New legislation for co-ops

Co-operatives are groups created to benefit members and are owned and controlled by those who use them. They can be set up for a very wide range of social and economic activities like retail, agriculture, child care, taxi services or arts and crafts.  In many ways co-operatives function as a small business, making use of the purchasing power associated with a larger group and sharing resources. For example farmers in a rural community may set up a co-operative to buy farming equipment, which all members will have access to.

New and improved legislation governing co-operatives will be in use in Western Australia from next year giving WA the most advanced and up to date co-operatives legislation in the country. Co-operatives will have 21 months from the yet to be named start date in 2010 to lodge an application for registration under the new legislation.

The imminent law change is being seen as a chance for every co-operative to streamline its processes and operate in a more efficient and effective manner.  Meanwhile, the Department of Commerce has been developing new guidelines, forms and procedures, plus taking calls via a Helpline, to assist co-operatives in the transition to the new legislation. 

Many people involved with co-operatives have been wondering how this new legislation will affect their rules or articles as they are also known. The new legislation sets out specific requirements which must be outlined in the rules. These differ depending on whether the co-operative is distributing (gives out returns or profits to members) or non-distributing. Whichever category a co-operative falls into, as long as members are careful to ensure their rules are consistent with the Act, they can have it any way they like.

One of the key benefits of the fresh legislation is the introduction of co-operative capital units (CCUs) which may be issued by the co-operative to any person, giving them interest in the capital, but not the share capital, of the co-operative.  CCUs enhance a co-operative’s capacity to raise capital by enabling fundraising amongst non-members. CCUs have been used effectively in the Eastern States with many co-operatives there finding CCUs can help them finance day to day operations and boost the success and profitability of the co-operative, making it easier to compete with commercial entities.

The Department of Commerce is pushing for an improvement in co-operatives’ annual return completion. Annual returns are significant for prospective members, clients and business partners who may wish to invest. Most co-operatives required to submit an annual return in 2009 have adequately done so however, many of these were outside the necessary time requirements. Some co-operatives are in the process of correcting their annual returns while others are being followed up to determine whether deregistration is necessary.
 
For more information on co-operatives please contact the Department's Co-operatives Unit on (08) 6364 3070 or via email. Alternatively, you could contact Co-operatives WA, an association whose purpose is to promote and develop the co-operatives sector in WA, on (08) 9368 5155.