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Legislative Assembly for the ACT: 2002 Week 9 Hansard (21 August) . . Page.. 2640 ..

MR STANHOPE (continuing):

A non-trading cooperative may trade but the benefits to the members flowing from the activities of the cooperative-for example, provision of child-care facilities or community radio-are not direct financial returns. Surpluses must be retained by the cooperative and must not be distributed to members. The investment in the cooperative does not result in a financial return and therefore a modified disclosure regime has been proposed. Trading cooperatives, however, exist for the purpose of maximising the financial position of the member through the services offered. Trading cooperatives, therefore, have a higher level of disclosure.

Part 2 also provides for the transfer of incorporation of a body corporate to a cooperative.

Part 3 of the bill provides for the legal capacity and powers of cooperatives. Traditionally, cooperative legislation has been somewhat paternalistic in character. The new bill provides wider corporate powers than cooperatives currently enjoy. Part 3 also sets out the general powers that a cooperative has as a body corporate. The bill provides that a cooperative has the legal capacity of a natural person. A similar regime to that which exists in the Corporations Act for persons having dealings with the cooperative is also provided in part 3 of the bill. A cooperative may also still apply for a government guarantee in respect of any loan.

Part 4 deals with membership of the cooperative. The rules of the cooperative must provide for a grievance procedure in relation to disputes under the rules of the cooperative, and application may also be made to the Supreme Court to settle disputes. Remedies in relation to oppressive conduct of affairs and statutory derivative actions are also provided for.

Part 5 of the bill provides for the rules of a cooperative to constitute a contract between the cooperative and each member. This part also provides for certain specified matters and regulations to be made by prescribing model rules.

Part 6 of the bill deals with active membership. Active membership arises out of the cooperative principle of member economic participation and ensures that only those members actively participating in the cooperative control the cooperative.

The active member provisions were introduced into the New South Wales Co-operation Act 1923 during 1987, with some further refinement occurring in 1988, and into the New South Wales Cooperatives Act 1992. If a member's whereabouts are not known to the cooperative or the member has not fulfilled the active membership obligations under the rules of the cooperative for a period of three years, or less if the rules so provide, the board is required to cancel the membership of the member and repay the amount due to the member in respect of that cancellation.

If repayment would adversely affect the financial position of the cooperative, the board may convert the amount due to deposit or debenture. The deposit or debenture must be repaid within 10 years. However, a member of a trading cooperative whose membership has been cancelled under this part is still considered to be a member for certain purposes for a period of five years.

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