1. Co-operatives National Law demystified
Kingfisher Law

2. The Co-operatives National Law (CNL) aims to provide all States and Territories with a uniform and modern set of laws for co- operatives. Previously, each jurisdiction had their own co- operatives law with key provisions that were “core consistent”. The CNL is an evolution of this.
The CNL will be supported by national and local regulations, allowing for a degree of flexibility in each State or Territory.
As of October 2015, New South Wales, Victoria, South Australia, Tasmania and the Northern Territory have either commenced, or passed legislation for, the use of the CNL.
What is it?

3. What is included as part of the legislation?
NSW is the lead jurisdiction, the CNL can be found at: app.2+0+N?tocnav=y
The National Regulations can be found at: g cd+0+N
Local regulations vary depending on the jurisdiction. Includes fee schedule.
What is included as part of the legislation?

4. What should I know? Three key improvements:
‘Small co-operatives’ have simplified financial reporting obligations to members and the State/Territory registries
Provisions relating to the Corporations Act 2001 (Cth) have been updated. Duties and liabilities of directors, officers and employees more closely resemble duties for company directors.
Co-operatives operating across CNL compliant jurisdictions will not have to register to operate in a new state.
What should I know?

5. How does this impact the current set of rules for co-operatives?
Existing rules do not need to be changed.
If there is any inconsistency – the CNL will prevail. Any references to the previous co-operative legislation will be read as meaning the CNL.
It is in the interest of every co-operative to consider the impact of the CNL package on their rules and the options it gives. Particularly if defined as a ‘small co-operative’.
Rules of all co-operatives in CNL jurisdictions will be registered under the CNL.
How does this impact the current set of rules for co-operatives?

6. When is a co-operative a small co-operative?
In essence, a co-operative will be a small co-operative if at least two of the below apply :
i)     The co-operative, and any entity it controls, has consolidated revenue of less than $8 million for the financial year.
ii)    The co-operative, and any entity it controls, has consolidated gross assets of less than $4 million at the end of the financial year.
iii)   The co-operative and any entities it controls, has fewer than 30 employees at the end of the financial year.
Refer to clause 1.4 of the National Regulations for the full definition
When is a co-operative a small co-operative?

7. What are the key parts of the CNL package?
Section 4 – Definitions
Section 18 – Distributing co-operatives
Section 19 – Non-distributing co-operatives
Part 2.1 Divisions 2 -4 – Becoming a co-operative
Section 56 – Content of rules
Sections 60 – 63 – Amendment of rules
Part 2.4 Division 2 – Disclosure requirements of distributing co- operatives
Section 110 – Becoming a member of co-operative
Section 121 – Liability of members to co-operative
What are the key parts of the CNL package?

8. What are the key parts of the CNL package?
Section 122 – Co-operative to give information to person intending or applying to become a member
Sections – Active membership provisions, distributing/ non –distributing
Part 2.6 Division 1 – Cancellation of membership of inactive members
Part 3.1 Division 4 – Duties and liabilities of directors, officers and employees
Part 3.2 Division 1 – Voting entitlements
Part 3.3 Division 3 – Annual financial reports and directors’ reports generally
Part 3.4 Division 2 – Co-operative Capital Units (CCUs)
Part 3.4 Division 3 – Disposal of surplus from activities
Part 4.5 – Winding up
What are the key parts of the CNL package?

9. What are the key parts of the CNL package?
Schedule 1- Matters for which rules of co-operative must make provision
Section 1: 26 requirements that ALL co-operatives (distributing and non-distributing) must ensure are included in their rules.
Section 2: 9 additional requirements that co-operatives with share capital require.
Section 3: 2 additional requirements for non-distributing co-operatives.
What are the key parts of the CNL package?

10. What are the key parts of the CNL package?
The National Regulations – use of the model rules
Schedule 5: Model rules for a distributing co-operative (pg 40)
Schedule 6: Model rules for a non-distributing co-operative without share capital (pg 67)
Schedule 7: Model rules for a non-distributing co-operative with share capital (pg 90)
What are the key parts of the CNL package?

11. 3 step process to seeking legal advice
Can the question be answered be answered by looking at the ‘Key parts of the CNL package’ slides?
If no – can it be answered by looking at the rest of the CNL or the Regulations?
If no – seek legal advice
3 step process to seeking legal advice

12. What are some examples of how the Corporations Act 2001 (Cth) has updated the CNL?
What sections of the CNL now incorporate Corporations Act (Cth) requirements?
FAQ

13. The CNL is an improvement on the previous legislation – a co- operative should at the minimum look at whether they’re defined as a small co-operative. If a co-operative satisfies the definition, they will save time and money.
Be aware of the redefined duties of directors, officers and employees.
Depending on the jurisdiction, the fee schedules may have changed.
Key points to remember

14. Be aware of terminology changes, ‘trading’ co-operatives are now ‘distributing’ co-operatives and ‘non-trading’ co-operatives are now ‘non-distributing’ co-operatives.
If a co-operative wants to keep things simple, the structure of the CNL package will mean that directors will not always need legal advice. However, if in doubt legal advice should be sought to not risk a fine from the state regulatory body.
Larger co-operatives may need to consider seeking legal advice as a matter of course.
Key points to remember

15. Jeremy Fisher, Kingfisher Law : www.kingfisherlaw.com.au
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