The draft Co-operatives Bill 2006 will regulate the formation, registration and operation of co-operatives in Western Australia.
There are several key changes to the bill.
The ability for co-operatives to engage in cross-border fundraising and trading by improving consistency with co-operative legislation with that of other states.
“Most of the other states have embraced what is know as Core Consistent Legislation, a reference to being, not a mirror image, but are substantially the same,” Co-operatives WA secretary Peter Wells says.
“If you go into another state, that jurisdiction will readily embrace you because you’ve come from a state where legislation is very much like their own.”
Enabling fundraising amongst non-members and provides another way for co-operatives to raise capital outside of their member base.
Current law states that only members can contribute funds and capital to the co-operative. The bill will enable co-operatives to issue a ‘co-operative capital unit’ to non-members. However, these securities do not entitle the holders to the same rights as members.
Buy back of shares of in-active members, or dry shareholders.
Under the current legislation, co-operatives are allowed to repay a portion of the full value of a share to a member rather than the full value.
However, the new bill states that, if an inactive member’s membership is cancelled, then the co-op must repay to that member the amount paid up on the shares, less any amount owed by the member to the co-op.
Co-operatives currently permitted to buy shares back at a discounted rate may still do so over a transitional period.
Improve accountability of board of directors, and introduce requirements for disclosure to members when co-operatives are formed and when shares and debentures are issued.
According to Mr Wells, this will make accountability issues and relationships clearer, and confirm and reinforce the co-operative business model.
