Co-operatives

A co-operative is a legal entity based on sharing, democracy and delegation for the benefit of all its members.

Anyone can apply to be a member of a co-operative, but the directors assess the suitability of applicants. Members are expected to actively participate and share the responsibility of running the organisation to ensure its success. Members can nominate as directors and elect directors. Co-operatives are subject to Corporations Law and state legislation (e.g. the Victorian Co-operatives Act 1996).

Advantages

  • Co-operatives are cheaper to register than a Company ($416).
  • Co-operatives are licensed to operate in all states after being registered in one.
  • All shareholders have an equal vote at general meetings irrespective of their shareholding and usage of the co-operative.
  • Shareholders, directors, managers and employees have no responsibility for debts of the cooperative (unless they cause the debts recklessly, negligently, or fraudulently)
  • Assistance to establish a cooperative is available from the Co-operative Federations in many states.
  • Co-operatives are member owned and controlled instead of by investors.
  • Members/shareholders have to be active in the co-operative.

Disadvantages

  • A co-operative is more expensive to register than an incorporated association
  • Co-operatives law is also more complicated (the Associations Incorporation Act runs to 134 pages, the Co-operatives Act 418)
  • Members/shareholders have to be active in using the co-operative
  • Co-operatives require an ongoing co-operative education programs for members.

Co-ops of different kinds don't necessarily have much in common, and in the Australian context, the only real definition of a co-operative is "any organisation that is incorporated as a co-operative under state or territory legislation".

General co-operatives can be found in many industries, though almost all large and well-known co-operatives are farmer co-operatives. There are approximately 2,400 registered general co-operatives in Australia. In most states, co-operatives legislation distinguishes between co-operatives that are permitted to distribute a profit to their members (reflecting the level of their use of the co-operative) and those that are non-profit-distributing.

The former are generally called trading co-operatives and are mostly quite large. The latter, sometimes called community advancement co-operatives, are far more numerous, and include the registered social clubs that were originally formed by groups of people from a particular locality or built on existing sporting organisations. These were given a monopoly on gambling machines in the 1950s and prospered greatly, becoming valuable community recreation resources. By no means all clubs incorporated as co-operatives, however, and in the late 1970s all new clubs were required to incorporate as not-for-profit companies. Those already incorporated as co-operatives were allowed to remain.

Wholesale and retail co-operatives include the few remaining co-operative stores (all in country areas), specialised trade co-operatives (such as for plumbers) and specialised consumer co-operatives, selling wine, organic foods or books to university students. The most common transport co-operatives are taxi co-operatives in larger regional centres. Community services co-operatives include co-operative childcare centres and neighbourhood centres, while housing co-operatives are mainly small, formed to own or manage government-owned housing. Many co-operatives have converted themselves into companies.

Unless there are special reasons why you think this form suits your organisation, both incorporated associations and companies have a less complex system of regulation than co-operatives.

If you wish to investigate the advantages of co-operative status then consult the brochures available on the Co-Operatives Victoria site.

  • What is a Co-Operative?
  • The Co-operative Formation Decision

If you then wish to pursue this option then follow the procedures in

  • The Co-operative Formation Process

This material deals specifically with Victorian procedures, although many of these are common Australia-wide, and there will be differences in the applicable requirements in other states. Consult the Federations in NSW, South Australia, and WA for details.

If in doubt, consult the relevant acts;

  • ACT - Co-operatives Act 2002
  • NSW - Co-operatives Act 1992 (and the Co-operatives Amendment Act 1997)
  • NT - Co-operatives Act
  • Qld - Co-operatives Act 1997
  • SA - Co-operatives Act 1997
  • Tas - http://www.austlii.edu.au/au/l... - Co-operatives Act 1996
  • W.A. - Co-Operative And Provident Societies Act 1903

Become a member