(a)  in defending or resisting proceedings in which the person is found to have a liability for which they could not be indemnified under subsection (2); or
(b)  in defending or resisting criminal proceedings in which the person is found guilty; or
(c)  in defending or resisting proceedings brought by the Registrar or a liquidator for a court order if the grounds for making the order are found by the court to have been established; or
(d)  in connection with proceedings for relief to the person under this Law in which the court denies the relief.
Paragraph (c) does not apply to costs incurred in responding to actions taken by the Registrar or a liquidator as part of an investigation before commencing proceedings for the court order.
(4) Meaning of outcome of proceedings
(cf Corporations Act s 199A (4))
For the purposes of subsection (3), the outcome of proceedings is the outcome of the proceedings and any appeal in relation to the proceedings.
199   Insurance premiums for certain liabilities of director, secretary, other officer or auditor
(cf Corporations Act s 199B)
(1)  A co-operative or a related corporation must not pay, or agree to pay, a premium for a contract insuring a person who is, or has been, an officer or auditor of the co-operative against a liability (other than one for legal costs) arising out of conduct involving a wilful breach of duty in relation to the co-operative.
Maximum penalty—$500.
(2)  This section applies to a premium whether it is paid directly or through an interposed entity.
(3)  An offence based on subsection (1) is an offence of strict liability.
200   Certain indemnities, exemptions, payments and agreements not authorised and certain documents void
(cf Corporations Act s 199C)
(1)  Sections 198 and 199 do not authorise anything that would otherwise be unlawful.
(2)  Anything that purports to indemnify or insure a person against a liability, or exempt them from a liability, is void to the extent that it contravenes section 198 or 199.
201   Application of Corporations Act—offences by officers of co-operatives
A co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to Part 5.8 of the Corporations Act, subject to the following modifications—
(a)  section 589 (2) and (3) of the Corporations Act are taken to be omitted;
(b)  the reference in section 592 (1) (a) of the Corporations Act to 23 June 1993 is, if the Co-operatives National Law Act of this jurisdiction so provides, to be read as a reference to a date specified in that Act of this jurisdiction for the purposes of this paragraph;
(c)  the modifications referred to in section 13 (3) of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
202   Application of Corporations Act—employee entitlements
A co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to Part 5.8A of the Corporations Act, subject to the modifications referred to in section 13 (3) of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
203   Directors’ remuneration
A director of a co-operative must not receive remuneration for services as a director other than—
(a)  fees, concessions and other benefits approved at a general meeting of the co-operative; and
(b)  director’s travelling and other expenses that the director properly incurs—
(i)  in attending meetings of the board of directors of the co-operative or any meetings of committees of directors of the co-operative; and
(ii)  in attending any general meetings of the co-operative.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
204   Certain financial accommodation to officers prohibited
(1)  An officer of a co-operative who is not a director of the co-operative must not obtain financial accommodation from the co-operative other than—
(a)  with the approval of a majority of the directors; or
(b)  under a scheme about providing financial accommodation to officers that has been approved by a majority of the directors.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
(2)  For the purposes of this section, financial accommodation is taken to be obtained by an officer of a co-operative if it is obtained by—
(a)  a proprietary company in which the officer is a shareholder or director; or
(b)  a trust of which the officer is a trustee or beneficiary; or
(c)  a trust of which a corporation is trustee if the officer is a director or other officer of the corporation.
(3)  A co-operative must not give financial accommodation to an officer of the co-operative if—
(a)  by giving the financial accommodation, the officer would contravene this section; and
(b)  the co-operative knows or should reasonably know of the contravention.
Maximum penalty (for subsection (3)): $50,000.
205   Financial accommodation to directors and associates
(1)  A co-operative must not provide financial accommodation to a director, or to a person the co-operative knows or should reasonably know is an associate of a director, unless—
(a)  the accommodation is—
(i)  approved under subsection (2); or
(ii)  given under a scheme approved under subsection (2); or
(iii)  provided on terms no more favourable to the director or associate than the terms on which it is reasonable to expect the co-operative would give if dealing with the director or associate at arm’s length in the same circumstances; and
(b)  the directors have approved the accommodation, at a meeting of the board at which a quorum was present, by a majority of at least two-thirds of the directors present and voting on the matter.
Maximum penalty—$50,000.
(2)  For the purposes of subsection (1) (a) (i) and (ii), financial accommodation or a scheme is approved if—
(a)  it is approved by a resolution passed at a general meeting; and
(b)  the full details of the accommodation or scheme were made available to members at least 21 days before the meeting.
(3)  A director or an associate of a director must not obtain financial accommodation given in contravention of subsection (1).
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
(4)  For the purposes of this section, a concessional rate of interest for a borrower from a co-operative is a normal term only if the borrower is entitled to the concession by being a member of a class of borrowers from the co-operative specified in its rules as being entitled to the concession.
(5)  If a director of a co-operative or an associate of a director accepts, in payment of a debt owed by a member of the co-operative to the director or associate, any proceeds of financial accommodation provided to the member by the co-operative, this section has effect as if the financial accommodation has been provided to the director or associate.
(6)  In this section, a reference to—
(a)  the provision of financial accommodation to a director or an associate of a director; or
(b)  the obtaining of financial accommodation by a director or an associate of a director; or
(c)  a debt owed to a director or an associate of a director;
includes a reference to a provision of financial accommodation to, or an obtaining of financial accommodation by, the director or associate, or a debt owed to the director or associate, jointly with another person.
(7)  In this section—
associate of a director means—
(a)  the director’s spouse or de facto partner; or
(b)  a person when acting in the capacity of trustee of a trust under which—
(i)  the director or director’s spouse or de facto partner has a beneficial interest; or
(ii)  a corporation referred to in paragraph (c) has a beneficial interest; or
(c)  a corporation if—
(i)  the director or director’s spouse or de facto partner has a material interest in shares in the corporation; and
(ii)  the nominal value of the shares is not less than 10% of the nominal value of the issued share capital of the corporation.
(8)  For the purposes of this section, a person has a material interest in a share in a corporation if—
(a)  the person has power to withdraw the share capital subscribed for the share or to exercise control over the withdrawal of the share capital; or
(b)  the person has power to dispose of the share or to exercise control over the disposal of the share; or
(c)  the person has power to exercise or to control the exercise of any right to vote conferred on the holder of the share.
206   Restriction on directors of certain co-operatives selling land to co-operative
A director of a co-operative, the primary activity of which is or includes the acquisition of land to settle or retain people on the land and of providing any community service or benefit, must not sell land to the co-operative except under a special resolution of the co-operative.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
207   Management contracts
(1)  A co-operative must not enter into a management contract unless the contract has first been approved by special resolution.
(2)  A management contract entered into in contravention of subsection (1) is void.
(3)  In this section—
management contract means a contract or other arrangement under which—
(a)  a person who is not an officer of the co-operative agrees to perform the whole, or a substantial part, of the functions of the co-operative, whether under the control of the co-operative or not; or
(b)  a co-operative agrees to perform the whole or a substantial part of its functions—
(i)  in a particular way; or
(ii)  in accordance with the directions of any person; or
(iii)  subject to stated restrictions or conditions.
Division 5 Declaration of interests
208   Declaration of interest
(1)  A director of a co-operative who is or becomes in any way, whether directly or indirectly, interested in a contract or proposed contract with the co-operative must declare the nature and extent of the interest to the board of directors under this section.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
(2)  In the case of a proposed contract, the declaration must be made—
(a)  at the meeting of the board at which the question of entering into the contract is first considered; or
(b)  if the director was not at that time interested in the proposed contract—at the next meeting of the board held after the director becomes interested in the proposed contract.
(3)  If a director becomes interested in a contract with the co-operative after it is made, the declaration must be made at the next meeting of the board held after the director becomes interested in the contract.
(4)  For the purposes of this section, a general written notice given to the board by a director to the effect that the director—
(a)  is a member of a stated entity; and
(b)  is to be regarded as interested in any contract that may, after the giving of the notice, be made with the entity;
is a sufficient declaration.
(5)  A director of a co-operative who holds an office or has an interest in property whereby, whether directly or indirectly, duties or interests might be created that could conflict with the director’s duties or interests as director must, under subsection (6), declare at a meeting of the board of directors the fact and the nature, character and extent of the conflict.
Maximum penalty—$24,000 or imprisonment for 2 years, or both.
(6)  A declaration required by subsection (5) in relation to holding an office or having an interest must be made by a person—
(a)  if the person holds the office or has the interest when he or she becomes a director—at the first meeting of the board held after whichever is the later of the following—
(i)  the person becomes a director;
(ii)  the relevant facts as to holding the office or having the interest come to the person’s knowledge; or
(b)  if the person starts to hold the office or acquires the interest after the person becomes a director—at the first meeting of the board held after the relevant facts as to holding the office or having the interest come to the person’s knowledge.
(7)  If a director has made a declaration under this section, then, unless the board otherwise decides, the director must not—
(a)  be present during any deliberation of the board in relation to the matter; or
(b)  take part in any decision of the board in relation to the matter.
(8)  For the purpose of the making of a decision of the board under subsection (7) in relation to a director who has made a declaration under this section, the director must not—
(a)  be present during any deliberation of the board for the purpose of making the decision; or
(b)  take part in the making by the board of the decision.
(9)  Any vote cast in contravention of this section is not to be counted.
209   Declarations to be recorded in minutes
Every declaration under this Division is to be recorded in the minutes of the meeting at which it was made.
210   Division does not affect other laws or rules
Except as provided in section 211, this Division is in addition to, and does not limit, the operation of a rule of law or a provision in the rules of a co-operative restricting a director from having an interest in contracts with the co-operative or from holding offices or possessing properties involving duties or interests in conflict with his or her duties or interests as director.
211   Certain interests need not be declared
The interest in a contract or proposed contract that a director is required by this Division to declare does not include an interest in—
(a)  a contract or proposed contract for a purchase of goods and services by the director from the co-operative; or
(b)  a lease of land to the director by the co-operative; or
(c)  a contract or proposed contract for the sale of agricultural products or livestock by the director to the co-operative; or
(d)  a contract or proposed contract that, under the rules of the co-operative, may be made between the co-operative and a member; or
(e)  a contract or proposed contract of a class of contracts prescribed by the National Regulations for the purposes of this section;
but only if the contract is made in good faith, in the ordinary course of the business of the co-operative, and on the terms that are usual and proper in similar dealings between the co-operative and its members.
Division 6 Co-operative’s registers, books and returns
212   Registers to be kept by co-operatives
(1)  A co-operative must keep the following registers under this section—
(a)  a register of directors;
(b)  a register of members (including their shareholding, if any);
(c)  a register of—
(i)  loans to, securities given by, debentures issued by, and deposits received by the co-operative; and
(ii)  names of persons who have given loans or deposits to the co-operative or hold securities or debentures given or issued by the co-operative;
(d)  a register of loans made by or guaranteed by the co-operative, and of securities taken by the co-operative;
(e)  a register of CCUs issued by the co-operative and their holders;
(f)  a register of memberships cancelled under Part 2.6;
(g)  a register of notifiable interests under section 368;
(h)  other registers required by the National Regulations.
Maximum penalty—$2,000.
(2)  Registers kept by a co-operative under this Law must be kept in the way, and contain the particulars, prescribed by this Law or the National Regulations.
(3)  An offence based on subsection (1) is an offence of strict liability.
Note—
Other provisions of this Law require a co-operative to keep other registers.
213   Location of registers
(1)  A register kept by a co-operative under this Law must be kept at—
(a)  the co-operative’s registered office; or
(b)  an office at the co-operative’s principal place of business; or
(c)  an office (whether of the co-operative or of someone else) where the work involved in maintaining the register is done; or
(d)  another office approved by the Registrar.
(2)  The office must be in this jurisdiction.
(3)  The co-operative must file with the Registrar a notice of the address at which the register is kept within 28 days after the register is—
(a)  established at an office that is not the co-operative’s registered office; or
(b)  moved from one office to another.
214   Inspection of co-operative’s registers and other documents
(1)  A co-operative must have at the office where the registers are kept and available during all reasonable hours for inspection by a member free of charge the following—
(a)  a copy of—
(i)  this Law; and
(ii)  the Co-operatives National Law Act of this jurisdiction; and
(iii)  the National Regulations; and
(iv)  the local regulations;
(b)  a copy of the rules of the co-operative and attachments to the rules required under section 421;
(c)  a copy of the minutes of each general meeting of the co-operative;
(d)  a copy of the last annual report of the co-operative;
(e)  the register of directors;
(f)  the register of members;
(g)  the register of names of persons who have given loans or deposits to the co-operative or hold securities or debentures given or issued by the co-operative;
(h)  the register of CCUs issued by the co-operative and their holders;
(i)  other registers that the National Regulations may provide are to be open for inspection under this section.
(2)  If a register is not kept on a computer, the member may inspect the register itself.
(3)  If the register is kept on a computer, the member may inspect a hard copy of the information on the register unless the person and the co-operative agree the person can access the information by computer.
(4)  A member is entitled to make a copy of entries in a register specified in subsection (1) free of charge unless the rules of the co-operative require a fee to be paid, in which case the copy may be made on payment of the required fee.
(5)  The fee required by the rules of the co-operative must not be more than the fee (for a copy of any entry in the register)—
(a)  prescribed by the National Regulations, except to the extent paragraph (b) applies; or
(b)  prescribed by the local regulations.
(6)  A co-operative must—
(a)  permit a member to inspect a document or make a copy of a document the member may inspect or make under this section; and
(b)  give the member all reasonable help to inspect the document or make the copy.
Maximum penalty—$2,000.
(7)  The rules of a co-operative may provide for the availability or non-availability of minutes of board meetings and subcommittee meetings for inspection by members.
(8)  A co-operative must have, at the place where the registers are kept and available during all reasonable hours for inspection by any person, the documents in relation to the co-operative prescribed by the National Regulations.
Maximum penalty—$2,000.
(9)  Neither subsection (7) nor a rule referred to in that subsection affects access to minutes being obtained under section 143 or any other provision of this Law.
215   Use of information on registers
(1)  A person must not—
(a)  use information about a person obtained from a register kept by a co-operative under this Law to contact or send material to the person; or
(b)  disclose information of that kind knowing the information is likely to be used to contact or send material to the person;
unless the use or disclosure of the information is—
(c)  relevant to the holding of the directorship, membership, shares, CCUs, loans, securities, debentures or deposits concerned or the exercise of the rights attaching to them; or
(d)  approved by the board; or
(e)  necessary to comply with a requirement of this Law.
(2)  A person who contravenes subsection (1) is liable to compensate anyone else who suffers loss or damage because of the contravention.
(3)  A person who makes a profit from a contravention of subsection (1) owes a debt to the co-operative.
(4)  The amount of the debt is the amount of the profit.
(5)  The use or disclosure of information referred to in subsection (1) (a) or (b) in the circumstances referred to in subsection (1) (c), (d) or (e) is authorised by this Law.
Note—
Regarding subsection (5), item 2.1 of National Privacy Principle 2 in Schedule 3 to the Privacy Act 1988 of the Commonwealth provides: “An organisation must not use or disclose personal information about an individual for a purpose (the secondary purpose) other than the primary purpose of collection unless: […] (g) the use or disclosure is required or authorised by or under law”.
216   Notice of appointment or cessation of appointment of directors and officers to be lodged with Registrar
(1)  A co-operative must give notice to the Registrar under this section of the appointment of a person as a director, chief executive officer or secretary of the co-operative or a subsidiary of the co-operative, and of the cessation of the appointment.
(2)  The notice must—
(a)  be in the approved form; and
(b)  be given within 28 days after the appointment or cessation of appointment; and
(c)  state the particulars prescribed by the National Regulations of the appointment or cessation of appointment.
(3)  An offence based on subsection (2) is an offence of strict liability.
Maximum penalty—$2,000.
217   List of members to be lodged with Registrar at request of Registrar
(1)  A co-operative must, at the written request of the Registrar, lodge with the Registrar, within the time and in the way the Registrar states, a full list of the members of the co-operative and of each subsidiary of the co-operative, together with the particulars about the members the Registrar states in the request.
Maximum penalty—$2,000.
(2)  An offence based on subsection (1) is an offence of strict liability.
218   Reports to be lodged with Registrar concerning prescribed particulars
(1)  A co-operative must lodge with the Registrar, within the period or periods prescribed by, or determined in accordance with, the National Regulations, a report on any particulars prescribed by the National Regulations.
Maximum penalty—$2,000.
(2)  An offence based on subsection (1) is an offence of strict liability.
219   Special return to be lodged at request of Registrar
(1)  The Registrar may, by written direction, require a co-operative to lodge with the Registrar a special return in the form, within the time, and relating to the subject matter, stated by the Registrar.
(2)  The co-operative must comply with a direction under subsection (1).
Maximum penalty—$2,000.
(3)  An offence based on subsection (2) is an offence of strict liability.
Note—
Part 3.3 also requires reports to be lodged with the Registrar.
Division 7 Name and registered office
220   Name to include certain matter
(1)  The name of a co-operative may consist of words, numbers or a combination of both.
(2)  The name of the co-operative must include the word “Co-operative” or “Cooperative” or the abbreviation “Co-op” or “Coop”.
(3)  The word “Limited” or the abbreviation “Ltd” must be the last word of the name.
(4)  A corporation that is formed or incorporated under an Act of this jurisdiction (but not this Law) must not register under that Act by a name including the word “Co-operative” or “Cooperative” or the abbreviation “Co-op” or “Coop”.
Maximum penalty—$2,000.
(5)  The Registrar must not register as the name of a co-operative a name that contains anything the National Regulations declare is an unsuitable name.
(6)  However, the Registrar may register a name that contains a thing declared to be an unsuitable name, if the Registrar is satisfied the name is suitable for registration in the particular circumstances.
(7)  The local regulations may exempt or provide for the exemption of specified entities or kinds of entities from subsection (4).
221   Exception to requirement for using “Limited” in name
(1)  The Registrar may, by designated instrument, approve of the omission of the word “Limited” or the abbreviation “Ltd” from the name of a co-operative, if its rules—
(a)  prohibit the co-operative making distributions to its members and paying fees to its directors; and
(b)  require the directors to approve all other payments the co-operative makes to directors.
(2)  The co-operative must notify the Registrar as soon as practicable if any of those requirements or prohibitions in its rules are not complied with or if its rules are modified to remove any of those requirements or prohibitions.
Maximum penalty—$2,000.
(3)  An approval may be granted subject to conditions and the conditions to which an approval is subject may be varied from time to time by the Registrar by notice in writing to the co-operative.
(4)  Any conditions to which the Registrar’s approval is subject are binding on the co-operative and must, if the Registrar so directs, be inserted in the rules of the co-operative.
Note—
See section 62 (1), which provides that rules may be amended by resolution passed by the board if the amendment does no more than give effect to a requirement, direction, restriction or prohibition imposed or given under the authority of this Law.
(5)  The Registrar may at any time by notice in writing to the co-operative revoke an approval under this section but only after giving the co-operative an opportunity to make submissions to the Registrar on the matter.
(6)  An approval under this section operates to exempt the co-operative from the requirement that the word “Limited” or the abbreviation “Ltd” form part of its name.
222   Use of abbreviations
A description of a co-operative is not inadequate or incorrect merely because of one or more of the following—
(a)  the use of the abbreviation “Co-op” or “Coop” instead of the word “Co-operative” or “Cooperative” in the co-operative’s name (see section 220 (2));
(b)  the use of the abbreviation “Ltd” instead of the word “Limited” in the co-operative’s name (see section 220 (3));
(c)  the use of the symbol “&” instead of the word “and” in the co-operative’s name;
(d)  the use of any of the words instead of the corresponding abbreviation or symbol in the co-operative’s name;
(e)  the use of any abbreviation or elaboration of the name of the co-operative that is approved in a particular case or for a particular purpose by the Registrar in writing.
223   Name to appear on seals, publications and business documents
(1)  A co-operative must ensure its name appears in legible characters—
(a)  on each seal of the co-operative; and
(b)  in all notices, advertisements and other official publications of the co-operative; and
(c)  in all its business documents.
Maximum penalty—$2,000.
(2)  An officer of a co-operative or a person on its behalf must not—
(a)  use any seal of the co-operative; or
(b)  issue or authorise the issue of a notice, advertisement or other official publication of the co-operative; or
(c)  sign or authorise to be signed on behalf of the co-operative a business document of the co-operative;
in or on which the co-operative’s name does not appear in legible characters.
Maximum penalty—$2,000.
(3)  A director of a co-operative must not knowingly authorise or permit a contravention of this section.
Maximum penalty—$2,000.
(4)  An offence based on subsection (1) is an offence of strict liability.
(5)  In this section—
business document of a co-operative means a document that is issued, signed or endorsed by or on behalf of the co-operative and is—
(a)  a business letter, statement of account, invoice or order for goods or services; or
(b)  a bill of exchange, promissory note, cheque or other negotiable instrument; or
(c)  a receipt or letter of credit issued by the co-operative; or
(d)  a document of a class prescribed by the National Regulations as a class of business documents.
224   Change of name of co-operative
(1)  A co-operative may by special resolution change its name to a name approved by the Registrar.
(2)  A change of name must be advertised as prescribed by the National Regulations.
(3)  A change of name does not take effect until—
(a)  the Registrar has noted the change on the certificate of registration of the co-operative; or
(b)  the certificate of registration is surrendered to the Registrar and a replacement certificate of registration is issued in the new name.
(4)  A change of name by a co-operative does not affect—
(a)  the identity of the co-operative; or
(b)  the exercise of a right, or the enforcement of an obligation, by or against the co-operative or a person; or
(c)  the continuation of legal proceedings by or against the co-operative.
(5)  Legal proceedings that might have been continued or started by or against the co-operative in its former name may be continued or started by or against the co-operative in its new name.
(6)  The Registrar may refuse to approve a change of name if the Registrar thinks the new name is unsuitable.
(7)  The Registrar may direct a co-operative to change its name if the Registrar considers the name is likely to be confused with the name of a corporation or a registered business name. The co-operative must comply with the direction.
Maximum penalty—$500.
(8)  An offence based on subsection (7) is an offence of strict liability.
225   Restriction on use of word co-operative or similar words
(1)  A person other than a co-operative must not trade, or carry on business, under a name or title containing the word “Co-operative” or “Cooperative”, the abbreviation “Co-op” or “Coop”, or words importing a similar meaning.
Maximum penalty—$2,000.
(2)  The local regulations may exempt or provide for the exemption of specified entities or kinds of entities from subsection (1).
226   Registered office of co-operative
(1)  A co-operative must have a registered office.
Maximum penalty—$2,000.
(2)  A co-operative is guilty of an offence if its registered office is not located in this jurisdiction.
Maximum penalty—$2,000.
(3)  A co-operative must, at the premises of its registered office, publicly and conspicuously display a notice stating the name of the co-operative and identifying the premises as its registered office.
Maximum penalty—$2,000.
(4)  Within 28 days after changing the address of its registered office, a co-operative must give the Registrar written notice of the new address of its registered office.
Maximum penalty—$2,000.
(5)  A co-operative’s office is registered as the co-operative’s registered office while the address of the office is recorded in the register of co-operatives by the Registrar and there specified as its registered office.
(6)  The Registrar may, by designated instrument, exempt a small co-operative, a class of small co-operatives or all small co-operatives from subsection (3).
(7)  An exemption may be given unconditionally or subject to conditions.
(8)  An offence based on subsection (1), (2), (3) or (4) is an offence of strict liability.
Part 3.2 Voting and meetings
Division 1 Voting entitlements
227   Application of Part to voting
The provisions of this Part apply to voting on all resolutions.
228   Voting
(1)  The right to vote attaches to membership and not shareholding.
(2)  Except as provided in subsections (3) and (4), each member has only one vote at a meeting of the co-operative.
(3)  If its rules so provide, a member of a co-operative group may have the number of votes (up to 5) at a general meeting that is stated in the rules.
(4)  If the rules so provide, the chairperson has a second vote at a board meeting or general meeting.
(5)  In the case of joint membership—
(a)  the joint members have only one vote between them; and
(b)  that vote may be exercised (subject to the grant of a proxy or power of attorney) only by the joint member decided under the rules.
(6)  In the case of shares held jointly by 2 or more members otherwise than by virtue of joint membership, each member holding the shares is entitled to vote in accordance with this section.
Note—
See section 233 for the effect on a member’s right to vote where a non-member has a relevant interest in a share held by the member or in the member’s right to vote.
229   Voting by proxy
(1)  If the rules of the co-operative so provide, voting may be by proxy at a general meeting.
(2)  The instrument of proxy may state the way in which a proxy is to vote on a particular resolution.
(3)  The proxy must vote in the way authorised by an instrument of proxy referred to in subsection (2).
(4)  A person must not act as a proxy unless he or she—
(a)  is an active member of the co-operative; or
(b)  in the case of a co-operative group—is entitled to represent a member of the group.
(5)  The rules of the co-operative may limit the number of persons for whom a person may act as a proxy on the same question.
230   Inactive members not entitled to vote
A member cannot vote if the member is not an active member of the co-operative.
231   Control of right to vote
(1)  A person must not directly or indirectly control the exercise of the right to vote of a member.
Maximum penalty—$6,000 or imprisonment for 6 months, or both.
(2)  If a person controls the exercise of the right of a member to vote at a meeting of a co-operative—
(a)  the vote of the member is invalid; and
(b)  if the person is a member—the vote of the person is invalid.
(3)  Nothing in this section prevents—
(a)  the exercise of a vote by means of a proxy or power of attorney; or
(b)  a director controlling the vote of a corporate member; or
(c)  an agreed purchaser controlling a member’s vote pending settlement.
232   Effect of disposal of shares on voting rights
A member of a co-operative cannot vote if the member has sold or transferred, or disposed of the beneficial interest in, all the member’s shares, or agreed to do so.
233   Effect of relevant share and voting interests on voting rights
(1)  Subject to subsection (3) and section 228 (5) and (6), a member of a co-operative cannot vote if another person (whether or not a member of the co-operative) has a relevant interest in any share held by the member or in the member’s right to vote.
(2)  A member who cannot vote because of this section may apply to the Registrar to review the matter.
(3)  The Registrar may order that the member may vote if the Registrar is satisfied in the circumstances of the case that loss of the right to vote would be unjust or unreasonable, and the order of the Registrar has effect accordingly.
234   Rights of representatives to vote
A person appointed under this Law to represent a member of a co-operative or co-operative group—
(a)  is entitled to receive notice of all meetings in the same way as the member represented; and
(b)  is entitled to exercise the same rights to vote as the member represented.
235   Other rights and duties of members not affected by ineligibility to vote
A provision of this Law that disentitles a member of a co-operative to vote (either generally or in relation to a particular matter) does not affect any other right, entitlement, obligation or duty of the member as a member.
236   Vote of disentitled member to be disregarded
A vote cast by or on behalf of a member of a co-operative when not entitled to vote under this Division or any other provision of this Law must be disregarded.
Division 2 Resolutions
237   Decisions to be by ordinary resolution
Unless this Law or the rules of the co-operative otherwise provide, every question for decision by a co-operative must be decided by ordinary resolution.
238   Ordinary resolutions
An ordinary resolution is a resolution of a co-operative that is passed by a simple majority at a general meeting of the co-operative or in a postal ballot of members.
239   Special resolutions
(1)  A special resolution is a resolution of a co-operative that is passed—
(a)  by a two-thirds majority at a general meeting of the co-operative; or
(b)  by a two-thirds majority in a postal ballot (other than a special postal ballot) of members; or
(c)  by a three-quarters majority in a special postal ballot of members.
Note 1—
A co-operative may by its rules require a higher majority voting percentage on any matter or that specified matters must be passed by postal or special postal ballot.
Note 2—
Section 250 enables 20% of members (or a lesser percentage specified in the rules) to require a postal ballot for a special resolution.
(2)  A special resolution may be passed by a postal ballot only if the rules of the co-operative so permit or this Law requires the special resolution to be passed by postal ballot (including a special postal ballot).
(3)  A resolution must not be considered to have been passed as a special resolution unless not less than 21 days notice has been given to the members of the co-operative stating—
(a)  the intention to propose the special resolution; and
(b)  the reasons for proposing the special resolution; and
(c)  the effect of the special resolution being passed.
240   How majority is ascertained
(1)  A resolution is passed by a particular majority at a meeting if that majority of the members of the co-operative who, being entitled to do so, vote in person or (if proxies are allowed) by proxy at the meeting vote in favour of the resolution.
(2)  A resolution is passed by a particular majority in a postal ballot if that majority of the members of the co-operative who, being entitled to do so, cast formal votes in the postal ballot vote in favour of the resolution.
241   Declaration of passing of special resolution
(1)  At a meeting of a co-operative for the purpose of passing a special resolution, a declaration by the chairperson of the meeting that the resolution has been passed as a special resolution is evidence of that fact.
(2)  A declaration by the returning officer for a postal ballot to pass a special resolution that the resolution has been passed as a special resolution is evidence of that fact.
(3)  Subsection (1) does not apply if a poll is taken at the meeting of the co-operative.
242   Effect of special resolution
(1)  A special resolution has effect from the date it is passed.
(2)  However, a special resolution relating to anything for which a special resolution is required to be passed by special postal ballot has no effect until it is registered.
Note—
Section 446 provides that a members’ voluntary winding up of a co-operative starts when the result of the special postal ballot is noted in the minutes by the secretary of the co-operative.
(3)  Subsection (2) and sections 243 and 244 do not apply to a special resolution amending the rules of a co-operative.
Note—
Part 2.3 deals with amendments to rules and when amendments take effect.
243   Registration of special resolution
(1)  A co-operative must, in accordance with subsection (2), file 2 copies of each special resolution passed by the co-operative with the Registrar for registration.
Maximum penalty—$2,000.
(2)  The copies must—
(a)  be filed within 28 days after the passing of a special resolution or the further period the Registrar allows; and
(b)  be signed by a director, the secretary of the co-operative or another authorised representative of the co-operative; and
(c)  be accompanied by the filing fee prescribed by—
(i)  the National Regulations, unless subparagraph (ii) applies; or
(ii)  the local regulations.
Note—
See section 444 (4) (a) regarding the period within which a special resolution must be filed with the Registrar in connection with the voluntary winding up of a co-operative.
(3)  A co-operative or an officer of the co-operative must not knowingly fail to file the required copies under this section.
Maximum penalty—$2,000.
(4)  An offence based on subsection (1) is an offence of strict liability.
244   Decision of Registrar on application to register special resolution
(1)  If the Registrar is satisfied the co-operative has complied with this Law and the special resolution is not contrary to this Law, the Registrar must register the special resolution and may issue a certificate of registration.
(2)  If the Registrar considers the effect of a special resolution filed for registration would be in contravention of this Law or any other law, the Registrar—
(a)  may refuse to register the special resolution; and
(b)  must give written notice to the co-operative that the special resolution—
(i)  for a special resolution referred to in section 242 (2)—has no effect; and
(ii)  in any other case—has no effect as from the date it was passed.
(3)  A certificate of registration of a special resolution issued by the Registrar is, in favour of any person advancing money to the co-operative on the faith of the certificate or in favour of any guarantor of that advance, evidence that the resolution was properly passed.
Division 3 Resolution by circulated document
245   Application of Division
This Division applies to a resolution of a co-operative, including a resolution appointing an officer or auditor or approving of or agreeing to any act, matter or thing, if—
(a)  the co-operative has fewer than 50 members; and
(b)  the resolution is required or permitted under this Law or the rules of the co-operative to be passed at a general meeting of the co-operative.
246   Resolution by circulation of document—fewer than 50 members
(1)  If all the members of a co-operative have signed a document that sets out the terms of a resolution and contains a statement that they are in favour of the resolution, the resolution is taken to have been passed at a general meeting of the co-operative.
(2)  The meeting is taken to have been held—
(a)  if all the members signed the document on the one day—on the day the document was signed, at the time the document was signed by the last member to sign; or
(b)  if the members signed the document on different days—on the day, and at the time, the document was signed by the last member to sign.
(3)  The document need not exist as a single document, but may exist in the form of 2 or more documents in identical terms.
(4)  The document is taken to constitute a minute of the general meeting.
(5)  Anything attached to the document and signed by the members signing the document is taken to have been laid before the co-operative at the general meeting.
(6)  The document is signed by all members of a co-operative only if the document is signed by each person who was a member of the co-operative at the time the document was signed by the last member to sign.
(7)  Nothing in this section affects or limits any rule of law about the effectiveness of the assent of members of a co-operative given to a document, or to an act, matter or thing, otherwise than at a general meeting of the co-operative.
Division 4 Postal ballots
247   Postal ballots
(1)  A postal ballot may be held as provided by the rules of a co-operative and must be conducted in the way prescribed by the National Regulations.
(2)  On the declaration by the returning officer of the result of the ballot, the secretary of the co-operative must make an entry in the minutes of the co-operative showing—
(a)  the number of formal votes cast in favour of the proposal concerned; and
(b)  the number of formal votes cast against the proposal; and
(c)  the number of informal votes cast.
248   Special postal ballots
(1)  A special postal ballot is a postal ballot that is conducted in accordance with this section.
(2)  The ballot must not be held less than 28 days after notice of the ballot is given to members.
Note—
This period is intended to enable sufficient time for a meeting to be called (whether by the board or on the requisition of members) and held to discuss the proposal the subject of the ballot.
(3)  The co-operative must send to each member (along with any other material required to be sent in relation to the postal ballot) a disclosure statement approved by the Registrar and containing information about—
(a)  the financial position of the co-operative; and
(b)  the interests of the directors of the co-operative in the proposal with which the ballot is concerned, including any interests of the directors in another organisation concerned in the proposal; and
(c)  any compensation or consideration to be paid to officers or members of the co-operative in connection with the proposal; and
(d)  any other matters the Registrar directs.
(4)  If the Registrar so requires, the disclosure statement is to be accompanied by a report made by an independent person approved by the Registrar about any matters the Registrar directs.
(5)  A draft disclosure statement must be submitted to the Registrar at least 28 days (or the shorter period the Registrar may allow in a particular case) before the notice of the special postal ballot is to be given to members.
(6)  Section 25 (except subsections (1), (2) and (3)) applies to a disclosure statement under this section with any necessary modifications, and in particular as if a reference in that section to a formation meeting were a reference to the notice of the special postal ballot.
Note—
Sections 380 and 445 provide for exemptions from this section in certain circumstances.
249   When special postal ballot is required
The board of a co-operative must conduct a special postal ballot when required by a provision of this Law.
Note—
Voting by special postal ballot is provided for by this Law as follows—
(a)  conversion of—
(i)  a co-operative with share capital to a co-operative without share capital, or vice versa; or
(ii)  a distributing co-operative to a non-distributing co-operative, or vice versa;
(see section 35);
(b)  a special resolution to require members to take up or subscribe for additional shares and a special resolution to deduct amounts for additional shares (see section 82);
(c)  a special resolution on the requisition of members (see section 250);
(d)  a special resolution to require members to lend money to the co-operative (see section 343);
(e)  an acquisition or disposal of certain assets (see section 359);
(f)  the maximum permissible level of share interest in a co-operative (see section 363);
(g)  certain share offers (see section 374);
(h)  a merger (see sections 396 and 476);
(i)  a transfer of engagements (see sections 396 and 476);
(j)  a transfer of incorporation (see section 404);
(k)  a compromise or arrangement between a co-operative and its members (see section 414);
(l)  a members’ voluntary winding up (see section 445).
250   Holding of postal ballot on requisition
(1)  The board of a co-operative must conduct a postal ballot (including a special postal ballot) for the passing of a special resolution on the written requisition of the number of members who together are able to cast at least 20% (or a lesser percentage specified in the rules of the co-operative) of the total number of votes able to be cast at a meeting of the co-operative.
(2)  A member cannot be a requisitioning member unless the member is an active member.
(3)  The following provisions apply to a requisition for a postal ballot—
(a)  it must state—
(i)  the proposed special resolution to be voted on; and
(ii)  the reasons for the making of the special resolution; and
(iii)  the effect of the special resolution being passed;
(b)  it must be signed by the requisitioning members (and may consist of several documents in like form each signed by one or more of the requisitioning members);
(c)  it must be served on the co-operative by being filed at the registered office of the co-operative.
(4)  The postal ballot must be conducted as soon as practicable and in any case must be conducted within 2 months after the requisition is served.
(5)  If the special resolution for which the requisitioned postal ballot is conducted is not passed, the co-operative may recover the expenses of the postal ballot from the members who requisitioned the postal ballot as a debt payable to the co-operative.
251   Expenses involved in postal ballots on requisition
(1)  All reasonable expenses incurred by a co-operative in preparing for and holding a special postal ballot are taken to form the expenses of the postal ballot conducted for the purposes of section 250.
(2)  Those expenses include (but are not limited to) the following expenses—
(a)  the cost of obtaining expert advice (including legal and financial advice) and of commissioning expert reports;
(b)  costs attributable to the use of staff of the co-operative in preparing for and holding the ballot;
(c)  the cost of producing, printing and posting the ballot papers and other material associated with the ballot.
Division 5 Meetings
252   Annual general meetings
(cf Corporations Act s 250N)
(1)  A co-operative must hold its initial annual general meeting within 18 months after its registration.
Maximum penalty—$1,000 or imprisonment for 3 months, or both.
(2)  A co-operative must hold an annual general meeting at least once in each calendar year after its initial annual general meeting and within 5 months after the end of its financial year.
Maximum penalty—$1,000 or imprisonment for 3 months, or both.
(3)  An offence based on subsection (1) or (2) is an offence of strict liability.
(4)  An annual general meeting is to be held in addition to any other meetings held by a co-operative in the year.
253   Special general meetings
A special general meeting of a co-operative may be called at any time by the board.
254   Notice of meetings
The board must give each member at least 14 days notice of each general meeting.
Note—
Section 239 requires 21 days notice of each special resolution to be considered at a general meeting.
255   Quorum at meetings
(1)  The quorum for a meeting of a co-operative must be stated in the rules of the co-operative.
(2)  An item of business must not be transacted at a meeting of a co-operative unless a quorum of members entitled to vote is present during the transaction of that item.
256   Decision at meetings
(1)  A question for decision at a general meeting of a co-operative is to be decided by a show of hands, unless a poll is required (see subsection (2)).
(2)  The question is to be decided by a poll if a poll is required by the chairperson of the meeting or by any 5 members present at the meeting or represented at the meeting by proxy.
(3)  A person who is a proxy for one or more members may cast only one vote on a question for decision by a show of hands.
(4)  A person who is a proxy for one or more members may cast more than one vote on a question for decision by a poll, unless the rules of the co-operative restrict the number of votes that a proxy may cast.
(5)  In the case of an equality of votes, the chairperson of the meeting at which the show of hands takes place or at which the poll is demanded may cast a second vote if the rules of the co-operative so provide.
(6)  This section has effect subject to section 229.
Note—
Section 229 deals with voting by proxy.
257   Calling of general meeting on requisition
(1)  The board of a co-operative must call a general meeting of the co-operative on the written requisition of the number of members who together are able to cast at least 20% (or a lesser percentage specified in the rules of the co-operative) of the total number of votes able to be cast at a meeting of the co-operative.
(2)  A member cannot be a requisitioning member unless the member is an active member.
(3)  The following provisions apply to a requisition for a general meeting—
(a)  it must state the objects of the meeting;
(b)  it must be signed by the requisitioning members (and may consist of several documents in like form each signed by one or more of the requisitioning members);
(c)  it must be served on the co-operative by being filed at the registered office of the co-operative.
(4)  The meeting must be called and held as soon as practicable and in any case must be held within 63 days after the requisition is served.
(5)  If the board does not call the meeting within 21 days after the requisition is served, the following provisions apply—
(a)  the requisitioning members (or any of them representing at least half their total voting rights) may call the meeting in the same way as nearly as possible as meetings are called by the board;
(b)  for that purpose, they may ask the co-operative to supply a written statement setting out the names and addresses of the persons entitled when the requisition was served to receive notice of general meetings of the co-operative;
(c)  the board must send the requested statement to the requisitioning members within 7 days after the request for the statement is made;
(d)  the meeting called by the requisitioning members must be held within 91 days after the requisition is served;
(e)  any reasonable expenses incurred by the requisitioning members because of the board’s failure to call the meeting must be paid by the co-operative;
(f)  any amount required to be paid by the co-operative under paragraph (e) must be retained by the co-operative out of any money due from the co-operative by way of fees or other remuneration for their services to any of the directors that were in default.
258   Minutes
(1)  Minutes of each general meeting, board meeting and committee meeting must be entered in the appropriate books within 28 days after the meeting.
(2)  A co-operative must ensure that minutes of a meeting are signed within a reasonable time after the meeting by one of the following—
(a)  the chairperson of the meeting;
(b)  the chairperson of the next meeting.
(3)  Minutes must be kept in the English language.
Note—
Section 214 makes provision regarding the availability of minutes for inspection.
259   Auditor entitled to notice and other communications
(cf Corporations Act s 249K)
(1)  A co-operative must give its auditor—
(a)  notice of a general meeting in the same way that a member of the co-operative is entitled to receive notice; and
(b)  any other communications relating to the general meeting that a member of the co-operative is entitled to receive.
Maximum penalty—$500.
(2)  An offence based on subsection (1) is an offence of strict liability.
260   Auditor’s right to be heard at general meetings
(cf Corporations Act s 249V)
(1)  A co-operative’s auditor is entitled to attend any general meeting of the co-operative.
(2)  The auditor is entitled to be heard at the meeting on any part of the business of the meeting that concerns the auditor in the capacity of auditor.
(3)  The auditor is entitled to be heard even if—
(a)  the auditor retires at the meeting; or
(b)  the meeting passes a resolution to remove the auditor from office.
(4)  The auditor may authorise a person in writing as the auditor’s representative for the purpose of attending and speaking at any general meeting.
261   Questions and comments by members on co-operative management at annual general meeting
(cf Corporations Act s 250S)
(1)  The chairperson of an annual general meeting of a co-operative must allow a reasonable opportunity for the members as a whole at the meeting to ask questions about or make comments on the management of the co-operative.
Maximum penalty—$500.
(2)  An offence based on subsection (1) is an offence of strict liability.
262   Questions by members of auditors at annual general meeting
(cf Corporations Act s 250T)
(1)  If a co-operative’s auditor or their representative is at the meeting, the chairperson of an annual general meeting of the co-operative must—
(a)  allow a reasonable opportunity for the members as a whole at the meeting to ask the auditor or the auditor’s representative questions relevant to—
(i)  the conduct of the audit; and
(ii)  the preparation and content of the auditor’s report; and
(iii)  the accounting policies adopted by the co-operative in relation to the preparation of the financial statements; and
(iv)  the independence of the auditor in relation to the conduct of the audit; and
(b)  allow a reasonable opportunity for the auditor or their representative to answer written questions submitted to the auditor.
Maximum penalty—$500.
(2)  An offence based on subsection (1) is an offence of strict liability.
(3)  If—
(a)  the co-operative’s auditor or their representative is at the meeting; and
(b)  the auditor has prepared a written answer to a written question submitted to the auditor;
the chairperson of the annual general meeting may permit the auditor or their representative to table the written answer to the written question.
(4)  The co-operative must make the written answer tabled under subsection (3) reasonably available to members as soon as practicable after the annual general meeting.
Maximum penalty (for subsection (4)): $500.
Part 3.3 Financial reports and audit
Note—
Columns 1 and 2 of the following Table set out the Division numbers and Division headings of this Part, and Columns 3 and 4 indicate (where relevant) provisions of Chapter 2M of the Corporations Act that generally correspond to each Division of this Part.
Table
Column 1
Column 2
Column 3
Column 4
Division of this Part
Heading to Division
Provisions of Chapter 2M of Corporations Act to which Division generally corresponds
Location of provisions in Chapter 2M of Corporations Act
Division 1
Preliminary
Division 2
Financial records
ss 286–290
Part 2M.2
Division 3
Annual financial reports and directors’ reports generally
ss 292–294 (also s 315 (2))
Part 2M.3, Div 1 (also Div 4)
Division 4
Annual financial reports
ss 295–297, 301
Part 2M.3, Div 1
Division 5
Annual directors’ reports
ss 298–300A
Part 2M.3, Div 1
Division 6
Half-year financial report and directors’ report
ss 302–306
Part 2M.3, Div 2
Division 7
Audit and auditor’s report
ss 307–313
Part 2M.3, Div 3
Division 8
Annual financial reporting to members
ss 314–318
Part 2M.3, Div 4
Division 9
Lodging reports and returns with Registrar
ss 319–322
Part 2M.3, Div 5
Division 10
Special provisions about consolidated financial statements
ss 323–323C
Part 2M.3, Div 6
Division 11
Financial years and half-years
s 323D
Part 2M.3, Div 7
Division 12
Auditors
ss 324AA–331 (except s 327H)
Part 2M.4, Divs 1–6
Division 13
Accounting and auditing standards
ss 337, 338
Part 2M.5
Division 14
Exemptions and modifications
ss 340–343
Part 2M.6
Division 15
Miscellaneous
s 344
Part 2M.7
Division 1 Preliminary
263   Interpretation
(1)  In this Part—
accounting standard—see section 314.
audit means—
(a)  an audit conducted for the purposes of this Law; or
(b)  a review of a financial report conducted for the purposes of this Law.
auditing standard—see section 314.
consolidated entity means a co-operative together with all the entities it is required by the accounting standards to include in consolidated financial statements.
directors’ declaration—see section 273.
financial report means an annual financial report or a half-year financial report prepared by a co-operative under this Part (and see section 273).
financial statements—see section 273.
notes to the financial statements—see section 273.
(2)  Terms used in this Part have the same meanings as they have in the Corporations Act, and in particular in Chapter 2M of the Corporations Act.
Note—
Examples of terms covered by subsection (2) are authorised audit company, entity, control and registered company auditor.
(3)  Without limiting subsection (2), the term controlled entity used in this Part has a meaning affected by section 50AA of the Corporations Act.
264   General modifications to applied provisions of Chapter 2M of Corporations Act
(1)  This section applies to the provisions of Chapter 2M of the Corporations Act as they apply under this Part.
(2)  In those provisions—
(a)  a reference to a company that is an auditor of a co-operative is to be read as a reference to a company and not a co-operative; and
(b)  a reference to a small proprietary company is to be read as a reference to a small co-operative (which is defined in section 4 as a co-operative of a class or description prescribed by the National Regulations); and
(c)  a reference to an order of exemption is to be read as a reference to an exemption under Division 14 of this Part.
(3)  Subsection (2) does not apply to the extent to which this Law or the National Regulations provide otherwise, whether expressly or by implication.
Division 2 Financial records
265   Obligation to keep financial records
(cf Corporations Act s 286)
(1)  A co-operative must keep written financial records that—
(a)  correctly record and explain its transactions and financial position and performance; and
(b)  would enable true and fair financial statements to be prepared and audited.
The obligation to keep financial records of transactions extends to transactions undertaken as trustee.
Maximum penalty—$2,500.
(2)  The co-operative must retain the financial records for 7 years after the transactions covered by the records are completed.
Maximum penalty—$2,500.
(3)  An offence based on subsection (1) or (2) is an offence of strict liability.
266   Language requirements
(cf Corporations Act s 287)
(1)  The financial records may be kept in any language.
(2)  A co-operative must ensure that an English translation of financial records not kept in English is made available within a reasonable time to a person who—
(a)  is entitled to inspect the records; and
(b)  asks for the English translation.
Maximum penalty—$2,500.
(3)  An offence based on subsection (2) is an offence of strict liability.
267   Physical format
(cf Corporations Act s 288)
(1)  A co-operative must ensure that, if financial records are kept in electronic form, they are to be convertible into hard copy.
(2)  If financial records are kept in electronic form, the co-operative must ensure that a hard copy is made available within a reasonable time to a person who is entitled to inspect the records.
(3)  An offence based on subsection (1) or (2) is an offence of strict liability.
Maximum penalty—$2,500.
268   Place where records are kept
(cf Corporations Act s 289)
(1)  A co-operative may decide where to keep the financial records.
(2)  If financial records about particular matters are kept outside this jurisdiction, the co-operative must ensure that sufficient written information about those matters are kept in this jurisdiction to enable true and fair financial statements to be prepared.
Maximum penalty—$2,500.
(3)  If financial records about particular matters are kept outside this jurisdiction, the co-operative must give the Registrar written notice in the approved form of the place where the information is kept.
Maximum penalty—$2,500.
(4)  The Registrar may direct a co-operative to produce specified financial records that are kept outside this jurisdiction. The co-operative must comply with the direction.
Maximum penalty—$2,000.
(5)  The direction must—
(a)  be in writing; and
(b)  specify a place in this jurisdiction where the records are to be produced (the place must be reasonable in the circumstances); and
(c)  specify a day (at least 14 days after the direction is given) by which the records are to be produced.
(6)  An offence based on subsection (2), (3) or (4) is an offence of strict liability.
269   Director access
(cf Corporations Act s 290)
(1)  A director of a co-operative has a right of access to the financial records at all reasonable times.
(2)  On application by a director, the Supreme Court may authorise a person to inspect the financial records on the director’s behalf.
(3)  A person authorised to inspect records may make copies of the records unless the Supreme Court orders otherwise.
(4)  The Supreme Court may make any other orders it considers appropriate, including either or both of the following—
(a)  an order limiting the use that a person who inspects the records may make of information obtained during the inspection;
(b)  an order limiting the right of a person who inspects the records to make copies in accordance with subsection (3).
Division 3 Annual financial reports and directors’ reports generally
270   Who has to prepare annual financial reports and directors’ reports
(1) Large co-operatives—requirement to prepare reports in accordance with this Part
(cf Corporations Act s 292 (1))
A large co-operative must prepare a financial report and a directors’ report in accordance with this Part for each financial year.
(2) Small co-operatives—requirement to prepare reports if directed to do so
(cf Corporations Act s 292 (2))
A small co-operative must prepare a financial report and a directors’ report if and as directed under section 271 or 272.
(3) Small co-operatives—where no direction A small co-operative that is not the subject of a direction under either section 271 or 272—
(a)  is not required to prepare reports in accordance with this Part; and
(b)  must comply with the requirements (if any) of the National Regulations regarding the preparation and provision of reports to members.
Note—
The rules of a co-operative may provide for the preparation of financial reports that would be additional to those required by the National Regulations.
271   Small co-operative—direction by members
(cf Corporations Act s 293 and s 315 (2))
(1) Direction to prepare reports
(cf Corporations Act s 293 (1))
Members with at least 5% of the votes in a small co-operative may give the co-operative a direction to—
(a)  prepare a financial report or directors’ report or both for a financial year in accordance with all or with specified requirements of this Part; and
(b)  send them to all members.
(2) Manner of giving direction
(cf Corporations Act s 293 (2))
The direction must be—
(a)  signed by the members giving the direction; and
(b)  made no later than 12 months after the end of the financial year concerned.
(3) Matters that may be included in direction
(cf Corporations Act s 293 (3))
The direction may specify all or any of the following—
(a)  that the financial report does not have to comply with some or all of the accounting standards;
(b)  that a directors’ report or a part of that report need not be prepared in accordance with this Part;
(c)  that the financial report is to be audited or reviewed.
(4) Direction regarding auditing or review If the direction specifies that the financial report is to be audited or reviewed, the direction may specify that the audit or review is to be conducted—
(a)  in accordance with Division 3 of Part 2M.3 of the Corporations Act (as applying under section 283); or
(b)  in accordance with requirements prescribed by the National Regulations.
(5) Direction given during financial year If a direction is given to a small co-operative under this section before the end of the financial year, the direction must specify the date by which the documents have to be prepared, sent or lodged. The date must be a reasonable one in view of the nature of the direction.
(6) Direction given after end of financial year
(cf Corporations Act s 315 (2))
If a direction is given to a small co-operative under this section after the end of the financial year, the co-operative must report to members under section 284 by the later of—
(a)  2 months after the date on which the direction is given; and
(b)  5 months after the end of the financial year.
272   Small co-operative—direction by Registrar
(cf Corporations Act s 294)
(1)  The Registrar may give a small co-operative a direction to comply with all or specified requirements of this Division and Divisions 4, 5, 7, 8, 9 and 10 for a financial year.
(2)  The small co-operative must comply with the direction.
Maximum penalty—$1,000.
(3)  An offence based on subsection (2) is an offence of strict liability.
(4)  The direction may specify any or all of the matters referred to in section 271 (3) and (4).
(5)  The direction may be general or may specify the particular requirements that the co-operative is to comply with.
(6)  The direction must specify the date by which the documents have to be prepared, sent or lodged. The date must be a reasonable one in view of the nature of the direction.
(7)  The direction must—
(a)  be made in writing; and
(b)  specify the financial year concerned; and
(c)  be made no later than 6 years after the end of that financial year.
Division 4 Annual financial reports
273   Contents of annual financial report
(cf Corporations Act s 295)
(1) Basic contents The financial report for a financial year consists of—
(a)  the financial statements for the year; and
(b)  the notes to the financial statements; and
(c)  the directors’ declaration about the statements and notes.
(2) Financial statements The financial statements for the year are—
(a)  the financial statements in relation to the entity reported on that are required by the accounting standards; and
(b)  if the accounting standards require financial statements in relation to a consolidated entity—the financial statements in relation to the consolidated entity that are required by the accounting standards.
(3) Notes to financial statements The notes to the financial statements are—
(a)  disclosures required by the National Regulations; and
(b)  notes required by the accounting standards; and
(c)  any other information necessary to give a true and fair view (see section 275).
(4) Directors’ declaration The directors’ declaration is a declaration by the directors—
(a)  whether, in the directors’ opinion, there are reasonable grounds to believe that the co-operative will be able to pay its debts as and when they become due and payable; and
(b)  whether, in the directors’ opinion, the financial statements and notes are in accordance with this Law, including—
(i)  section 274; and
(ii)  section 275; and
(c)  if the co-operative has quoted securities—that the directors have been given the declarations required by section 295A of the Corporations Act (as applying under section 277).
Note—
Section 295A of the Corporations Act (as applying under section 277) requires the chief executive officer and chief financial officer of a co-operative with quoted securities to make an additional declaration described in that section.
(5) Directors’ declaration—particular requirements The directors’ declaration must—
(a)  be made in accordance with a resolution of the directors; and
(b)  specify the date on which the declaration is made; and
(c)  be signed by a director.
274   Compliance with accounting standards and regulations
(cf Corporations Act s 296)
(1)  The financial report for a financial year must comply with the accounting standards.
(2)  However, a small co-operative’s financial report does not have to comply with particular accounting standards if—
(a)  the report is prepared in response to a direction under section 271 or 272; and
(b)  the direction specifies that the report does not have to comply with those accounting standards.
(3)  The financial report must comply with any further requirements in the National Regulations.
275   True and fair view
(cf Corporations Act s 297)
(1)  The financial statements and notes for a financial year must give a true and fair view of—
(a)  the financial position and performance of the co-operative; and
(b)  if consolidated financial statements are required—the financial position and performance of the consolidated entity.
(2)  This section does not affect the obligation under section 274 for a financial report to comply with accounting standards.
Note—
If the financial statements and notes prepared in compliance with the accounting standards would not give a true and fair view, additional information must be included in the notes to the financial statements under section 273 (3) (c).
276   Audit of annual financial report
(1) Large co-operative—audit to be conducted in accordance with applied provisions of Corporations Act
(cf Corporations Act s 301 (1))
A large co-operative must have the financial report for a financial year audited in accordance with Division 3 of Part 2M.3 of the Corporations Act (as applying under section 283) and obtain an auditor’s report.
(2) Small co-operative—where audit not required
(cf Corporations Act s 301 (2))
A small co-operative’s financial report for a financial year does not have to be audited if—
(a)  the report is prepared in response to a direction under section 271 or 272; and
(b)  the direction did not ask for the financial report to be audited.
(3) Small co-operative—where manner of required audit is specified in direction If a small co-operative’s financial report for a financial year is prepared in response to a direction under section 271 or 272 and the direction asked for the financial report to be audited—
(a)  in accordance with Division 3 of Part 2M.3 of the Corporations Act (as applying under section 283); or
(b)  in some other specified manner;
the co-operative must have the financial reported audited as directed and obtain an auditor’s report.
(4) Small co-operative—where manner of required audit is not specified in direction If a small co-operative’s financial report for a financial year is prepared in response to a direction under section 271 or 272 and the direction asked for the financial report to be audited without specifying the manner in which the audit is to be conducted, the co-operative must have the financial report audited in accordance with Division 3 of Part 2M.3 of the Corporations Act (as applying under section 283) and obtain an auditor’s report.
277   Application of Corporations Act—co-operatives with quoted securities—declaration about financial statements by certain officers
A co-operative with quoted securities is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to section 295A of the Corporations Act, subject to the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
Division 5 Annual directors’ reports
278   Annual directors’ report
(cf Corporations Act s 298)
(1)  A co-operative must prepare a directors’ report for each financial year.
(2)  The directors’ report must include—
(a)  the general information required by—
(i)  section 279 of this Law (all co-operatives); and
(ii)  section 299A of the Corporations Act (as applying under section 281) (co-operatives with quoted securities); and
(b)  the specific information required by—
(i)  section 280 of this Law (all co-operatives); and
(ii)  sections 300 and 300A of the Corporations Act (as applying under section 281) (co-operatives with quoted securities); and
(c)  a copy of the auditor’s declaration under section 307C of the Corporations Act (as applying under section 283) in relation to the audit for the financial year.
(3)  If the financial report for a financial year includes additional information under section 273 (3) (c) (information included to give a true and fair view of financial position and performance), the directors’ report for the financial year must also—
(a)  set out the directors’ reasons for forming the opinion that the inclusion of that additional information was necessary to give the true and fair view required by section 275; and
(b)  specify where that additional information can be found in the financial report.
(4)  The directors’ report must—
(a)  be made in accordance with a resolution of the directors; and
(b)  specify the date on which the report is made; and
(c)  be signed by a director.
(5)  A small co-operative does not have to comply with subsection (1) for a financial year if—
(a)  it is preparing financial statements for that year in response to a direction under section 271 or 272; and
(b)  the direction specified that a directors’ report need not be prepared.
279   Annual directors’ report—general information
(cf Corporations Act s 299)
(1) General information about operations and activities The directors’ report for a financial year must—
(a)  contain a review of operations during the year of the entity reported on and the results of those operations; and
(b)  give details of any significant changes in the entity’s state of affairs during the year; and
(c)  state the entity’s principal activities during the year and any significant changes in the nature of those activities during the year; and
(d)  give details of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect—
(i)  the entity’s operations in future financial years; or
(ii)  the results of those operations in future financial years; or
(iii)  the entity’s state of affairs in future financial years; and
(e)  refer to likely developments in the entity’s operations in future financial years and the expected results of those operations; and
(f)  if the entity’s operations are subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory—give details of the entity’s performance in relation to environmental regulation.
(2)  The entity reported on is—
(a)  the co-operative (if consolidated financial statements are not required); or
(b)  the consolidated entity (if consolidated financial statements are required).
(3) Prejudicial information need not be disclosed The directors’ report may omit material that would otherwise be included under subsection (1) (e) if it is likely to result in unreasonable prejudice to—
(a)  the co-operative; or
(b)  if consolidated financial statements are required—the consolidated entity or any entity (including the co-operative) that is part of the consolidated entity.
(4) Statement of omission of material If material is omitted, the directors’ report must say so.
280   Annual directors’ report—specific information
(1) Details to be included
(cf Corporations Act s 300 (1))
The directors’ report for a financial year must include details of—
(a)  dividends or distributions paid to members during the year; and
(b)  dividends or distributions recommended or declared for payment to members, but not paid, during the year; and
(c)  the name of each person who has been a director of the co-operative at any time during or since the end of the year and the period for which they were a director; and
(d)  the name of each person who—
(i)  is an officer of the co-operative at any time during the year; and
(ii)  was a partner in an audit firm, or a director of an audit company, that is an auditor of the co-operative for the year; and
(iii)  was such a partner or director at a time when the audit firm or the audit company undertook an audit of the co-operative; and
(e)  options that are—
(i)  granted over unissued shares or unissued interests during or since the end of the year; and
(ii)  granted to any of the directors or any of the 5 most highly remunerated officers of the co-operative (other than the directors); and
(iii)  granted to them as part of their remuneration (see subsections (4)–(6)); and
(f)  unissued shares or interests under option as at the day the report is made (see subsections (4) and (6)); and
(g)  shares or interests issued during or since the end of the year as a result of the exercise of an option over unissued shares or interests (see subsections (4) and (7)); and
(h)  indemnities given and insurance premiums paid during or since the end of the year for a person who is or has been an officer or auditor (see subsections (8) and (9)).
(2) Details included in financial report
(cf Corporations Act s 300 (2))
Details do not have to be included in the directors’ report under this section if they are included in the co-operative’s financial report for the financial year.
(3) Details included in financial report—to be identified as “Non-audit services”
(cf Corporations Act s 300 (2A))
If subsection (2) is relied on to not include in the directors’ report for a financial year details that would otherwise be required to be included in that report under section 300 (11B) (a) or (11C) (b) of the Corporations Act (as applying under section 281), that report must specify, in the section headed “Non-audit services”, where those details may be found in the co-operative’s financial report for that financial year.
(4) Options
(cf Corporations Act s 300 (3))
Subsection (1) (e)–(g) cover—
(a)  options over unissued shares and interests of the co-operative; and
(b)  if consolidated financial statements are required—options over unissued shares and interests of any entity forming part of the consolidated entity.
(5) Options details
(cf Corporations Act s 300 (5))
The details of an option granted are—
(a)  the entity granting the option; and
(b)  the name of the person to whom the option is granted; and
(c)  the number and class of shares or interests over which the option is granted.
(6) Option details—unissued shares or interests
(cf Corporations Act s 300 (6))
The details of unissued shares or interests under option are—
(a)  the entity that will issue shares or interests when the options are exercised; and
(b)  the number and classes of those shares or interests; and
(c)  the issue price, or the method of determining the issue price, of those shares or interests; and
(d)  the expiry date of the options; and
(e)  any rights that option holders have under the options to participate in any share issue or interest issue of the co-operative or any other entity.
(7) Shares or interests issued as a result of exercise of option
(cf Corporations Act s 300 (7))
The details of shares or interests issued as a result of the exercise of an option are—
(a)  the entity issuing the shares or interests; and
(b)  the number of shares or interests issued; and
(c)  if the entity has different classes of shares or interests—the class to which each of those shares or interests belongs; and
(d)  the amount unpaid on each of those shares or interests; and
(e)  the amount paid, or agreed to be considered as paid, on each of those shares or interests.
(8) Indemnities and insurance premiums for officers or auditors
(cf Corporations Act s 300 (8))
The directors’ report for a co-operative must include details of—
(a)  any indemnity that is given to a current or former officer or auditor against a liability, or any relevant agreement under which an officer or auditor may be given an indemnity of that kind; and
(b)  any premium that is paid, or agreed to be paid, for insurance against a current or former officer’s or auditor’s liability for legal costs.
(9) Indemnities and insurance premiums—details required
(cf Corporations Act s 300 (9))
The details required under subsection (8) are—
(a)  for an officer—their name or the class of officer to which they belong or belonged; and
(b)  for an auditor—their name; and
(c)  the nature of the liability; and
(d)  for an indemnity given—the amount the co-operative paid and any other action the co-operative took to indemnify the officer or auditor; and
(e)  for an agreement to indemnify—the amount that the relevant agreement requires the co-operative to pay and any other action the relevant agreement requires the co-operative to take to indemnify the officer or auditor; and
(f)  for an insurance premium—the amount of the premium.
The directors’ report need not give details of the nature of the liability covered by, or the amount of the premium payable under, a contract of insurance to the extent that disclosure of those details is prohibited by the insurance contract.
(10) Details relating to directors and secretary
(cf Corporations Act s 300 (10))
The report for a co-operative must also include details of—
(a)  each director’s qualifications, experience and special responsibilities; and
(b)  the number of meetings of the board of directors held during the year and each director’s attendance at those meetings; and
(c)  the number of meetings of each board committee held during the year and each director’s attendance at those meetings; and
(d)  the qualifications and experience of each person who is the secretary of the co-operative as at the end of the year.
(11) Proceedings on behalf of a co-operative—application for leave
(cf Corporations Act s 300 (14))
The report for a co-operative must also include the following details of any application for leave under Part 7.4 made in respect of the co-operative—
(a)  the applicant’s name;
(b)  a statement as to whether leave was granted.
(12) Proceedings on behalf of a co-operative—with leave granted
(cf Corporations Act s 300 (15))
The report for a co-operative must also include the following details of any proceedings that a person has brought or intervened in on behalf of the co-operative with leave under Part 7.4—
(a)  the person’s name;
(b)  the names of the parties to the proceedings;
(c)  sufficient information to enable members to understand the nature and status of the proceedings (including the cause of action and any orders made by the court).
281   Application of Corporations Act—co-operatives with quoted securities—additional information to be provided in directors’ annual report
A co-operative with quoted securities is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to sections 299A, 300 (11)–(11E) and 300A of the Corporations Act, subject to the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
Division 6 Half-year financial report and directors’ report
282   Application of Corporations Act—co-operatives that are disclosing entities—half-year financial reports and directors’ reports
A co-operative that is a disclosing entity within the meaning of the Corporations Act is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to Division 2 of Part 2M.3 of the Corporations Act, subject to the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
Division 7 Audit and auditor’s report
283   Application of Corporations Act—audit and auditor’s report
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 Division 3 of Part 2M.3 of the Corporations Act, subject to the following modifications—
(a)  section 308 (3AA) of the applied provisions is to be read as if the words “company limited by guarantee” were omitted and the words “small co-operative” were substituted;
(b)  section 311 (5) of the applied provisions is to be read as if the reference to section 344 of the Corporations Act were a reference to section 328 of this Law;
(c)  the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
Division 8 Annual financial reporting to members
284   Annual financial reporting to members
(1) Annual reports for members of large co-operatives
(cf Corporations Act s 314 (1))
A large co-operative must report to members for a financial year by providing either of the following in accordance with subsection (5) or (9)—
(a)  all of the following reports—
(i)  the financial report for the year;
(ii)  the directors’ report for the year;
(iii)  the auditor’s report on the financial report;
(b)  a concise report for the year that complies with subsection (3).
Maximum penalty—$1,000.
(2) Annual reports for members of small co-operatives
(cf Corporations Act s 314 (1))
Subject to any direction under section 271 or 272, a small co-operative must provide financial reports to members for a financial year that comply with any requirements prescribed by the National Regulations.
Maximum penalty—$1,000.
(3) Concise report
(cf Corporations Act s 314 (2))
A concise report of a large co-operative for a financial year consists of—
(a)  a concise financial report for the year drawn up in accordance with accounting standards applying for the purposes of this paragraph; and
(b)  the directors’ report for the year; and
(c)  a statement by the auditor—
(i)  that the financial report has been audited; and
(ii)  whether, in the auditor’s opinion, the concise financial report complies with the accounting standards applying for the purposes of paragraph (a); and
(d)  a copy of any qualification in, and of any statements included in the emphasis of matter section of, the auditor’s report on the financial report; and
(e)  a statement that the report is a concise report and that the full financial report and auditor’s report will be sent to the member free of charge if the member asks for them.
(4) Where accounting standards require discussion and analysis for concise financial report
(cf Corporations Act s 314 (3))
If the accounting standards applying for the purposes of subsection (3) (a) require a discussion and analysis to be included in a concise financial report—
(a)  the auditor must report on whether the discussion and analysis complies with the requirements that the accounting standards lay down for the discussion and analysis; and
(b)  the auditor does not otherwise need to audit the statements made in the discussion and analysis.
(5) Manner of providing reports
(cf Corporations Act s 314 (1AA))
A co-operative may provide the reports, or the concise report, for a financial year by doing all of the following—
(a)  sending, to each member who has made the election referred to in subsection (6) (a)—
(i)  a hard copy of the reports, or the concise report; or
(ii)  if the member has elected to receive the reports, or the concise report, as an electronic copy in accordance with subsection (6) (c)—an electronic copy of the reports, or the concise report;
(b)  making a copy of the reports, or the concise report, readily accessible on a website;
(c)  directly notifying, in writing, all members who did not make the election referred to in subsection (6) (a) that the copy is accessible on the website, and specifying the direct address on the website where the reports, or the concise report, may be accessed.
Note—
A direct address may be specified, for example, by specifying the URL of the reports or the concise report.
(6) Election by members as to how reports are to be provided
(cf Corporations Act s 314 (1AB))
For the purposes of subsection (5) (a), a co-operative must, on at least one occasion, directly notify in writing each member that—
(a)  the member may elect to receive, free of charge, a copy of the reports for each financial year, or a copy of the concise report for each financial year; and
(b)  if the member does not so elect—the member may access the reports, or the concise report, on a specified website; and
(c)  if the member does so elect and the co-operative offers to send the report either as a hard copy or an electronic copy—the member may elect to receive the copy as either a hard copy or an electronic copy.
Maximum penalty—$1,000.
(7) Election continues until changed
(cf Corporations Act s 314 (1AC))
An election made under subsection (6) is a standing election for each later financial year until the member changes his, her or its election.
Note—
The member may request the co-operative not to send them material under this section—see section 316 of the Corporations Act as applying under this Part.
(8) Restriction on electronic notification of members
(cf Corporations Act s 314 (1AD))
A member may, for the purposes of subsection (5) (c) or subsection (6), be notified by electronic means only if the member has previously nominated that means as one by which the member may be notified.
(9) Providing reports
(cf Corporations Act s 314 (1AE))
A co-operative may provide the reports, or the concise report, by sending each member—
(a)  a hard copy of the reports, or the concise report; or
(b)  an electronic copy of the reports, or the concise report, if the member has nominated that means as one by which the member may be sent the reports or the concise report.
(10) Strict liability
(cf Corporations Act s 314 (1A))
An offence based on subsection (1), (2) or (6) is an offence of strict liability.
285   Deadline for reporting to members
(1) General rule
(cf Corporations Act s 315 (4))
A co-operative must report to members under section 284 within 5 months after the end of the financial year, except where section 315 (1) of the Corporations Act as applying under subsection (2) applies to the co-operative.
(2) Application of Corporations Act—rule for co-operatives that are disclosing entities A co-operative that is a disclosing entity within the meaning of the Corporations Act is declared to be an applied Corporations legislation matter for the purposes of the Corporations application legislation of this jurisdiction in relation to section 315 (1) of the Corporations Act, subject to the following modifications—
(a)  the applied provision is to be read as if the words “four months” were omitted and the words “5 months” were substituted;
(b)  the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
286   Member’s choices for annual financial information
(1) Member’s request
(cf Corporations Act s 316 (1))
A member may request the co-operative—
(a)  not to send them the material required by section 284; or
(b)  to send them a full financial report and the directors’ report and auditor’s report.
A request may be a standing request or for a particular financial year. The member is not entitled to a report for a financial year earlier than the one before the financial year in which the request is made.
(2) Time for complying with request
(cf Corporations Act s 316 (2))
The co-operative must comply with a request under subsection (1) (b)—
(a)  within 7 days after the request is received; or
(b)  by the deadline for reporting under section 285;
whichever is later.
(3) Reports to be sent free of charge
(cf Corporations Act s 316 (3))
When sending a full financial report, directors’ report and auditor’s report, the co-operative must do so free of charge unless the member has already received a copy of them free of charge.
(4) Strict liability
(cf Corporations Act s 316 (4))
An offence based on subsection (2) or (3) is an offence of strict liability.
Maximum penalty—$1,000 penalty units or imprisonment for 3 months, or both.
287   Consideration of reports at annual general meeting
(cf Corporations Act s 317)
(1)  The directors of a co-operative that is required to hold an annual general meeting must lay before the annual general meeting—
(a)  in the case of a large co-operative—
(i)  the financial report; and
(ii)  the directors’ report; and
(iii)  the auditor’s report; or
(b)  in the case of a small co-operative—the financial reports required under section 284;
for the last financial year that ended before the annual general meeting.
Note—
If the co-operative’s first annual general meeting is held before the end of its first financial year, there will be no reports to lay before the meeting.
Maximum penalty—$1,000 or imprisonment for 3 months, or both.
(2)  An offence based on subsection (1) is an offence of strict liability.
288   Application of Corporations Act—additional reporting by debenture issuers
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 section 318 of the Corporations Act, subject to the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
Division 9 Lodging reports and returns with Registrar
289   Lodgment of annual reports by large co-operatives with Registrar
(cf Corporations Act s 319)
(1)  A large co-operative that has to prepare or obtain a report for a financial year under Divisions 3–5 must lodge the report with the Registrar. This obligation extends to a concise report provided to members under section 284.
Maximum penalty—$2,500.
(2)  An offence based on subsection (1) is an offence of strict liability.
(3)  The time for lodgment is—
(a)  within 3 months after the end of the financial year for a co-operative that is a disclosing entity within the meaning of the Corporations Act; and
(b)  within 5 months after the end of the financial year for any other co-operative.
290   Lodgment of half-year reports with Registrar
(cf Corporations Act s 320)
(1)  A co-operative that has to prepare or obtain a report for a half-year under Division 6 must lodge the report with the Registrar within 75 days after the end of the half-year.
Maximum penalty—$2,500.
(2)  An offence based on subsection (1) is an offence of strict liability.
291   Registrar’s power to require lodgment
(cf Corporations Act s 321)
(1)  The Registrar may give a co-operative a direction to lodge with the Registrar a copy of reports prepared or obtained by it under Divisions 3–6, and the co-operative must comply with the direction.
Maximum penalty—$1,000.
(2)  An offence based on subsection (1) is an offence of strict liability.
(3)  The direction must—
(a)  be made in writing; and
(b)  specify the period or periods concerned; and
(c)  be made no later than 6 years after the end of the period or periods; and
(d)  specify the date by which the documents have to be lodged.
(4)  The date specified under subsection (3) (d) must be at least 14 days after the date on which the direction is given.
292   Relodgment if financial statements or directors’ reports amended after lodgment
(cf Corporations Act s 322)
(1)  If a financial report or directors’ report is amended after it is lodged with the Registrar, the co-operative must—
(a)  lodge the amended report with the Registrar within 14 days after the amendment; and
(b)  give a copy of the amended report free of charge to any member who asks for it.
Maximum penalty—$1,000.
(2)  If the amendment is a material one, the co-operative must also notify members as soon as practicable of—
(a)  the nature of the amendment; and
(b)  their right to obtain a copy of the amended report under subsection (1).
Maximum penalty—$1,000.
(3)  An offence based on subsection (1) or (2) is an offence of strict liability.
293   Lodgment by small co-operatives of annual returns with Registrar
(1)  A small co-operative must lodge an annual return with the Registrar for each financial year.
Maximum penalty—$1,000.
(2)  An offence based on subsection (1) is an offence of strict liability.
(3)  The contents of an annual return are to be as prescribed by the National Regulations.
(4)  The time for lodgment is within 5 months after the end of the financial year.
Division 10 Special provisions about consolidated financial statements
294   Application of Corporations Act—special provisions about consolidated statements
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 Division 6 of Part 2M.3 of the Corporations Act, subject to the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
Division 11 Financial years and half-years
295   Financial year
(cf Corporations Act s 323D)
(1)  The financial year of a co-operative ends on the day in each year that is provided for by the rules of the co-operative.
(2)  The first financial year of a co-operative may extend from the date of its registration to a date not more than 18 months after its registration.
(3)  On an amendment of the rules of a co-operative amending its financial year, the amendment may provide either—
(a)  that the current financial year (as at the date of the amendment) is to be extended for not more than 6 months; or
(b)  that the next financial year is to be a period of more than one year but not more than 18 months.
(4)  Without limitation, the National Regulations may make provision for or with respect to requiring the adoption by a co-operative of the same financial year for each entity that the co-operative controls.
296   Half-year
(cf Corporations Act s 323D (5))
A half-year for a co-operative is the first 6 months of a financial year, but the directors may determine that the half-year is to be shorter or longer (but not by more than 7 days).
Division 12 Auditors
Subdivision 1 General provisions relating to auditors
297   Application of Corporations Act—auditors
(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 Divisions 1–5 of Part 2M.4 of the Corporations Act, subject to the following modifications—
(a)  section 324BA in Division 2 of Part 2M.4 is to be read as if the words “Subject to section 324BD,” were omitted;
(b)  section 324BD in Division 2 of Part 2M.4 is taken to be omitted;
(c)  the modifications referred to in sections 13 (3) and 264 of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
(2)  A reference in the provisions of the Corporations Act as applying under this section to a registered company auditor is taken to be a reference to a registered company auditor within the meaning of the Corporations Act (and accordingly a reference in that term to a company is not a reference to a co-operative).
Subdivision 2 Appointment of auditors
298   Appointment of auditor of small co-operative
(cf Corporations Act s 325)
(1)  The directors of a small co-operative may appoint an auditor for the co-operative if an auditor has not been appointed by the co-operative in general meeting.
(2)  An auditor appointed under subsection (1) holds office, subject to this Part, until the co-operative’s next annual general meeting.
299   Initial appointment of auditor of large co-operative
(cf Corporations Act s 327A)
(1)  The directors of a large co-operative must appoint an auditor of the co-operative within one month after the day on which it is registered as a co-operative unless the co-operative at a general meeting has appointed an auditor.
(2)  Subject to this Part, an auditor appointed under subsection (1) holds office until the co-operative’s first annual general meeting.
(3)  A director of a co-operative must take all reasonable steps to comply with, or to secure compliance with, subsection (1).
Maximum penalty—$2,500 or imprisonment for 6 months, or both.
300   Annual appointment at annual general meeting of auditor of large co-operative to fill vacancy
(1) Large co-operative required to appoint auditor
(cf Corporations Act s 327B (1))
A large co-operative must—
(a)  appoint an auditor of the co-operative at its first annual general meeting; and
(b)  appoint an auditor of the co-operative to fill any vacancy in the office of auditor at each subsequent annual general meeting.
Maximum penalty—$2,500.
(2) Tenure of auditor
(cf Corporations Act s 327B (2))
An auditor appointed under subsection (1) holds office until the auditor—
(a)  dies; or
(b)  is removed, or resigns, from office in accordance with section 310; or
(c)  ceases to be capable of acting as auditor because of Division 2 of Part 2M.4 of the Corporations Act as applying under this Part; or
(d)  ceases to be auditor under subsection (3), (4) or (5).
(3) Termination of appointment of individual auditor
(cf Corporations Act s 327B (2A))
An individual auditor ceases to be auditor of a large co-operative under this subsection if—
(a)  on a particular day (the start day), the individual auditor—
(i)  informs the Registrar of a conflict of interest situation in relation to the co-operative under section 324CA (1A) of the Corporations Act as applying under this Part; or
(ii)  informs the Registrar of particular circumstances in relation to the co-operative under section 324CE (1A) of the Corporations Act as applying under this Part; and
(b)  the individual auditor does not give the Registrar a notice, before the notification day (see subsection (6)), that that conflict of interest situation has, or those circumstances have, ceased to exist before the end of the period (the remedial period) of 21 days, or such longer period as the Registrar approves in writing, from the start day.
(4) Termination of appointment of audit firm
(cf Corporations Act s 327B (2B))
An audit firm ceases to be auditor of a large co-operative under this subsection if—
(a)  on a particular day (the start day), the Registrar is—
(i)  informed of a conflict of interest situation in relation to the co-operative under section 324CB (1A) of the Corporations Act as applying under this Part; or
(ii)  informed of particular circumstances in relation to the co-operative under section 324CF (1A) of the Corporations Act as applying under this Part; and
(b)  the Registrar has not been given a notice on behalf of the audit firm, before the notification day (see subsection (6)), that that conflict of interest situation has, or those circumstances have, ceased to exist before the end of the period (the remedial period) of 21 days, or such longer period as the Registrar approves in writing, from the start day.
(5) Termination of appointment of audit company
(cf Corporations Act s 327B (2C))
An audit company ceases to be auditor of a large co-operative under this subsection if—
(a)  on a particular day (the start day), the Registrar is—
(i)  informed of a conflict of interest situation in relation to the co-operative under section 324CB (1A) or 324CC (1A) of the Corporations Act as applying under this Part; or
(ii)  informed of particular circumstances in relation to the co-operative under section 324CF (1A) or 324CG (1A) or (5A) of the Corporations Act as applying under this Part; and
(b)  the Registrar has not been given a notice on behalf of the audit company, before the notification day (see subsection (6)), that that conflict of interest situation has, or those circumstances have, ceased to exist before the end of the period (the remedial period) of 21 days, or such longer period as the Registrar approves in writing, from the start day.
(6) Meaning of notification day
(cf Corporations Act s 327B (2D))
The notification day is—
(a)  the last day of the remedial period; or
(b)  such later day as the Registrar approves in writing (whether before or after the remedial period ends).
(7) Compliance with requirement to appoint auditor
(cf Corporations Act s 327B (3))
A director of a large co-operative must take all reasonable steps to comply with, or to secure compliance with, subsection (1).
Maximum penalty—$2,500 or imprisonment for 6 months, or both.
(8) Member of audit firm ceases to be auditor when firm ceases to be auditor
(cf Corporations Act s 327B (4))
If an audit firm ceases to be the auditor of a large co-operative under subsection (2) at a particular time, each member of the firm who—
(a)  is taken to have been appointed as an auditor of the co-operative under section 324AB (1) or 324AC (4) of the Corporations Act as applying under this Part; and
(b)  is an auditor of the co-operative immediately before that time;
ceases to be an auditor of the co-operative at that time.
301   Appointment by directors or annual general meeting of auditor of large co-operative to fill casual vacancy
(cf Corporations Act s 327C)
(1)  If—
(a)  a vacancy occurs in the office of auditor of a large co-operative; and
(b)  the vacancy is not caused by the removal of an auditor from office; and
(c)  there is no surviving or continuing auditor of the co-operative;
the directors must, within one month after the vacancy occurs, appoint an auditor to fill the vacancy unless the co-operative at a general meeting has appointed an auditor to fill the vacancy.
(2)  An auditor appointed under subsection (1) holds office, subject to this Part, until the co-operative’s next annual general meeting.
(3)  A director of a large co-operative must take all reasonable steps to comply with, or to secure compliance with, subsection (1).
Maximum penalty (for subsection (3)): $2,500 or imprisonment for 6 months, or both.
302   Appointment to replace auditor removed from office
(cf Corporations Act s 327D)
(1)  This section deals with the situation in which an auditor of a co-operative is removed from office at a general meeting in accordance with section 310.
(2)  The co-operative may at that general meeting (without adjournment), by special resolution immediately appoint an individual, firm or company as auditor of the co-operative if a copy of the notice of nomination has been sent to the individual, firm or company under section 308 (3).
(3)  If a special resolution under subsection (2)—
(a)  is not passed; or
(b)  could not be passed merely because a copy of the notice of nomination has not been sent to an individual, firm or company under section 308 (3);
the general meeting may be adjourned and the co-operative may, at the adjourned meeting, by ordinary resolution appoint an individual, firm or company as auditor of the co-operative if—
(c)  a member of the co-operative gives the co-operative notice of the nomination of the individual, firm or company for appointment as auditor; and
(d)  the co-operative receives the notice at least 14 clear days before the day to which the meeting is adjourned.
(4)  The day to which the general meeting is adjourned must be—
(a)  not earlier than 20 days after the day of the meeting; and
(b)  not later than 30 days after the day of the meeting.
(5)  Subject to this Part, an auditor appointed under subsection (2) or (3) holds office until the co-operative’s next annual general meeting.
303   Registrar to be notified of appointment of auditor
A co-operative must notify the Registrar in an approved form of the appointment, by the co-operative or directors of the co-operative, of an auditor of the co-operative within 28 days after the date of the appointment.
Maximum penalty—$2,000.
304   Registrar may appoint auditor if auditor removed but not replaced
(cf Corporations Act s 327E)
(1)  This section deals with the situation in which a large co-operative fails to appoint an auditor under section 302 (2) or (3) (the auditor replacement failure).
(2)  The co-operative must give the Registrar written notice of the auditor replacement failure within the period of 7 days commencing on the day of the auditor replacement failure (the notification period).
(3)  If the co-operative gives the Registrar the notice required by subsection (2), the Registrar must appoint an auditor of the co-operative as soon as practicable after receiving the notice. This subsection has effect subject to section 306.
(4)  If the co-operative does not give the Registrar the notice required by subsection (2), the Registrar may appoint an auditor of the co-operative at any time—
(a)  after the end of the notification period; and
(b)  before the Registrar receives notice of the auditor replacement failure from the co-operative.
This subsection has effect subject to section 306.
(5)  If the co-operative—
(a)  does not give the Registrar the notice required by subsection (2); and
(b)  gives the Registrar notice of the auditor replacement failure after the end of the notification period;
the Registrar must appoint an auditor of the co-operative as soon as practicable after receiving the notice. This subsection has effect subject to section 306.
(6)  Subject to this Part, an auditor appointed under this section holds office until the co-operative’s next annual general meeting.
305   Registrar’s general power to appoint auditor of large co-operative
(cf Corporations Act s 327F)
(1)  The Registrar may appoint an auditor of a large co-operative if—
(a)  the co-operative does not appoint an auditor when required by this Law to do so; and
(b)  a member of the co-operative applies to the Registrar in writing for the appointment of an auditor under this section.
This subsection has effect subject to section 306.
(2)  An individual, firm or company appointed as auditor of a co-operative under subsection (1) holds office, subject to this Part, until the next annual general meeting of the co-operative.
306   Restrictions on Registrar’s powers to appoint auditor of large co-operative
(cf Corporations Act s 327G)
(1)  The Registrar may appoint an individual, firm or company as auditor of a co-operative under section 304 or 305 only if the individual, firm or company consents to being appointed.
(2)  The Registrar must not appoint an auditor of a co-operative under section 304 or 305 if—
(a)  there is another auditor of the co-operative (the continuing auditor); and
(b)  the Registrar is satisfied that the continuing auditor is able to carry out the responsibilities of auditor alone; and
(c)  the continuing auditor agrees to continue as auditor.
(3)  The Registrar must not appoint an auditor of a co-operative under section 304 or 305 if—
(a)  the co-operative does not give the Registrar the notice required by section 304 (2) before the end of the notification period; and
(b)  the Registrar has already appointed an auditor of the co-operative under section 304 after the end of the notification period.
307   Remaining auditors may act during vacancy
(cf Corporations Act s 327I)
While a vacancy in the office of auditor of a co-operative continues, the surviving or continuing auditor or auditors (if any) may act as auditors of the co-operative.
308   Nomination of auditor
(cf Corporations Act s 328B)
(1)  Subject to this section, a co-operative may appoint an individual, firm or company as auditor of the co-operative at its annual general meeting only if a member of the co-operative gives the co-operative written notice of the nomination of the individual, firm or company for appointment as auditor—
(a)  before the meeting was convened; or
(b)  not less than 21 days before the meeting.
This subsection does not apply if an auditor is removed from office at the annual general meeting.
(2)  If a co-operative purports to appoint an individual, firm or company as auditor of the co-operative in contravention of subsection (1)—
(a)  the purported appointment is of no effect; and
(b)  the co-operative is guilty of an offence.
Maximum penalty—$2,500.
(3)  If a member gives a co-operative notice of the nomination of an individual, firm or company for appointment as auditor of the co-operative, the co-operative must send a copy of the notice to—
(a)  each individual, firm or company nominated; and
(b)  each auditor of the co-operative; and
(c)  each person entitled to receive notice of general meetings of the co-operative;
and this is so whether the appointment is to be made at a meeting or an adjourned meeting referred to in section 302 or at an annual general meeting.
(4)  The copy of the notice of nomination must be sent—
(a)  not less than 7 days before the meeting; or
(b)  at the time notice of the meeting is given.
309   Auditor’s consent to appointment
(cf Corporations Act s 328A)
(1)  A co-operative or the directors of a co-operative must not appoint an individual, firm or company as auditor of the co-operative unless that individual, firm or company—
(a)  has consented, before the appointment, to act as auditor; and
(b)  has not withdrawn that consent before the appointment is made;
and for the purposes of this section, a consent, or the withdrawal of a consent, must be given by written notice to the co-operative or the directors.
(2)  A notice under subsection (1) given by a firm must be signed by a member of the firm who is a registered company auditor both—
(a)  in the firm name; and
(b)  in his or her own name.
(3)  A notice under subsection (1) given by a company must be signed by a director or senior manager of the company both—
(a)  in the company’s name; and
(b)  in his or her own name.
(4)  If a co-operative or the directors of a co-operative appoint an individual, firm or company as auditor of a co-operative in contravention of subsection (1)—
(a)  the purported appointment does not have any effect; and
(b)  the co-operative is guilty of an offence.
Maximum penalty (for subsection (4)): $2,500.
Subdivision 3 Removal and resignation of auditors
310   Removal and resignation of auditors
(cf Corporations Act s 329)
(1)  An auditor of a co-operative may be removed from office by resolution of the co-operative at a general meeting of which notice under subsection (2) has been given, but not otherwise.
(2)  Notice of intention to move the resolution must be given to the co-operative at least 2 months before the meeting is to be held. However, if the co-operative calls a meeting after the notice of intention is given under this subsection, the meeting may pass the resolution even though the meeting is held less than 2 months after the notice of intention is given.
(3)  Where notice under subsection (2) of a resolution to remove an auditor is received by a co-operative, it must as soon as possible send a copy of the notice to the auditor and lodge a copy of the notice with the Registrar.
(4)  Within 7 days after receiving a copy of the notice, the auditor may make representations in writing, not exceeding a reasonable length, to the co-operative and request that, before the meeting at which the resolution is to be considered, a copy of the representations be sent by the co-operative at its expense to every member of the co-operative to whom notice of the meeting is sent.
(5)  Unless the Registrar on the application of the co-operative otherwise orders, the co-operative must send a copy of the representations in accordance with the auditor’s request, and the auditor may, without prejudice to his or her right to be heard orally or, where a firm is the auditor, to have a member of the firm heard orally on its behalf, require that the representations be read out at the meeting.
(6)  An auditor of a co-operative may, by notice in writing given to the co-operative, resign as auditor of the co-operative if—
(a)  the auditor has, by notice in writing given to the Registrar, applied for consent to the resignation and stated the reasons for the application and, at or about the same time as the notice was given to the Registrar, notified the co-operative in writing of the application to the Registrar; and
(b)  the consent of the Registrar has been given.
(7)  The Registrar must, as soon as practicable after receiving a notice from an auditor under subsection (6), notify the auditor and the co-operative whether the Registrar consents to the resignation of the auditor.
(8)  A statement made by an auditor in an application to the Registrar under subsection (6) or in answer to an inquiry by the Registrar relating to the reasons for the application—
(a)  is not admissible in evidence in any civil or criminal proceedings against the auditor; and
(b)  may not be made the ground of a prosecution, action or suit against the auditor;
and a certificate by the Registrar that the statement was made in the application or in the answer to the inquiry by the Registrar is conclusive evidence that the statement was so made.
(9)  Subject to subsection (10), the resignation of an auditor takes effect—
(a)  on the day (if any) specified for the purpose in the notice of resignation; or
(b)  on the day on which the Registrar gives its consent to the resignation; or
(c)  on the day (if any) fixed by the Registrar for the purpose;
whichever last occurs.
(10)  The resignation of an auditor of a small co-operative does not require the consent of the Registrar under subsection (6), and takes effect—
(a)  on the day (if any) specified for the purpose in the notice of resignation; or
(b)  on the day on which the notice is received by the co-operative;
whichever is the later.
(11)  Where on the retirement or withdrawal from a firm of a member the firm will no longer be capable, by reason of the provisions of section 324BB (1) (b) (i) or (2) (b) (i) of the Corporations Act (as applying under this Part) of acting as auditor of a co-operative, the member so retiring or withdrawing is (if not disqualified from acting as auditor of the co-operative) taken to be the auditor of the co-operative until he or she obtains the consent of the Registrar to his or her retirement or withdrawal.
(12)  Within 14 days after—
(a)  the removal from office of an auditor of a co-operative; or
(b)  the receipt of a notice of resignation from an auditor of a co-operative;
the co-operative must—
(c)  lodge with the Registrar a notice of the removal or resignation in the approved form; and
(d)  where there is a trustee for the holders of debentures or CCUs of the co-operative—give to the trustee a copy of the notice lodged with the Registrar.
311   Effect of winding up on office of auditor
(cf Corporations Act s 330)
An auditor of a co-operative ceases to hold office if—
(a)  a special resolution is passed for the voluntary winding up of the co-operative; or
(b)  in a case to which paragraph (a) does not apply—an order is made by the Supreme Court for the winding up of the co-operative.
Subdivision 4 Auditors’ fees and expenses
312   Fees and expenses of auditors
(cf Corporations Act s 331)
The reasonable fees and expenses of an auditor of a co-operative are payable by the co-operative.
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 s 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 Part 1.2 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 s 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.
Note—
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).
Note—
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)).
(3)  The exemption may—
(a)  be expressed to be subject to conditions; and
(b)  be indefinite or limited to a specified period; and
(c)  if indefinite, be expressed to commence on a specified date.
(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 s 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.
Note—
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).
Note—
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)).
(3)  The exemption may—
(a)  be expressed to be subject to conditions; and
(b)  be indefinite or limited to a specified period; and
(c)  if indefinite, be expressed to commence on a specified date.
318   Exemptions—criteria for exemptions for individual co-operatives or classes of co-operatives
(cf Corporations Act s 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 s 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.
Note—
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).
Note—
The target provisions correspond to the provisions of the Corporations Act referred to in section 342AA of that Act.
(3)  The exemption may—
(a)  be expressed to be subject to conditions; and
(b)  be indefinite or limited to a specified period; and
(c)  if indefinite, be expressed to commence on a specified date.
(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 s 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.
Note—
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).
Note—
The target provisions correspond to the provisions of the Corporations Act referred to in section 342AB of that Act.
(3)  The exemption may—
(a)  be expressed to be subject to conditions; and
(b)  be indefinite or limited to a specified period; and
(c)  if indefinite, be expressed to commence on a specified date.
321   Exemptions—criteria for exemptions for non-auditor members etc
(cf Corporations Act s 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—
(a)  be expressed to be subject to conditions; and
(b)  be indefinite or limited to a specified period; and
(c)  if indefinite, be expressed to commence on a specified date.
323   Registrar’s power to modify the operation of section 324DA of Corporations Act
(cf Corporations Act s 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 s 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.
Maximum penalty—$500.
(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 s 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.
Maximum penalty—$2,000.
328   Contravention by directors of provisions of this Part
(cf Corporations Act s 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.
Note—
This subsection is a civil penalty provision (see section 554).
(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.
Note—
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 3.4 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.
Note—
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.
Note—
See section 13, including Note 1 to that section.
(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
(1)  A person must not—
(a)  advertise; or
(b)  publish a statement that directly or indirectly refers to;
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.
Maximum penalty—$1,000.
(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—
(a)  publishing a newspaper or magazine; or
(b)  broadcasting by radio or television;
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.
(3)  An offence based on subsection (1) is an offence of strict liability.
340   Application money to be held on trust
(cf Corporations Act s 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.
Maximum penalty—$2,500 or imprisonment for 6 months, or both.
(2)  If the application money needs to be returned to an applicant, the person must return the money as soon as practicable.
Maximum penalty—$2,500 or imprisonment for 6 months, or both.
(3)  An offence based on subsection (1) or (2) is an offence of strict liability.
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.
Note—
See section 13, including Note 1 to that section.
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—
(a)  for a co-operative with share capital—
(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.
Note—
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.
(5)  In this section—
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.
Maximum penalty—$6,000.
(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.
(5)  In this section—
undertaking of a co-operative means all the assets of the co-operative.
Note—
This section applies to non-distributing co-operatives as well as to distributing co-operatives.
Part 3.5 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.
Maximum penalty—$2,000.
(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.
Maximum penalty—$2,000.
(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.
Note—
See Part 1 of Schedule 2 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.
Maximum penalty—$2,000.
(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.
Maximum penalty—$2,000.
(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.
Maximum penalty—$2,000.
(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—
(a)  be in the approved form; and
(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.
Note—
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)  Sections 163, 164 and 165 apply to shares forfeited under this section as if the shares had been forfeited under Part 2.6.
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 Part 2 of Schedule 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.
Note—
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.
(2)  An exemption may be given unconditionally or subject to conditions.
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.
Maximum penalty—$10,000 or imprisonment for 2 years, or both.
(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.
(2)  An exemption may be given unconditionally or subject to conditions.
Chapter 4 Structural and other events for co-operatives
Part 4.1 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 Part 2.2 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 Part 2.4 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 Part 4.4 of this Law;
(h)  the modifications referred to in section 13 (3) of this Law so far as they are relevant.
Note—
See section 13, including Note 1 to that section.
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.
Note—
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 4.2 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.
Note—
See section 13, including Note 1 to that section.
Part 4.3 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.
Note—
Section 168 (1) provides that “Even though a person’s shares in a co-operative have been forfeited under [Part 2.6], 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.
Maximum penalty—$1,000.
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.
Note—
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.
Note—
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
(1)  In this section—
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 4.4 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