Start a Co-op
Please use the links below to navigate through information about what a Co-op is, and how to start one.
Home › Start a Co-op › What is a Co-op?
What is a Co-op
A co-operative is defined as an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Co-operative enterprises are based on the following Seven Principles of Co-operatives:
- Voluntary and open membership
A co-operative is a voluntary organisation, open to all persons able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
- Democratic member control
A co-operative is a democratic organisation controlled by its members, who actively participate in setting policies and making decisions. Members serving as elected representatives are accountable to the membership. In co-operatives other than co-operative groups members have equal voting rights (one member, one vote). Co-operative groups are organised in a democratic manner.
- Member economic participation
Members contribute equitably to, and democratically control, the capital of their co-operative. Usually, at least part of that capital is the common property of the co-operative. Usually, members receive limited compensation, if any, for capital subscribed as a condition of membership. Members of a co-operative allocate surplus to be used for any or all of the purposes of —
(a) developing the co-operative, possibly by setting up reserves, at least part of which are indivisible; and
(b) benefiting members in proportion to their transactions with the co-operative; and
(c) supporting other activities approved by the membership.
- Autonomy and independence
A co-operative is an autonomous, self-help organisation controlled by its members. If a co-operative enters into agreements with other organisations, including governments, or raises capital from external sources, it does so on terms that ensure democratic control by its members and maintain its autonomy.
- Education, training and information
A co-operative provides education and training for its members, elected representatives, managers and employees so they can contribute effectively to the development of the co-operative. A co-operative informs the general public, particularly young people and opinion leaders, about the nature and benefits of co-operatives.
- Co-operation among co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
- Concern for the community
Co-operatives, while focusing on member needs, work for the sustainable development of their communities through policies accepted by their members.
Co-operatives go about their business with a focus on the needs of their membership with members required to actively engage with their co-operative as patron customers.
Co-operatives are legal entities that can be incorporated under different legislative jurisdictions.
The majority of Western Australia’s co-operatives are registered under the Co-operatives Act 2009 (WA).
Entities registered under the Co-operatives Act 2009 (WA) are either a:
- Distributing co-operative i.e. rules allow return or distribution of profits/surplus to members; or
- Non-distributing co-operative i.e. rules prohibit return or distribution of surpluses to members other than the return of nominal paid up value of shares at time of winding-up.
Members of a distributing or non-distributing co-operative have only one vote each, delivering what is referred to as Democratic Control.
When interpreting the Co-operatives Act 2009 (WA), the Act states a construction that promotes co-operative principles is to be preferred to a construction that would not promote co-operative principles.
Home › Start a Co-op › Why a Co-op?
Why a Co-op?
Co-operatives play an important economic and social role in their community – focusing on the needs of members.
Co-operatives are controlled by their members.
Members have only one vote, irrespective of the member’s shareholding or level of business transacted with their co-operative, delivering Democratic Control.
Co-operative entities are formed for one or more reasons including:
- providing members with a service that would not otherwise be available (market failure);
- achieving better outcomes as a TEAM compared with acting alone (Together Everyone Achieves More);
- introducing competition to moderate the influence of investor driven entities in a particular market (countervailing power);
- keeping profits local for local re-investment by locals (growing community);
- managing important intergenerational industry infrastructure assets (custodian); and
- providing regional service hubs to reduce barriers to entry (community landlord).
The precursor to selecting a legal structure is at least to have a rudimentary outline of the proposed business.
To determine that a co-operative model is the best structure for what is being proposed it is important to assess alternative structures.
Deciding that a co-operative model is the best structure should be a decision by a group that is truly representative of the prospective members.
Needing to know more about co-operatives and the Co-operative Advantage?
Co-operatives WA can assist with your understanding of how co-operatives are structured and governed.
Initial consultation is free-of-charge and obligation free.
Co-operatives WA can work with you to:
- Outline and help navigate optional (replaceable) rules;
- Prepare bespoke rules that are fit for purpose and compliant;
- Prepare Disclosure Statements;
- Lodge application for approval of Draft Rules and Disclosure Statements;
- Prepare the Formation Meeting agenda;
- Facilitate holding of the Formation Meeting; and
- Lodgement of application to a register co-operative.
Documented Scope of Work, Fee Quote and Membership Subscription detail available upon request – info@cooperativeswa.org.au
Home › Start a Co-op › How to Register?
How to register a Co-op in WA
Having decided a co-operative model is the best structure, important steps need to be completed before a co‑operative can be registered under the Co-operatives Act 2009 (WA).
If not already addressed when deciding the co-operative model is the right entity structure, the promotors of the co‑operative need to:
- Determine which type of co-operative best suites the proposed activities – i.e. a distributing co‑operative or a non-distributing co-operative;
- Identify one or more primary activity i.e. at least one activity must reflect the co-operative’s basic purpose and make a significant contribution to the planned business;
- Determine what a member must do in support of the primary activity(ies) to remain a member and how that support will be measured i.e. defined and quantifiable support;
- Draft Rules (constitution) that will govern the co-operative and are Co-operatives Act 2009 (WA) compliant;
- Draft a Disclosure Statement, if a distributing co-operative, that is Co-operatives Act 2009 (WA) compliant; and
- Ensure there are enough people committed to joining the co-operative and be bound by the Draft Rules to satisfy the requirement to have:
- no less than 5 members at all times; and
- director positions filled.
It would then be possible to progress with:
- Applying for Registrar’s approval of Draft Rules and the Disclosure Statement (if required), at least 35 days prior to the required Formation Meeting i.e. meeting at which prospective members to vote to accept the Approved Rules, sign membership applications and appoint directors;
- Giving notice of proposed Formation Meeting to potential members;
- If Draft Rules (and Disclosure Statement, if required) are approved by the Registrar, proceed with the Formation Meeting;
- Completing, post-Formation Meeting:
- Application for registration of co-operative;
- Statement of director details; and
- Certification of a copy of the Approved Rules and Disclosure Statement (if applicable); and
- Lodgement of application for registration of co-operative with supporting documents.
If the application for registration is in order, Registrar will issue to the co-operative a Certificate of Registration and an official copy of the Registered Rules.
Needing to know more about co-operatives and the Co-operative Advantage?
Co-operatives WA can assist with your understanding of how co-operatives are structured and governed.
Initial consultation is free-of-charge and obligation free.
Co-operatives WA can work with you to:
- Outline and help navigate optional (replaceable) rules;
- Prepare bespoke rules that are fit for purpose and compliant;
- Prepare Disclosure Statements;
- Lodge application for approval of Draft Rules and Disclosure Statements;
- Prepare the Formation Meeting agenda;
- Facilitate holding of the Formation Meeting; and
- Lodgement of application to a register co-operative.
Documented Scope of Work, Fee Quote and Membership Subscription detail available upon request – info@cooperativeswa.org.au
Home › Start a Co-op › How to Run?
How to run a Co-op in WA
Most Western Australian co-operatives are companies registered under the Co-operatives Act 2009 (WA) with several registered under the Corporations Act 2001 (Cth).
Co-operatives are companies and are regulated according to the law of the jurisdiction of their registration and governed in accordance with their Registered Rules (Constitution).
The Co-operatives Act 2009 (WA) is administered from Perth by the Consumer Protection Division of the Western Australian Department of Mines, Industry Regulation and Safety. The Corporations Act 2001 (Cth) is administered from Canberra by the Australian Securities and Investments Commission.
The Co-operatives Act 2009 (WA) has simplified provisions for the governance of small co-operatives, comparable with those available to small Pty Ltd entities registered under the Corporations Act 2001.
A co-operative is prima facie a small co-operative for the financial year if it satisfies at least 2 of the following:
- consolidated revenue of the co‑operative and the entities it controls (if any) is less than $8 million for the financial year;
- value of the consolidated gross assets and the entities it controls (if any) is less than $4 million at the end of the financial year;
- the co‑operative and the entities it controls (if any) had fewer than 30 employees at the end of the financial year,
and the co-operative has not issued shares to more than 20 members during that year and raised more than $2 million by the issue of those shares.
Management of a co-operative has many similarities to mainstream businesses but there are important differences relating to areas such as their governance, membership, member obligations, distribution of share capital and annual surpluses, voting rights, human resources, communications, marketing and strategic purpose.
Go to drop down menus at www.commerce.wa.gov.au/consumer-protection/running-co-operative for guidance on key feature of running a co-operative.
Home › Start a Co-op › FAQs?
FAQs
What is the minimum number of members required for a co-operative?
Minimum number of members required for an ordinary co-operative is five, unless the Registrar has given special dispensation to have fewer than five members. If the co-operative is a federation of co-operatives i.e. all members are themselves co-operatives, the membership can be as few as two co-operatives.
What is the minimum number of directors a co-op must have?
Why can’t co-operatives registered under state or territory legislation obtain an ACN?
Australian Company Numbers (ACN) are only issued to companies registered under the Corporations Act 2001.
Is a co-operative’s activities limited to those primary activities shown in its Registered Rules?
Can a co-operative registered in a particular state or territory operate elsewhere in Australia?
Yes, however there are special requirements for a co-operative operating outside its place of origin to show the jurisdiction of its registration on each of its seals, if any, all advertisements and other official publications of the co‑operative and in all its business documents.
Is a Director of a co-operative registered under the Co-operatives Act required to have a Director Identification Number?
No, the Director Identification Number scheme is a federal government requirement and does not apply to co-operatives registered under state or territory legislation.
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