Co-operative Information

 

Federation personnel are usually available to meet with management and/or Directors to discuss co-operative issues such as updating rules, managing records under the Co-operative legislation, assisting in setting up networking amongst other co-operatives, liaising with the regulator, finding other organisations with whom to share training costs, etc. They also often act as a facilitator, to assist in resolving issues within the co-operative, between organisations, etc.

Ask us and we’ll see what we can do to assist. Contact the Secretary Richard O’Leary by telephone on 02 6562 4116, or send an email.

The Federation also provides services to foreign co-operatives wishing to operate in NSW.

The International Co-operative Principles – link

At a glance – what is different about a co-operative – traditional trading (distributing) co-operative:

Co-operatives are uniquely member-owned, member-controlled entities which exist to provide benefits to members. The challenge for the board of a co-operative is to work out how to achieve this benefit, which may not be related to profit for the co-operative. Co-operatives use profits to achieve activities; investor-owned entities use activities to achieve profits. There is a fundamental difference – the co-operative advantage.

 

 ELEMENT  CO-OPERATIVE  INVESTOR-OWNED ENTITY
Membership Membership is open to all applicants who will be users – suppliers, customers, workers (depending on the type of co-operative) Membership is acquired by investment and may not be open but restricted to invitees only
Ownership Members (users) Investors (generally not users of the business)
Investment In Australia shares retain their nominal value and are issued by the co-operative, not bought from other members Shares usually change hands at current market rates, between shareholders
Voting One member one vote – control relates to membership, not how many shares are held One share one vote – control relates to the number of shares held by each shareholder
Benefits Members receive patronage benefits (rebates) in proportion to the use they make of the co-operative. Return on invested capital is not normally significant Investors receive a share of the profits of the entity as dividends, based on the number of shares owned
Taxation Patronage benefits (rebates) can be treated as tax deductions by the co-operative or can be franked. Their treatment in the hands of members depends on the member’s use of the co-operative – ie whether membership is for business or domestic reasons Dividends are franked and taxable in shareholders’ hands
Reason for membership Membership is usually to gain an economy of scale advantage for the member’s own business activities, eg sector-wide marketing, bulk purchasing. The business advantage is often not received by the co-operative but directly in members’ hands Investment is for return on capital ie dividends
Terms of trade Purchases from members usually are priced at a compromise between lowest possible cost and best possible return for suppliers; sales to members are usually a compromise between highest possible price and lowest possible cost for customers. The key factor is the economic viability of the businesses of the members, achieved by the long term success of the co-operative The lowest possible purchase price is usually sought and the highest possible sales price is usually levied, with maximisation of profits for the investor-owned business always the key factor

Links to Information of Interest:

 

Some things you should know before you start up. Click here for details.

Click here for details.

Visit the Registry site for a downloadable version of the model rules and step-by-step help in getting your new co-operative started – click here.

Keep up with the best thinking on boardroom performance and other issues in institutional and corporate governance. A suggested FREE on-line journal to which every board member can subscribe

A recent Rural Co-operatives paper.