Cooperatives

Joining or starting a cooperative? In doing so, you become part of a voluntary trading organisation owned and managed by its members for a common benefit.

Cooperatives are:
 
  • a company, which can be formed by at least five people or are registered corporations
  • open to people who use its services and are willing to be active members
  • democratic where members have equal voting rights and share in making policies and decisions.
 
Your members will share:
 
  • the investment and operational risks
  • all the benefits
  • any losses.
 
There are two different types of cooperatives:
 
  • Distributing – can give surplus funds to its members
  • Non-distributing – uses extra funds to support its activities and can’t distribute funds to members.
 
Your cooperative can also be defined by its size:


Small cooperatives
 
A small cooperative doesn’t issue shares to more than 20 members exceeding $2 million or doesn’t issue securities to the public. As a small co-operative you must also have at least one of the following:
 
  • total income of less than $8 million
  • total gross assets less than $4 million
  • fewer than 30 employees.
 
Large cooperatives
 
Large cooperatives issue shares to more than 20 members exceeding $2 million or issue securities to the public. As a large cooperative you must also have at least one of the following:
 
  • total income of more than $8 million
  • total gross assets more than $4 million
  • more than 30 employees.

Quick guide to creating a cooperative

  • Prepare your cooperative’s rules

    Your cooperative must have a written set of rules to govern how it works. A cooperative’s rules should support clear communication and help the cooperative be inclusive, fair and open with its members.

    You should think carefully about the rules from the start and talk with your members to get their input before your formation meeting.

    A cooperative’s rules outline:
    • the purpose of the cooperative
    • rights and responsibilities of committee and members
    • financial responsibilities
    • how problems and complaints are handled
    • how to change rules
    • powers of members and the board
    • procedures for meetings and how decisions are made.
     
    The rules act as a contract between the cooperative and:
    • each member
    • each director, chief executive officer and secretary
    • between members.
     
    Use the model rules to help you understand your legal responsibilities and to include what’s relevant for your cooperative.
    Model rules - distributing cooperative - Download PDF | 820KB
    Model rules - non-distributing cooperative without share capital - Download PDF | 1.6MB
    Model rules - non-distributing cooperative with share capital - Download PDF | 730KB
  • Write your formation disclosure statement

    Non-distributing cooperatives are not required to provide a formation disclosure statement unless later requested by Consumer and Business Services.

    Distributing cooperatives are legally required to prepare a formation disclosure statement so new members know what is expected of them. You must give the statement to any potential members before they sign up.

    The statement outlines the cooperative’s:
    • registered office and mailing address
    • purpose and main activity
    • members’ involvement, including financial contribution
    • projected income and expenses
    • names of members and directors
    • who will act as an auditor, if required.
     
    You may choose to use the template, or write your own. It’s recommended you use the template so you include all the important details.
    Disclosure statement for distributing cooperatives – example - Download PDF | 315KB
    Converting a cooperative – disclosure statement example - Download PDF | 304KB
  • Submit your rules and disclosure statement for approval

    Before you can use your rules, Consumer and Business Services must first approve them.
     
    If you’re wanting to start a distributing cooperative, Consumer and Business Services must also approve your formation disclosure statement.

    To seek approval, you must lodge an application with your document(s) and fee.
    Application to approve cooperative name, rules and formation disclosure statement - Download PDF | 550KB

    Within 28 days of lodging your application, Consumer and Business Services will notify you if it has:
    • approved your rules as submitted
    • approved different rules to those you submitted
    • not approved your rules and the reasons why.
     
    If your rules are not approved, you can make changes and resubmit them.

    If your rules are approved, Consumer and Business Services will also send you:
    • confirmation of the operating name
    • the approved documents
    • the application form to register your cooperative.
  • Hold your cooperative’s formation meeting

    Once your rules have been approved by Consumer and Business Services, you must next hold your formation meeting.

    At least five members must attend this meeting to discuss and vote on the rules. A two-thirds majority is required for the rules to be adopted.

    If your members reject the approved rules, you’ll need to restart the process and the reason why you need your members’ input from the start – to save money, time and effort.

    If members adopt the rules, these will become your registered rules. You can make changes to the registered rules later.

    You will also need to:
     
    • present, discuss, and sign the disclosure statement – for a distributing cooperative only
    • tell members how they can access the rules
    • provide and collect membership application forms
    • elect the directors, chair and secretary
    • authorise a contact person to register the co-operative.
  • Register your cooperative

    To register your cooperative, at least five active members must sign the application to register form.
    Application to register a cooperative form - Download PDF | 280KB  

    You must attach to your application to register:
    • two copies of the rules signed by the chairperson and secretary of the formation meeting
    • a copy of the disclosure statement signed by the chairperson and secretary of the formation meeting.
     
    Lodge the form with Consumer and Business Services with the appropriate registration fee:
    • proposed or existing cooperative
    • proposed or existing cooperative (not required under CNL)
    • disclosure statement registration fee
  • Arranging your cooperative’s accounts, audits, and financial reports

    Your cooperatives must keep written financial records that show transactions, its financial position and performance. Records must be kept for seven years. If recorded in another language, you must attach an English transcript.

    Small cooperatives
    Auditors

    An auditor isn’t needed if the cooperative is small. However, cooperative members or Consumer and Business Services can request an audit, at which time directors must appoint an auditor.

    Financial reports

    Small cooperatives need to report to members within five months of the end of the cooperative’s financial year and include:
    • detailed income and expenditure statement
    • detailed balance sheet
    • statement of changes in equity.
     
    A cash flow statement is also needed when a cooperative controls entities that have both:
    • a combined income of $750,000 or more
    • a value of the combined gross assets of $250,000 or more.
     
    The financial statements must comply with Australian accounting standards and include:
    • financial position, performance and cash flows
    • figures for the previous year
    • statement of accounting policies.
     
    The directors must present financial reports at the annual general meeting. Financial reports and directors’ reports must also be presented to members if at least 5% of voting members request them.
     
    Disclosing entity cooperatives have additional reporting requirements and should consult their legal or financial adviser about these obligations.
    Annual report for a small cooperative – CBS form - Download PDF | 344KB
     
    A lodgement fee will be incurred.

    Once again will we be notified when this changes are there processes in place? If not we should just state that there is a lodgement fee.


    Large cooperatives 
    Auditors

    A registered company auditor is needed for large cooperatives. The auditor must be appointed at the first annual general meeting (AGM) or by directors within one month of registration, if before the AGM.
    Intention to remove auditor or update details - Download PDF | 465KB
    Resignation of auditor of a large cooperative - Download PDF | 380KB
     
    Financial reports

    Large cooperatives need to report to members and Consumer and Business Services within five months of the cooperative’s end of financial year. Reports must comply with Australian accounting standards and include:
    • financial statements for the year
    • notes to financial statements
    • directors’ report
    • auditor’s report.
     
    Reports need to be lodged in the state where the cooperative is registered. You must advise Consumer and Business Services if financial records are kept in another state.
    Annual report for a large cooperative - Download PDF | 37KB
    Extend or shorten time to report - Download PDF | 188KB  


    A lodgement fee will be incurred.

  • Arrange your cooperative’s licences and insurance

    Licences
    Having the correct licences and registrations is fundamental to your business. They allow you to operate without fear of closure from non-compliance and are the foundation to a successful business.
     
    Search the Australian Business Licence and Information Service (ABLIS) to find licences, permits and other registrations that apply to your business and your location.

    Insurance
    Insurance reduces your risks and covers your financial losses should an insured risk event occur.

    Your business needs insurance to cover risks associated with your liabilities, assets and income.

    Insurance does not change the law or reduce your fault – it simply shifts the onus of paying for any liability from you to the insurer.

    The type of insurance you need will depend on your business and the industry you’re in.

    Consult an expert in the field to help you determine and obtain the cover you need.

    Visit the Australian Government’s business website to find out more about:
  • Understand how to change a cooperative’s rules

    A cooperative’s rules can be changed by:
    • special resolution at a general meeting
    • post ballot if the rules allow for it
    • the board – If directed by Consumer and Business Services.
     
    Consumer and Business Services must approve proposed changes to rules that cover:
    • active membership
    • moving from a non-distributing to a distributing cooperative
    • a registered club, which restricts the voting rights of some members.
     
    You must give members at least 21 days’ notice of a general meeting to change the rules. The notice must state:
    • the changes
    • the reason for proposing the changes
    • how the changes will affect members and the cooperative.
     
    If the changes relate to active membership, they must also:
    • state if the member can vote
    • include the full text of the proposed resolution
    • include a copy of the Act about cancelling memberships when inactive – section 156 CNL
     
    At least 60% of eligible voters need to pass the resolution for it to be approved unless existing rules state a higher percentage.
     
    You need to register the changes with Consumer and Business Services before they can take effect.
  • How and where to submit your application

    Application
     
    Complete the Application to register rule amendment/s form C10  – signed by an authorised person for the cooperative.

    Supporting evidence
     
    Attach a copy of the rules, including the changes, to your application.
     
    Lodgement

    Lodge your application within 28 days of the resolution being passed.

    By post

    CBS Licensing and Registration
    GPO Box 1719
    Adelaide SA 5001

    In person

    CBS Customer Service Centre
    91 Grenfell Street
    Adelaide

Planning templates

Use these free planning templates and guides to help you better plan, prepare, manage, and exit a business. Investing time into proper research and planning can help turn your ideas into reality, and prepare you for what’s to come.

Business plan

A business plan works as a guide when your business is operating; how you operate, planning the future and preparing for risks. It is often a required document for finance applications.

Marketing plan

An effective marketing plan highlights what you are marketing (your product or service), who you market to, how you market to them and how to determine success or identify improvements.

Emergency plan

Your business is critical to your financial wellbeing, so you’ll want to protect it as much as you can against emergencies and disasters.

Succession plan

Planning for the day you leave your business is a valuable investment.

Our friendly team is here to help

If you need any assistance, please call 1300 142 820 for information relating to small business or visit our contact page for more information.