CO-OPERATIVES BILL 2007

Western Australian Bills

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This is a Bill, not an Act. For current law, see the Acts databases.

CO-OPERATIVES BILL 2007

Western Australia Co-operatives Bill 2007 CONTENTS Part 1 -- Preliminary Division 1 -- Introductory 1. Short title 2 2. Commencement 2 3. Objects of this Act 2 4. Terms used in this Act 3 Division 2 -- Qualified privilege 5. Qualified privilege 8 Division 3 -- The co-operative principles 6. Co-operative principles 8 7. Interpretation to promote co-operative principles 10 Division 4 -- Application of Corporations Act to co-operatives 8. Definitions 10 9. Excluded matter 11 10. Applying the Corporations legislation to co-operatives 12 11. Modifications to applied provisions 14 Part 2 -- Formation Division 1 -- Types of co-operatives 12. Types of co-operatives 15 13. Distributing co-operatives 15 14. Non-distributing co-operatives 15 Division 2 -- Formation meeting 15. Formation meeting 16 160--2 page i

Co-operatives Bill 2007 Contents Division 3 -- Approval of disclosure statement and rules 16. Approval of disclosure statement 17 17. Approval of rules 19 Division 4 -- Registration of proposed co-operative 18. Application for registration of proposed co-operative 20 19. Registration of co-operative 21 20. Incorporation and certificate of registration 22 Division 5 -- Registration of an existing corporation 21. Existing corporation can be registered 23 22. Formation meeting and transitional provision 23 23. Application for registration 24 24. Requirements for registration 25 25. Transitional provision 26 26. Certificate of registration 26 27. Effect of registration 26 Division 6 -- Conversion of co-operative 28. Conversion of co-operative 27 Division 7 -- Reviews 29. Appeal against refusal to approve disclosure statement 27 30. Appeal against refusal to approve draft rules 27 31. Appeal against refusal to register 28 32. Supreme Court's powers on appeal 28 Division 8 -- General 33. Acceptance of money by proposed co-operative 28 34. Issue of duplicate certificate 28 Part 3 -- Legal capacity and powers Division 1 -- General powers 35. Effect of incorporation 29 36. Power to form companies and enter into joint ventures 29 Division 2 -- Doctrine of ultra vires abolished 37. Interpretation 29 page ii

Co-operatives Bill 2007 Contents 38. Doctrine of ultra vires abolished 30 39. Legal capacity 30 40. Restrictions on co-operatives in rules 31 Division 3 -- Persons having dealings with co-operatives 41. Assumptions entitled to be made 31 42. Assumptions 32 43. Person who knows or ought to know is not entitled to make assumptions 33 44. Lodgment of documents not to constitute constructive knowledge 33 45. Effect of fraud 34 Division 4 -- Authentication and execution of documents and confirmation of contracts 46. Common seal 34 47. Official seal 34 48. Authentication need not be under seal 35 49. Co-operative may authorise person to execute deed 35 50. Execution under seal 36 51. Contractual formalities 36 52. Other requirements as to consent or sanction not affected 36 Division 5 -- Pre-registration contracts 53. Contracts before registration 36 54. Person may be released from liability but is not entitled to indemnity 38 55. This Division replaces other rights and liabilities 38 Part 4 -- Membership Division 1 -- General 56. Becoming a member 39 57. Members of co-operative group 39 58. Qualification for membership and transitional provision 40 59. Membership may be joint 40 60. Members under 18 years of age 41 61. Representatives of corporations 41 62. Notification of shareholders and shareholdings 41 page iii

Co-operatives Bill 2007 Contents 63. Circumstances in which membership ceases -- all co-operatives 42 64. Additional circumstances in which membership ceases -- co-operatives with share capital 43 65. Carrying on business with too few members 43 Division 2 -- Rights and liabilities of members 66. Rights of membership not exercisable until registered etc. 44 67. Liability of members to co-operative 44 68. Co-operative to make information available to person intending to become a member 45 69. Entry fees and regular subscriptions 45 70. Members etc. may be required to deal with co-operative 46 71. Fines payable by members 47 72. Charge and set off of co-operative 47 73. Repayment of shares on resignation or expulsion 48 Division 3 -- Death of member 74. Meaning of "interest" 50 75. Transfer of share or interest on death of member 50 76. Transfer of small shareholdings and interests on death 50 77. Value of shares and interests 51 78. Co-operative protected 51 Division 4 -- Disputes involving members 79. Grievance procedure 51 80. Application to Supreme Court 52 Division 5 -- Oppressive conduct of affairs 81. Interpretation 53 82. Application of Division 53 83. Who may apply for court order 53 84. Orders that the Supreme Court may make 54 85. Basis on which Supreme Court makes orders 55 86. Winding-up need not be ordered if oppressed members prejudiced 55 87. Application of winding-up provisions 55 88. Changes to rules 56 89. Copy of order to be lodged with Registrar 56 page iv

Co-operatives Bill 2007 Contents Division 6 -- Proceedings on behalf of a co-operative by members and others 90. Bringing, or intervening in, proceedings on behalf of a co-operative 56 91. Applying for and granting leave 57 92. Substitution of another person for the person granted leave 58 93. Effect of ratification by members 58 94. Leave to discontinue, compromise or settle proceedings brought, or intervened in, with leave 59 95. General powers of the Supreme Court 59 96. Power of Supreme Court to make costs order 60 Part 5 -- Rules 97. Effect of rules 61 98. Content of rules 61 99. Purchase and inspection of copy of rules 62 100. False copies of rules 62 101. Model rules 62 102. Rules can only be altered in accordance with this Act 63 103. Approval of alteration of rules 63 104. Alteration by special resolution 64 105. Alteration by resolution of board 64 106. Alteration does not take effect until registered 64 107. Appeal against refusal to approve alteration 65 108. Appeal against refusal to register 65 109. Supreme Court's powers on appeal 65 Part 6 -- Active membership Division 1 -- Definitions 110. Meaning of "active membership resolution" 66 111. What is active membership 66 112. What are active membership provisions and resolutions 66 Division 2 -- Rules to contain active membership provisions 113. Number of primary activities required 67 114. Rules to contain active membership provisions 67 page v

Co-operatives Bill 2007 Contents 115. Factors and considerations for determining primary activities etc. 67 116. Active membership provisions -- distributing co-operatives 68 117. Regular subscription -- active membership of non-distributing co-operative 68 Division 3 -- Active membership resolutions 118. Notice of meeting 69 119. Eligibility of directors to vote on proposal at board meeting 69 Division 4 -- Cancellation of membership of inactive or missing members 120. Cancellation of membership of inactive or missing member 69 121. Share to be forfeited if membership cancelled 70 122. Failure to cancel membership -- offence by director 70 123. Deferral of forfeiture by board 71 124. Cancellation of membership prohibited in certain circumstances 71 125. Notice of intention to cancel membership 72 126. Order of Supreme Court against cancellation 72 127. Repayment of amounts due because of cancelled membership 73 128. Interest on deposits, debentures and co-operative capital units 75 129. Repayment of deposits, and redemption of debentures and co-operative capital units 76 130. Register of cancelled memberships 76 Division 5 -- Entitlements of former members of distributing co-operatives 131. Application of Division 77 132. Former shareholders to be taken to be shareholders for certain purposes 77 133. Entitlements of former shareholders on mergers etc. 78 134. Set off of amounts repaid etc. on forfeited shares 79 135. Regulations may exempt co-operatives from provisions 80 page vi

Co-operatives Bill 2007 Contents Part 7 -- Shares Division 1 -- Nature of share 136. Nature of share in co-operative 81 Division 2 -- Disclosure 137. Disclosure to intending shareholders in distributing co-operative 81 138. Content of disclosure statement to intending shareholders 82 139. Exemptions for disclosure statements 82 Division 3 -- Issues of shares 140. Shares -- general 83 141. Application of Corporations Act for particular share subscriptions 83 142. Minimum paid up amount 84 143. Shares not to be issued at a discount 84 144. Issue of shares at a premium 84 145. Joint ownership of shares 85 146. Members may be required to take up additional shares 85 147. Bonus share issues 86 148. Restrictions on bonus shares 87 149. Notice about bonus shares 87 Division 4 -- Beneficial and non-beneficial interest in shares 150. Direction to disclose 88 151. Disclosure by member of relevant interests and instructions 88 152. Registration as trustee etc. on death of owner of shares 90 153. Registration as administrator of estate on incapacity of shareholder 90 154. Registration as Official Trustee in Bankruptcy 90 155. Liabilities of person registered as trustee or administrator 91 156. Notice of trusts in register of members 91 157. No notice of trust except as provided by this Division 91 page vii

Co-operatives Bill 2007 Contents Division 5 -- Sale or transfer of shares 158. Sale or transfer of shares 92 159. Transfer on death of member 92 160. Restriction on total shareholding 92 161. Transfer not effective until registered 93 162. Non-members become members on registration 93 Division 6 -- Repurchase of shares 163. Purchase and repayment of shares 93 164. Deposit, debentures or co-operative capital units instead of payment when share repurchased 94 165. Cancellation of shares 96 Part 8 -- Voting and meetings Division 1 -- Voting entitlements 166. Application of Part to voting 97 167. Voting 97 168. Voting by proxy 97 169. Control of the right to vote 98 170. Effect of disposal of shares on voting rights 98 171. Effect of relevant share and voting interests on voting rights 98 172. Rights of representatives 99 173. Other rights and duties of members not affected by ineligibility to vote 99 174. Vote of disentitled member to be disregarded 99 Division 2 -- Resolutions 175. Decisions to be by ordinary resolution 99 176. Ordinary resolutions 100 177. Special resolutions 100 178. How majority obtained is ascertained 100 179. Declaration of passing of special resolution 101 180. Effect of special resolution 101 181. Lodgment of special resolution 101 182. Decision of Registrar on application to register special resolution 102 Division 3 -- Resolution by circulated document 183. Application of Division 3 103 184. Resolution by circulation of document -- fewer than 50 members 103 page viii

Co-operatives Bill 2007 Contents Division 4 -- Postal ballots 185. Postal ballots 104 186. Special postal ballots 104 187. When a special postal ballot required 105 188. Holding of postal ballot on requisition 106 189. Expenses involved in postal ballots on requisition 107 Division 5 -- Meetings 190. Annual general meetings 107 191. Special general meetings 108 192. Notice of meetings 108 193. Quorum at meetings 108 194. Decision at meetings 108 195. Calling of general meeting on requisition 109 196. Minutes 110 Part 9 -- Management and administration of co-operatives Division 1 -- The Board 197. Board of directors 112 198. Election of directors 112 199. Qualification of directors 113 200. Disqualified persons 114 201. Meeting of the board of directors 116 202. Transaction of business outside meetings 117 203. Alternate directors 117 204. Delegation by board 117 205. Removal from and vacation of office 118 Division 2 -- Secretary 206. Secretary 119 Division 3 -- Duties and liabilities of directors, officers and employees 207. Meaning of "officer" 119 208. Officers must act honestly 120 209. Standard of care and diligence required 120 210. Improper use of information or position 121 211. Recovery of damages by co-operative 122 212. Other duties and liabilities not affected 122 213. Application of Corporations Act concerning indemnities and insurance for officers and auditors 122 page ix

Co-operatives Bill 2007 Contents 214. Application of Corporations Act provisions concerning officers of co-operatives 123 Division 4 -- Restrictions on directors and officers 215. Directors' remuneration 124 216. Certain financial accommodation to officers prohibited 124 217. Financial accommodation to directors and associates 125 218. Restriction on directors of certain co-operatives selling land to co-operative 127 219. Management contracts 127 Division 5 -- Declaration of interests 220. Declaration of interest 128 221. Declarations to be recorded in minutes 130 222. Division does not affect other laws or rules 130 223. Certain interests need not be declared 130 Division 6 -- Financial reports and audit 224. Meaning of "control" and "entity" 131 225. Requirements for financial records and financial reports 131 226. Power of Registrar to grant exemptions 132 227. Disclosure by directors 133 228. Protection of auditors etc. 133 229. Financial year 134 Division 7 -- Registers, records and returns 230. Registers to be kept by co-operatives 134 231. Location of registers 135 232. Inspection of registers etc. 136 233. Use of information on registers 137 234. Notice of appointment etc. of directors and officers 138 235. Annual report to be lodged with Registrar 138 236. List of members to be provided at request of Registrar 139 237. Special return to be given at request of Registrar 139 Division 8 -- Name and registered office 238. Name to include certain matter 140 239. Use of abbreviations 141 240. Name to appear on business documents etc. 142 page x

Co-operatives Bill 2007 Contents 241. Change of name of co-operative 142 242. Restriction on use of word "co-operative" or similar words 143 243. Registered office of co-operative 143 Part 10 -- Funds and property Division 1 -- Power to raise money 244. Meaning of obtaining financial accommodation 145 245. Fund raising to be in accordance with Act and regulations 145 246. Limits on deposit taking 145 247. Members etc. not required to see to application of money 145 248. Registrar's directions about fundraising 146 249. Subordinated debt 146 250. Application of Corporations Act to issues of debentures 147 251. Application of Corporations Act to particular issues of debentures 148 252. Disclosure statement 149 253. Approval of board for transfer of debentures 150 254. Application of Corporations Act -- reissue of redeemed debentures 150 255. Compulsory loan by member to co-operative 150 256. Interest payable on compulsory loan 151 Division 2 -- Co-operative capital units 257. General nature of co-operative capital units 152 258. Priority of CCU's on winding-up 153 259. Financial accommodation provisions apply to issue of CCUs 153 260. CCUs to be issued to non-members 154 261. Minimum requirements for rules concerning CCUs 154 262. CCUs not to be issued unless terms of issue approved by Registrar 154 263. Directors' duties concerning CCUs 155 264. Redemption of CCUs 156 265. Capital redemption reserve 156 266. Issue of shares in substitution for redemption 157 Division 3 -- Charges 267. Registration of charges 157 page xi

Co-operatives Bill 2007 Contents Division 4 -- Receivers and other controllers of property of co-operatives 268. Receivers and other controllers of property of co-operatives 157 Division 5 -- Disposal of surplus from activities 269. Retention of surplus for benefit of co-operative 158 270. Application for charitable purposes or members' purposes 158 271. Distribution of surplus or reserves to members 158 272. Application of surplus to other persons 159 Division 6 -- Acquisition and disposal of assets 273. Acquisition and disposal of assets 159 Part 11 -- Restrictions on the acquisition of interests in co-operatives Division 1 -- Restrictions on share and voting interests 274. Application of Part 162 275. Notice required to be given of voting interest 162 276. Notice required to be given of substantial share interest 162 277. Requirements for notices 163 278. Maximum permissible level of share interest 163 279. Transitional provision 164 280. Shares to be forfeited to remedy contravention 164 281. Powers of board in response to suspected contravention 165 282. Powers of Supreme Court in relation to contravention 166 283. Co-operative to notify Registrar of interest over 20% 166 284. Co-operative to keep register 167 285. Unlisted companies to provide list of shareholders etc. 167 286. Excess share interest not to affect loan liability 168 287. Extent of operation of Division 168 288. Registrar may grant exemption from Division 169 page xii

Co-operatives Bill 2007 Contents Division 2 -- Restrictions on certain share offers 289. Share offers to which Division applies 169 290. Offer to be approved by special resolution using special postal ballot 169 291. Some offers totally prohibited if they discriminate 169 292. Offers to be submitted to board first 170 293. Announcements of proposed takeovers concerning proposed company 170 294. Additional disclosure requirements for offers involving conversion to company 172 295. Consequences of prohibited offer 172 296. Registrar may grant exemptions 173 Part 12 -- Merger, transfer of engagements, winding-up Division 1 -- Mergers and transfers of engagements 297. Application of Division 174 298. Mergers and transfers of engagements of local co-operatives 174 299. Requirements before application can be made 174 300. Disclosure statement required 174 301. Making an application 176 302. Approval of merger 176 303. Approval of transfer of engagements 177 304. Transfer of engagements by direction of Registrar 177 Division 2 -- Transfer of incorporation 305. Application for transfer 178 306. Requirements before application can be made 179 307. Meaning of "new body" and "transfer" 179 308. New body ceases to be registered as co-operative 180 309. Transfer not to impose greater liability etc. 180 310. Effect of new certificate of registration 180 311. New body must give copy of new certificate of registration or incorporation to Registrar 181 312. New body is a continuation of the co-operative 181 Division 3 -- Winding-up and deregistration 313. Methods of winding-up 181 page xiii

Co-operatives Bill 2007 Contents 314. Winding-up on Registrar's certificate 181 315. Method of deregistration 182 316. Application of Corporations Act to winding-up and deregistration 182 317. Restrictions on voluntary winding-up 184 318. Start of members' voluntary winding-up 184 319. Distribution of surplus -- non-distributing co-operatives 184 320. Liquidator -- vacancy may be filled by Registrar 185 321. Review of liquidator's remuneration 185 322. Liability of member to contribute in a winding-up where shares forfeited etc. 185 Division 4 -- Administration of co-operative -- application of Corporations Act 323. Application of Corporations Act to administration of co-operative 186 Division 5 -- Appointment of administrator 324. Appointment of administrator 186 325. Effect of appointment of administrator 187 326. Revocation of appointment 187 327. Expenses of administration 189 328. Liabilities arising from administration 189 329. Additional powers of Registrar 190 330. Stay of proceedings 190 331. Administrator to report to Registrar 191 Division 6 -- Effect of merger etc. on property, liabilities etc. 332. How this Division applies to a merger 191 333. How this Division applies to a transfer of engagements 191 334. How this Division applies to a transfer of incorporation 192 335. Effect of merger etc. on property, liabilities etc. 192 Division 7 -- Miscellaneous 336. Grounds for winding-up, transfer of engagements, appointment of administrator 194 337. Application of Corporations Act for insolvent co-operatives 195 page xiv

Co-operatives Bill 2007 Contents Part 13 -- Arrangements and reconstructions Division 1 -- General requirements 338. Requirements for binding compromise or arrangement 196 339. Supreme Court ordered meeting of creditors 197 340. Registrar to be given notice and opportunity to make submissions 197 341. Results of 2 or more meetings 198 342. Persons disqualified from administering compromise etc. 198 343. Application of Schedule 4 to person appointed 199 344. Application of Corporations Act to person appointed 199 345. Copy of order to be attached to rules 199 346. Directors to arrange for reports 200 347. Power of Supreme Court to restrain further proceedings 200 348. Supreme Court need not approve compromise or arrangement takeovers 201 Division 2 -- Explanatory statements 349. Explanatory statement required to accompany notice of meeting etc. 201 350. Requirements for explanatory statement 203 351. Contravention of Division -- offence by co-operative 203 Division 3 -- Facilitating reconstructions and mergers 352. Provisions for facilitating reconstructions and mergers 204 Division 4 -- Acquisition of shares of dissenting shareholders 353. Definitions 206 354. Schemes and contracts to which Division applies 206 355. Acquisition of shares pursuant to notice to dissenting shareholder 206 356. Restrictions when excluded shares exceed 10% 207 357. Remaining shareholders may require acquisition 208 page xv

Co-operatives Bill 2007 Contents 358. Transfer of shares pursuant to compulsory acquisition 209 359. Disposal of consideration for shares compulsorily acquired 210 Division 5 -- Miscellaneous 360. Notification of appointment of scheme manager 211 361. Power of Supreme Court to require reports 211 362. Effect of out-of-jurisdiction compromise or arrangement 212 363. Jurisdiction to be exercised in harmony with Corporations Act jurisdiction 212 364. Registrar may appear etc. 212 Part 14 -- Mutual recognition Division 1 -- Introductory 365. Definitions 213 366. What constitutes carrying on business 213 367. Co-operatives law 214 368. Excluded matter 215 Division 2 -- Mutual recognition of foreign co-operatives 369. Operation of foreign co-operatives in this State 216 370. Authorisation to carry on business 217 371. Registration under Companies (Co-operative) Act 1943 217 372. Notification to Registrar 217 373. Authorisation notices for participating co-operatives 219 374. Authorisation notices for non-participating co-operatives 219 375. Name of foreign co-operative 220 376. When foreign co-operative not authorised to carry on business 220 377. Withdrawal of authority to carry on business 220 378. Appeals 221 379. Application of Act and regulations to foreign co-operatives 222 page xvi

Co-operatives Bill 2007 Contents Division 3 -- General 380. Name and place of origin to appear on business and other documents 222 381. Supply of information to participating Registrars 223 382. Registrar to be notified of changes 223 383. Cessation of business 223 384. Functions conferred on Registrar under co-operatives law 224 Division 4 -- Winding-up of foreign co-operatives in this State 385. Winding-up to relate to State activities 224 386. Supreme Court may order winding-up 224 387. Application of Corporations Act to winding-up of foreign co-operatives 225 388. Outstanding property of foreign co-operative 226 Division 5 -- Mergers and transfers of engagements 389. Definitions 226 390. Authority for merger or transfer of engagements 227 391. Requirements before application can be made 227 392. Disclosure statement required 228 393. Making an application 230 394. Approval of merger 230 395. Approval of transfer of engagements 231 396. Effect of merger or transfer of engagements 232 397. Division applies instead of certain other provisions of this Act 234 Part 15 -- Supervision and protection of co-operatives Division 1 -- Supervision and protection 398. Definitions 235 399. "Co-operative" includes subsidiaries, foreign co-operatives and co-operative ventures 235 400. Appointment of inspectors 236 401. Registrar and investigators have functions of inspectors 236 402. Inspector's identity card 236 403. Production or display of inspector's identity card 237 page xvii

Co-operatives Bill 2007 Contents 404. Powers of inspector 237 405. Inspector's appointment conditions 237 406. Entry of place 238 407. Consent to entry 238 408. Inspectors may require certain persons to appear, answer questions and produce documents 239 409. Powers of inspectors on place entered 240 410. Functions of inspectors in relation to relevant documents 240 411. Protection from incrimination 241 412. Warrants 242 413. Warrants -- applications made other than in person 243 414. Entry with warrant 244 415. General powers after entering places 245 416. Power to seize evidence 246 417. Receipt for seized things 246 418. Return of seized things 246 419. Power to require name and address 247 420. False or misleading statements 248 421. Power to require production of documents 248 422. False or misleading documents 248 423. Obstruction of inspectors 249 424. Copies or extracts of records to be admitted in evidence 249 425. Privilege 250 Division 2 -- Inquiries 426. Definitions 251 427. Appointment of investigators 252 428. Powers of investigators 253 429. Examination of involved person 253 430. Privilege 254 431. Offences by involved person 255 432. Offences relating to documents 255 433. Record of examination 256 434. Report of investigator 256 435. Proceedings following inquiry 258 436. Admission of investigator's report as evidence 258 437. Costs of inquiry 258 page xviii

Co-operatives Bill 2007 Contents Division 3 -- Prevention of fraud etc. 438. Falsification of records 259 439. Fraud or misappropriation 260 440. Offering or paying commission 260 441. Accepting commission 260 442. False statements in loan application etc. 261 Division 4 -- Miscellaneous powers of the Registrar 443. Application for special meeting or inquiry 261 444. Holding of special meeting 262 445. Expenses of special meeting or inquiry 262 446. Power to hold special inquiry into co-operative 263 447. Special meeting following inquiry 263 448. Information and evidence 263 449. Extension or abridgment of time 263 450. Power of Registrar to intervene in proceedings 264 Part 16 -- Administration of this Act Division 1 -- The Registrar 451. Registrar of Co-operatives 265 452. Deputy Registrar and other staff 265 453. Delegation by Registrar 266 454. Registers to be kept by Registrar 266 455. Keeping of registers 267 456. Disposal of records by Registrar 267 457. Inspection of registers 268 458. Approvals by Registrar 268 459. Lodgment of documents 269 460. Way of lodging 269 461. Power of Registrar to refuse to register or reject documents 269 Division 2 -- Protection from liability 462. Particular persons protected from liability 270 Division 3 -- Evidence 463. Certificate of registration 271 464. Certificate evidence 271 465. Records kept by co-operatives 272 466. Minutes 272 467. Official certificates 272 page xix

Co-operatives Bill 2007 Contents 468. The Registrar and proceedings 273 469. Rules 273 470. Registers 273 Division 4 -- Enforceable undertakings 471. Undertakings following contravention of, or failure to comply with, this Act 273 472. Register of undertakings 274 473. Enforcement orders 274 Part 17 -- Offences and proceedings 474. Offences by officers of co-operatives 277 475. Notice to be given of conviction for offence 277 476. Secrecy 277 477. False or misleading statements 280 478. Further offence for continuing failure to do required act 280 479. Civil remedies 281 480. Injunctions 282 481. Proceedings for offences etc. 283 Part 18 -- General 482. Co-operative ceasing to exist 285 483. Service of documents on co-operative 285 484. Service on member of co-operative 286 485. Reciprocal arrangements 287 486. Translations of documents 287 487. Exemptions may be on conditions 287 488. Approval of forms 287 489. Regulation making power 288 490. Companies (Co-operative) Act 1943 repealed 288 491. Co-operative and Provident Societies Act 1903 repealed 288 492. Transitional and savings provisions 288 493. Consequential amendments 288 Schedule 1 -- Matters for which rules must make provision 1. Requirements for all co-operatives 289 2. Additional matters -- co-operatives with share capital 290 page xx

Co-operatives Bill 2007 Contents 3. Additional matters -- non-distributing co-operatives 291 Schedule 2 -- Relevant interests, associates, related bodies Division 1 -- Relevant interests 1. Terminology used in this Schedule 292 2. Basic rules -- relevant interests 292 3. Control of corporation having power in relation to a share 292 4. Control of 20% of voting power in corporation having power in relation to a share 293 5. Deemed relevant interest in advance of performance of agreement that will give rise to a relevant interest 293 6. Control of corporation having a relevant interest by virtue of clause 5 294 7. Matters not affecting application of Division 294 8. Corporation may have a relevant interest in its own shares 295 9. Exclusions -- money lenders 295 10. Exclusions -- certain trustees 295 11. Exclusions -- instructions to securities dealer to dispose of share 296 12. Exclusions -- honorary proxies 296 13. Exclusions -- holders of prescribed offices 296 14. Prescribed exclusions 296 15. Effect of Schedule 296 16. Relevant interest -- corporation other than co-operative 297 Division 2 -- Associates 17. Effect of Part 297 18. Associates of a corporation 297 19. Matters relating to voting rights 297 20. General 298 21. Exclusions 299 Division 3 -- Related corporations 22. Related corporations 299 page xxi

Co-operatives Bill 2007 Contents Schedule 3 -- Registration etc. of charges Division 1 -- Preliminary 1. Interpretation 300 2. Application to charges referred to in clause 17 301 3. Lodgment of documents 301 Division 2 -- Registration Subdivision 1 -- Charges 4. Charges to which the Schedule applies 301 5. Excluded charges 302 6. Personal chattels 303 7. Book debts 303 8. Crops or stock 304 9. Deposit of documents of title 304 10. Charges on land or fixtures on land 304 11. Where other property is also charged 304 12. Effect of failure to lodge or give notice or document 304 Subdivision 2 -- Notice of charge 13. Lodgment of notice of charge and copy of instrument, and transitional provision 305 14. Series of debentures 306 15. Operation of priority provisions in respect of issue of debentures 306 16. Discounts 307 17. Acquisition of property subject to charge 307 Subdivision 3 -- Registration 18. Register of Co-operative Charges 308 19. Registration of documents relating to charge 308 20. Provisional registration if stamp duty not paid 309 21. Provisional registration if required particulars not supplied 310 22. Effect of provisional registration 311 23. If 2 or more charges relate to the same property 312 24. Registration of assignment or variation of charge 312 25. Standard time for the purposes of this Subdivision 312 page xxii

Co-operatives Bill 2007 Contents Subdivision 4 -- Certain charges void against liquidator or administrator 26. Definitions 313 27. Certain charges void against liquidator or administrator 313 28. Certain varied charges void against liquidator or administrator 314 29. Supreme Court may extend required period 315 30. Certain later charges void 315 31. Effect of provisions on purchaser in good faith 316 Subdivision 5 -- Certain charges in favour of persons void 32. Definitions 317 33. Charges in favour of certain persons void in certain cases 317 34. Supreme Court may give leave for enforcement of charge 318 35. Certain transactions excluded 318 Subdivision 6 -- Assignment, variation or satisfaction of charges 36. Assignment and variation of charges 319 37. Satisfaction of, and release of property from, charges 320 Subdivision 7 -- General 38. Lodgment of notices 320 39. Lodgment offences 321 40. Co-operative to keep documents relating to charges 321 41. Co-operative to keep register, and transitional provision 321 42. Certificates 323 43. Power of Supreme Court to rectify register of charges 324 44. Registrar may exempt from compliance with certain requirements of Division 324 Division 3 -- Order of priority Subdivision 1 -- General 45. Definitions 325 46. Priorities of charges 326 page xxiii

Co-operatives Bill 2007 Contents Subdivision 2 -- Priority rules 47. General priority rules in relation to registered charges 327 48. General priority rule in relation to unregistered charges 328 49. Special priority rules 328 Schedule 4 -- Receivers, and other controllers, of property of co-operatives 1. Interpretation 330 2. Application of Schedule 331 3. Persons not to act as receivers 331 4. Supreme Court may declare whether controller is validly acting 332 5. Liability of controller 333 6. Liability of controller under pre-existing agreement about property used by co-operative 334 7. Powers of receiver 335 8. Controller's duty of care in exercising power of sale 337 9. Supreme Court may authorise managing controller to dispose of property despite prior charge 337 10. Receiver's power to carry on co-operative's business during winding-up 338 11. Controller's duties in relation to financial institution accounts and financial records 339 12. Managing controller to report within 2 months about co-operative's affairs 340 13. Reports by receiver 341 14. Supervision of controller 342 15. Controller may apply to Supreme Court 343 16. Power of Supreme Court to fix receiver's remuneration 343 17. Controller has qualified privilege in certain cases 345 18. Notification of matters relating to controller 345 19. Statement that receiver appointed or other controller acting 346 20. Officers to report to controller about co-operative's affairs 347 page xxiv

Co-operatives Bill 2007 Contents 21. Controller may require reports 349 22. Controller may inspect records 350 23. Lodging controller's accounts 350 24. Payment of certain debts, out of property subject to floating charge, in priority to claims under charge 352 25. Enforcement of controller's duty to make returns 354 26. Supreme Court may remove controller for misconduct 354 27. Supreme Court may remove redundant controller 354 28. Effect of clauses 26 and 27 355 Schedule 5 -- Applied co-operatives provisions 1. Provisions applicable to participating co-operatives 356 2. Provisions applicable to non-participating co-operatives 356 Schedule 6 -- Modifications to Corporations Act 1. Modifications to winding-up provisions 358 Schedule 7 -- Transitional and savings provisions Division 1 -- Preliminary 1. Terms used in this Schedule 360 2. Interpretation Act 1984 not affected 360 3. Transitional regulations 360 Division 2 -- Prohibition on registration under former Act 4. Prohibition on registration under Companies (Co-operative) Act 1943 or Co-operative and Provident Societies Act 1903 361 Division 3 -- Transfer to incorporation under this Act 5. Co-operative companies and registered societies to register under this Act 362 6. Decision of Registrar to register co-operative company or registered society 363 page xxv

Co-operatives Bill 2007 Contents Division 4 -- General transitional provisions 7. Special resolutions, applications to the Court and court orders 363 8. Inspections or inquiry 364 9. Acquisition of shares of shareholders dissenting from scheme or contract approved by majority 364 10. Transitional provisions about active members 365 Division 5 -- Pending incorporation, reconstruction or winding-up 11. Pending incorporation 365 12. Pending reconstruction 366 13. Pending wind-up 366 Schedule 8 -- Consequential amendments and repeal Division 1 -- Consequential amendments commencing on registration of Co-operative Bulk Handling Limited 1. Grain Marketing Act 2002 amended 368 2. Local Government Act 1995 amended 368 Division 2 -- Consequential amendments commencing on commencement of this Act 3. Civil Judgments Enforcement Act 2004 amended 369 4. Criminal Property Confiscation Act 2000 amended 369 5. Equal Opportunity Act 1984 amended 369 6. Taxi Act 1994 amended 370 7. Western Australian Treasury Corporation Act 1986 amended 370 Division 3 -- Consequential amendments commencing on repeal of former Acts 8. Civil Judgments Enforcement Act 2004 amended 370 9. Criminal Property Confiscation Act 2000 amended 371 10. Equal Opportunity Act 1984 amended 371 11. Housing Loan Guarantee Act 1957 amended 371 12. Local Government Act 1995 amended 371 13. Taxi Act 1994 amended 372 14. Western Australian Treasury Corporation Act 1986 amended 372 page xxvi

Co-operatives Bill 2007 Contents Defined Terms page xxvii

Western Australia LEGISLATIVE ASSEMBLY (As amended during consideration in detail) Co-operatives Bill 2007 A Bill for An Act to provide a legislative framework for the formation, registration and management of co-operatives and for related purposes. The Parliament of Western Australia enacts as follows: page 1

Co-operatives Bill 2007 Part 1 Preliminary Division 1 Introductory s. 1 Part 1 -- Preliminary Division 1 -- Introductory 1. Short title This is the Co-operatives Act 2007. 5 2. Commencement This Act comes into operation as follows: (a) sections 1 and 2 -- on the day on which this Act receives the Royal Assent; (b) the rest of the Act, other than sections 490 and 491, and 10 Schedule 8 Divisions 1 and 3 -- on a day fixed by proclamation; (c) sections 490 and 491, and Schedule 8 Division 3 -- on the last day of the period of 2 years after the day fixed under paragraph (a); 15 (d) Schedule 8 Division 1 -- on the day that Co-operative Bulk Handling Limited becomes registered under this Act. 3. Objects of this Act The objects of this Act are to -- 20 (a) enable the formation, registration and operation of co-operatives; and (b) promote co-operative philosophy, principles, practices and objectives; and (c) protect the interests of co-operatives, their members and 25 the public in the operations and activities of co-operatives; and (d) ensure that the directors of co-operatives are accountable for their actions and decisions to the members of co-operatives; and page 2

Co-operatives Bill 2007 Preliminary Part 1 Introductory Division 1 s. 4 (e) encourage and facilitate self-management by co-operatives at all levels; and (f) encourage the development, integration and strengthening of co-operatives at local, regional, 5 national and international levels by supporting and fostering State and national peak organisations and co-operative instrumentalities. 4. Terms used in this Act (1) In this Act -- 10 "active member" has the meaning given to that term in section 111; "active membership provision" has the meaning given to that term in section 112; "agreement" means an agreement, arrangement or 15 understanding -- (a) whether formal or informal or partly formal and partly informal; and (b) whether written or oral or partly written and partly oral; and 20 (c) whether or not having legal or equitable force and whether or not based on legal or equitable rights; "alter", in relation to the rules of a co-operative, includes to add to, substitute or rescind; "associate" has the meaning given to that term in Schedule 2 25 Division 2; "board" means the board of directors of a co-operative and in circumstances where a person or committee is exercising a power of the board delegated under the rules of a co-operative, includes that person or committee; 30 "chief executive officer", of a co-operative or a subsidiary of a co-operative, means the principal executive officer of the co-operative or subsidiary for the time being, by whatever name called, and whether or not that officer is a director or the secretary; page 3

Co-operatives Bill 2007 Part 1 Preliminary Division 1 Introductory s. 4 "constitution", of a co-operative, includes the articles of association, memorandum, rules and other constituent documents; "co-operative" means a body registered under this Act as a 5 co-operative; "co-operative capital unit" has the meaning given to that term in section 257(1); "co-operative group" means a co-operative that has a membership as described in section 57; 10 "corporation" has the meaning given to that term in the Corporations Act; "Corporations Act" means the Commonwealth Corporations Act 2001; "debenture" means a document issued by a co-operative that 15 evidences or acknowledges indebtedness of the co-operative in respect of money that is or may be deposited with or lent to the co-operative, whether constituting a charge on property of the co-operative or not, and includes a unit of a debenture, except that it does not 20 include -- (a) a cheque, order for the payment of money or bill of exchange; or (b) a promissory note having a face value of not less than $50 000; or 25 (c) any other document of a class that is prescribed by the regulations as exempt from this definition; "deed of arrangement" means a deed of company arrangement in force under the Corporations Act Part 5.3A as that Part applies under this Act or a deed of that type as varied and 30 in force from time to time; "deposit taking co-operative" means a co-operative that is permitted under section 246 to accept money on deposit; "distributing co-operative" means a co-operative as described in section 13; page 4

Co-operatives Bill 2007 Preliminary Part 1 Introductory Division 1 s. 4 "eligible member" means a person considered by the board of a co-operative to be eligible to become a member of that co-operative; "financial records" includes the following -- 5 (a) invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; (b) documents of prime entry; (c) working papers and other documents needed to 10 explain -- (i) the methods by which financial statements are made up; and (ii) adjustments to be made in preparing financial statements; 15 "financial report" means an annual financial report or a half-year financial report prepared under the Corporations Act Chapter 2M; "financial services business" has the meaning given to that term in the Corporations Act section 761A; 20 "financial services licensee" has the meaning given to that term in the Corporations Act section 761A; "financial statements" means annual financial statements under the Corporations Act section 295 or half-year financial statements applying under the Corporations Act 25 section 303; "foreign co-operative" means a corporation that is registered, incorporated or formed under, or subject to, a law in force outside this State, including outside Australia, that regulates co-operatives or organisations having attributes 30 the same as or similar to co-operatives except that it does not include -- (a) a body incorporated under the Corporations Act or under another law of the Commonwealth; or page 5

Co-operatives Bill 2007 Part 1 Preliminary Division 1 Introductory s. 4 (b) an authorised deposit-taking institution as defined in the Commonwealth Banking Act 1959 section 5; "inspector" means a person appointed as an inspector under Part 15; 5 "model rules" means the model rules prescribed by the regulations under section 101; "mortgage" includes lien, charge or other security over property; "non-distributing co-operative" means a co-operative as 10 described in section 14; "officer", of a co-operative, means -- (a) a director or secretary of the co-operative; or (b) a person who is concerned, or takes part, in the management of the co-operative, whether or not as a 15 director; or (c) a receiver and manager, appointed under a power contained in an instrument, of property of the co-operative; or (d) an administrator of a deed of arrangement executed 20 by the co-operative; or (e) a liquidator or provisional liquidator appointed in a voluntary winding-up of the co-operative; or (f) an administrator of the co-operative appointed under -- 25 (i) the Corporations Act Part 5.3A as applying under this Act; or (ii) Part 12 Division 5 of this Act; or (g) a trustee or other person administering a compromise 30 or arrangement made between the co-operative and another person; page 6

Co-operatives Bill 2007 Preliminary Part 1 Introductory Division 1 s. 4 "primary activity", of a co-operative, means an activity stated in the rules of the co-operative to be a primary activity of the co-operative; "records" includes books, financial records, financial 5 statements, minutes, registers, deeds, writings, documents and other sources of information compiled, recorded or stored in written form or on microfilm, or by electronic process, or in any other manner or by any other means; "Registrar" means the Registrar of Co-operatives under 10 section 451; "related corporation" has the meaning given to that term in Schedule 2 Division 3; "relevant interest" in -- (a) a right to vote has the meaning given to that term in 15 Schedule 2 Division 1 clause 2(1); and (b) a share has the meaning given to that term in Schedule 2 Division 1 clause 2(2); "rules", of a co-operative, means the rules of the co-operative for the time being applying under this Act; 20 "seal", of a co-operative, means the common seal or official seal of the co-operative; "share" means share in the share capital of a co-operative; "subsidiary" has the meaning given to that term in the Corporations Act; 25 "surplus", in relation to a co-operative, means the excess of income over expenditure after making proper allowance for taxation expense, for depreciation in value of the property of the co-operative and for future contingencies; "transfer day", for a particular transferred co-operative, means 30 the day on which that co-operative became registered under this Act; "transferred co-operative" means a co-operative that immediately before the commencement of this Act was page 7

Co-operatives Bill 2007 Part 1 Preliminary Division 2 Qualified privilege s. 5 registered as a co-operative company under the Companies (Co-operative) Act 1943 or as a registered society under the Co-operative and Provident Societies Act 1903. (2) A reference in this Act to the Corporations Act or a provision of 5 the Corporations Act applying under this Act (or a part of this Act) is a reference to that Act or provision to the extent that it is declared to apply to a matter for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 as a law of this State. 10 Division 2 -- Qualified privilege 5. Qualified privilege (1) If this Act provides that a person has qualified privilege for an act, matter or thing, the person, in relation to the act, matter or thing -- 15 (a) has qualified privilege in proceedings for defamation; and (b) is not, in the absence of malice on the person's part, liable to an action for defamation at the suit of a person. (2) In subsection (1) -- 20 "malice" includes ill-will to the person concerned or any other improper motive. (3) Neither this section nor a provision of this Act that provides as mentioned in subsection (1) limits or affects any right, privilege or immunity that a person has, apart from this section or such a 25 provision, as a defendant in proceedings, or an action, for defamation. Division 3 -- The co-operative principles 6. Co-operative principles The co-operative principles are the principles set out in the 30 following Table. page 8

Co-operatives Bill 2007 Preliminary Part 1 The co-operative principles Division 3 s. 6 Table of co-operative principles Principle 1. 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. 2. 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. 3. 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. 4. 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. page 9

Co-operatives Bill 2007 Part 1 Preliminary Division 4 Application of Corporations Act to co-operatives s. 7 Principle 5. 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. 6. 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. 7. 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. 7. Interpretation to promote co-operative principles In the interpretation of a provision of this Act, a construction that would promote co-operative principles is to be preferred to a construction that would not promote co-operative principles. 5 Division 4 -- Application of Corporations Act to co-operatives 8. Definitions In this Division -- "company" has the meaning given to that term in the Corporations Act section 9; 10 "Corporations legislation" means the Corporations legislation to which the Corporations Act Part 1.1A applies; "excluded Corporations legislation provision" means any provision of the Corporations legislation that does not apply to co-operatives as a law of the Commonwealth. page 10

Co-operatives Bill 2007 Preliminary Part 1 Application of Corporations Act to co-operatives Division 4 s. 9 9. Excluded matter (1) A co-operative is declared to be an excluded matter for the purposes of the Corporations Act section 5F in relation to the whole of the Corporations legislation other than to the extent 5 specified in subsection (2). (2) Subsection (1) does not exclude the application of the following provisions of the Corporations legislation to co-operatives to the extent that the provisions would otherwise be applicable to them -- 10 (a) provisions relating to a matter that the regulations provide is not to be excluded from the operation of the Corporations legislation; (b) provisions relating to the role of a co-operative in the formation of a company; 15 (c) provisions relating to the registration of a co-operative as a company under the Corporations Act Chapter 5B; (d) provisions relating to substantial shareholdings, by or involving a co-operative, in a company; (e) provisions conferring or imposing functions on a 20 co-operative as a member, or former member, of a corporation; (f) provisions relating to dealings by a co-operative in financial products of a corporation, other than financial products of the co-operative itself; 25 (g) provisions conferring or imposing functions on a co-operative in its dealings with a corporation, not being dealings in financial products of the co-operative; (h) provisions relating to financial products of a co-operative, other than shares in, co-operative capital 30 units in, debentures of or deposits with a co-operative; (i) provisions relating to financial markets and participants in financial markets; page 11

Co-operatives Bill 2007 Part 1 Preliminary Division 4 Application of Corporations Act to co-operatives s. 10 (j) provisions relating to financial services licensees whose licence covers dealing in, or providing advice about, financial products; (k) provisions relating to carrying on a financial services 5 business; (l) provisions relating to financial statements, and audits of financial statements, of financial services licensees whose licence covers dealing in, or providing advice about, financial products; 10 (m) provisions relating to clients of financial services licensees whose licence covers dealing in, or providing advice about, financial products; (n) provisions relating to registers of interests in financial products. 15 (3) To remove doubt it is declared that subsection (1) does not operate to exclude the operation of the following provisions of the Corporations Act, except in relation to shares in, co-operative capital units in, debentures of, or deposits with, a co-operative -- 20 (a) Part 1.2A; (b) Chapter 2L; (c) Chapter 6CA; (d) Chapter 6D; (e) Part 7.10. 25 (4) If a co-operative is directed by an order of the Supreme Court under section 84(i) to become registered as a company under the Corporations Act, the provisions referred to in subsection (2)(c) apply to the extent necessary for the co-operative to be registered as a company under Chapter 5B of that Act. 30 10. Applying the Corporations legislation to co-operatives (1) The regulations may declare a matter relating to co-operatives to be an applied Corporations legislation matter for the purposes of page 12

Co-operatives Bill 2007 Preliminary Part 1 Application of Corporations Act to co-operatives Division 4 s. 10 the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to any excluded Corporations legislation provision or provisions, with any modifications that are specified in the declaration. 5 (2) Without limiting subsection (1), any such regulations may -- (a) specify modifications to the definitions and other interpretative provisions of the Corporations legislation relevant to any excluded Corporations legislation provision that is the subject of the declaration; and 10 (b) provide for ASIC to exercise a function under any excluded Corporations legislation provision that is the subject of the declaration, but only if -- (i) ASIC is to exercise the function under an agreement referred to in section 11(8) or (9A)(b) 15 of the new ASIC Act; and (ii) ASIC is authorised to exercise that function under section 11 of the new ASIC Act; and (c) specify that a reference to ASIC in an excluded 20 Corporations legislation provision that is the subject of the declaration is to be a reference to another person; and (d) identify an excluded Corporations legislation provision to which the declaration relates by reference to the 25 provision as in force at a particular time; and (e) specify a court (other than the Supreme Court) to exercise a function conferred on a court or the Court by an excluded Corporations legislation provision to which the declaration relates. 30 (3) Words and expressions used in this section and also in the Corporations (Ancillary Provisions) Act 2001 Part 3 have the same meanings in this section as they have in that Part. page 13

Co-operatives Bill 2007 Part 1 Preliminary Division 4 Application of Corporations Act to co-operatives s. 11 11. Modifications to applied provisions (1) If a provision of this Act or the regulations declares a matter to be an applied Corporations legislation matter for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 (the 5 "declaratory provision") in relation to any provisions of the Corporations legislation (the "applied provisions"), the declaratory provision is taken to specify the following modifications -- (a) a reference in the applied provisions to articles or a 10 memorandum of association or a constitution or replaceable rules is to be read as a reference to rules; (b) a cross-reference in the applied provisions to another provision of the Corporations Act is, if that cross-reference is not appropriate (because for example 15 the provision cross-referred to is not among the applied provisions), to be read as a cross-reference to the equivalent provision of this Act; (c) a reference in the applied provisions to the Gazette is to be read as a reference to the Western Australian 20 Government Gazette; (d) a reference in the applied provisions to the Commonwealth is to be read as a reference to this State; (e) any of the applied provisions that are not relevant to co-operatives or that are incapable of application to 25 co-operatives are to be ignored; (f) modifications prescribed under a regulation under subsection (2). (2) The regulations may prescribe the modifications that are necessary or desirable for the effective operation of the applied 30 provisions. page 14

Co-operatives Bill 2007 Formation Part 2 Types of co-operatives Division 1 s. 12 Part 2 -- Formation Division 1 -- Types of co-operatives 12. Types of co-operatives (1) A body may be registered under this Act as a co-operative. 5 (2) A co-operative may be either -- (a) a distributing co-operative; or (b) a non-distributing co-operative. 13. Distributing co-operatives (1) A distributing co-operative must have a share capital. 10 (2) A distributing co-operative is a co-operative whose rules allow it to give returns or distributions on surplus or share capital. (3) A distributing co-operative must have a membership of -- (a) for a co-operative group, 2 or more co-operatives; and (b) for any other distributing co-operative -- 15 (i) if a lesser number than 5 is prescribed by the regulations, at least that number of active members; or (ii) otherwise, 5 or more active members. 14. Non-distributing co-operatives 20 (1) A non-distributing co-operative is a co-operative whose rules prohibit it from giving returns or distributions on surplus or share capital to members, other than the nominal value of shares, if any, at winding-up. (2) A non-distributing co-operative may or may not have a share 25 capital. (3) A non-distributing co-operative must have a membership of -- (a) for a co-operative group, 2 or more co-operatives; and page 15

Co-operatives Bill 2007 Part 2 Formation Division 2 Formation meeting s. 15 (b) for any other non-distributing co-operative -- (i) if a lesser number than 5 is prescribed by the regulations, at least that number of active members; or 5 (ii) otherwise, 5 or more active members. Division 2 -- Formation meeting 15. Formation meeting (1) Before a proposed co-operative, other than an existing corporation, can be registered, a formation meeting must be held 10 in accordance with this section. (2) At the formation meeting -- (a) a person must act as chairman, and a person must be specified to act as secretary; and (b) in the case of a proposed distributing co-operative, a 15 disclosure statement approved under section 16 must be presented to the meeting; and (c) the proposed rules of the co-operative approved under section 17 in respect of the proposed co-operative, must be agreed to by two-thirds of the eligible members 20 attending the meeting; and (d) the eligible members attending the meeting must sign the application for membership; and (e) the eligible members attending the meeting must elect the first directors of the proposed co-operative in 25 accordance with the proposed rules; and (f) the eligible members attending the meeting must authorise a person -- (i) to apply to the Registrar for registration of the proposed co-operative; and 30 (ii) to do anything necessary to have the proposed co-operative registered. page 16

Co-operatives Bill 2007 Formation Part 2 Approval of disclosure statement and rules Division 3 s. 16 (3) The formation meeting must be held by -- (a) for a co-operative group, not less than 2 suitably qualified co-operatives; and (b) for any other co-operative, not less than 5 persons, or if 5 a lesser number than 5 is prescribed by the regulations, not less than the prescribed number of persons, suitably qualified to be members of the proposed co-operative. (4) For the purposes of subsection (3), a person or a co-operative is suitably qualified to be a member if -- 10 (a) there are reasonable grounds to believe the person or co-operative will be an active member of the proposed co-operative; and (b) for an individual, the person has attained the age of 18; and 15 (c) the person satisfies any other requirements for membership set out in the proposed rules. (5) Each co-operative forming a proposed co-operative group may be represented at the formation meeting by one person. Division 3 -- Approval of disclosure statement and rules 20 16. Approval of disclosure statement (1) A draft disclosure statement of a proposed distributing co-operative must be submitted to the Registrar at least 35 days (or a shorter period the Registrar may allow in a particular case) before the formation meeting is due to be held. 25 (2) The draft disclosure statement submitted under subsection (1) must be accompanied by a written statement specifying the date on which the formation meeting is due to be held. (3) The disclosure statement must contain the information necessary to ensure that eligible members are adequately 30 informed of the nature and extent of a person's financial page 17

Co-operatives Bill 2007 Part 2 Formation Division 3 Approval of disclosure statement and rules s. 16 involvement or liability as a member of the co-operative including so far as applicable -- (a) the estimated costs of formation; and (b) the active membership provisions of the proposed 5 co-operative; and (c) the rights and liabilities attaching to shares in the proposed co-operative; and (d) the capital required for the co-operative at the time of formation; and 10 (e) the projected income and expenditure of the co-operative for its first year of operation; and (f) information about any pre-registration contractual obligations of the co-operative under Part 3 Division 5; and 15 (g) any other information that the Registrar directs. (4) The disclosure statement cannot include a statement purporting to be made by an expert or to be based on a statement made by an expert unless -- (a) the expert has given, and has not withdrawn, the 20 expert's written consent to the submission of the disclosure statement with the statement included in the form and context in which it is included; and (b) there appears in the disclosure statement a statement that the expert has given, and has not withdrawn, the 25 expert's consent. (5) The Registrar may -- (a) approve the draft statement as submitted; or (b) amend the draft statement, or require a stated amendment of the draft, and then approve the amended 30 statement; or (c) approve a different statement to that submitted; or (d) refuse to approve the statement; or page 18

Co-operatives Bill 2007 Formation Part 2 Approval of disclosure statement and rules Division 3 s. 17 (e) require the person submitting the disclosure statement to give the Registrar any additional information the Registrar reasonably requires, and then act under paragraph (a), (b), (c) or (d). 5 (6) The Registrar may approve a disclosure statement with or without conditions. (7) Subject to subsection (8), the Registrar approves of a disclosure statement by giving written notice of the approval of the statement to the person who submitted the draft statement to the 10 Registrar. (8) The Registrar is taken to have approved the disclosure statement as submitted to the Registrar unless at least 5 days before the date specified in the written statement submitted under subsection (2), the Registrar gives written notice to the person 15 who submitted the draft statement that the Registrar -- (a) has approved an amended or different disclosure statement; or (b) is still considering the matter; or (c) refuses to approve the disclosure statement. 20 17. Approval of rules (1) A draft of the rules proposed for the co-operative (including active membership provisions in accordance with Part 6) must be submitted to the Registrar at least 35 days (or a shorter period the Registrar may allow in a particular case) before the 25 formation meeting is due to be held. (2) The draft rules submitted under subsection (1) must be accompanied by a written statement specifying the date on which the formation meeting is due to be held. (3) The proposed rules must -- 30 (a) be in accordance with section 98; and (b) be in a form that may reasonably be approved. page 19

Co-operatives Bill 2007 Part 2 Formation Division 4 Registration of proposed co-operative s. 18 (4) The Registrar may -- (a) approve the proposed rules as submitted; or (b) approve different proposed rules to those submitted; or (c) refuse to approve the proposed rules. 5 (5) Subject to subsection (6), the Registrar approves proposed rules by giving written notice of that approval to the person who submitted the proposed rules to the Registrar. (6) The Registrar is taken to have approved the proposed rules as submitted to the Registrar unless at least 5 days before the date 10 specified in the written statement submitted under subsection (2), the Registrar gives written notice to the person who submitted the proposed rules that the Registrar -- (a) has approved different proposed rules to those submitted; or 15 (b) is still considering the matter; or (c) refuses to approve the proposed rules. Division 4 -- Registration of proposed co-operative 18. Application for registration of proposed co-operative (1) An application for registration as a co-operative, other than an 20 application by a corporation under Division 5, must -- (a) be made in the form approved by the Registrar; and (b) be accompanied by the fee prescribed by the regulations; and (c) be signed by -- 25 (i) for a co-operative group, at least 2 directors elected at the formation meeting; and (ii) for any other proposed co-operative, at least 5, or if a lesser number than 5 is prescribed under a regulation, at least the prescribed number of, page 20

Co-operatives Bill 2007 Formation Part 2 Registration of proposed co-operative Division 4 s. 19 suitably qualified members, including 2 directors elected at the formation meeting; and (d) be accompanied by -- 5 (i) a copy of the proposed rules, certified in writing by the chairman and secretary for the formation meeting to have been agreed to at the formation meeting in accordance with section 15(2)(c); and (ii) in the case of a proposed distributing 10 co-operative, a copy of the disclosure statement, certified in writing by the chairman and secretary for the formation meeting to have been presented to that meeting as required by section 15(2)(b); and 15 (iii) a statement listing the name, address, occupation and place and date of birth of each person elected at the formation meeting in accordance with section 15(2)(e) to be a director of the proposed co-operative and containing a certificate signed 20 by the chairman and secretary verifying that those persons were elected; and (iv) a certificate signed by the chairman and secretary verifying that a specified person is the person authorised under section 15(2)(f); and 25 (v) any other particulars that the Registrar may require. (2) The application must be lodged with the Registrar within 2 months after closure of the formation meeting for the proposed co-operative or within the extended period that the 30 Registrar may allow. 19. Registration of co-operative (1) When an application is made under this Division for registration of a proposed co-operative, the Registrar must register the page 21

Co-operatives Bill 2007 Part 2 Formation Division 4 Registration of proposed co-operative s. 20 co-operative and its rules if satisfied that the requirements referred to in subsection (2) have been met. (2) The requirements for registration of a co-operative under this Division are that -- 5 (a) the proposed rules of the proposed co-operative must be those approved by the Registrar under section 17; and (b) the requirements of this Act must have been complied with in relation to the proposed co-operative and compliance must be likely to continue; and 10 (c) the proposed co-operative must be designed to function in accordance with the co-operative principles or, if it is not designed to function entirely in accordance with the co-operative principles, the Registrar must be satisfied that there are special reasons why the co-operative 15 should be registered under this Act; and (d) there must be no reasonable cause for refusing registration of the proposed co-operative. (3) If the Registrar is not satisfied that the requirements for registration of the co-operative have been met the Registrar may 20 refuse to register the co-operative and its rules. (4) The Registrar must give to the applicant written notice of the refusal and the reasons for the refusal. 20. Incorporation and certificate of registration (1) The incorporation of the co-operative takes effect on the 25 registration of the co-operative. (2) On the registration of the co-operative, the Registrar must issue a certificate of registration. page 22

Co-operatives Bill 2007 Formation Part 2 Registration of an existing corporation Division 5 s. 21 Division 5 -- Registration of an existing corporation 21. Existing corporation can be registered A corporation may apply to the Registrar to be registered as a co-operative under this Act, if the corporation is -- 5 (a) incorporated or registered or deemed to be registered under the Corporations Act; or (b) incorporated or registered under any other Act relating to the incorporation or registration of bodies corporate. 22. Formation meeting and transitional provision 10 (1) Before applying for registration as a co-operative, a corporation must pass a special resolution in accordance with its constitution approving of -- (a) the proposed registration; and (b) any alterations of its existing constitution necessary to 15 enable the corporation to comply with this Act. (2) At the meeting to pass the special resolution -- (a) the proposed rules of the proposed co-operative approved under section 17, and including active membership provisions in accordance with Part 6, must 20 also be passed by special resolution; and (b) in the case of a proposed distributing co-operative, a disclosure statement approved under section 16 must be presented to the meeting. (3) For a corporation that on registration under this Division will be 25 a transferred co-operative, the requirement to pass a special resolution approving the proposed registration and the proposed rules is satisfied if the resolution complies with section 177(1)(a) or (b), and (3). page 23

Co-operatives Bill 2007 Part 2 Formation Division 5 Registration of an existing corporation s. 23 23. Application for registration (1) An application for registration under this Division must be -- (a) in the form approved by the Registrar; and (b) accompanied by the fee prescribed by the regulations; 5 and (c) accompanied by -- (i) a written declaration, signed no more than 28 days before the application for registration by the directors or the committee of management of 10 the corporation, stating that at a meeting of the directors or committee they formed the opinion that the corporation will be able to pay its debts as they fall due; and (ii) a report in the form approved by the Registrar as 15 to the affairs of the corporation and showing its assets and liabilities, made up to the latest practicable date before the application; and (iii) a copy of the constitution of the corporation in force at the date of the application; and 20 (iv) 2 copies of the proposed rules of the co-operative, certified in writing by the directors or the committee of management to have been approved under section 22(2) by special resolution; and 25 (v) in the case of a proposed distributing co-operative, a copy of the disclosure statement presented to the meeting held under section 22, certified in writing by the directors or committee of management of the corporation to have been 30 presented to that meeting; and (vi) a list containing the name, address, occupation and place and date of birth of each director; and (vii) evidence to the satisfaction of the Registrar of the incorporation of the existing corporation; and page 24

Co-operatives Bill 2007 Formation Part 2 Registration of an existing corporation Division 5 s. 24 (viii) any other particulars that the Registrar may require. (2) For a corporation that on registration under this Division will be a transferred co-operative, an application need only comprise 5 the requirements of subsection (1)(a), (c)(iv) and (viii). 24. Requirements for registration (1) When an application is made for registration as a co-operative under this Division, the Registrar must register the corporation as a co-operative under this Act and register its rules under this 10 Act if the Registrar is satisfied that the requirements for registration of the co-operative have been met. (2) The requirements for registration as a co-operative under this Division are as follows -- (a) the proposed rules of the proposed co-operative must be 15 the proposed rules approved by the Registrar under section 17; (b) the requirements of this Act must have been complied with in relation to the proposed co-operative and compliance must be likely to continue; 20 (c) there must be no reasonable cause for refusing registration of the proposed co-operative. (3) If the Registrar is not satisfied that the requirements for registration of the co-operative have been met, the Registrar may refuse to register the co-operative and its rules and must 25 give to the applicant written notice of the refusal and the reasons for the refusal. (4) If the Registrar has decided under this section to register a corporation under this Act, the corporation must notify the authority responsible for registering the corporation under the 30 law under which it was previously registered of that decision. (5) Despite anything to the contrary in this Division, the registration of a corporation as a co-operative does not take effect until the page 25

Co-operatives Bill 2007 Part 2 Formation Division 5 Registration of an existing corporation s. 25 corporation ceases to be registered under the law under which it was previously registered. (6) The corporation must notify the Registrar in writing within 7 days after ceasing to be registered under that other law. 5 25. Transitional provision (1) This section applies to a corporation that, on registration under this Division, will be a transferred co-operative. (2) Section 24(4) to (6) does not apply to the corporation. (3) If the Registrar decides to register the corporation, the Registrar 10 must ensure that the corporation ceases to be registered under the old Act. 26. Certificate of registration (1) On the registration of a corporation as a co-operative, the Registrar must -- 15 (a) issue a certificate of registration to the corporation; and (b) publish notice of the issue of the certificate in the Gazette. (2) The corporate name of a corporation registered as a co-operative is the name approved by the Registrar, as specified in the 20 certificate of registration issued by the Registrar. 27. Effect of registration (1) The corporation is taken to be incorporated under this Act on its registration. (2) Except as expressly provided in this Act, the registration and 25 incorporation of the corporation as a co-operative does not prejudice any right of a member in respect of any shares held at the time of registration and incorporation. (3) The change of registration and incorporation does not affect the identity of the corporation which is taken to be the same body page 26

Co-operatives Bill 2007 Formation Part 2 Conversion of co-operative Division 6 s. 28 after registration as a co-operative as it was before and no act, matter or thing is affected by the change. Division 6 -- Conversion of co-operative 28. Conversion of co-operative 5 (1) A co-operative may, by alteration of its rules, convert from -- (a) a co-operative with share capital to a co-operative without share capital or vice versa; or (b) a distributing co-operative to a non-distributing co-operative or vice versa. 10 (2) An alteration of the rules for the conversion of a co-operative with share capital to a co-operative without share capital cannot be passed until at least 2 weeks after a notice has been published in a newspaper circulating generally in the district in which the registered office of the co-operative is situated advising of the 15 proposal to submit the proposed alteration to members of the co-operative. (3) An alteration of the rules for the conversion of a co-operative must be approved by special resolution passed by means of a special postal ballot. 20 Division 7 -- Reviews 29. Appeal against refusal to approve disclosure statement The person who submitted a draft disclosure statement to the Registrar under this Act may appeal to the Supreme Court against a failure of the Registrar to approve the statement. 25 30. Appeal against refusal to approve draft rules The person who submitted draft rules to the Registrar under this Act may appeal to the Supreme Court against a failure of the Registrar to approve the rules. page 27

Co-operatives Bill 2007 Part 2 Formation Division 8 General s. 31 31. Appeal against refusal to register The applicant for registration of a proposed co-operative under this Part may appeal to the Supreme Court against a failure of the Registrar to register the co-operative. 5 32. Supreme Court's powers on appeal The Supreme Court may make any order it considers appropriate to dispose of an appeal under this Division. Division 8 -- General 33. Acceptance of money by proposed co-operative 10 (1) A proposed co-operative that, or a person on a proposed co-operative's behalf who, accepts money for the proposed co-operative before the proposed co-operative is registered must hold that money on trust until the co-operative is registered. (2) If a co-operative is not registered within the period of 3 months 15 after the acceptance of money under subsection (1), the proposed co-operative or the person who accepted the money on its behalf must refund the money to the person who paid it. Penalty: a fine of $6 000. 34. Issue of duplicate certificate 20 The Registrar must issue a duplicate certificate of registration if -- (a) the Registrar is satisfied that the original certificate is lost or destroyed; and (b) the fee prescribed by the regulations is paid. page 28

Co-operatives Bill 2007 Legal capacity and powers Part 3 General powers Division 1 s. 35 Part 3 -- Legal capacity and powers Division 1 -- General powers 35. Effect of incorporation As a corporation, a co-operative -- 5 (a) has perpetual succession; and (b) has a common seal; and (c) may sue and be sued in its corporate name; and (d) subject to this Act, is capable of taking, purchasing, leasing, holding, selling and disposing of real and 10 personal property; and (e) may do and suffer all acts and things that corporations may by law do and suffer and that are necessary or expedient. 36. Power to form companies and enter into joint ventures 15 Without limiting any other provision of this Act, a co-operative has power -- (a) to form or participate in the formation of a corporation or unit trust; and (b) to acquire interests in and sell or otherwise dispose of 20 interests in corporations, unit trusts and joint ventures; and (c) to form or enter into a partnership, joint venture or other association with other persons or bodies. Division 2 -- Doctrine of ultra vires abolished 25 37. Interpretation In this Division -- (a) a reference to the doing of an act by a co-operative includes a reference to the making of an agreement by page 29

Co-operatives Bill 2007 Part 3 Legal capacity and powers Division 2 Doctrine of ultra vires abolished s. 38 the co-operative and a reference to a transfer of property to or by the co-operative; and (b) a reference to legal capacity includes a reference to powers. 5 38. Doctrine of ultra vires abolished (1) The objects of this Division are -- (a) to provide that the doctrine of ultra vires does not apply to co-operatives; and (b) without affecting the validity of a co-operative's 10 dealings with others, to ensure that the co-operative's officers and members give effect to the provisions of the co-operative's rules relating to the primary activities or powers of the co-operative. (2) This Division is to be construed and have effect in accordance 15 with subsection (1). 39. Legal capacity (1) A co-operative has, both within and outside this State, the legal capacity of an individual. (2) Without limiting subsection (1), a co-operative has, both within 20 and outside this State, power -- (a) to issue and allot fully or partly paid shares in the co-operative; and (b) to issue debentures of, and co-operative capital units in, the co-operative; and 25 (c) to distribute any of the property of the co-operative among the members, in kind or otherwise; and (d) to give security by charging uncalled capital; and (e) to grant a charge on property of the co-operative; and (f) to procure the co-operative to be registered or 30 recognised as a corporation in any place outside this State; and page 30

Co-operatives Bill 2007 Legal capacity and powers Part 3 Persons having dealings with co-operatives Division 3 s. 40 (g) to do any other act that it is authorised to do by any other law, including a law of a place outside this State. (3) Subsections (1) and (2) have effect in relation to a co-operative -- 5 (a) if the co-operative's rules contain an express or implied restriction on, or an express or implied prohibition of, the exercise by the co-operative of any of its powers, despite that restriction or prohibition; and (b) if the rules of the co-operative contain a provision 10 stating the objects of the co-operative, despite that fact. (4) The fact that the doing of an act by a co-operative would not be, or is not, in its best interests does not affect its legal capacity to do the act. 40. Restrictions on co-operatives in rules 15 (1) A co-operative's rules may contain an express restriction on, or an express prohibition of, the exercise by the co-operative of a power of the co-operative. (2) The exercise of a power or the doing of an act in contravention of subsection (1) is not invalid merely because of the 20 contravention. (3) A co-operative's rules may set out the object of that co-operative. (4) The exercise of a power or the doing of an act in contravention of subsection (3) is not invalid merely because of the 25 contravention. Division 3 -- Persons having dealings with co-operatives 41. Assumptions entitled to be made (1) A person is entitled to make the assumptions in section 42 in relation to -- 30 (a) dealings with a co-operative; and page 31

Co-operatives Bill 2007 Part 3 Legal capacity and powers Division 3 Persons having dealings with co-operatives s. 42 (b) dealings with a person who has, or purports to have, directly or indirectly acquired title to property from a co-operative. (2) If a person is entitled to assume a matter, the co-operative or 5 anyone referred to in subsection (1)(b) is not entitled to assert in proceedings in relation to the dealings that the matter is incorrect. 42. Assumptions (1) A person may assume that the co-operative's rules have been 10 complied with. (2) A person may assume that anyone who appears, from information provided by the co-operative that is available to the public from the Registrar, to be a director or officer of the co-operative -- 15 (a) has been properly appointed; and (b) has authority to exercise the powers and perform the duties customarily exercised or performed by a director or officer of a similar co-operative. (3) A person may assume that anyone who is held out by the 20 co-operative to be an officer or agent of the co-operative -- (a) has been properly appointed; and (b) has authority to exercise the powers and to perform the duties customarily exercised or performed by that kind of officer or agent of a similar co-operative. 25 (4) A person may assume that anyone who is, or may be assumed to be, an officer or agent of the co-operative who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy. 30 (5) A person may assume that a document has been duly executed by the co-operative if it is signed by 2 people, one of whom is, or may be assumed to be, a director of the co-operative, and the page 32

Co-operatives Bill 2007 Legal capacity and powers Part 3 Persons having dealings with co-operatives Division 3 s. 43 other is, or may be assumed to be, a director or the secretary of the co-operative. (6) A person may assume that a document has been duly executed by the co-operative if -- 5 (a) the co-operative's seal appears to have been fixed to the document in accordance with Division 4; and (b) the fixing of the seal appears to be witnessed by 2 people, one of whom is, or may be assumed to be, a director of the co-operative, and the other is, or may be 10 assumed to be, a director or the secretary of the co-operative. (7) A person may assume that the officers and agents of the co-operative properly perform their duties to the co-operative. 43. Person who knows or ought to know is not entitled to make 15 assumptions This Division does not entitle a person to make an assumption, and does not prevent an assertion being made in relation to an assumption if -- (a) the person has actual knowledge that the assumption is 20 not correct; or (b) the person's connection or relationship with the co-operative is such that the person ought to know that the assumption is not correct. 44. Lodgment of documents not to constitute constructive 25 knowledge (1) A person is not considered to have knowledge of a co-operative's rules, any of the contents of a co-operative's rules, a document, the contents of a document, or any particulars, merely because of either or both of the following -- 30 (a) the rules, the document or the particulars have been lodged with the Registrar; page 33

Co-operatives Bill 2007 Part 3 Legal capacity and powers Division 4 Authentication and execution of documents and confirmation of contracts s. 45 (b) the rules, the document or the particulars are referred to in any other document that has been lodged with the Registrar, or lodged with a person under a previous law corresponding to a provision of this Act. 5 (2) Subsection (1) does not apply in relation to a document, or in relation to the contents of a document, that has been lodged under Part 10 Division 3 to the extent that the document relates to a charge that is registrable under that Division or law. (3) Despite subsection (1), a member of a co-operative is taken to 10 have knowledge of the rules of the co-operative. 45. Effect of fraud (1) A person's entitlement under this Division to make an assumption is not affected merely by the fact that a person -- (a) has acted or is acting fraudulently in relation to the 15 dealing or acquisition or purported acquisition of title to property to which the assumption relates; or (b) has forged a document that appears to have been sealed on behalf of a co-operative. (2) A person is not entitled to make an assumption if the person has 20 actual knowledge of the fraudulent action or forgery referred to in subsection (1). Division 4 -- Authentication and execution of documents and confirmation of contracts 46. Common seal 25 A document or proceeding requiring authentication by a co-operative may be authenticated under the common seal of the co-operative. 47. Official seal (1) A co-operative may, if authorised by its rules, have, for use in 30 place of its common seal outside the State where its common page 34

Co-operatives Bill 2007 Legal capacity and powers Part 3 Authentication and execution of documents and confirmation Division 4 of contracts s. 48 seal is kept, one or more official seals, each of which must be a facsimile of the common seal of the co-operative with the addition on its face of the name of every place where it is to be used. 5 (2) The person affixing an official seal must, in writing signed by the person, certify on the document to which it is affixed the date on which and the place at which it is affixed. (3) A document sealed with an official seal is taken to be sealed with the common seal of the co-operative. 10 48. Authentication need not be under seal A document or proceeding requiring authentication by a co-operative may be authenticated by the signature of two people, one of whom is a director of the co-operative and one of whom is a director or the secretary of the co-operative and need 15 not be authenticated under the seal of the co-operative. 49. Co-operative may authorise person to execute deed (1) A co-operative may, by writing under its common seal, empower a person, either generally or in relation to a specified matter, as its agent or attorney ("authorised attorney") to 20 execute deeds on its behalf. (2) A deed signed by an authorised attorney on behalf of the co-operative and under the seal of the attorney, or under the appropriate official seal of the co-operative, binds the co-operative and has effect as if it were under the common seal 25 of the co-operative. (3) The authority of an authorised attorney, as between the co-operative and a person dealing with the attorney, continues during the period, if any, specified in the instrument conferring the authority or, if no period is specified, until notice of the 30 revocation or termination of the authority of the attorney has been given to the person dealing with the attorney. page 35

Co-operatives Bill 2007 Part 3 Legal capacity and powers Division 5 Pre-registration contracts s. 50 50. Execution under seal A contract or other document executed, or purporting to have been executed, under the seal of a co-operative is not invalid merely because a person attesting the affixing of the seal was in 5 any way, whether directly or indirectly, interested in the contract or other document or in the matter to which the contract or other document relates. 51. Contractual formalities (1) So far as concerns the formalities of making, varying or 10 discharging a contract, a person acting under the express or implied authority of a co-operative may make, vary or discharge a contract in the name of, or on behalf of, the co-operative as if that contract were made, varied or discharged by an individual. (2) The making, varying or discharging of a contract under 15 subsection (1) is effectual in law and binds the co-operative and other parties to the contract. (3) This section does not prevent a co-operative from making, varying or discharging a contract under its seal. 52. Other requirements as to consent or sanction not affected 20 This Division does not affect the operation of a law that requires some consent or sanction to be obtained, or some procedure to be complied with, in relation to the making, varying or discharging of a contract. Division 5 -- Pre-registration contracts 25 53. Contracts before registration (1) If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a proposed co-operative, the co-operative becomes bound by the contract and entitled to its benefit if the co-operative, or a co-operative that is reasonably 30 identifiable with it, is registered and ratifies the contract -- (a) within a reasonable period after the contract is entered into; or page 36

Co-operatives Bill 2007 Legal capacity and powers Part 3 Pre-registration contracts Division 5 s. 53 (b) within any period agreed to by the parties to the contract. (2) The person is released from any liability under the pre-registration contract if the co-operative enters into another 5 contract in substitution for it -- (a) within a reasonable period after the pre-registration contract is entered into; or (b) within any period agreed to by the parties to the pre-registration contract. 10 (3) The person is liable to pay damages to each other party to the pre-registration contract if the co-operative is not registered, or the co-operative is registered but does not ratify the contract or enter into a substitute for it -- (a) within a reasonable period after the contract is entered 15 into; or (b) within the period agreed to by the parties to the contract. (4) The maximum amount of damages the person is liable to pay to a party is the amount the co-operative would be liable to pay to the party if the co-operative had been registered and had ratified 20 the contract and then completely failed to perform it. (5) If proceedings are brought to recover damages under subsection (3) because the co-operative is registered but does not ratify the pre-registration contract or enter into a substitute for it, the court may do anything that it thinks just in the 25 circumstances, including ordering the co-operative -- (a) to pay all or part of the damages that the person is liable to pay; or (b) to transfer property that the co-operative received because of the contract to a party to the contract; or 30 (c) to pay an amount to a party to the contract. page 37

Co-operatives Bill 2007 Part 3 Legal capacity and powers Division 5 Pre-registration contracts s. 54 (6) If the co-operative ratifies the pre-registration contract but fails to perform all or part of it, the court may order the person to pay all or part of the damages that the co-operative is ordered to pay. 54. Person may be released from liability but is not entitled to 5 indemnity (1) Any of the parties to the pre-registration contract may release the person who entered into, or purported to enter into, the contract from any liability in relation to that contract. (2) The release must be in writing. 10 (3) The party giving the release is not entitled to recover damages under section 53 from the person. (4) Despite any rule of law or equity, the person does not have a right of indemnity against the co-operative in respect of the person's liability under this Division even if the person was 15 acting, or purporting to act, as trustee for the co-operative. 55. This Division replaces other rights and liabilities This Division replaces any rights or liabilities anyone would otherwise have in relation to the pre-registration contract. page 38

Co-operatives Bill 2007 Membership Part 4 General Division 1 s. 56 Part 4 -- Membership Division 1 -- General 56. Becoming a member (1) On the registration of a co-operative, the persons who signed the 5 application for registration become members of the co-operative. (2) Other persons may be admitted as members of the co-operative as provided by its rules. (3) A person under 18 years of age may be admitted as a member of 10 the co-operative unless the rules of the co-operative provide otherwise. (4) A corporation is not, merely because it is a corporation, disqualified from being a member of a co-operative unless the co-operative's rules provide that corporations are disqualified 15 from being members. (5) If 2 or more co-operatives merge, the members of the merged co-operative are -- (a) the members of the merging co-operatives; and (b) other persons admitted as members of the merged 20 co-operative in accordance with its rules. 57. Members of co-operative group (1) The members of a co-operative group are -- (a) the co-operatives by which the co-operative group is formed; and 25 (b) any other co-operative, admitted to membership in accordance with the rules of the co-operative group; and (c) any other corporation or other body admitted to membership in accordance with subsection (2). page 39

Co-operatives Bill 2007 Part 4 Membership Division 1 General s. 58 (2) A corporation or other body, not being a co-operative, may be admitted to membership of the co-operative group if -- (a) it is incorporated or registered under any other law, whether or not a law of this State; and 5 (b) in the opinion of the board of the co-operative group, it is designed to function in accordance with co-operative principles; and (c) it is eligible to be admitted to membership in accordance with the rules of the co-operative group. 10 58. Qualification for membership and transitional provision (1) Subject to subsection (3), a person is not qualified to be admitted to membership of a co-operative unless -- (a) there are reasonable grounds for believing that the person will be an active member of the co-operative; 15 and (b) the person is otherwise eligible under the rules of the co-operative. (2) The rules of a co-operative must contain provisions that -- (a) impose a duty on all persons who become members to 20 be active members; and (b) explain the consequences of failing to be or ceasing to be an active member. (3) A person who was a member of a co-operative immediately before that co-operative became a transferred co-operative is 25 qualified to be admitted to membership of the co-operative despite the absence of reasonable grounds for believing that the person will be an active member of the co-operative. 59. Membership may be joint Membership of a co-operative may be individual and, unless the 30 rules of the co-operative provide otherwise, may be joint. page 40

Co-operatives Bill 2007 Membership Part 4 General Division 1 s. 60 60. Members under 18 years of age (1) A member of a co-operative is not entitled to avoid any obligation or liability as a member under any contract, deed or other document entered into as a member on any ground 5 relating to minority. (2) A person under 18 years of age is not competent to hold an office in a co-operative. (3) A member of a co-operative who is under 18 years of age is entitled to vote. 10 (4) This section applies only to individuals. 61. Representatives of corporations (1) If a corporation is a member of a co-operative, it may by instrument served on the co-operative appoint a person to represent it in relation to its membership. 15 (2) The power to appoint a representative is subject to any restriction imposed by the rules of the co-operative as to the entitlement of a person to represent a corporation. (3) A person is not qualified to be appointed the representative of a company that is not a listed corporation (within the meaning of 20 the Corporations Act) unless the person is an officer, member or employee of the company. 62. Notification of shareholders and shareholdings On the request of the board of directors of the co-operative, a corporation that is a corporate member must provide the board 25 of directors of the co-operative with -- (a) a list of the names of all the shareholders of the corporation and the number of shares held by each shareholder; or page 41

Co-operatives Bill 2007 Part 4 Membership Division 1 General s. 63 (b) in the case of a corporation without share capital, a list of the members of the corporation, within 7 days of the request. Penalty: a fine of $2 000. 5 63. Circumstances in which membership ceases -- all co-operatives (1) A person ceases to be a member of a co-operative in each of the following circumstances and as otherwise provided by this Act -- 10 (a) if the member's membership is cancelled under Part 6; (b) if the member is expelled or resigns in accordance with the rules of the co-operative; (c) if -- (i) the individual member becomes bankrupt or the 15 corporate member becomes insolvent; or (ii) the member's property becomes subject to control under the law relating to bankruptcy, unless provision is made to the contrary in the rules of the co-operative; 20 (d) on death; (e) if the contract of membership is rescinded on the ground of misrepresentation or mistake; (f) in the case of a member that is a corporation, if the body is deregistered. 25 (2) On the death of a member, the member's estate remains liable under section 67 as the member until the member's personal representative or some other person is registered in the member's place. page 42

Co-operatives Bill 2007 Membership Part 4 General Division 1 s. 64 64. Additional circumstances in which membership ceases -- co-operatives with share capital In the case of a co-operative that has a share capital, in addition to the circumstances in section 63, a member ceases to be a 5 member in each of the following circumstances -- (a) the member's total shareholding is transferred to another person in accordance with the rules of the co-operative, and the transferee is registered as holder; (b) the member's total shareholding is forfeited in 10 accordance with this Act or the rules of the co-operative; (c) the member's total shareholding is sold by the co-operative under a power conferred by the rules of the co-operative, and the purchaser is registered as holder; (d) the member's total shareholding is purchased by the 15 co-operative in accordance with this Act; (e) the amount paid up to the stated nominal value on the member's shares is repaid to the member in accordance with the rules of the co-operative. 65. Carrying on business with too few members 20 (1) A person who is a director of a co-operative commits an offence if the person knowingly allows the co-operative to continue to carry on business with fewer than the minimum number of members for more than 28 days after the number of members falls below the minimum number. 25 Penalty: a fine of $2 000. (2) Each person who is found guilty of an offence under subsection (1) is also liable to satisfy all obligations of the co-operative incurred after the 28 days referred to in subsection (1), and may be sued without any other member 30 being joined in the action. (3) The minimum number of members allowed is -- (a) for a co-operative group, 2; or page 43

Co-operatives Bill 2007 Part 4 Membership Division 2 Rights and liabilities of members s. 66 (b) for any other co-operative, 5, or if a lesser number is prescribed by the regulations, the prescribed number. (4) The Registrar may, by written notice, extend and further extend in a particular case the period of 28 days referred to in 5 subsection (1). (5) An application for an extension must be made -- (a) in a form approved by the Registrar; and (b) before the period to be extended ends. Division 2 -- Rights and liabilities of members 10 66. Rights of membership not exercisable until registered etc. (1) A member of a co-operative is not entitled to exercise any rights of membership until -- (a) the member's name appears as a member in the register of members, directors and shares referred to in 15 section 230(1)(a); and (b) the member has made a payment to the co-operative for membership or acquired a share or interest that is provided for in the rules of the co-operative. (2) The board of a co-operative must ensure that the name of a 20 person admitted to membership is recorded as a member in the register of members, directors and shares within 28 days after the person is admitted to membership. Penalty: a fine of $2 000. 67. Liability of members to co-operative 25 (1) A member of a co-operative is not, as a member, under any personal liability to the co-operative, except as provided by this Division. (2) A member of a co-operative with a share capital is liable to the co-operative for the amount, if any, unpaid on the shares held by page 44

Co-operatives Bill 2007 Membership Part 4 Rights and liabilities of members Division 2 s. 68 the member together with any charges payable by the member to the co-operative as required by the rules of the co-operative. (3) A member of a co-operative without a share capital is liable to the co-operative for any charges payable by the member to the 5 co-operative as required by the rules of the co-operative. 68. Co-operative to make information available to person intending to become a member (1) The board of a co-operative must give written notice to each person intending to become a member of the co-operative and 10 eligible to do so that the person may request to either inspect at the co-operative's nearest office, or be sent -- (a) a consolidated copy of the rules of the co-operative; and (b) a copy of all special resolutions applicable to the member and passed by the members of the co-operative 15 since its last annual general meeting, except special resolutions providing for an alteration of the rules of the co-operative; and (c) a copy of the last annual report of the co-operative under section 235. 20 (2) If a person who has received notice under this section makes a request referred to in subsection (1), the co-operative must comply with that request. 69. Entry fees and regular subscriptions (1) The rules of a co-operative may -- 25 (a) require the payment by members of entry fees and regular subscriptions; and (b) provide for the repayment of those fees and subscriptions on a person ceasing to be a member. (2) The calculation of the amount of a particular member's regular 30 subscription may be based on the amount of business the member does with the co-operative. page 45

Co-operatives Bill 2007 Part 4 Membership Division 2 Rights and liabilities of members s. 70 (3) A co-operative must give a person intending to become a member written notice of entry fees or regular subscriptions payable by the member to the co-operative. (4) A person who becomes a member of a co-operative is not liable 5 to pay entry fees or regular subscriptions except -- (a) those fees or subscriptions of which the person was given written notice before becoming a member; and (b) any regular subscriptions that may be imposed in accordance with the rules and of which the member has 10 been given notice. 70. Members etc. may be required to deal with co-operative (1) The rules of a co-operative may contain provisions that require a member to have specified dealings with the co-operative for a fixed period and to enter into a contract for that purpose. 15 (2) A co-operative may, if authorised by its rules, make a contract with a member containing provisions that require the member to have specified dealings with the co-operative for a fixed period. (3) In particular, the provisions of the rules or a contract may require a member -- 20 (a) to sell products through or to the co-operative; or (b) to obtain supplies or services through or from the co-operative; or (c) to pay to the co-operative a stated amount as liquidated damages for any failure to comply with a requirement 25 authorised by this section. (4) An amount required to be paid to the co-operative as liquidated damages is, for the purposes of section 72, a debt payable by the member to the co-operative. (5) A contract authorised by this section is binding on the 30 co-operative and all other parties even though, but for this Act, the contract would be invalid as being in restraint of trade. page 46

Co-operatives Bill 2007 Membership Part 4 Rights and liabilities of members Division 2 s. 71 (6) Rules authorised by this section are authorised even though, but for this section, the rules might be invalid as being in restraint of trade. 71. Fines payable by members 5 (1) A co-operative may impose a fine on a member for an infringement of the rules of the co-operative if the rules of the co-operative so provide. (2) A fine imposed under subsection (1) cannot exceed the maximum fine fixed by the rules in accordance with section 98. 10 (3) A fine cannot be imposed unless -- (a) notice of intention to impose the fine and the reason for it has been given to the member; and (b) the member has been given a reasonable opportunity to appear before the board in person (with or without 15 witnesses) or to send to the board a written statement to show cause why the fine should not be imposed. (4) The co-operative may set off the whole or any part of the fine against an amount payable to the member for produce delivered by the member to the co-operative, but no part of the fine is to 20 be set off against any advance that, in accordance with the rules of the co-operative, is payable to the member from the co-operative, for produce so delivered. 72. Charge and set off of co-operative (1) A co-operative has, in relation to a debt payable by a member or 25 former member to the co-operative, a charge on each of the following -- (a) the share or interest in the capital and the credit balance and deposits of the member or former member; (b) any rebate, bonus, dividend or interest payable to the 30 member or former member; page 47

Co-operatives Bill 2007 Part 4 Membership Division 2 Rights and liabilities of members s. 73 (c) any entry fees and regular subscriptions required to be repaid to a member when the member ceases to be a member. (2) The co-operative may set off any amount paid on account of 5 that share or other thing, or any amount credited or payable to the member or former member, in or towards payment of the debt. (3) The charge created by this section may be enforced by the appropriation by the co-operative of the thing that is subject to 10 the charge, but only after at least 7 days notice has been given to the member or former member. (4) Any share in respect of which capital has been so appropriated must be cancelled. 73. Repayment of shares on resignation or expulsion 15 (1) When a member resigns from a co-operative or is expelled from a co-operative under its rules, the co-operative must -- (a) within 12 months after the date of resignation or expulsion, repay to the former member an amount (the "repayable amount") made up of the amount paid up 20 to the stated nominal value of the shares held by the member at the resignation or expulsion date, less any amount owed by the member to the co-operative at the resignation or expulsion date under the rules of the co-operative or any contract or otherwise; or 25 (b) in the case of a transferred co-operative the rules of which state how to calculate the repayable amount owing to a former member at the time of resignation or expulsion, within 3 years after the date of resignation or expulsion, repay to the former member an amount in 30 accordance with those rules; or page 48

Co-operatives Bill 2007 Membership Part 4 Rights and liabilities of members Division 2 s. 73 (c) within 12 months after the date of resignation or expulsion, apply the repayable amount under subsection (2) if -- (i) the board considers repayment would adversely 5 affect the financial position of the co-operative; or (ii) the board and the former member agree. (2) The repayable amount may be applied in one of the following ways -- 10 (a) the co-operative may appropriate the amount as a donation to the co-operative, but only if the former member consents in writing to the donation; (b) if the co-operative is a deposit taking co-operative, the co-operative may apply the amount as a deposit by the 15 former member with the co-operative, subject to the requirements of section 128 as to interest on the deposit; (c) the co-operative may issue debentures or co-operative capital units to the former member in satisfaction of the amount. 20 (3) If the balance sheet of the co-operative last issued before the resignation or expulsion of a member of the co-operative disclosed a loss or deficiency or a significant change in the financial position or prospects of the co-operative is subsequently reported prior to the resignation or expulsion, the 25 paid up value of the member's shares may, for the purposes of calculating the repayable amount, be reduced as described in subsection (4). (4) The paid up value of the member's shares may be reduced by an amount that bears to the amount of the loss or deficiency so 30 disclosed the same proportion as the number of shares held by the member bore to the total number of shares held by all members of the co-operative as at the date of resignation or expulsion of the member. page 49

Co-operatives Bill 2007 Part 4 Membership Division 3 Death of member s. 74 (5) Shares for which capital has been repaid under subsection (1)(a) or applied under subsection (1)(c) must be cancelled. Division 3 -- Death of member 74. Meaning of "interest" 5 In this Division -- "interest", of a deceased member in a co-operative, includes -- (a) the member's membership; and (b) any credit balance due to the member; and (c) any loan from or to or deposit with the co-operative; 10 and (d) any surplus arising on the sale by the co-operative as mortgagee of any property mortgaged by the deceased to the co-operative; "transfer", of an interest, includes the payment of money. 15 75. Transfer of share or interest on death of member Subject to sections 76 and 159, on the death of a member, the board must transfer the deceased member's share or interest in the co-operative to -- (a) the personal representative of the deceased member; or 20 (b) the person that the deceased's personal representative specifies in an application made to the co-operative within 3 months after the death of the member. 76. Transfer of small shareholdings and interests on death (1) Subject to section 159, if the total value of a deceased member's 25 shares or interest in a co-operative is less than $10 000 (or such other amount as may be prescribed), the board may, on the basis of such evidence as it considers sufficient, transfer the shares or interest in accordance with whichever of the following paragraphs is appropriate -- 30 (a) if the member or person dies testate, to the person who appears to the board to be entitled to the shares or page 50

Co-operatives Bill 2007 Membership Part 4 Disputes involving members Division 4 s. 77 interest under the will of the deceased member or person; (b) if the member or person dies intestate, to any person who appears to the board to be entitled to obtain a grant 5 of administration of the estate of the deceased and that person must then hold the shares or interest on the same trusts as if he or she had obtained that grant. (2) A transfer cannot be made under this section after evidence has been produced to the co-operative of the grant of letters of 10 administration of the estate, or probate of the will, of the deceased member. 77. Value of shares and interests The value of the shares or interest of a deceased member must be determined for the purposes of this Division in accordance 15 with the rules of the co-operative. 78. Co-operative protected Any transfer of property made by the board of a co-operative in accordance with this Division is valid and effectual against any demand made on the co-operative by any other person. 20 Division 4 -- Disputes involving members 79. Grievance procedure (1) The rules of a co-operative must set out a grievance procedure for dealing with any dispute under the rules -- (a) between a member and another member; and 25 (b) between a member and the co-operative. (2) A member may appoint any person to act on behalf of the member in the grievance procedure. (3) The grievance procedure must allow for natural justice to be applied. page 51

Co-operatives Bill 2007 Part 4 Membership Division 4 Disputes involving members s. 80 (4) In this section and section 80 -- "member" includes any person who was a member not more than 6 months before the dispute occurred. 80. Application to Supreme Court 5 (1) The Supreme Court may, on the application of a member of a co-operative, or a co-operative, make an order declaring and enforcing -- (a) the rights or obligations of members of the co-operative between themselves; or 10 (b) the rights or obligations of the co-operative and any member between themselves. (2) An order may be made under this section whether or not a right of a proprietary nature is involved and whether or not the applicant has an interest in the property of the co-operative. 15 (3) The Supreme Court may refuse to make an order on the application or may make an order for costs against a party, whether successful or not, if the Court is of the opinion that -- (a) the issue raised in the application is trivial; or (b) having regard to the importance of the issue, the nature 20 of the co-operative, any other available method of resolving the issue, the costs involved, lapse of time, acquiescence or any other relevant circumstance, it was unreasonable to make the application; or (c) the unreasonable or improper conduct of a party -- 25 (i) has been responsible for the making of the application; or (ii) has added to the cost of the proceedings. page 52

Co-operatives Bill 2007 Membership Part 4 Oppressive conduct of affairs Division 5 s. 81 Division 5 -- Oppressive conduct of affairs 81. Interpretation In this Division, a reference to a member of a co-operative includes, in the case of a co-operative that has a share capital, a 5 reference to a person to whom a share in the co-operative has been transmitted by will or by operation of law. 82. Application of Division This Division does not apply in respect of anything done under Part 6. 10 83. Who may apply for court order The following persons may apply to the Supreme Court for an order under this Division -- (a) the Registrar; (b) a member who believes that the affairs of the 15 co-operative are being conducted in a way that is -- (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member; or (ii) contrary to the interests of the members as a whole; 20 (c) a member who believes that an act or omission, or a proposed act or omission, by or on behalf of the co-operative, or a resolution, or a proposed resolution, of members, was or would be -- (i) oppressive or unfairly prejudicial to, or unfairly 25 discriminatory against, a member; or (ii) contrary to the interests of the members as a whole. page 53

Co-operatives Bill 2007 Part 4 Membership Division 5 Oppressive conduct of affairs s. 84 84. Orders that the Supreme Court may make On application under this Division, the Supreme Court may make any order that it considers appropriate including (without being limited to) one or more of the following orders -- 5 (a) an order that the Registrar appoint an administrator of the co-operative; (b) an order that the co-operative be wound-up; (c) an order for regulating the conduct of affairs of the co-operative in the future; 10 (d) an order for the repayment of the member's shares in accordance with the provisions of this Act for repayment of share capital; (e) an order for the purchase of the shares of any member by the co-operative and for the reduction accordingly of 15 the co-operative's capital; (f) an order directing the co-operative to institute, prosecute, defend or discontinue specified proceedings, or authorising a member or members of the co-operative to institute, prosecute, defend or discontinue specified 20 proceedings in the name and on behalf of the co-operative; (g) an order appointing a receiver or a receiver and manager of property of the co-operative; (h) an order restraining a person from engaging in specified 25 conduct or from doing a specified act or thing; (i) an order directing a co-operative to become registered as a company under the Corporations Act; (j) an order requiring a person to do a specified act or thing; (k) an order as to costs. page 54

Co-operatives Bill 2007 Membership Part 4 Oppressive conduct of affairs Division 5 s. 85 85. Basis on which Supreme Court makes orders The Supreme Court may make an order under this Division if it considers that -- (a) the affairs of a co-operative are being conducted in a 5 way that is -- (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member (the "oppressed member"), whether or not in the capacity of a member; or 10 (ii) contrary to the interests of the members as a whole; or (b) an act or omission, or a proposed act or omission, by or on behalf of a co-operative, or a resolution, or a 15 proposed resolution, of members of a co-operative, was or would be -- (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member (the "oppressed member"), whether or not in the 20 capacity of a member; or (ii) contrary to the interests of the members as a whole. 86. Winding-up need not be ordered if oppressed members prejudiced 25 The Supreme Court need not make an order under this Division for the winding-up of a co-operative if the Court considers that the winding-up of the co-operative would unfairly prejudice an oppressed member. 87. Application of winding-up provisions 30 If an order that a co-operative be wound-up is made under this Division, the provisions of this Act relating to the winding-up of co-operatives apply, with any changes that are necessary, as if page 55

Co-operatives Bill 2007 Part 4 Membership Division 6 Proceedings on behalf of a co-operative by members and others s. 88 the order had been made on an application filed in the Supreme Court by the co-operative. 88. Changes to rules (1) If an order under this Division makes an alteration to the rules 5 of a co-operative -- (a) the alteration has effect as if it had been properly made by special resolution of the co-operative; and (b) the co-operative cannot (despite any other provisions of this Act) without the leave of the Supreme Court make 10 any further alteration to the rules inconsistent with the provisions of the order. (2) On receiving a copy of an order altering the rules of a co-operative the Registrar must register the alteration. 89. Copy of order to be lodged with Registrar 15 An applicant for an order under this Division must lodge an office copy of the order with the Registrar within 14 days after it is made. Penalty: a fine of $1 000. Division 6 -- Proceedings on behalf of a co-operative by 20 members and others 90. Bringing, or intervening in, proceedings on behalf of a co-operative (1) A person may bring proceedings on behalf of a co-operative, or intervene in proceedings to which a co-operative is a party for 25 the purpose of taking responsibility on behalf of the co-operative for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them), if -- (a) the person is -- 30 (i) a member, former member, or person entitled to be registered as a member, of the co-operative or of a related corporation; or page 56

Co-operatives Bill 2007 Membership Part 4 Proceedings on behalf of a co-operative by members and Division 6 others s. 91 (ii) an officer or former officer of the co-operative; or (iii) the Registrar; and 5 (b) the person is acting with leave granted under section 91. (2) Proceedings brought on behalf of a co-operative may be brought in the co-operative's name. 91. Applying for and granting leave (1) A person referred to in section 90(1)(a) may apply to the 10 Supreme Court for leave to bring, or to intervene in, proceedings. (2) The Supreme Court may grant the application if it is satisfied that -- (a) it is probable that the co-operative will not itself bring 15 the proceedings, or properly take responsibility for them, or for a step in them; and (b) the applicant is acting in good faith; and (c) it is in the best interests of the co-operative that the applicant be granted leave; and 20 (d) if the applicant is applying for leave to bring proceedings, there is a serious question to be tried; and (e) either -- (i) at least 14 days before making the application, the applicant gave written notice to the 25 co-operative of the intention to apply for leave and of the reasons for applying; or (ii) it is appropriate to grant leave even if subparagraph (i) is not satisfied. page 57

Co-operatives Bill 2007 Part 4 Membership Division 6 Proceedings on behalf of a co-operative by members and others s. 92 92. Substitution of another person for the person granted leave (1) Any of the following persons may apply to the Supreme Court for an order that they be substituted for a person to whom leave has been granted under section 91 -- 5 (a) a member, former member, or person entitled to be registered as a member, of the co-operative or a related corporation; (b) an officer, or former officer, of the co-operative; (c) the Registrar. 10 (2) The application may be made whether or not the other person has already brought the proceedings or made the intervention. (3) The Supreme Court may make the order if it is satisfied that -- (a) the applicant is acting in good faith; and (b) in all the circumstances, it is appropriate to make the 15 order. (4) An order substituting one person for another person has the effect that -- (a) the grant of leave is taken to have been made in favour of the substituted person; and 20 (b) if the other person has already brought the proceedings or intervened, the substituted person is taken to have brought those proceedings or to have made that intervention. 93. Effect of ratification by members 25 (1) A ratification or approval of conduct by members of a co-operative -- (a) does not prevent a person from bringing or intervening in proceedings with leave under section 91 or from applying for leave under that section; and 30 (b) does not have the effect that proceedings brought or intervened in with leave under section 91 must be page 58

Co-operatives Bill 2007 Membership Part 4 Proceedings on behalf of a co-operative by members and Division 6 others s. 94 decided in favour of the defendant, or that an application for leave under that section must be refused. (2) The Supreme Court may take into account a ratification or an approval of the conduct by members of a co-operative in 5 deciding what order or judgment (including as to damages) to make in proceedings brought or intervened in with leave under section 91 or in relation to an application for leave under that section. (3) In taking a ratification or approval into account under 10 subsection (2), the Supreme Court may have regard to -- (a) how well-informed about the conduct the members were when deciding whether to ratify or approve that conduct; and (b) whether the members who ratified or approved the 15 conduct were acting for proper purposes. 94. Leave to discontinue, compromise or settle proceedings brought, or intervened in, with leave Proceedings brought, or intervened in, with leave cannot be discontinued, compromised or settled without the leave of the 20 Supreme Court. 95. General powers of the Supreme Court (1) The Supreme Court may make any order, and give any direction, that it thinks just in relation to proceedings brought or intervened in with leave, or in relation to an application for 25 leave, including -- (a) interim orders; and (b) directions about the conduct of the proceedings, including requiring mediation; and (c) an order directing the co-operative, or an officer of the 30 co-operative, to do, or not to do, any act; and page 59

Co-operatives Bill 2007 Part 4 Membership Division 6 Proceedings on behalf of a co-operative by members and others s. 96 (d) an order appointing an independent person to investigate, and report to the Supreme Court, on -- (i) the financial affairs of the co-operative; or (ii) the facts or circumstances that gave rise to that 5 cause of action the subject of the proceedings; or (iii) the costs incurred in the proceedings and the person granted leave. (2) A person appointed by the Supreme Court under subsection (1)(d) is entitled, on giving reasonable notice to the 10 co-operative, to inspect and make copies of any books of the co-operative for any purpose connected with their appointment. 96. Power of Supreme Court to make costs order At any time, the Supreme Court may, in relation to proceedings brought or intervened in with leave under section 91 or an 15 application for leave under that section, make any orders it thinks just about the costs of the person who applied for or was granted leave, of the co-operative or of any other party to the proceedings or application, including an order requiring indemnification for costs. page 60

Co-operatives Bill 2007 Rules Part 5 s. 97 Part 5 -- Rules 97. Effect of rules (1) The rules of a co-operative have the effect of a contract under seal -- 5 (a) between the co-operative and each member; and (b) between the co-operative and each director, the secretary and the chief executive officer of the co-operative; and (c) between a member and each other member. (2) Under the contract, each of those persons agrees to observe and 10 perform the provisions of the rules as in force for the time being so far as those provisions apply to that person. 98. Content of rules (1) The rules of a co-operative must state or otherwise make provision for the matters specified in Schedule 1. 15 (2) The rules must be divided into paragraphs numbered consecutively. (3) The rules may state the objects of the co-operative. (4) The rules may incorporate any provision of the model rules. (5) The rules may provide for the co-operative to impose a fine, 20 payable to the co-operative, on a member for an infringement of the rules. (6) If the rules provide for the imposition of a fine, the rules must specify the maximum fine that may be imposed on a member. (7) The maximum fine fixed by the rules cannot be more than an 25 amount prescribed by the regulations as the maximum fine. (8) The rules may contain other provisions not inconsistent with this Act. page 61

Co-operatives Bill 2007 Part 5 Rules s. 99 99. Purchase and inspection of copy of rules (1) A member is entitled to obtain from a co-operative a copy of its rules on payment of the amount required by the rules of the co-operative or, if the rules do not prescribe an amount, on 5 payment of $5. (2) The amount required by the rules cannot be more than the fee prescribed by the regulations for obtaining a copy of the rules from the Registrar. (3) A person is entitled to obtain from the Registrar a copy of the 10 rules of a co-operative on payment of the fee prescribed by the regulations. 100. False copies of rules (1) A person who gives to a member of a co-operative or to a person intending or applying to become a member of a 15 co-operative a copy of any rules or any alterations of rules, other than those which have been duly registered, representing that they are binding on the members of the co-operative is guilty of an offence. Penalty: a fine of $1 000. 20 (2) A person who alters any of the rules of a co-operative after they have been registered and circulates them representing that they have been duly registered when they have not been is guilty of an offence. Penalty: a fine of $1 000. 25 101. Model rules (1) The regulations may prescribe model rules. (2) The model rules may make provision for any matter for which the rules of a co-operative may make provision. page 62

Co-operatives Bill 2007 Rules Part 5 s. 102 102. Rules can only be altered in accordance with this Act The rules of a co-operative cannot be altered except in accordance with this Act. 103. Approval of alteration of rules 5 (1) A proposed alteration of the rules of a co-operative must be approved by the Registrar before the resolution altering the rules is passed by the co-operative or the board of the co-operative. (2) A draft of the proposed alteration must be submitted to the Registrar at least 21 days (or a shorter period the Registrar may 10 allow in a particular case) before -- (a) the notice of the proposed special resolution altering the rules is due to be given to the members by the co-operative; or (b) the resolution is due to be passed by the board of the 15 co-operative. (3) The proposed alteration submitted under subsection (2) must be accompanied by a written statement specifying the date on which the notice is due to be given to members or the resolution is due to be passed by the board, as the case may be. 20 (4) The proposed alteration must -- (a) be in accordance with section 98; and (b) be made in a form approved by the Registrar; and (c) be accompanied by a statement setting out the reasons for the alteration. 25 (5) The Registrar may -- (a) approve the proposed alteration as submitted; or (b) approve a different alteration to that submitted; or (c) refuse to approve the proposed alteration. page 63

Co-operatives Bill 2007 Part 5 Rules s. 104 (6) Subject to subsection (7), the Registrar approves a proposed alteration by giving written notice of the approval to the co-operative. (7) The Registrar is taken to have approved a proposed alteration as 5 submitted to the Registrar unless at least 5 days before the date specified in the written statement submitted under subsection (3), the Registrar gives written notice to the co-operative that the Registrar -- (a) has approved a different alteration to that submitted; or 10 (b) has refused to approve the proposed alteration; or (c) is still considering the matter. 104. Alteration by special resolution The rules of a co-operative must be altered by special resolution unless this Act provides otherwise. 15 105. Alteration by resolution of board (1) The rules of a co-operative may be altered by a resolution passed by the board if the alteration does no more than give effect to a requirement, restriction or prohibition imposed under the authority of this Act. 20 (2) If the rules of a co-operative are altered under this section, the co-operative must cause the alteration to be notified in writing to its members as soon as practicable after the alteration takes effect and in any event not later than the day when notice is given to the members of the next annual general meeting of the 25 co-operative after the alteration takes effect. 106. Alteration does not take effect until registered (1) An alteration of the rules of a co-operative does not take effect unless and until it is registered by the Registrar. (2) An application for registration of an alteration must -- 30 (a) be made in a form approved by the Registrar; and page 64

Co-operatives Bill 2007 Rules Part 5 s. 107 (b) be made within 28 days, or a shorter or longer period prescribed by the regulations, after the resolution to alter the rules is passed; and (c) be accompanied by a consolidated copy of the rules of 5 the co-operative, including the alteration. (3) The Registrar must register the alteration unless -- (a) the Registrar is satisfied that the alteration is contrary to this Act; or (b) the Registrar has other reasonable cause to refuse to 10 register the alteration. (4) A certificate of registration of an alteration of the rules of a co-operative given by the Registrar is, in favour of any person advancing money to the co-operative on the faith of the certificate or in favour of any guarantor of that advance, 15 evidence that the alteration in the rules was properly made. 107. Appeal against refusal to approve alteration A co-operative may appeal to the Supreme Court against a failure of the Registrar to approve an alteration of its rules. 108. Appeal against refusal to register 20 A co-operative may appeal to the Supreme Court against a failure of the Registrar to register an alteration of its rules. 109. Supreme Court's powers on appeal The Supreme Court may make any order it considers appropriate to dispose of an appeal under section 107 or 108. page 65

Co-operatives Bill 2007 Part 6 Active membership Division 1 Definitions s. 110 Part 6 -- Active membership Division 1 -- Definitions 110. Meaning of "active membership resolution" In this Part -- 5 "active membership resolution" has the meaning given in section 112(2). 111. What is active membership For the purposes of this Act, a member of a co-operative is an active member of the co-operative if the member -- 10 (a) uses or supports an activity of, or maintains a relationship or an arrangement with, the co-operative, for carrying on a primary activity of the co-operative, in the way and to the extent that the rules of the co-operative provide is sufficient to establish active 15 membership; or (b) maintains any other relationship or arrangement with the co-operative for carrying on a primary activity of the co-operative that the regulations provide is sufficient to establish active membership. 20 112. What are active membership provisions and resolutions (1) Active membership provisions in the rules of a co-operative are provisions in the rules that state -- (a) which of the activities of the co-operative are the primary activities of the co-operative; and 25 (b) the way in which and the extent to which a member of the co-operative must use or support an activity of, or maintain a relationship or an arrangement with, the co-operative for carrying on a primary activity of the co-operative, in order to establish active membership of 30 the co-operative. page 66

Co-operatives Bill 2007 Active membership Part 6 Rules to contain active membership provisions Division 2 s. 113 (2) An active membership resolution is a resolution that would, if given effect to, make or amend active membership provisions in the rules of a co-operative. Division 2 -- Rules to contain active membership provisions 5 113. Number of primary activities required A co-operative must have at least one primary activity. 114. Rules to contain active membership provisions The board of a co-operative must ensure that the rules of the co-operative contain active membership provisions in 10 accordance with this Part. 115. Factors and considerations for determining primary activities etc. (1) The board of a co-operative must ensure that the relevant factors and considerations are taken into account in deciding -- 15 (a) which of the activities of a co-operative are its primary activities; and (b) the way and extent to which a member is required to use or support an activity of, or maintain a relationship or an arrangement with, a co-operative, for carrying on a 20 primary activity of the co-operative, in order to establish active membership of the co-operative. (2) The relevant factors and considerations are -- (a) the primary activity or, if more than one, the primary activities taken together must form the basic purpose for 25 which the co-operative exists and a significant contribution to the business of the co-operative; and (b) the way and extent of the required utilisation, support, relationship or arrangement should be reasonable when considered in relation to the activities of the 30 co-operative as a whole; and page 67

Co-operatives Bill 2007 Part 6 Active membership Division 2 Rules to contain active membership provisions s. 116 (c) any other factors and considerations that are prescribed by the regulations. (3) The regulations may -- (a) provide for the matters to be taken into account in 5 deciding whether an activity makes a significant contribution to the business of the co-operative; and (b) specify minimum percentages of turnover, minimum amounts of income or minimum amounts of business necessary to constitute that significant contribution. 10 (4) Nothing in this section limits the right of active members other than the board of the co-operative to propose an active membership resolution. 116. Active membership provisions -- distributing co-operatives The only active membership provisions that are permitted to be 15 contained in the rules of a distributing co-operative are -- (a) provisions requiring a member to use an activity of the co-operative for carrying on a primary activity specified in the provisions to establish active membership; and (b) any other active membership provisions that the 20 Registrar may approve. 117. Regular subscription -- active membership of non-distributing co-operative (1) Active membership provisions for a non-distributing co-operative may provide that the payment of a regular 25 subscription by a member of the co-operative, to be applied to a primary activity of the co-operative, is sufficient to establish active membership of the co-operative. (2) A member of a co-operative who would, on payment of the subscription, be an active member of a co-operative is taken to 30 be an active member until the subscription is payable. page 68

Co-operatives Bill 2007 Active membership Part 6 Active membership resolutions Division 3 s. 118 Division 3 -- Active membership resolutions 118. Notice of meeting (1) At least 21 days notice must be given to members of a co-operative of a meeting at which an active membership 5 resolution is to be proposed. (2) The notice must, in addition to the other matters required under this Act to be stated -- (a) contain the full text of the proposed resolution; and (b) contain a copy of section 120. 10 119. Eligibility of directors to vote on proposal at board meeting If the board of a co-operative is meeting to consider a proposal to submit an active membership resolution to a meeting of the co-operative all the directors are eligible to vote on that proposal at the meeting of the board. 15 Division 4 -- Cancellation of membership of inactive or missing members 120. Cancellation of membership of inactive or missing member (1) In this section -- "required period", in relation to a co-operative, means -- 20 (a) 3 years; or (b) a shorter period if specified in the rules of the co-operative. (2) Subject to subsection (3), sections 123 and 124, the board of a co-operative must declare the membership of a member 25 cancelled if -- (a) the whereabouts of the member are not presently known to the co-operative and have not been known to the page 69

Co-operatives Bill 2007 Part 6 Active membership Division 4 Cancellation of membership of inactive or missing members s. 121 co-operative for at least the required period before that time; or (b) the member is not presently an active member of the co-operative and has not been an active member of the 5 co-operative at any time during the required period immediately before that time. (3) Subsection (2) applies to a member only if he or she was a member of the co-operative throughout the required period. (4) Whether a member was an active member at a particular time in 10 the past is to be decided by reference to the active membership provisions in force at that time. (5) The board's declaration under this section has the effect of cancelling the membership concerned. (6) A person may apply to the Supreme Court for an order under 15 section 126 in relation to the cancellation of the person's membership under this section. 121. Share to be forfeited if membership cancelled (1) If a co-operative has a share capital, the board of the co-operative must declare the shares of a member to be forfeited 20 at the same time as the member's membership is cancelled under section 120. (2) The board's declaration has the effect of forfeiting the shares concerned. (3) Nothing in this section affects the operation of section 127. 25 122. Failure to cancel membership -- offence by director If the board of a co-operative fails to cancel the membership of a member as required by this Part, a director of the co-operative who did not use all due diligence to prevent the failure commits an offence. 30 Penalty: a fine of $2 000. page 70

Co-operatives Bill 2007 Active membership Part 6 Cancellation of membership of inactive or missing members Division 4 s. 123 123. Deferral of forfeiture by board (1) The board of a co-operative may by resolution defer cancellation of a member's membership for a period of up to 12 months (the "deferral period") -- 5 (a) if the board has reasonable grounds to believe that a member has ceased to be an active member because of unusual circumstances that prevent the member fulfilling his or her active membership obligations; or (b) if -- 10 (i) the board thinks that during the deferral period an active membership resolution may be put to the members of the co-operative; and (ii) the effect of the resolution would be relevant to the question of whether the member is an active 15 member. (2) The board of the co-operative must review the resolution to defer within the deferral period to determine if a further resolution should be made under subsection (1). 124. Cancellation of membership prohibited in certain 20 circumstances Unless the regulations otherwise provide, the board of a co-operative must not declare the membership of a member to be cancelled under this Part -- (a) if the co-operative is insolvent; or 25 (b) if the co-operative is under administration under the Corporations Act Part 5.3A as applying under this Act; or (c) if a compromise or an arrangement is being administered in relation to the co-operative; or 30 (d) if the co-operative is in the course of being wound-up; or page 71

Co-operatives Bill 2007 Part 6 Active membership Division 4 Cancellation of membership of inactive or missing members s. 125 (e) if an appointment of a receiver, whether or not a receiver and manager, of any property of the co-operative is in force; or (f) if the co-operative has, for the purposes of being 5 registered as a company under the Corporations Act, lodged with the Registrar a copy of the entry made in the minute book of the co-operative under section 185; or (g) in other circumstances as may be prescribed by the 10 regulations. 125. Notice of intention to cancel membership (1) Unless subsection (2) applies, the board of a co-operative must ensure that notice of its intention to declare the membership of a member to be cancelled is given to the member not less than 15 28 days prior to the day of the cancellation. (2) Notice is not required to be given under this section if -- (a) the member's whereabouts are unknown to the co-operative; or (b) the amount required to be repaid to the member in 20 relation to the cancelled membership, whether because of the cancellation of shares or otherwise, does not exceed the amount prescribed by the regulations, or if an amount is not prescribed, $100. 126. Order of Supreme Court against cancellation 25 (1) If the Supreme Court is satisfied that the cancellation of a member's membership under section 120 was or would be unreasonable, the Court may by order direct that the membership should not have been cancelled or should not be cancelled. page 72

Co-operatives Bill 2007 Active membership Part 6 Cancellation of membership of inactive or missing members Division 4 s. 127 (2) While an order is in force under this section -- (a) the membership concerned is not required to be cancelled and any shareholding of the member is not required to be forfeited; and 5 (b) the person whose membership was cancelled is entitled to be reinstated as a member of the co-operative with all the rights and entitlements, including any shareholding, attaching to or arising from the former membership. (3) Reinstatement of a member under this section is to be effected 10 in accordance with the directions of the Supreme Court. 127. Repayment of amounts due because of cancelled membership (1) If the membership of a member of a co-operative is cancelled under this Part, the co-operative must -- 15 (a) within 12 months after the date of cancellation, repay to the former member an amount (the "repayable amount") made up of the amount paid up to the stated nominal value of the shares forfeited by the member at the time of cancellation less any amount owed by the 20 member to the co-operative at that time under the rules of the co-operative or any contract or otherwise; or (b) in the case of a transferred co-operative the rules of which state how to calculate the repayable amount owing to a former member at the time of cancellation of 25 membership, within 3 years after the date of cancellation, repay to the former member an amount in accordance with those rules; or (c) within 12 months after the date of cancellation, apply the repayable amount under subsection (2) if -- 30 (i) the board considers that repayment would adversely affect the financial position of the co-operative; or (ii) the board and the former member agree. page 73

Co-operatives Bill 2007 Part 6 Active membership Division 4 Cancellation of membership of inactive or missing members s. 127 (2) The repayable amount may be applied in one of the following ways -- (a) if the co-operative is a deposit-taking co-operative, the co-operative may apply the amount as a deposit by the 5 former member with the co-operative, subject to the requirements of section 128 as to interest on the deposit; (b) the co-operative may issue debentures or co-operative capital units to the former member in satisfaction of the amount; 10 (c) the co-operative may appropriate the amount as a donation to the co-operative, but only if the former member consents in writing to the donation. (3) If the balance sheet of the co-operative last issued before the cancellation of a member's membership disclosed a loss or 15 deficiency or a significant change in the financial position or prospects of the co-operative is subsequently reported prior to the loss or deficiency, the paid up value of the member's shares may, for the purposes of calculating the repayable amount, be reduced as described in subsection (4). 20 (4) The paid up value of the member's shares may be reduced by an amount that bears to the amount of the loss or deficiency so disclosed the same proportion as the number of shares held by the member bore to the total number of shares held by all members of the co-operative at the time of cancellation. 25 (5) If the former member is subsequently readmitted to membership, any amount held by the co-operative under this section must, if the member so requests, be applied towards the cost of admission to membership, including any subscription for share capital. 30 (6) Despite subsection (2)(c), if -- (a) the co-operative cannot, after taking all reasonable action, find the former member; and page 74

Co-operatives Bill 2007 Active membership Part 6 Cancellation of membership of inactive or missing members Division 4 s. 128 (b) the payment due is less than the amount prescribed by the regulations, or if an amount is not prescribed, $100, the co-operative may appropriate the payment as a donation to the co-operative. 5 128. Interest on deposits, debentures and co-operative capital units (1) This section applies when -- (a) the amount payable to a former member under section 73 or 127 is applied as a deposit with the 10 co-operative; or (b) the co-operative allots or issues debentures or co-operative capital units to the former member in satisfaction of that amount. (2) The deposit, debenture or co-operative capital unit bears interest 15 during any period -- (a) in the case of a co-operative with share capital -- (i) at the rate, or if there is more than one rate, at the higher or highest rate, of dividend payable for that period on the share capital of the 20 co-operative; or (ii) if the rate of dividend payable for that period has not been determined, at the rate, or the higher or highest rate, payable for the immediately preceding period for which a rate has been 25 decided; or (iii) if a rate of dividend has never been determined in relation to the share capital of the co-operative, at the rate that the board of the co-operative considers reasonable; 30 or page 75

Co-operatives Bill 2007 Part 6 Active membership Division 4 Cancellation of membership of inactive or missing members s. 129 (b) in the case of a co-operative without share capital, at the rate that the board of the co-operative considers reasonable; or (c) if the rules provide for a rate to be payable that is higher 5 than the rate applicable under paragraph (a) or (b), at that higher rate. (3) A former member may agree to the rate of interest being less than that which would otherwise be payable under this section and may agree to no interest being paid. 10 (4) The following provisions of the Corporations Act, as applied by section 250 of this Act, do not apply to an allotment or issue of debentures or co-operative capital units under this section -- (a) Chapter 2L; (b) Chapter 6D. 15 129. Repayment of deposits, and redemption of debentures and co-operative capital units (1) A deposit, debenture or co-operative capital unit to which an amount payable to a former member is applied under this Division or section 73(2) is to be repaid or redeemed, as the 20 case may be, as soon as repayment or redemption would not, in the opinion of the board, adversely affect the financial position of the co-operative. (2) The deposit, debenture or co-operative capital unit must in any case be repaid or redeemed within 10 years, or within any 25 shorter period that the rules of the co-operative may require, after cancellation of the member's membership. 130. Register of cancelled memberships A co-operative must keep a register stating the particulars, as prescribed by the regulations, of persons whose membership has 30 been cancelled under this Part. page 76

Co-operatives Bill 2007 Active membership Part 6 Entitlements of former members of distributing co-operatives Division 5 s. 131 Division 5 -- Entitlements of former members of distributing co-operatives 131. Application of Division (1) This Division only applies to distributing co-operatives. 5 (2) Sections 132, 133 and 134 apply to the extent they are not inconsistent with the rules of each particular distributing co-operative. 132. Former shareholders to be taken to be shareholders for certain purposes 10 (1) Even though a person's shares in a co-operative have been forfeited under this Part, the person is to be taken to be the holder of shares in the co-operative (the same in all respects as those that were forfeited) for the following purposes -- (a) the entitlements of a shareholder in relation to the 15 purchase of shares in the co-operative pursuant to an offer described in section 289(a), (b) or (c) or the purchase of all the shares in the co-operative, if the offer or purchase occurs within 2 years after the person's shares were forfeited; 20 (b) the entitlement of a shareholder when the co-operative becomes registered as a company if the relevant special resolution under section 306 is passed within 2 years after the person's shares were forfeited; (c) the entitlement of a shareholder to a distribution of 25 surplus in a winding-up of the co-operative that commences within 2 years after the person's shares were forfeited. (2) Subsection (1)(a) does not apply to -- (a) an offer described in section 289(a) or (c) that is made 30 by another co-operative; or (b) the purchase of all the shares in the co-operative by another co-operative. page 77

Co-operatives Bill 2007 Part 6 Active membership Division 5 Entitlements of former members of distributing co-operatives s. 133 (3) Subsection (1)(c) does not apply if the winding-up is for the purposes of a merger under Part 12 Division 1. (4) For the removal of doubt, it is declared that the entitlement under subsection (1)(a) of a person whose shares have been 5 forfeited does not include an entitlement to vote on any matter. (5) This section does not apply to a forfeited shareholding in a co-operative if section 133 operates to require that forfeited shareholding to be regarded as a forfeited shareholding in another co-operative. 10 133. Entitlements of former shareholders on mergers etc. (1) This section applies when a person's shares in a co-operative (the "original co-operative") are forfeited under this Part and within 2 years after that forfeiture -- (a) the original co-operative becomes a subsidiary of 15 another co-operative (the "new co-operative"); or (b) another co-operative (the "new co-operative") is created as a result of a merger under Part 12 Division 1 involving the original co-operative; or (c) the engagements of the original co-operative are 20 transferred to another co-operative (the "new co-operative") under Part 12 Division 1. (2) A person referred to in subsection (1) is, for the purposes of the operation of section 132, and the further operation of this section, taken to have held shares in the new co-operative and as 25 having had those shares in the new co-operative forfeited under this Part when the person's shares in the original co-operative were forfeited. (3) The extent of the forfeited shareholding in the new co-operative is determined as follows -- 30 (a) if the entitlement of active members of the original co-operative in the circumstances concerned is solely an entitlement to be allotted shares in the new co-operative, the forfeited shareholding in the new co-operative is the page 78

Co-operatives Bill 2007 Active membership Part 6 Entitlements of former members of distributing co-operatives Division 5 s. 134 shareholding to which the person would have been entitled had the person's shares in the original co-operative not been forfeited; (b) in any other case, the forfeited shareholding in the new 5 co-operative is the shareholding that is the same in all respects as the forfeited shareholding in the original co-operative. (4) The determination under subsection (3)(a) of the person's shareholding in the new co-operative must be made -- 10 (a) solely on the basis of the person's shareholding in the original co-operative when the shares were forfeited or, in a further operation of this section in respect of the person, when the person was first to be regarded as having a forfeited shareholding in the original 15 co-operative; and (b) without regard to any additional shareholding in the original co-operative to which the person would have become entitled had the shares not been forfeited, whether as a result of any bonus share issue or 20 otherwise. 134. Set off of amounts repaid etc. on forfeited shares (1) If a person has an entitlement because of the operation of section 133, the entitlement operates to end any liability of the co-operative -- 25 (a) to repay to the person under section 127 any amount for the forfeited shares concerned; or (b) in respect of a deposit held by the co-operative, or debentures allotted or issued to the person, or co-operative capital units issued under section 127 for 30 the forfeited shares concerned, except a liability to pay interest that is payable but unpaid. (2) If an amount has been repaid to a person under section 127 or 129, the amount repaid is to be set off against any entitlement page 79

Co-operatives Bill 2007 Part 6 Active membership Division 5 Entitlements of former members of distributing co-operatives s. 135 of the person under section 132 for the forfeited shares concerned. (3) If the amount repaid cannot be set off against the entitlement because the entitlement is not, or is only partly, an entitlement 5 to money, the entitlement is lost unless the person pays to the co-operative the amount repaid to the person and does so within the period required under subsection (4). (4) If the circumstances referred to in subsection (3) arise, the co-operative concerned must -- 10 (a) give written notice of the matter by post to the person concerned at the person's address last known to the co-operative, specifying a period of not less than 28 days after the notice is given during which any amount repaid must be paid to the co-operative; and 15 (b) publish a general notice to that effect in a newspaper circulating generally in the district in which the registered office of the co-operative is situated. 135. Regulations may exempt co-operatives from provisions The regulations may exempt a co-operative from a provision of 20 this Division. page 80

Co-operatives Bill 2007 Shares Part 7 Nature of share Division 1 s. 136 Part 7 -- Shares Division 1 -- Nature of share 136. Nature of share in co-operative (1) A share or other interest in a co-operative -- 5 (a) is personal property; and (b) is transferable or transmissible as provided by this Act and the rules of the co-operative; and (c) is, subject to the rules of the co-operative, capable of devolution by will or by operation of law. 10 (2) Subject to subsection (1) -- (a) the laws applying to ownership of and dealing with personal property apply to a share or other interest of a member in a co-operative as they apply to other property; and 15 (b) equitable interests in respect of a share or other interest of a member in a co-operative may be created, dealt with and enforced as in the case of other personal property. Division 2 -- Disclosure 137. Disclosure to intending shareholders in distributing 20 co-operative (1) An eligible person who intends to apply for shares in a co-operative and is not already a shareholder in the co-operative may request, from the board of the distributing co-operative, a current disclosure statement that -- 25 (a) has been approved by the Registrar under section 16(5); or (b) complies with section 138 and has been lodged by the co-operative with the Registrar. page 81

Co-operatives Bill 2007 Part 7 Shares Division 2 Disclosure s. 138 (2) The board of the distributing co-operative is to respond to a request for a current disclosure statement within 7 days. 138. Content of disclosure statement to intending shareholders (1) A disclosure statement given to a person under section 137 must 5 contain -- (a) a statement of the rights and liabilities attaching to shares; and (b) a statement that the person may request to either inspect at the co-operative's nearest office, or be sent -- 10 (i) the last annual report of the co-operative under section 235(2); and (ii) any other relevant information about the financial position and prospects of the co-operative if there has been a significant 15 change since the date of the last annual report; and (c) any other information the Registrar directs. (2) If a person who has received a disclosure statement makes a request under subsection (1)(b), the co-operative must comply 20 with that request within 7 days. 139. Exemptions for disclosure statements (1) The Registrar may, by order published in the Gazette, exempt the board of a distributing co-operative, or the boards of a class of distributing co-operatives from a requirement under 25 section 137 or 138. (2) An exemption under subsection (1) may be given only if the Registrar is satisfied that compliance with the requirement would be inappropriate in the circumstances or would impose an unreasonable burden. page 82

Co-operatives Bill 2007 Shares Part 7 Issues of shares Division 3 s. 140 Division 3 -- Issues of shares 140. Shares -- general (1) The share capital of a co-operative varies in amount according to the nominal value of shares from time to time subscribed. 5 (2) Shares are to be of a fixed amount which is to be specified in the rules of the co-operative. (3) A co-operative may have more than one class of shares provided the shareholding and the rights of shareholders comply with the co-operative principles. 10 (4) Subject to this Part and Part 4, shares must not be issued to a non-member. 141. Application of Corporations Act for particular share subscriptions (1) If subsection (2) applies to shares of a co-operative, the shares 15 are declared to be applied Corporations legislation matters for the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the Corporations Act sections 716(2), 722, 723(2), 724(1)(a) and (2)(a) and 734, subject to the following modifications -- 20 (a) the provisions apply as if a co-operative were a company; (b) a reference in the provisions to ASIC is to be read as a reference to the Registrar; (c) a reference in the provisions to a disclosure document is 25 to be read as a reference to a disclosure statement, of any type, under this Act; (d) a reference in the provisions to securities is to be read as a reference to shares; (e) any other modifications, within the meaning of the 30 Corporations (Ancillary Provisions) Act 2001 Part 3, that are prescribed by the regulations. page 83

Co-operatives Bill 2007 Part 7 Shares Division 3 Issues of shares s. 142 (2) Shares in a co-operative are subject to the declaration under subsection (1) if -- (a) the shares are offered to persons who are not shareholders in the co-operative; or 5 (b) the invitation is made to persons who are not shareholders in the co-operative. 142. Minimum paid up amount (1) A share in a co-operative other than a transferred co-operative must not be allotted unless at least 10% of the nominal value of 10 the share has been paid. (2) Any balance unpaid for shares at the time of allotment must be paid in a way specified in the rules of the co-operative or permitted by this Act. (3) This section does not apply to a bonus share issued under 15 section 147 or 271. 143. Shares not to be issued at a discount A co-operative must not issue shares at a discount. 144. Issue of shares at a premium (1) A distributing co-operative may issue shares at a premium. 20 (2) A premium may be in the form of cash or other valuable consideration. (3) If a distributing co-operative issues shares for which it receives a premium, an amount equal to the total amount or value of the premiums on the shares must be transferred to a share premium 25 account. (4) The share premium account is to be treated as paid up share capital of the distributing co-operative and may be applied in any one or more of the following ways -- (a) in paying up unissued shares to be issued to members of 30 the co-operative as fully paid bonus shares; page 84

Co-operatives Bill 2007 Shares Part 7 Issues of shares Division 3 s. 145 (b) in paying up, in whole or in part, the balance unpaid on shares previously issued to members of the co-operative; (c) in the payment of dividends, if those dividends are satisfied by the issue of shares to members of the 5 co-operative; (d) in writing off the expenses incurred in establishing the co-operative; (e) in providing for the premium payable on redemption of shares, debentures or co-operative capital units. 10 145. Joint ownership of shares A share may be held by 2 or more persons jointly, unless the rules of the co-operative provide otherwise. 146. Members may be required to take up additional shares (1) The board of a distributing co-operative may require a member 15 to take up or subscribe for additional shares under a proposal approved by a special resolution of the co-operative. (2) The board of a distributing co-operative may deduct amounts in payment for additional shares from money payable to members for dealings with the co-operative, under a proposal approved 20 by a special resolution of the co-operative. (3) A proposal to require a member to take up or subscribe for additional shares must -- (a) be accompanied by a disclosure statement, approved by the Registrar, that explains the purpose for which the 25 funds raised by the issue of the additional shares are to be used; and (b) clearly show the total number of additional shares to be issued and the basis on which the shares are to be apportioned among members; and 30 (c) be accompanied by a statement informing the member that the member may inform the board by notice on or before the date specified in the statement, being a date page 85

Co-operatives Bill 2007 Part 7 Shares Division 3 Issues of shares s. 147 before the passing of the special resolution, that the member resigns on the passing of the special resolution. (4) A proposal to deduct amounts in payment for additional shares from amounts payable to members for dealings with the 5 distributing co-operative must clearly show -- (a) the basis on which the deductions are to be made; and (b) the time and way of making those deductions. (5) A proposal approved under this section is binding on -- (a) all members of the distributing co-operative at the date 10 of the passing of the special resolution, other than a member who has given a notice of resignation in accordance with subsection (3)(c); and (b) all persons who become members of the distributing co-operative after that date and before the total number 15 of shares to be issued under the proposal has been issued. (6) Sections 16 (except subsection (3)) and 29 apply to the approval of a disclosure statement under this section with any necessary changes and in particular as if any reference in section 16 to a 20 formation meeting were a reference to the special resolution. (7) This section does not apply to the issue of bonus shares to a member under section 271(2). 147. Bonus share issues (1) In addition to section 271(2) a distributing co-operative may 25 issue bonus shares to members of the co-operative if the assets of the co-operative -- (a) have been sold at a profit; or (b) have been revalued at a greater value than that disclosed before the revaluation in the books of the co-operative. 30 (2) This section does not apply if the assets were acquired for resale at a profit. page 86

Co-operatives Bill 2007 Shares Part 7 Issues of shares Division 3 s. 148 148. Restrictions on bonus shares Bonus shares issued under section 147 may be issued in accordance with the rules of the co-operative, subject to the following restrictions -- 5 (a) each issue must have been approved by a special resolution of the co-operative; (b) they are to be issued as fully paid up shares with no payment required to be made by a member of the co-operative to whom they are issued; 10 (c) they are to be issued only for shares of the same class of shares that are fully paid up as at the date of issue of the bonus shares; (d) the total nominal value of bonus shares issued by a co-operative in any one year cannot be more than 20%, 15 or another percentage prescribed by the regulations, of the nominal value of the issued share capital of the co-operative immediately before the date of issue of the bonus shares. 149. Notice about bonus shares 20 Notice of the meeting or postal ballot at which a resolution is to be proposed as a special resolution for the purpose of approving a bonus share issue must be accompanied by -- (a) a statement of the value of the assets concerned as disclosed in the books of the co-operative before the sale 25 or revaluation; and (b) if the issue arises from, or partly from, a sale of assets, a statement of the price for which the assets were sold; and (c) if the issue arises from, or partly from, a revaluation of 30 assets, a certificate of value of the assets, being a certificate given in relation to a valuation made not more than 12 months before the date of the notice by a person prescribed by the regulations or a person having qualifications prescribed by the regulations; and page 87

Co-operatives Bill 2007 Part 7 Shares Division 4 Beneficial and non-beneficial interest in shares s. 150 (d) particulars of acquisitions of shares in the co-operative made within the 3 years immediately preceding the date of the notice by or on behalf of each of its directors and his or her spouse (or de facto partner) and the father, 5 mother, children, brothers and sisters of each such director and spouse (or de facto partner); and (e) a certificate signed by 2 directors of the co-operative stating that to the best of their knowledge and belief the issue of bonus shares would not be imprudent and that 10 no circumstances are known to them as to why the issue should not take place. Division 4 -- Beneficial and non-beneficial interest in shares 150. Direction to disclose The board of a co-operative may direct a person to disclose 15 matters as described in section 151 if the person is -- (a) a member of the co-operative; or (b) a person named in a disclosure made in response to a previous direction under this section as having a relevant interest in, or having given instructions about, shares in 20 the co-operative. 151. Disclosure by member of relevant interests and instructions (1) A person given a direction under section 150 must, unless subsection (2) applies, disclose to the board -- (a) full details of the person's relevant interest in the shares 25 of the co-operative (the "relevant shares") and of the circumstances that gave rise to the interest; and (b) the name and address of each other person who has a relevant interest in the relevant shares together with full details of -- 30 (i) the nature and extent of the interest; and page 88

Co-operatives Bill 2007 Shares Part 7 Beneficial and non-beneficial interest in shares Division 4 s. 151 (ii) the circumstances that gave rise to the other person's interest; and (c) the name and address of each person who has given the 5 person instructions about -- (i) the acquisition or disposal of the shares; or (ii) the exercise of any voting or other rights attached to the shares; or (iii) any other matter relating to the shares, 10 together with full details of those instructions, including the date or dates on which they were given. Penalty: a fine of $3 000. (2) A matter referred to in subsection (1)(b) or (c) need only be disclosed to the extent to which the matter is ascertainable by 15 the person required to make the disclosure. (3) The disclosure must be made within the period of 5 days after the person is given the direction, unless within that period the person applies in writing to the Registrar for an exemption from compliance with the direction. 20 (4) The Registrar may, in writing, exempt a person from complying with a direction if the Registrar believes the direction is unjustified. (5) If the Registrar refuses to give an exemption under subsection (4), the disclosure required by the direction must be 25 made within the period of 5 days after the person receives written notice of that refusal. (6) A board that receives information from a person acting on a direction given to the person by the board must pay to the person the fee, if any, prescribed by the regulations. page 89

Co-operatives Bill 2007 Part 7 Shares Division 4 Beneficial and non-beneficial interest in shares s. 152 152. Registration as trustee etc. on death of owner of shares (1) A trustee, executor or administrator of the estate of a dead person who was the registered holder of a share in a co-operative may be registered as the holder of the share as 5 trustee, executor or administrator of that estate. (2) A trustee, executor or administrator of the estate of a dead person who was entitled in equity to a share in a co-operative may, with the consent of the co-operative and of the registered holder of the share, be registered as the holder of the share as 10 trustee, executor or administrator of that estate. 153. Registration as administrator of estate on incapacity of shareholder (1) This section applies to a person (the "appointed person") who is appointed under a law of a State or Territory relating to the 15 administration of the estates of persons who, through mental or physical infirmity, are incapable of managing their affairs, to administer the estate of another person (the "incapable person"). (2) If the incapable person is the registered holder of a share in a 20 co-operative, the appointed person may be registered as the holder of that share as administrator of the estate of the incapable person. (3) If the incapable person is entitled in equity to a share in a co-operative, the appointed person may, with the consent of the 25 co-operative and of the registered holder of that share, be registered as the holder of the share as administrator of the estate of the incapable person. 154. Registration as Official Trustee in Bankruptcy (1) This section applies when a share in a co-operative that is the 30 property of a bankrupt vests by force of the Commonwealth Bankruptcy Act 1966 in the Official Trustee in Bankruptcy. page 90

Co-operatives Bill 2007 Shares Part 7 Beneficial and non-beneficial interest in shares Division 4 s. 155 (2) If the bankrupt is the registered holder of the share, the Official Trustee may be registered as the holder of the share as the Official Trustee in Bankruptcy. (3) If the bankrupt is entitled in equity to the share, the Official 5 Trustee may, with the consent of the co-operative and of the registered holder of the share, be registered as the holder of the share as the Official Trustee in Bankruptcy. 155. Liabilities of person registered as trustee or administrator (1) A person registered under section 152, 153 or 154 is, while so 10 registered, subject to the same liabilities in relation to the share as those to which the person would have been subject if the share had remained, or had been, registered in the name of the dead person, the incapable person or the bankrupt. (2) The person registered is subject to no other liabilities in relation 15 to the share. 156. Notice of trusts in register of members Shares held by a trustee under a particular trust may, with the consent of the co-operative, be marked in the register of members, directors and shares referred to in section 230(1)(a) in 20 a way that identifies the shares as being held under the trust. 157. No notice of trust except as provided by this Division Except as provided in this Division -- (a) no notice of a trust, whether express, implied or constructive, is to be entered on a register or be 25 receivable by the Registrar; and (b) no liabilities are affected by anything done under this Division; and (c) nothing done under this Division affects a co-operative with notice of a trust. page 91

Co-operatives Bill 2007 Part 7 Shares Division 5 Sale or transfer of shares s. 158 Division 5 -- Sale or transfer of shares 158. Sale or transfer of shares (1) A share in a co-operative cannot be sold or transferred except -- (a) in accordance with Part 4 Division 3 and section 159, on 5 the death of a member; or (b) to a person appointed to administer the estate of a shareholder under a law relating to the administration of the estates of persons who, through mental or physical infirmity, are incapable of managing their affairs; or 10 (c) with the consent of the board, to any person if there are reasonable grounds for believing that the person will be an active member of the co-operative; or (d) in accordance with Part 11 Division 2. (2) A share in a co-operative cannot be sold or transferred except in 15 accordance with the rules of the co-operative. 159. Transfer on death of member (1) Despite sections 75 and 76, on the death of a member, the member's share in the co-operative may be transferred to a person other than an administrator or executor with the consent 20 of the board of the co-operative. (2) The board may only give its consent under subsection (1) if there are reasonable grounds for believing that the person will be an active member of the co-operative. 160. Restriction on total shareholding 25 The board of a co-operative must not consent under section 158(1)(c) to the issue, sale or transfer of a share if, as a result of the issue, sale or transfer, the nominal value of the shares held by the purchaser or transferee would be more than the maximum permissible level of share interest applying under 30 section 278. page 92

Co-operatives Bill 2007 Shares Part 7 Repurchase of shares Division 6 s. 161 161. Transfer not effective until registered A transferor of a share remains the holder of the share until the transferee is noted as the holder of the share in the register of members, directors and shares referred to in section 230(1)(a). 5 162. Non-members become members on registration Where a share in a co-operative is transferred to a non-member under this Part or Part 4, the transferee becomes a member of the co-operative on the transferee being noted as a member in the register of members, directors and shares referred to in 10 section 230(1)(a). Division 6 -- Repurchase of shares 163. Purchase and repayment of shares (1) The rules of a co-operative may authorise the co-operative to -- (a) purchase any share of a member in the co-operative at 15 the request of the member; and (b) repay to a member, with the member's consent, all or any part of the amount paid up to the stated nominal value on any share held by the member when the amount repaid is not required for the activities of the 20 co-operative. (2) The amount paid by a co-operative under this section in purchasing shares or repaying an amount paid up to the stated nominal value on shares, or both, in any financial year of the co-operative must not be more than the total of -- 25 (a) 5% of the nominal value of the issued share capital of the co-operative immediately before the start of that financial year; and (b) the amount of any additional share capital of the co-operative subscribed for during that year. 30 (3) The members of a co-operative may by special resolution exempt a co-operative from the operation of subsection (2) in page 93

Co-operatives Bill 2007 Part 7 Shares Division 6 Repurchase of shares s. 164 relation to a particular financial year, either unconditionally or on conditions. (4) The amount paid for a share when it is repurchased may be an amount decided by the board that is less than the nominal value 5 of the share but only -- (a) if the records of the co-operative disclose that the amount paid is the net shareholder's equity per share in the undertaking of the co-operative; or (b) in accordance with the rules of the co-operative. 10 (5) This section does not apply if the member has resigned or has been expelled from the co-operative or the member's membership has been otherwise cancelled. 164. Deposit, debentures or co-operative capital units instead of payment when share repurchased 15 (1) If a co-operative repurchases a share of a member, the co-operative may instead of paying the purchase price to the member -- (a) in the case of a deposit-taking co-operative, apply the amount as an interest bearing deposit by the member 20 with the co-operative; or (b) allot or issue debentures or co-operative capital units of the co-operative to the member in satisfaction of the amount. (2) Subsection (1) applies only if -- 25 (a) the board considers that payment of the repurchase price would adversely affect the financial position of the co-operative; or (b) the board and the member so agree. page 94

Co-operatives Bill 2007 Shares Part 7 Repurchase of shares Division 6 s. 164 (3) The deposit, debenture or co-operative capital unit bears interest during any period -- (a) in the case of a co-operative with share capital -- (i) at the rate (or, if there is more than one rate, at 5 the higher or highest rate) of dividend payable for that period on the share capital of the co-operative; or (ii) if the rate of dividend payable for that period has not been decided, at the rate (or the higher or 10 highest rate) payable for the immediately preceding period for which a rate has been decided; or (iii) if a rate of dividend has never been decided for the share capital of the co-operative, at the rate 15 that the board of the co-operative considers reasonable; or (b) in the case of a co-operative without share capital, at the rate that the board of the co-operative considers 20 reasonable; or (c) if the rules provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b), at the higher rate. (4) The deposit, debenture or co-operative capital unit must be 25 repaid to the member or redeemed, as the case may be, as soon as repayment or redemption would not, in the opinion of the board, adversely affect the financial position of the co-operative. (5) The deposit, debenture or co-operative capital unit must in any 30 case be repaid or redeemed within 10 years (or within any shorter period that the rules of the co-operative require) after the repurchase of the shares concerned. page 95

Co-operatives Bill 2007 Part 7 Shares Division 6 Repurchase of shares s. 165 165. Cancellation of shares (1) A co-operative must cancel any share purchased by or forfeited to the co-operative in accordance with this Act or the rules of the co-operative. 5 (2) Any shares held by a co-operative in itself at the time the co-operative is registered under this Act are cancelled under this section. page 96

Co-operatives Bill 2007 Voting and meetings Part 8 Voting entitlements Division 1 s. 166 Part 8 -- Voting and meetings Division 1 -- Voting entitlements 166. Application of Part to voting The provisions of this Part applying to voting apply to voting on 5 all resolutions. 167. Voting (1) The right to vote attaches to membership and not shareholding. (2) Except as provided in subsections (3) and (4), each member has only one vote at a meeting of the co-operative. 10 (3) If its rules so provide, a member of a co-operative group may have the number of votes (up to 5) at a general meeting that is specified in the rules. (4) If the rules so provide, the chairman has a casting vote at a board meeting or general meeting. 15 (5) In the case of joint membership -- (a) the joint members have only one vote between them; and (b) that vote may be exercised, subject to the grant of a proxy or power of attorney, only by the joint member 20 determined in accordance with the rules. 168. Voting by proxy (1) If the rules so provide, voting may be by proxy at a general meeting. (2) The instrument of proxy may state the way in which a proxy is 25 to vote on a particular resolution. (3) The proxy must vote in the way authorised by an instrument of proxy referred to in subsection (2). page 97

Co-operatives Bill 2007 Part 8 Voting and meetings Division 1 Voting entitlements s. 169 (4) The rules of a co-operative may limit the number of persons for whom a person may act as a proxy on the same question. (5) A person cannot exercise more than one proxy vote during a vote on the same question unless the vote is conducted by poll 5 demanded under section 194. 169. Control of the right to vote (1) Subject to subsection (3), a person must not directly or indirectly control the exercise of the right to vote of a member. Penalty: a fine of $12 000. 10 (2) If a person controls the exercise of the right to vote of a member at a meeting of a co-operative -- (a) the vote of the member is invalid; and (b) if the person is a member, the vote of the person is invalid. 15 (3) Nothing in this section prevents -- (a) the exercise of a vote by means of a proxy or power of attorney; or (b) a director controlling the vote of a corporate member; or (c) an agreed purchaser controlling a member's vote 20 pending settlement. 170. Effect of disposal of shares on voting rights A member of a co-operative cannot vote if the member has sold or transferred, or disposed of the beneficial interest in, the member's shares, or has agreed to do so. 25 171. Effect of relevant share and voting interests on voting rights (1) A member of a co-operative cannot vote if another person, whether or not a member of the co-operative, has a relevant interest in any share held by the member or in the right to vote of the member. page 98

Co-operatives Bill 2007 Voting and meetings Part 8 Resolutions Division 2 s. 172 (2) A member who cannot vote because of this section may apply to the Registrar to review the matter. (3) The Registrar may order that the member may vote if the Registrar is satisfied in the circumstances of the case that loss of 5 the right to vote would be unjust or unreasonable, and the order of the Registrar has effect accordingly. 172. Rights of representatives A person appointed under this Act to represent a member of a co-operative -- 10 (a) is deemed to receive any notice of meetings given to the member represented; and (b) is entitled to exercise the same rights to vote as the member represented. 173. Other rights and duties of members not affected by 15 ineligibility to vote A provision of this Act that disentitles a member of a co-operative to vote, either generally or in relation to a particular matter, does not affect any other right, entitlement, obligation or duty of the member as a member. 20 174. Vote of disentitled member to be disregarded Any vote cast by or on behalf of a member of a co-operative when not entitled to vote must be disregarded. Division 2 -- Resolutions 175. Decisions to be by ordinary resolution 25 Unless this Act or the rules of the co-operative provide otherwise, every question for decision by a co-operative must be decided by ordinary resolution. page 99

Co-operatives Bill 2007 Part 8 Voting and meetings Division 2 Resolutions s. 176 176. Ordinary resolutions An ordinary resolution is a resolution of a co-operative that is passed by a simple majority at a general meeting of the co-operative or in a postal ballot of members. 5 177. Special resolutions (1) A special resolution is a resolution of a co-operative that is passed -- (a) by a two-thirds majority at a general meeting of members; or 10 (b) by a two-thirds majority in a postal ballot, other than a special postal ballot, of members; or (c) by a three-quarters majority in a special postal ballot of members. (2) A special resolution may be passed by a postal ballot only if the 15 rules of the co-operative allow, or this Act requires, the special resolution to be passed by postal ballot, including a special postal ballot. (3) A resolution is not taken to have been passed as a special resolution unless not less than 21 days notice has been given to 20 the members of the co-operative stating -- (a) the intention to propose the special resolution; and (b) the reasons for proposing the special resolution; and (c) the effect of the special resolution being passed. 178. How majority obtained is ascertained 25 (1) A resolution is passed by a particular majority at a meeting if that majority of the members of the co-operative who, being entitled to do so, vote in person or, if proxies are allowed, by proxy at the meeting vote in favour of the resolution. (2) A resolution is passed by a particular majority in a postal ballot 30 if that majority of the members of the co-operative who, being page 100

Co-operatives Bill 2007 Voting and meetings Part 8 Resolutions Division 2 s. 179 entitled to do so, cast formal votes in the postal ballot vote in favour of the resolution. 179. Declaration of passing of special resolution (1) At a meeting of a co-operative for the purpose of passing a 5 special resolution, a declaration by the chairman of the meeting that the resolution has been passed as a special resolution is evidence of that fact. (2) A declaration by the returning officer for a postal ballot to pass a special resolution that the resolution has been passed as a 10 special resolution is evidence of that fact. (3) Subsection (1) does not apply if a poll is taken at the meeting of the co-operative. 180. Effect of special resolution (1) A special resolution, other than a special resolution required to 15 be passed by special postal ballot, has effect from the date that it is passed. (2) A special resolution relating to anything for which a special resolution is required to be passed by special postal ballot has no effect until it is registered under section 182(1). 20 181. Lodgment of special resolution (1) A co-operative must lodge 2 copies of each special resolution passed by the co-operative with the Registrar in accordance with this section for registration. (2) The copies must -- 25 (a) be lodged within 28 days after the passing of a special resolution or a longer period allowed by the Registrar; and (b) be signed by a director, the secretary of the co-operative or another authorised representative of the co-operative; 30 and page 101

Co-operatives Bill 2007 Part 8 Voting and meetings Division 2 Resolutions s. 182 (c) be accompanied by the lodgment fee prescribed by the regulations. (3) A co-operative and an officer of the co-operative must not knowingly fail to lodge the required copies under this section. 5 Penalty: a fine of $2 000. (4) This section and section 182 do not apply to a special resolution altering the rules of a co-operative. 182. Decision of Registrar on application to register special resolution 10 (1) If the Registrar is satisfied that the co-operative has complied with this Act, and that a special resolution passed by special postal ballot is not contrary to this Act, the Registrar must register the special resolution. (2) If the Registrar considers that the effect of a special resolution 15 lodged for registration would be in contravention of this Act or any other law, the Registrar -- (a) may refuse to register the special resolution; and (b) must give written notice to the co-operative that the special resolution -- 20 (i) in the case of a special resolution referred to in section 180(2), has no effect; and (ii) in any other case, has no effect as from the date that it was passed. (3) A certificate of registration of a special resolution given by the 25 Registrar is, in favour of any person advancing money to the co-operative on the faith of the certificate or in favour of any guarantor of that advance, evidence that the resolution was properly passed. page 102

Co-operatives Bill 2007 Voting and meetings Part 8 Resolution by circulated document Division 3 s. 183 Division 3 -- Resolution by circulated document 183. Application of Division 3 This Division applies to a resolution of a co-operative, including a resolution appointing an officer or auditor or approving of or 5 agreeing to any act, matter or thing, if -- (a) the co-operative has fewer than 50 members; and (b) the resolution is required or permitted under this Act or the rules of the co-operative to be passed at a general meeting of the co-operative. 10 184. Resolution by circulation of document -- fewer than 50 members (1) If all the members of a co-operative have signed a document that sets out the terms of a resolution and contains a statement that they are in favour of the resolution, the resolution is taken 15 to have been passed at a general meeting of the co-operative. (2) The meeting is taken to have been held -- (a) if all the members signed the document on the one day, on that day and at the time the document was signed by the last member to sign; or 20 (b) if the members signed the document on different days, on the day, and at the time, the document was signed by the last member to sign. (3) The document need not exist as a single document, but may exist in the form of 2 or more documents in identical terms. 25 (4) The document is taken to constitute a minute of the general meeting. (5) Anything attached to the document and signed by the members signing the document is taken to have been laid before the co-operative at the general meeting. page 103

Co-operatives Bill 2007 Part 8 Voting and meetings Division 4 Postal ballots s. 185 (6) The document is signed by all members of a co-operative only if the document is signed by each person who was a member of the co-operative at the time the document was signed by the last member to sign. 5 (7) Nothing in this section affects or limits any rule of law about the effectiveness of the assent of a member of a co-operative given to a document, or to an act, matter or thing, otherwise than at a general meeting of the co-operative. Division 4 -- Postal ballots 10 185. Postal ballots (1) A postal ballot may be conducted in the manner provided by the rules of the co-operative and may, if the rules so allow, incorporate one or more methods of electronic voting. (2) On the declaration by the returning officer of the result of the 15 ballot, the secretary of the co-operative must make an entry in the minute book of the co-operative showing -- (a) the number of formal votes cast in favour of the proposal concerned; and (b) the number of formal votes cast against the proposal; 20 and (c) the number of informal votes cast. 186. Special postal ballots (1) A special postal ballot is a postal ballot that is conducted as required by this section. 25 (2) The ballot cannot be held less than 21 days after notice of the ballot is given to members so as to enable sufficient time for a meeting to discuss the proposal that is the subject of the ballot to be convened and held (whether by the board or on the requisition of members). page 104

Co-operatives Bill 2007 Voting and meetings Part 8 Postal ballots Division 4 s. 187 (3) The co-operative must send to each member, along with any other material required to be sent in connection with the postal ballot, a disclosure statement approved by the Registrar and containing information about -- 5 (a) the financial position of the co-operative; and (b) the interests of the directors of the co-operative in the proposal with which the ballot is concerned, including any interests of the directors in another organisation concerned in the proposal; and 10 (c) any compensation or consideration to be paid to officers or members of the co-operative in connection with the proposal; and (d) any other matters as the Registrar directs. (4) If required by the Registrar, the disclosure statement is to be 15 accompanied by a report, made by an independent person approved by the Registrar, about any matters that the Registrar directs. (5) Sections 16 (except subsection (3)) and 29 apply to the approval of a disclosure statement under this section with any necessary 20 changes and in particular as if any reference in section 16 to a formation meeting were a reference to the notice of the special postal ballot. 187. When a special postal ballot required In addition to any requirement of this Act, the rules of a 25 co-operative must require a special postal ballot to be conducted for the purpose of passing a special resolution in relation to any of the following matters relating to the co-operative -- (a) conversion of -- (i) a share capital co-operative to a non-share capital 30 co-operative or vice versa; or (ii) a distributing co-operative to a non-distributing co-operative or vice versa; page 105

Co-operatives Bill 2007 Part 8 Voting and meetings Division 4 Postal ballots s. 188 (b) transfer of incorporation; (c) an acquisition or disposal of assets referred to in section 273; (d) the maximum permissible level of share interest in the 5 co-operative; (e) takeover; (f) merger; (g) transfer of engagements; (h) members' voluntary winding-up. 10 188. Holding of postal ballot on requisition (1) The board of a co-operative must conduct a postal ballot, including a special postal ballot, for the passing of a special resolution on the written requisition of such number of members who together are able to cast at least 20%, or any lesser 15 percentage specified in the rules of the co-operative, of the total number of votes able to be cast at a meeting of the co-operative. (2) The following provisions apply to a requisition for a postal ballot -- (a) it must state -- 20 (i) the proposed special resolution to be voted on; and (ii) the reasons for the making of the special resolution; and (iii) the effect of the special resolution being passed; 25 (b) it must be signed by the requisitioning members, and may consist of several documents in like form each signed by one or more of the requisitioning members; (c) it must be served on the co-operative by being lodged at the registered office of the co-operative. page 106

Co-operatives Bill 2007 Voting and meetings Part 8 Meetings Division 5 s. 189 (3) The postal ballot must be conducted as soon as practicable and in any case must be conducted within 2 months after the requisition is served. (4) If the special resolution for which the requisitioned postal ballot 5 is conducted is not passed, the co-operative may recover the expenses of the postal ballot from the members who requisitioned the postal ballot as a debt due to the co-operative. (5) The members' liability under subregulation (4) is joint and several. 10 189. Expenses involved in postal ballots on requisition (1) All reasonable expenses incurred by a co-operative in and in connection with preparing for and holding a special postal ballot are to be considered to constitute the "expenses of the postal ballot" for the purposes of section 188(4). 15 (2) Those expenses include (but are not limited to) the following expenses -- (a) the cost of obtaining expert advice, including legal and financial advice, and of commissioning expert reports; (b) costs attributable to the use of staff of the co-operative 20 in connection with preparing for and holding the ballot; (c) the cost of producing, printing and posting the ballot papers and other material associated with the ballot; (d) the cost of convening and holding a meeting under section 186(2) at the request of the members who 25 requisitioned the postal ballot. Division 5 -- Meetings 190. Annual general meetings (1) In the case of a co-operative registered under Part 2 Division 4, the first annual general meeting of the co-operative must be held 30 within 18 months after registration under this Act. page 107

Co-operatives Bill 2007 Part 8 Voting and meetings Division 5 Meetings s. 191 (2) In the case of a co-operative registered under Part 2 Division 5, the first annual general meeting of the co-operative must be held within 18 months after the last annual general meeting held by that co-operative before it was registered under this Act. 5 (3) The second or any later annual general meeting of a co-operative must be held within -- (a) 5 months after the close of the financial year of the co-operative; or (b) a further time that may be allowed by the Registrar or is 10 prescribed by the regulations. 191. Special general meetings A special general meeting of a co-operative may be called at any time by the board of the co-operative. 192. Notice of meetings 15 The board must give each member at least 14 days notice of each general meeting. 193. Quorum at meetings (1) The quorum for a meeting of a co-operative must be specified in the rules. 20 (2) An item of business cannot be transacted at a meeting of a co-operative unless a quorum of members entitled to vote is present during the transaction of that item. 194. Decision at meetings (1) Unless subsection (4) requires it to be determined by a poll, a 25 question for decision at a general meeting is to be determined by a show of hands. (2) A proxy may exercise only one vote on a question determined by a show of hands. page 108

Co-operatives Bill 2007 Voting and meetings Part 8 Meetings Division 5 s. 195 (3) A proxy may exercise more than one vote on a question determined by a poll. (4) A question is to be determined by a poll if -- (a) 5 members, present in person at the meeting or 5 represented at the meeting by a proxy, demand the poll; or (b) the chairman directs that the question will be determined by poll. (5) In the case of an equality of votes, whether on a show of hands 10 or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded may exercise a casting vote if the rules so provide. 195. Calling of general meeting on requisition (1) The board of a co-operative must convene a general meeting of 15 the co-operative on the written requisition of such number of members who together are able to cast at least 20% (or any lesser percentage specified in the rules of the co-operative) of the total number of votes able to be cast at a meeting of the co-operative. 20 (2) The following provisions apply to a requisition for a general meeting -- (a) it must state the objects of the meeting; (b) it must be signed by the requisitioning members, and may consist of several documents in like form each 25 signed by one or more of the requisitioning members; (c) it must be served on the co-operative by being lodged at the registered office of the co-operative. (3) The meeting must be called and held as soon as practicable and in any case must be held within 2 months after the requisition is 30 served. page 109

Co-operatives Bill 2007 Part 8 Voting and meetings Division 5 Meetings s. 196 (4) If the board does not call a meeting within 35 days after a requisition is served, the following provisions apply -- (a) the requisitioning members, or any of them representing at least half their total voting rights, may call the 5 meeting in the same way as nearly as possible as meetings are called by the board; (b) for that purpose they may request the co-operative to supply a written statement setting out the names and addresses of the persons entitled when the requisition 10 was served to receive notice of general meetings of the co-operative; (c) the board must send the requested statement to the requisitioning members within 7 days after the request for the statement is made; 15 (d) the meeting called by the requisitioning members must be held not later than 3 months after the requisition is served; (e) any reasonable expenses incurred by the requisitioning members because of the board's failure to call the 20 meeting must be paid by the co-operative; (f) any amount required to be paid by the co-operative under paragraph (e) must be retained by the co-operative out of any money due from the co-operative by way of fees or other remuneration in respect of their services to 25 such of the directors as were in default. 196. Minutes (1) Minutes of -- (a) each general meeting; and (b) each meeting of the board; and page 110

Co-operatives Bill 2007 Voting and meetings Part 8 Meetings Division 5 s. 196 (c) each meeting of a committee to which the board's functions have been delegated under section 204(1), must be entered in the appropriate records within one month after the meeting and confirmed at, and signed by the chairman 5 of, the next meeting. (2) The minutes of each general meeting must be available for inspection by members. (3) Minutes must be kept in the English language. page 111

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 1 The Board s. 197 Part 9 -- Management and administration of co-operatives Division 1 -- The Board 197. Board of directors 5 (1) Subject to this Act and the rules of the co-operative, the business of a co-operative is to be managed by a board of directors. (2) The board of directors may exercise all the powers of the co-operative that are not, by this Act or the rules of the 10 co-operative, required to be exercised by the co-operative in a general meeting or by postal ballot. (3) The acts of a director are valid despite any defect that may afterwards be discovered in his or her appointment or qualification. 15 198. Election of directors (1) Except as provided in subsections (2), (3) and (4), the directors of a co-operative are to be elected in the manner specified in the rules of the co-operative. (2) The first directors of -- 20 (a) a co-operative formed under this Act are to be elected at its formation meeting; and (b) a co-operative that was a corporation incorporated under another Act are to be the directors in office at the date of registration under this Act. 25 (3) If authorised by the rules of the co-operative, a board of directors may appoint a person to fill a casual vacancy in the office of a director until the next annual general meeting. page 112

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 The Board Division 1 s. 199 (4) A resolution passed at a general meeting of a co-operative electing 2 or more directors is void unless -- (a) the meeting previously resolved that the nominations for election could be voted on together; and 5 (b) no votes were cast against that previous resolution. (5) Subsection (4) does not affect -- (a) a resolution to appoint directors by an amendment to the co-operative's rules; or (b) a ballot or poll to elect 2 or more directors if the ballot 10 or poll does not require members voting for one candidate to vote for another specific candidate. (6) For the purposes of subsection (5), a ballot or poll does not require a member to vote for a candidate merely because the member is required to express a preference among individual 15 candidates in order to cast a valid vote. (7) A nomination for election or appointment to the office of a director must give details of the qualifications and experience of the person nominated. (8) Unless this Act or the rules of a co-operative provides 20 otherwise, a director is eligible for re-election at the end of his or her term of office. 199. Qualification of directors (1) In this section -- "member director" means a director who is a person qualified 25 to be a director under subsection (2)(a). (2) A person is not qualified to be a director of a co-operative unless the person is -- (a) a member of the co-operative or a representative of a corporation that is a member of the co-operative; or 30 (b) an employee of the co-operative or a person qualified as provided by the rules. page 113

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 1 The Board s. 200 (3) The majority of directors must be member directors. (4) Subsection (3) does not prevent the rules of a co-operative requiring that a greater number of directors than a majority must be member directors. 5 200. Disqualified persons (1) A person must not act as a director or directly or indirectly take part in or be concerned with the management of a co-operative if the person -- (a) is the auditor of the co-operative or a partner, employee 10 or employer of the auditor; or (b) has been convicted, whether before or after the commencement of this section, within or outside this State -- (i) on indictment of an offence relating to the 15 promotion, formation or management of a corporation; or (ii) of an offence involving fraud or dishonesty punishable on conviction by imprisonment for not less than 3 months; or 20 (iii) of an offence under the Corporations Act section 184, 344, 590, 592, 670A or 728; or (iv) of an offence under a provision of a previous law of this State or of another State or Territory, with which any of the provisions referred to in 25 subparagraph (iii) corresponds, within 5 years after the conviction or, if sentenced to imprisonment, after the person's release from prison, except with the leave of the Supreme Court. Penalty: a fine of $24 000 and imprisonment for 2 years. page 114

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 The Board Division 1 s. 200 (2) A person must not act as a director or directly or indirectly take part in or be concerned with the management of a co-operative if the person -- (a) has been convicted of an offence under this Act, within 5 5 years after the conviction, except with leave of the Supreme Court; or (b) is disqualified from managing corporations under the Corporations Act Part 2D.6; or (c) is an insolvent under administration, as defined in the 10 Corporations Act section 9. Penalty: a fine of $24 000 and imprisonment for 2 years. (3) In proceedings for an offence against subsection (1), a certificate by an authority prescribed by the regulations stating that a person was released from prison on a specified date, is 15 evidence that the person was released from prison on that date. (4) A person who intends to apply for leave of the Supreme Court must give the Registrar at least 21 days notice of the person's intention. (5) The Supreme Court may grant leave subject to any condition or 20 limitation it considers appropriate. (6) A person must comply with any condition or limitation subject to which leave is granted. Penalty: a fine of $24 000 and imprisonment for 2 years. (7) On the application of the Registrar the Supreme Court may 25 revoke its leave. (8) Subject to this section, a co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the provisions of the Corporations Act Part 2D.6, subject to 30 the following modifications -- (a) a reference in the provisions to a corporation is to be read as a reference to a co-operative; page 115

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 1 The Board s. 201 (b) a reference in the provisions to a company is to be read as a reference to a co-operative; (c) a reference in the provisions to ASIC is to be read as a reference to the Registrar; 5 (d) any other modifications, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3, that are prescribed by the regulations. 201. Meeting of the board of directors (1) In this section -- 10 "independent director" means a director who is an employee of the co-operative or a person qualified as provided by the rules; "member director" has the meaning given to that term in section 199(1). 15 (2) Meetings of the board of directors must be held at least once every 3 months and may be held as often as may be necessary. (3) A meeting of the board of directors may be called by a director giving notice individually to every other director. (4) The board of directors may hold meetings, or allow directors to 20 take part in its meetings by telephone, video link, or another form of communication that allows reasonably contemporaneous and continuous communication between the directors taking part in the meeting. (5) A quorum of a meeting of the board of directors is 50% of the 25 number of directors or a greater number of directors specified in the rules of the co-operative. (6) For a quorum, the member directors must outnumber the independent directors by at least one, or, if a greater number is stated in the rules of the co-operative, the greater number. 30 (7) The chairman of the board may be elected either by the board or at a general meeting of the co-operative, and is to be elected, page 116

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 The Board Division 1 s. 202 hold office, and retire, and may be removed from office, as provided by the rules of the co-operative. 202. Transaction of business outside meetings (1) The board of a co-operative may, if it considers appropriate, 5 transact any of its business by the circulation of papers among all of the directors of the board. (2) A resolution in writing approved in writing by a majority of the directors of the board is taken to be a decision of the board. (3) Separate copies of a resolution of the board may be signed by 10 the directors if the wording of the resolution and approval is identical in each copy. (4) For the purpose of approving a resolution under this section, the chairman of the board and each director have the same voting rights as they have at an ordinary meeting of the board. 15 (5) The resolution is approved when the last director required for the majority signs. (6) A resolution of a board must be recorded in the minutes of the meetings of the board within 28 days after the resolution is approved. 20 (7) Papers may be circulated among directors of the board for the purposes of this section by facsimile or other transmission of the information in the papers concerned. 203. Alternate directors The rules of a co-operative may provide for an alternate director 25 to be appointed to act in the place of a director who is absent from a meeting of the board. 204. Delegation by board (1) If authorised by the rules of a co-operative, the board of the co-operative may, by resolution, delegate the board's powers, page 117

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 1 The Board s. 205 other than this power of delegation, specified in the resolution to -- (a) a director; or (b) a committee of 2 or more directors; or 5 (c) a committee of members of the co-operative; or (d) a committee of members of the co-operative and other persons if members form the majority of persons on the committee; or (e) a committee of directors and other persons. 10 (2) The board may, by resolution, revoke wholly or in part a delegation under this section. (3) A function, the exercise of which has been delegated under this section, may be exercised from time to time in accordance with the terms of the delegation while the delegation remains 15 unrevoked. (4) A delegation under this section may be made subject to conditions or limitations as to the exercise of any of the functions delegated, or as to time or circumstance. (5) Despite any delegation under this section, the board may 20 continue to exercise all or any of the functions delegated. 205. Removal from and vacation of office (1) The directors hold office and must retire, and may be removed from office, as provided by the rules of the co-operative. (2) A director vacates office in the circumstances, if any, provided 25 in the rules of the co-operative and in any of the following cases -- (a) if the director is disqualified from being a director as provided by section 200; (b) if the director absents himself or herself from 30 3 consecutive ordinary meetings of the board without its leave; page 118

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Secretary Division 2 s. 206 (c) if the director resigns the office of director by written notice given by the director to the co-operative; (d) if the director is removed from office by special resolution of the co-operative; 5 (e) if the person ceases to hold the qualification by reason of which the person was qualified to be a director; (f) if an administrator of the co-operative's affairs is appointed under Part 12 Division 5. Division 2 -- Secretary 10 206. Secretary (1) A co-operative must have a secretary. (2) The board of the co-operative is to appoint the secretary. (3) The board may appoint a person to act as the secretary during the absence or incapacity of the secretary. 15 (4) A person is not qualified to be appointed as, or to act as, the secretary unless the person is an adult who ordinarily lives in Australia. Division 3 -- Duties and liabilities of directors, officers and employees 20 207. Meaning of "officer" In this Division -- "officer" of a co-operative means -- (a) a director or secretary of the co-operative; or (b) a person who is concerned, or takes part, in the 25 management of the co-operative, whether or not as a director; or (c) a receiver, or receiver and manager, of property of the co-operative, or another authorised person who enters into possession or assumes control of property page 119

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 3 Duties and liabilities of directors, officers and employees s. 208 of the co-operative for the purpose of enforcing a charge; or (d) an administrator of a deed of arrangement executed by the co-operative; or 5 (e) a liquidator or provisional liquidator appointed in a voluntary winding-up of the co-operative; or (f) an administrator of the co-operative appointed under the Corporations Act Part 5.3A as applying under this Act; or 10 (g) a trustee or other person administering a compromise or arrangement made between the co-operative and another person or other persons. 208. Officers must act honestly An officer of a co-operative must at all times act honestly in the 15 exercise of his or her powers and the discharge of the duties of his or her office, both in the State and elsewhere. Penalty: (a) for a contravention committed with intent to deceive or defraud the co-operative, members or creditors of 20 the co-operative or creditors of another person or for another fraudulent purpose, a fine of $24 000 and imprisonment for 2 years; (b) in any other case, a fine of $6 000. 209. Standard of care and diligence required 25 (1) In the exercise of his or her powers and the discharge of his or her functions, an officer of a co-operative must exercise the degree of care and diligence that a reasonable person in a like position in a co-operative would exercise in the co-operative's circumstances. 30 Penalty: a fine of $2 000. page 120

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Duties and liabilities of directors, officers and employees Division 3 s. 210 (2) An officer is not liable to be convicted for a contravention of this section if the co-operative has resolved by ordinary resolution to forgive the contravention. (3) An officer of a co-operative who makes a business judgment is 5 taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if the officer -- (a) makes the judgment in good faith for a proper purpose; and 10 (b) does not have a material personal interest in the subject matter of the judgment; and (c) informs himself or herself about the subject matter of the judgment to the extent he or she reasonably believes to be appropriate; and 15 (d) rationally believes that the judgment is in the best interests of the co-operative. (4) The officer's belief that the judgment is in the best interests of the co-operative is a rational one unless the belief is one that no reasonable person in their position would hold. 20 210. Improper use of information or position (1) An officer or employee or former officer or employee of a co-operative or a member of a committee referred to in section 204(1) must not make improper use of information acquired by reason of his or her position as an officer or 25 employee or member to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the co-operative. (2) An officer or employee of a co-operative or a member of a committee referred to in section 204(1) must not make improper 30 use of his or her position as an officer or employee or member, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the co-operative. page 121

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 3 Duties and liabilities of directors, officers and employees s. 211 Penalty: (a) for a contravention committed with intent to deceive or defraud the co-operative, members or creditors of the co-operative or creditors of another person or for 5 another fraudulent purpose, a fine of $24 000 and imprisonment for 2 years; (b) in any other case, a penalty not exceeding a fine of $6 000. 211. Recovery of damages by co-operative 10 (1) If a person contravenes a provision of this Division in relation to a co-operative, the co-operative may, whether or not the person has been convicted of an offence for that contravention, recover an amount from the person as a debt payable to the co-operative. 15 (2) The amount that the co-operative is entitled to recover from the person is -- (a) if the person or another person made a profit as a result of the contravention, an amount equal to that profit; and (b) if the co-operative has suffered loss or damage as a 20 result of the contravention, an amount equal to that loss or damage. 212. Other duties and liabilities not affected This Division has effect in addition to, and does not limit, a law relating to the duty or liability of a person because of the 25 person's office or employment in relation to a co-operative and does not prevent the institution of any civil proceeding for a breach of a duty or for a liability of that type. 213. Application of Corporations Act concerning indemnities and insurance for officers and auditors 30 A co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations page 122

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Duties and liabilities of directors, officers and employees Division 3 s. 214 (Ancillary Provisions) Act 2001 Part 3 in relation to the Corporations Act sections 199A, (except 199A(2)(b)), 199B and 199C, subject to the following modifications -- (a) a reference in the sections to a company is to be read as 5 a reference to a co-operative; (b) a reference in the sections to ASIC is to be read as a reference to the Registrar; (c) a reference to section 183 is to be read as a reference to section 210(1) of this Act; 10 (d) a reference to section 182 is to be read as a reference to section 210(2) of this Act; (e) any other modifications, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3, that are prescribed by the regulations. 15 214. Application of Corporations Act provisions concerning officers of co-operatives A co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the 20 Corporations Act sections 344, 589 to 598 and 1307, subject to the following modifications -- (a) in section 344, "a company, registered scheme or disclosing entity" is to be read as "a co-operative"; (b) a reference in the sections, other than section 344, to a 25 company is to be read as a reference to a co-operative; (c) a reference in the sections to ASIC is to be read as a reference to the Registrar; (d) any other modifications, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3, 30 that are prescribed by the regulations. page 123

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 4 Restrictions on directors and officers s. 215 Division 4 -- Restrictions on directors and officers 215. Directors' remuneration A director of a co-operative must not receive remuneration for services as a director other than fees, concessions and other 5 benefits that are approved at a general meeting of the co-operative. Penalty: a fine of $24 000 or imprisonment for 2 years. 216. Certain financial accommodation to officers prohibited (1) An officer of a co-operative who is not a director of the 10 co-operative must not obtain financial accommodation from the co-operative other than -- (a) with the approval of a majority of the directors; or (b) under a scheme about providing financial accommodation to officers that has been approved by a 15 majority of the directors. Penalty: a fine of $24 000 or imprisonment for 2 years. (2) For the purposes of this section, financial accommodation is taken to be obtained by an officer of a co-operative if it is obtained by -- 20 (a) a proprietary company in which the officer is a shareholder or director; or (b) a trust of which the officer is a trustee or beneficiary; or (c) a trust of which a corporation is trustee if the officer is a director or other officer of the corporation. 25 (3) A co-operative must not give financial accommodation to an officer of the co-operative if -- (a) by giving the financial accommodation, the officer would contravene this section; and (b) the co-operative knows or should reasonably know of 30 the contravention. Penalty: a fine of $50 000. page 124

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Restrictions on directors and officers Division 4 s. 217 217. Financial accommodation to directors and associates (1) In this section -- "associate" of a director means -- (a) the director's spouse (or de facto partner); or 5 (b) a person when acting in the capacity of trustee of a trust under which -- (i) the director or director's spouse (or de facto partner) has a beneficial interest; or (ii) a corporation mentioned in paragraph (c) has 10 a beneficial interest; or (c) a corporation if -- (i) the director or director's spouse (or de facto partner) has a material interest in shares in the 15 corporation; and (ii) the nominal value of the shares is not less than 10% of the nominal value of the issued share capital of the corporation. (2) For the purposes of this section, a person has a "material 20 interest" in a share in a corporation if -- (a) the person has power to withdraw the share capital subscribed for the share or to exercise control over the withdrawal of the share capital; or (b) the person has power to dispose of or to exercise control 25 over the disposal of the share; or (c) the person has power to exercise or to control the exercise of any right to vote conferred on the holder of the share. (3) A co-operative must not provide financial accommodation to a 30 director, or to a person the co-operative knows or should page 125

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 4 Restrictions on directors and officers s. 217 reasonably know is an associate of a director, unless the accommodation is -- (a) approved under subsection (4); or (b) given under a scheme approved under subsection (4); or 5 (c) provided on terms no more favourable to the director or associate than the terms on which it is reasonable to expect the co-operative would give if dealing with the director or associate at arm's length in the same circumstances. 10 Penalty: a fine of $50 000. (4) For the purposes of subsection (3)(a) and (b), financial accommodation or a scheme is approved if -- (a) it is approved by a resolution passed at a general meeting; and 15 (b) the full details of the accommodation or scheme were made available to members at least 21 days before the meeting. (5) A director or an associate of a director must not obtain financial accommodation given in contravention of subsection (3). 20 Penalty: a fine of $24 000 or imprisonment for 2 years. (6) For the purposes of this section, a concessional rate of interest for a borrower from a co-operative is a normal term only if the borrower is entitled to the concession by being a member of a class of borrowers from the co-operative specified in its rules as 25 being entitled to the concession. (7) If a director of a co-operative or an associate of a director accepts in payment of a debt owed by a member of the co-operative to the director or associate, any proceeds of financial accommodation provided to the member by the 30 co-operative, this section has effect as if the financial accommodation has been provided to the director or associate. page 126

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Restrictions on directors and officers Division 4 s. 218 (8) In this section, a reference to -- (a) the provision of financial accommodation to a director or an associate of a director; or (b) the obtaining of financial accommodation by a director 5 or an associate of a director; or (c) a debt owed to a director or an associate of a director, includes a reference to a provision of financial accommodation to, or an obtaining of financial accommodation by, the director or associate, or a debt owed to the director or associate, jointly 10 with another person. 218. Restriction on directors of certain co-operatives selling land to co-operative A director of a co-operative the primary activity of which is or includes the acquisition of land in order to settle or retain people 15 on the land, must not sell land to the co-operative except under a special resolution of the co-operative. Penalty: a fine of $24 000 or imprisonment for 2 years. 219. Management contracts (1) In this section -- 20 "management contract" means a contract or other arrangement under which -- (a) a person who is not an officer of the co-operative agrees to perform the whole, or a substantial part, of the functions of the co-operative, whether under the 25 control of the co-operative or not; or (b) a co-operative agrees to perform the whole or a substantial part of its functions -- (i) in a particular way; or (ii) in accordance with the directions of any 30 person; or (iii) subject to specified restrictions or conditions. page 127

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 5 Declaration of interests s. 220 (2) A co-operative must not enter into a management contract unless that contract has first been approved by special resolution. (3) A management contract entered into in contravention of 5 subsection (2) is void. Division 5 -- Declaration of interests 220. Declaration of interest (1) A director of a co-operative who is or becomes in any way (whether directly or indirectly) interested in a contract, or 10 proposed contract with the co-operative must declare the nature and extent of the interest to the board of directors under this section. Penalty: a fine of $24 000 and imprisonment for 2 years. (2) In the case of a proposed contract, the declaration must be 15 made -- (a) at the meeting of the board at which the question of entering into the contract is first considered; or (b) if the director was not at that time interested in the proposed contract, at the next meeting of the board held 20 after the director becomes interested in the proposed contract. (3) If a director becomes interested in a contract with the co-operative after it is made, the declaration must be made at the next meeting of the board held after the director 25 becomes interested in the contract. (4) For the purposes of this section, a general written notice given to the board by a director to the effect that the director -- (a) is a member of a specified entity; and (b) is to be regarded as interested in any contract that may, 30 after the giving of the notice, be made with the entity, is a sufficient declaration. page 128

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Declaration of interests Division 5 s. 220 (5) A director of a co-operative who holds an office or has an interest in property whereby, whether directly or indirectly, duties or interests might be created that could conflict with the director's duties or interests as director must, under 5 subsection (6), declare at a meeting of the board of directors the fact and the nature, character and extent of the conflict. Penalty: a fine of $24 000 and imprisonment for 2 years. (6) A declaration required by subsection (5) in relation to holding an office or having an interest must be made by a person -- 10 (a) if the person holds the office or has the interest when he or she becomes a director, at the first meeting of the board held after -- (i) the person becomes a director; or (ii) the relevant facts as to holding the office or 15 having the interest come to the person's knowledge, whichever is the later; or (b) if the person starts to hold the office or acquires the interest after the person becomes a director, at the first 20 meeting of the board held after the relevant facts as to holding the office or having the interest come to the person's knowledge. (7) If a director has made a declaration under this section, then unless the board determines otherwise, the director cannot -- 25 (a) be present during any deliberation of the board in relation to the matter; or (b) take part in any decision of the board in relation to the matter. (8) For the purposes of the making of a determination of the board 30 under subsection (7) in relation to a director who has made a declaration under this section, the director cannot -- (a) be present during any deliberation of the board for the purpose of making the determination; or page 129

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 5 Declaration of interests s. 221 (b) take part in the making by the board of the determination. 221. Declarations to be recorded in minutes Every declaration under this Division is to be recorded in the 5 minutes of the meeting at which it was made. 222. Division does not affect other laws or rules Except as provided in section 223, this Division is in addition to, and does not limit, the operation of a law or a provision in the rules of the co-operative restricting a director from having 10 an interest in contracts with the co-operative or from holding offices or possessing properties involving duties or interests in conflict with his or her duties or interests as director. 223. Certain interests need not be declared The interest in a contract or proposed contract that a director is 15 required by this Division to declare does not include an interest in -- (a) a contract or proposed contract for a purchase of goods and services by the director from the co-operative; or (b) a lease of land to the director by the co-operative; or 20 (c) a contract or proposed contract for the sale of commodities or animals by the director to the co-operative; or (d) a contract or proposed contract that, under the rules of the co-operative, may be made between the co-operative 25 and a member; or (e) a contract or proposed contract of a class of contracts prescribed by the regulations, but only if the contract is made in good faith, in the ordinary course of the business of the co-operative, and on the terms that 30 are usual and proper in similar dealings between the co-operative and its members. page 130

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Financial reports and audit Division 6 s. 224 Division 6 -- Financial reports and audit 224. Meaning of "control" and "entity" In this Division -- "control" has the same meaning in relation to a co-operative 5 that it has under the Corporations Act in relation to a corporation; "entity" has the same meaning in relation to a co-operative that it has under the Corporations Act in relation to a corporation. 10 225. Requirements for financial records and financial reports (1) A co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the provisions of the Corporations Act Part 2F.3, sections 249K 15 and 249V and Chapter 2M, subject to the following modifications -- (a) a reference in the provisions to a company or to a public company is to be read as a reference to a co-operative; (b) a reference in the provisions to the Court is to be read as 20 a reference to the Supreme Court; (c) a reference in the provisions to "prescribed" is to be read as a reference to "approved by the Registrar"; (d) a reference in the provisions to ASIC is to be read as a reference to the Registrar; 25 (e) an offence created in relation to the provisions is the offence set out in subsection (2); (f) any penalty for the offence referred to in paragraph (e) is the penalty set out in subsection (2); (g) a reference in sections 247A and 300(14) and (15) to the 30 Corporations Act section 237 is to be read as a reference to section 91 of this Act; page 131

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 6 Financial reports and audit s. 226 (h) a reference in section 300(8) to the Corporations Act section 199A(2) or (3) is to be read as a reference to section 213 of this Act; (i) the provisions apply as if sections 247D, 291, 300(12) 5 and (13), 315(3) and (4), 323D(1) and (2), 323DA, 325 and Part 2M.1, Part 2M.4 Division 2, Part 2M.5 and Part 2M.6 of the Corporations Act were omitted; (j) a reference in Chapter 2M.3 to a small proprietary company is to be read as a reference to a co-operative 10 with a monetary threshold of or under the prescribed amount; (k) any other modifications, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3, that are prescribed by the regulations. 15 (2) A co-operative must -- (a) keep financial records and prepare financial reports as required under this Act; and (b) ensure that the financial reports are audited in accordance with this Act. 20 Penalty: a fine of $2 000. (3) Without limiting the matters for which regulations under this section may make provision, the regulations may make provision for or in relation to the following -- (a) requiring the submission of financial reports to the 25 Australian Accounting Standards Board; (b) requiring the adoption by a co-operative of the same financial year for each entity that the co-operative controls. 226. Power of Registrar to grant exemptions 30 The Registrar may, by order published in the Gazette, exempt -- (a) a co-operative; or page 132

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Financial reports and audit Division 6 s. 227 (b) a person or firm proposed to be appointed as an auditor of a co-operative; or (c) a director or auditor of a co-operative, from compliance with a provision of a regulation made for the 5 purpose of this Part or with a provision of the Corporations Act as that Act applies under section 225. 227. Disclosure by directors The directors of a co-operative must make the disclosures about the affairs of the co-operative and of any entity that the 10 co-operative controls that are required by the regulations. Penalty: a fine of $2 000. 228. Protection of auditors etc. (1) An auditor of a co-operative has qualified privilege in relation to -- 15 (a) a statement that the auditor makes, orally or in writing, in the course of his or her duties as auditor; or (b) the giving of notice, or the sending of copies of financial reports or other reports, to the Registrar under this Act. (2) A person has qualified privilege in relation to -- 20 (a) the publishing of a document prepared by an auditor in the course of the auditor's duties and required by or under this Act to be lodged with the Registrar, whether or not the document has been lodged; or (b) the publishing of a statement made by an auditor 25 referred to in subsection (1). (3) This section does not limit or affect a right, privilege or immunity that an auditor or other person has, apart from this section, as defendant in proceedings for defamation. page 133

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 7 Registers, records and returns s. 229 229. Financial year (1) The financial year of a co-operative ends on the day in each year that is provided for by the rules of the co-operative. (2) In the case of a co-operative registered under Part 2 Division 4, 5 the first financial year of the co-operative may extend from the date of its registration to a date not more than 18 months after registration. (3) In the case of a co-operative registered under Part 2 Division 5, the first financial year of the co-operative is to be a period not 10 extending beyond a date that is 18 months after the end of the co-operative's last financial year before the co-operative registered under this Act. (4) On an alteration of the rules of a co-operative altering its financial year, the alteration may provide either that the 15 financial year current at the date of alteration is to be extended for a period not exceeding 6 months or that the financial year next following the financial year that is so current is to be a period exceeding 12 months but not exceeding 18 months. Division 7 -- Registers, records and returns 20 230. Registers to be kept by co-operatives (1) A co-operative must keep the following registers in accordance with this section -- (a) a register of members, directors and shares, if any; (b) a register of loans to, securities given by, debentures and 25 co-operative capital units issued by and deposits received by the co-operative; (c) a register of names of persons who have given loans or deposits to, or who hold securities given by, or who hold debentures or co-operative capital units issued by the 30 co-operative; page 134

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Registers, records and returns Division 7 s. 231 (d) a register of loans made by or guaranteed by the co-operative, and of any securities taken by the co-operative; (e) a register of holders of co-operative capital units, in 5 accordance with section 257(4); (f) a co-operative register of charges, in accordance with Schedule 3 clause 41; (g) a register of memberships cancelled under Part 6, in accordance with section 130; 10 (h) a register of notifiable interests, in accordance with section 284; (i) a register of undertakings, in accordance with section 472(1); (j) other registers prescribed by the regulations. 15 Penalty: a fine of $2 000. (2) The registers must be kept in the way, and contain the particulars, specified by this Act or prescribed by the regulations. 231. Location of registers 20 (1) A register kept under this Division must be kept at -- (a) the co-operative's registered office; or (b) an office at the co-operative's principal place of business; or (c) an office, whether of the co-operative or of someone 25 else, where the work involved in maintaining the register is done; or (d) another office approved by the Registrar. (2) The office must be in this State. page 135

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 7 Registers, records and returns s. 232 (3) The co-operative must lodge with the Registrar a notice of the address at which the register is kept within 28 days after the register is -- (a) established at an office that is not the co-operative's 5 registered office; or (b) moved from one office to another. 232. Inspection of registers etc. (1) A co-operative must have at the office where the registers are kept and available during all reasonable hours for inspection by 10 a member free of charge the following -- (a) a copy of this Act and the regulations; (b) a current copy of the rules of the co-operative and any order under section 345; (c) a copy of the minutes of each general meeting of the 15 co-operative; (d) a copy of the last annual report of the co-operative under section 235; (e) the register of directors, members and shares; (f) the register of names of persons who have given loans or 20 deposits to or hold securities, debentures or co-operative capital units given or issued by the co-operative; (g) other registers prescribed by the regulations. (2) If a register is not kept on a computer, the person may inspect the register itself. 25 (3) If the register is kept on a computer, the person may inspect a hard copy of the information on the register unless the person and the co-operative agree that the person can access the information by computer. (4) A member is entitled to make a copy of entries in a register 30 specified in subsection (1) and to do so free of charge unless the page 136

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Registers, records and returns Division 7 s. 233 rules of the co-operative require a fee to be paid, in which case on payment of the required fee. (5) The fee required by the rules cannot be more than the fee prescribed for a copy of any entry in the register. 5 (6) A co-operative must -- (a) permit a member to inspect a document or make a copy of a document that the member is entitled to inspect or make under this section; and (b) give the member all reasonable assistance to inspect the 10 document or make the copy. Penalty: a fine of $2 000. (7) A co-operative must have at the place where the registers are kept and available during all reasonable hours for inspection by any person such documents in relation to the co-operative as are 15 prescribed. Penalty: a fine of $2 000. 233. Use of information on registers (1) A person must not -- (a) use information about a person obtained from a register 20 kept under this Division to contact or send material to the person; or (b) disclose information of that kind knowing that the information is likely to be used to contact or send material to the person, 25 unless that use or disclosure of the information is -- (c) relevant to the holding of the directorship, membership, shares, loans, securities, debentures, co-operative capital units or deposits concerned or the exercise of the rights attaching to them; or 30 (d) approved by the board; or (e) necessary to comply with a requirement of this Act. page 137

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 7 Registers, records and returns s. 234 (2) A person who contravenes subsection (1) is liable to compensate anyone else who suffers loss or damage because of the contravention. (3) A person who makes a profit from a contravention of 5 subsection (1) owes a debt to the co-operative. (4) The amount of the debt is the amount of the profit. 234. Notice of appointment etc. of directors and officers (1) A co-operative must give notice to the Registrar in accordance with this section of the appointment of a person as a director, 10 chief executive officer or secretary of the co-operative or a subsidiary of the co-operative, and of the cessation of the appointment. (2) The notice must -- (a) be in the form approved by the Registrar; and 15 (b) be given within 28 days after the appointment or cessation of appointment; and (c) state the particulars, prescribed by the regulations, of the appointment or cessation of appointment. Penalty: a fine of $2 000. 20 235. Annual report to be lodged with Registrar (1) For the purposes of subsection (2) the required period is -- (a) 28 days after the annual general meeting of the co-operative; or (b) if the annual general meeting of the co-operative is not 25 held within the period stated in section 190(3)(a), 28 days after the end of that period. (2) A co-operative must lodge with the Registrar, within the required period in each year, an annual report containing the following -- 30 (a) a notice in the form approved by the Registrar listing the secretary, the directors and the chief executive officers of the co-operative and of each subsidiary of the page 138

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Registers, records and returns Division 7 s. 236 co-operative, as at the date that the annual report is lodged with the Registrar; (b) if the co-operative is required under section 225 to prepare a financial report for its most recently ended 5 financial year, a copy of the financial report; (c) a copy of the financial statements of each subsidiary of the co-operative in relation to the most recently ended financial year of the subsidiary, or a copy of the consolidated financial statements for all subsidiaries of 10 the co-operative in relation to the most recently ended financial year of the subsidiaries; (d) a copy of any report by the auditors or directors of the co-operative or subsidiary -- (i) prepared under section 225(2); or 15 (ii) on a financial report referred to in paragraph (b) or a financial statement referred to in paragraph (c); (e) other particulars prescribed by the regulations. Penalty: a fine of $2 000. 20 236. List of members to be provided at request of Registrar A co-operative must, at the written request of the Registrar, send to the Registrar, within the time and in the way that the Registrar specifies, a full list of the members of the co-operative and of each subsidiary of the co-operative, together with the 25 particulars with regard to those members that the Registrar specifies in the request. Penalty: a fine of $2 000. 237. Special return to be given at request of Registrar (1) The Registrar may, by direction in writing, require a 30 co-operative to give to the Registrar a special return in the form, within the time, and relating to the subject matter, specified by the Registrar. page 139

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 8 Name and registered office s. 238 (2) The co-operative must comply with a direction under subsection (1). Penalty: a fine of $2 000. Division 8 -- Name and registered office 5 238. Name to include certain matter (1) The name of a co-operative may consist of words, numbers or a combination of both. (2) The name of a co-operative must include the word "Co-operative" or "Cooperative" or the abbreviation "Co-op". 10 (3) Subject to subsection (4) the word "Limited" or the abbreviation "Ltd" must be the last word of the name. (4) The Registrar may approve the registration of a co-operative without "Limited" or the abbreviation "Ltd" in its name, or alter the registration of a co-operative by omitting "Limited" or the 15 abbreviation "Ltd" from its name, if its constitution -- (a) requires the co-operative to pursue charitable purposes only and to apply its income in promoting those purposes; and (b) prohibits the co-operative making distributions to its 20 members and paying fees to its directors; and (c) requires the directors to approve all other payments the co-operative makes to directors. (5) The co-operative must notify the Registrar as soon as practicable if any of those requirements or prohibitions in its 25 constitution are not complied with or if its constitution is modified to remove any of those requirements or prohibitions. Penalty: a fine of $2 000. (6) The Registrar may at any time by notice in writing to the co-operative revoke an approval under subsection (4) but only page 140

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Name and registered office Division 8 s. 239 after giving the co-operative an opportunity to make submissions to the Registrar on the matter. (7) A corporation that is formed or incorporated under an Act other than this Act must not register under the other Act by a name 5 that includes the word "Co-operative" or "Cooperative" or the abbreviation "Co-op". Penalty: a fine of $2 000. (8) The Registrar cannot register as the name of a co-operative a name that contains anything a regulation declares is an 10 unsuitable name, unless the Minister is satisfied the name is suitable for registration in the circumstances of a particular case. (9) Subsection (7) does not apply to a corporation that is allowed under another Act to use the word "Co-operative" or "Cooperative" or the abbreviation "Co-op" in its name. 15 239. Use of abbreviations A description of a co-operative is not inadequate or incorrect merely because of one or more of the following -- (a) the use of the abbreviation "Co-op" instead of the word "Co-operative" or "Cooperative" in the co-operative's 20 name; (b) the use of the abbreviation "Ltd" instead of the word "Limited" in the co-operative's name; (c) the use of the symbol "&" instead of the word "and" in the co-operative's name; 25 (d) the use of any of those words instead of the corresponding abbreviation or symbol in the co-operative's name; (e) the use of any abbreviation or elaboration of the name of the co-operative that is approved in a particular case or 30 for a particular purpose by the Registrar in writing. page 141

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 8 Name and registered office s. 240 240. Name to appear on business documents etc. (1) A co-operative must ensure its name appears in legible characters on its seal, and in any of the following documents issued, signed or endorsed by or on behalf of the 5 co-operative -- (a) a bill of exchange, promissory note, cheque or other negotiable instrument; (b) a receipt or letter of credit issued by the co-operative; (c) a document of a class prescribed by the regulations. 10 Penalty: a fine of $2 000. (2) An officer of a co-operative or a person on its behalf must not -- (a) use a seal of the co-operative; or (b) sign or authorise to be signed on behalf of the 15 co-operative any document referred to in subsection (1), in or on which the co-operative's name does not appear in legible characters. Penalty: a fine of $2 000. (3) A director of a co-operative who knowingly authorises or 20 permits a contravention of this section is guilty of an offence. Penalty: a fine of $2 000. 241. Change of name of co-operative (1) A co-operative may by special resolution change its name to a name approved by the Registrar. 25 (2) A change of name must be advertised as prescribed by the regulations. (3) A change of name does not take effect until -- (a) the Registrar has noted the change on the certificate of registration of the co-operative; or page 142

Co-operatives Bill 2007 Management and administration of co-operatives Part 9 Name and registered office Division 8 s. 242 (b) the certificate of registration is surrendered to the Registrar and a replacement certificate of registration is issued in the new name. (4) A change of name by a co-operative does not affect -- 5 (a) the identity of the co-operative; or (b) the exercise of a right, or the enforcement of an obligation, by or against the co-operative or a person; or (c) the continuation of legal proceedings by or against the co-operative. 10 (5) Legal proceedings that might have been continued or started by or against the co-operative in its former name may be continued or started by or against the co-operative in its new name. (6) The Registrar may refuse to approve a change of name if the Registrar thinks the new name is unsuitable. 15 (7) The Registrar may direct a co-operative to change its name if the Registrar considers the name is likely to be confused with the name of a corporation or a registered business name. 242. Restriction on use of word "co-operative" or similar words (1) A person other than a co-operative must not trade, or carry on 20 business, under a name or title containing the word "Co-operative" or "Cooperative" or the abbreviation "Co-op" or words importing a similar meaning. Penalty: a fine of $2 000. (2) Subsection (1) does not apply to a corporation referred to in 25 section 238(9). 243. Registered office of co-operative (1) A co-operative must have a registered office. Penalty: a fine of $2 000. (2) A co-operative must, at the premises of its registered office, 30 publicly and conspicuously display a notice stating the name of page 143

Co-operatives Bill 2007 Part 9 Management and administration of co-operatives Division 8 Name and registered office s. 243 the co-operative and identifying the premises as its registered office. Penalty: a fine of $2 000. (3) Within 28 days after changing the address of its registered 5 office, a co-operative must give the Registrar written notice of the new address. Penalty: a fine of $2 000. page 144

Co-operatives Bill 2007 Funds and property Part 10 Power to raise money Division 1 s. 244 Part 10 -- Funds and property Division 1 -- Power to raise money 244. Meaning of obtaining financial accommodation A reference in this Division to the obtaining of financial 5 accommodation includes a reference to the obtaining of credit and the borrowing or raising of money by any means. 245. Fund raising to be in accordance with Act and regulations The regulations may impose requirements and restrictions on the obtaining of financial accommodation, and the giving of 10 security in order to obtain financial accommodation, by a co-operative. 246. Limits on deposit taking A co-operative cannot accept money on deposit unless -- (a) the co-operative is authorised by its rules to accept 15 money on deposit and was authorised by its rules immediately before the commencement of this section to accept money on deposit; or (b) the co-operative was a deposit-taking corporation immediately before it became a co-operative and it is 20 authorised by its rules to accept money on deposit; or (c) in the case of a merged co-operative, one or more of the co-operatives involved in the merger was a deposit-taking co-operative immediately before the registration of the merged co-operative and the merged 25 co-operative is authorised by its rules to accept money on deposit. 247. Members etc. not required to see to application of money A member or other person from whom a co-operative obtains financial accommodation is not required to see to its application page 145

Co-operatives Bill 2007 Part 10 Funds and property Division 1 Power to raise money s. 248 and is not affected or prejudiced by the fact that in obtaining that financial accommodation, the co-operative contravened a provision of this Act or the rules of the co-operative. 248. Registrar's directions about fundraising 5 (1) The Registrar may, if the Registrar considers it is in the interests of a co-operative's members, by written notice served on a co-operative, give a direction to the co-operative as to the way in which it is to exercise its functions in connection with the activities of the co-operative in obtaining financial 10 accommodation. (2) A direction under subsection (1) may make provision for any one or more of the following matters -- (a) requiring the co-operative to stop obtaining financial accommodation or to stop obtaining financial 15 accommodation in a particular way; (b) requiring the co-operative to repay in accordance with the direction all or part of financial accommodation obtained; (c) requiring the co-operative to re-finance in a specified 20 way financial accommodation repaid in accordance with the Registrar's direction; (d) the way in which the co-operative is permitted to invest or use the proceeds of financial accommodation it obtains. 25 (3) Within 28 days of receiving a direction, a co-operative may apply to the Supreme Court for a review of that decision. 249. Subordinated debt (1) In this section -- "subordinated debt" means debt incurred under an agreement 30 under which, in the event of the winding-up of the page 146

Co-operatives Bill 2007 Funds and property Part 10 Power to raise money Division 1 s. 250 co-operative, a claim of the creditor against the co-operative in relation to the debt is to rank in priority -- (a) equally with the claim of another creditor who is a party to a similar agreement; and 5 (b) except as provided by paragraph (a), after the claims of another creditor of the co-operative and before the claims of members to repayment of share capital in the co-operative. (2) A co-operative may incur subordinated debt. 10 (3) An agreement under which subordinated debt is incurred has effect despite the provisions of the Corporations Act Part 5.6 Division 6, as applied under Part 12 Division 3 of this Act. 250. Application of Corporations Act to issues of debentures (1) Subject to subsection (2), the debentures of a co-operative are 15 declared to be applied Corporations legislation matters for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the provisions of Part 1.2A, Chapter 2L, Chapter 6CA, Chapter 6D and Part 7.10 of the Corporations Act, subject to the following modifications -- 20 (a) the provisions apply as if a co-operative were a company; (b) a reference in the provisions to a corporation includes a reference to a co-operative; (c) a reference in the provisions to ASIC is to be read as a 25 reference to the Registrar; (d) any other changes, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3, that are prescribed by the regulations. (2) The provisions of the Corporations Act applying to the 30 debentures of a co-operative by this section do not apply to the following -- (a) a loan to which section 255 applies; page 147

Co-operatives Bill 2007 Part 10 Funds and property Division 1 Power to raise money s. 251 (b) an issue of debentures of a co-operative that is made -- (i) solely to members; or (ii) solely to members and employees of the co-operative; or 5 (iii) to a person who on becoming an inactive member of the co-operative has had his or her share capital converted to debt. (3) Words used in this section that are not defined in this Act have the same meanings as in the Corporations Act. 10 251. Application of Corporations Act to particular issues of debentures An issue of debentures to which section 252 applies is declared to be an applied Corporations legislation matter for the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation 15 to the Corporations Act, sections 722 and 734, subject to the following modifications -- (a) the provisions apply as if a co-operative were a company; (b) a reference in the provisions to a disclosure document is 20 to be read as a reference to a disclosure statement under section 252; (c) a reference in the provisions to securities is to be read as a reference to debentures; (d) a reference in the provisions to ASIC is to be read as a 25 reference to the Registrar; (e) any other modifications, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3 that are prescribed under the regulations. page 148

Co-operatives Bill 2007 Funds and property Part 10 Power to raise money Division 1 s. 252 252. Disclosure statement (1) This section applies to the issue of debentures of a co-operative if the issue is made -- (a) solely to members; or 5 (b) solely to members and employees of the co-operative. (2) This section does not apply to the issue of debentures under section 73(2) or 127(1). (3) Before issuing to a person debentures to which this section applies, that person may request a disclosure statement, 10 approved by the Registrar, and containing the information that is reasonably necessary to enable a person to make an informed assessment of the financial prospects of the co-operative, including -- (a) the purpose for which the money raised by the 15 co-operative by the issue of debentures is to be used; and (b) the rights and liabilities attaching to the debentures; and (c) the financial position of the co-operative; and (d) the interests of the directors of the co-operative in the 20 issue of the debentures; and (e) compensation or consideration to be paid to officers or members of the co-operative in connection with the issue of debentures; and (f) other matters that the Registrar directs. 25 (4) Sections 16 (except subsection (3)) and 29 apply to the approval of a disclosure statement under this section with any necessary changes and, in particular, as if a reference in section 16 to a formation meeting were a reference to the issue of debentures. page 149

Co-operatives Bill 2007 Part 10 Funds and property Division 1 Power to raise money s. 253 253. Approval of board for transfer of debentures A debenture of a co-operative cannot be sold or transferred except with the consent of the board and in accordance with the rules of the co-operative. 5 254. Application of Corporations Act -- reissue of redeemed debentures Debentures issued by a co-operative to any of its members or employees are declared to be applied Corporations legislation matters for the purposes of the Corporations (Ancillary 10 Provisions) Act 2001 Part 3 in relation to the Corporations Act section 124(1)(b) or 563AAA as if a co-operative were a company. 255. Compulsory loan by member to co-operative (1) A co-operative may require its members to lend money, with or 15 without security, to the co-operative, in accordance with a proposal approved by special resolution of the co-operative. (2) The proposal cannot require a loan to be for a term of more than 7 years or another term prescribed by the regulations. (3) The proposal must -- 20 (a) be accompanied by a disclosure statement, approved by the Registrar, that explains the purpose for which the money raised by the co-operative under the proposal is to be used, and includes any other information that the Registrar directs; and 25 (b) show the total amount of the loan to be raised by the co-operative and the basis on which the money required to be lent by each member is to be calculated; and (c) be accompanied by a statement informing the member that the member may inform the board by notice on or 30 before the date specified in the statement, being a date before the passing of the special resolution, that the member resigns on the passing of the special resolution. page 150

Co-operatives Bill 2007 Funds and property Part 10 Power to raise money Division 1 s. 256 (4) If the proposal allows, the board of the co-operative may, under the terms of the proposal, deduct the money required to be lent by a member to the co-operative from money payable from the co-operative to the member for his or her dealings with the 5 co-operative. (5) A proposal to deduct money referred to in subsection (4) must, in addition to meeting the requirements of subsection (3), show -- (a) the basis on which the money is to be deducted; and 10 (b) the time and way of making the deductions. (6) When approved the proposal is binding on -- (a) all members of the co-operative at the date of passing of the special resolution, other than a member who has given a notice of resignation in accordance with 15 subsection (3)(c); and (b) all persons who become members of the co-operative after that date and before the total amount of the loan to be raised under the proposal has been raised. (7) Sections 16 (except subsection (3)) and 29 apply to the approval 20 of a disclosure statement under this section with any necessary changes and in particular as if a reference in section 16 to a formation meeting were a reference to the special resolution. 256. Interest payable on compulsory loan (1) The rate of interest payable by a co-operative on a loan under 25 section 255 during a period is -- (a) in the case of a co-operative with share capital -- (i) the rate (or if there is more than one rate, the higher or highest rate) of dividend payable for the period on the share capital of the 30 co-operative; or (ii) if the rate of dividend payable for the period has not been determined, the rate (or the higher or page 151

Co-operatives Bill 2007 Part 10 Funds and property Division 2 Co-operative capital units s. 257 highest rate) of dividend payable for the immediately preceding period for which a rate has been determined; or (iii) if a rate of dividend has never been determined 5 for the share capital of the co-operative, the rate that the board of the co-operative considers reasonable; or (b) in the case of a co-operative without share capital, the 10 rate that the board of the co-operative considers reasonable; or (c) if the rules provide for a rate to be payable that is higher than the rate applicable under paragraph (a) or (b), that higher rate. 15 (2) A member may agree to the rate of interest being less than the rate that would otherwise be payable under this section and may agree to no interest being paid. Division 2 -- Co-operative capital units 257. General nature of co-operative capital units 20 (1) A co-operative capital unit ("CCU") is an interest issued by a co-operative conferring an interest in the capital, but not the share capital, of the co-operative. (2) A CCU -- (a) is personal property; and 25 (b) is transferable or transmissible as provided by this Act and the rules of the co-operative, subject to the terms of issue of the CCU; and (c) is, subject to the rules of the co-operative, capable of devolution by will or by operation of law. page 152

Co-operatives Bill 2007 Funds and property Part 10 Co-operative capital units Division 2 s. 258 (3) Subject to subsection (2) -- (a) the laws applicable to ownership of and dealing with personal property apply to a CCU as they apply to other property; and 5 (b) equitable interests in respect of a CCU may be created, dealt with and enforced as in the case of other personal property. (4) A transferor of a CCU remains the holder of the CCU until the transfer is registered and the name of the transferee, and the 10 details of the transferee's CCU holding, are entered in the register of CCU holders referred to in section 230(1). (5) Despite any rule of law or equity to the contrary, a condition subject to which a CCU is issued is not invalid merely because the CCU is, by the condition, made irredeemable or redeemable 15 only on the happening of a contingency however remote or at the end of a period however long. 258. Priority of CCU's on winding-up (1) On a winding-up of a co-operative, a debt owed to a person as the holder of a CCU issued by the co-operative is to rank for 20 priority of payment in accordance with the terms of issue of the CCU. (2) Such a debt may rank as a secured debt if it is secured but if it is unsecured may not rank in priority to other unsecured debts. (3) It may rank equally with or behind unsecured debts and, if the 25 debt ranks behind unsecured debts, may rank in priority to, equally with or behind debts due to contributories. 259. Financial accommodation provisions apply to issue of CCUs (1) The issuing of CCUs is to be considered to be the obtaining of financial accommodation and accordingly Part 10 Division 1 30 applies to the issue of CCUs. page 153

Co-operatives Bill 2007 Part 10 Funds and property Division 2 Co-operative capital units s. 260 (2) For the purposes of that Division, a CCU is to be considered to be a debenture. 260. CCUs to be issued to non-members CCUs may be issued to a person whether or not the person is a 5 member of the co-operative. 261. Minimum requirements for rules concerning CCUs The rules of a co-operative that permit the co-operative to issue CCUs must contain provision to the effect of the following provisions and cannot contain provisions that are inconsistent 10 with the following provisions -- (a) each holder of a CCU is entitled to one vote per CCU held at a meeting of the holders of CCUs; (b) the rights of the holders of CCUs may be varied only in the way and to the extent provided by their terms of 15 issue and only with the consent of at least 75% of those holders of CCUs who, being entitled to do so, cast a formal vote to accept the variation at a meeting; (c) the holder of a CCU has, in the person's capacity as a holder of a CCU, none of the rights or entitlements of a 20 member of the co-operative; (d) the holder of a CCU is entitled to receive notice of all meetings of the co-operative and all other documents in the same manner as the holder of a debenture of the co-operative. 25 262. CCUs not to be issued unless terms of issue approved by Registrar (1) A co-operative is not to issue CCUs unless -- (a) the terms of issue have been approved by a special resolution of the co-operative; and page 154

Co-operatives Bill 2007 Funds and property Part 10 Co-operative capital units Division 2 s. 263 (b) the issue is made pursuant to an offer accompanied by a copy of a statement approved by the Registrar under subsection (3); and (c) the Registrar approves of the terms of the issue under 5 subsection (4). (2) The terms of issue must include, but is not limited to including, the following information -- (a) details of entitlement to repayment of capital; (b) details of entitlement to participate in surplus assets and 10 profits; (c) details of entitlement to interest on capital, including whether interest is cumulative or non-cumulative; (d) details of how capital and interest on capital are to rank for priority of payment on a winding-up; 15 (e) whether there is a limit on the total holding of CCUs that may be acquired by persons who are not members of the co-operative and, if there is a limit, what the limit is. (3) The statement approved by the Registrar for the purposes of the 20 issue is to set out the terms of the issue, the rights of the holders of CCUs, the terms of redemption and the manner of transferability of CCUs. (4) The Registrar is not to approve the terms of issue unless satisfied that they will not result in a failure to comply with 25 co-operative principles and are not contrary to the rules of the co-operative or this Act. 263. Directors' duties concerning CCUs In discharging their duties, it is proper for the directors of a co-operative to take into account that the holders of CCUs, in 30 their capacity as holders of CCUs, have none of the rights and entitlements of, and are not entitled to be regarded as, members of the co-operative. page 155

Co-operatives Bill 2007 Part 10 Funds and property Division 2 Co-operative capital units s. 264 264. Redemption of CCUs (1) The redemption of CCUs is not to be considered to be a reduction in the share capital of the co-operative. (2) A co-operative may redeem CCUs but only on the terms and in 5 the way that is provided by the terms of their issue and only if they are fully paid up. (3) CCUs may not be redeemed except out of -- (a) profits that would otherwise be available for dividends; or 10 (b) the proceeds of a fresh issue of shares, or an approved issue of CCUs, made for the purpose of the redemption. (4) An issue of CCUs is an approved issue for the purposes of subsection (3) if there is the same entitlement to priority of payment of capital and dividend in relation to shares in the 15 co-operative as there was for the redeemed CCUs. (5) Any premium payable on redemption is to be provided for out of profits or out of the share premium account or an account created for that purpose. 265. Capital redemption reserve 20 (1) This section applies if CCUs are redeemed out of profits that would otherwise be available for dividends. (2) Out of profits that would otherwise have been available for dividends there is to be transferred to a reserve called the capital redemption reserve a sum equal to the nominal amount of the 25 CCUs redeemed. (3) The provisions of this Act relating to the reduction of share capital of a co-operative apply as if the capital redemption reserve were paid up share capital of the co-operative. (4) The capital redemption reserve may be applied in paying up 30 unissued shares of the co-operative to be issued to members of the co-operative as fully paid bonus shares. page 156

Co-operatives Bill 2007 Funds and property Part 10 Charges Division 3 s. 266 266. Issue of shares in substitution for redemption (1) If a co-operative has redeemed or is about to redeem CCUs held by an active member of the co-operative, it may -- (a) issue shares to the member up to the sum of the nominal 5 value of the CCUs redeemed or to be redeemed, as if those CCUs had never been issued; or (b) pay up amounts unpaid on shares held by the member up to the sum of the nominal value of the CCUs redeemed or to be redeemed, as if those CCUs had never been 10 issued. (2) This section applies only if the terms of issue of the CCUs provide for the conversion of CCUs held by an active member of the co-operative into shares of the co-operative. Division 3 -- Charges 15 267. Registration of charges Schedule 3 has effect but does not apply to -- (a) a mortgage, charge or encumbrance that is over specific land and is registered under the Transfer of Land Act 1893; or 20 (b) a mortgage, charge or encumbrance registered under the Mining Act 1978; or (c) a mortgage, charge or encumbrance registered under the Bills of Sale Act 1899. Division 4 -- Receivers and other controllers of property 25 of co-operatives 268. Receivers and other controllers of property of co-operatives Schedule 4 has effect. page 157

Co-operatives Bill 2007 Part 10 Funds and property Division 5 Disposal of surplus from activities s. 269 Division 5 -- Disposal of surplus from activities 269. Retention of surplus for benefit of co-operative The board of a co-operative may resolve to retain all or part of the surplus arising in a year from the business of the 5 co-operative to be applied for the benefit of the co-operative. 270. Application for charitable purposes or members' purposes (1) A co-operative may apply a part of the surplus arising in a year from the business of the co-operative for a charitable purpose. (2) A distributing co-operative may apply a part of the surplus 10 arising in a year from the business of the co-operative towards supporting an activity approved by the co-operative. (3) The rules must limit the amount that may be applied under subsection (1) or (2) to a specified proportion of the surplus. (4) A co-operative may apply part of the surplus for a purpose and 15 to the extent authorised by rules. 271. Distribution of surplus or reserves to members (1) In this section -- "limited dividend" means a dividend that is not more than the amount prescribed by the regulations. 20 (2) A distributing co-operative may apply a part of the surplus arising in any year from the business of the co-operative or a part of the reserves of the co-operative by -- (a) distribution to members as a rebate in proportion to the value of business done by each member with the 25 co-operative or to profits earned by the co-operative on business done by each member with the co-operative; or (b) the issue of bonus shares to members in proportion to the value of business done by each member with the co-operative, to profits earned by the co-operative on 30 business done by each member with the co-operative or to shares held by the member; or page 158

Co-operatives Bill 2007 Funds and property Part 10 Acquisition and disposal of assets Division 6 s. 272 (c) the issue to members of a limited dividend in proportion to shares held by the member. (3) The amount of a rebate or dividend payable to a member under subsection (2)(a) or (c) may, with the consent of the member, be 5 applied -- (a) in payment for the issue to the member of bonus shares; or (b) as a loan to the co-operative. 272. Application of surplus to other persons 10 (1) A part of the surplus arising in a year from the business of a distributing co-operative may be credited to a person who is not a member, but is qualified to be a member, by way of rebate in proportion to the value of business done by the person with the co-operative or to the profit earned by the co-operative on 15 business done by the person with the co-operative, if -- (a) the person was a member when the business was done and the membership has lapsed; or (b) the person has applied for membership since the business was done. 20 (2) Nothing in this section precludes the payment of a bonus to an employee in accordance with the terms of his or her employment. Division 6 -- Acquisition and disposal of assets 273. Acquisition and disposal of assets 25 (1) In this section -- "undertaking", of a co-operative, means all the assets of the co-operative. page 159

Co-operatives Bill 2007 Part 10 Funds and property Division 6 Acquisition and disposal of assets s. 273 (2) Unless otherwise provided by the rules, a co-operative must not do any of the following things except as approved by special resolution by means of a special postal ballot -- (a) sell, or lease as a going concern -- 5 (i) the undertaking of the co-operative; or (ii) a part of that undertaking that relates to its primary activities and the value of which represents the percentage prescribed by the regulations or more of the total value of the 10 undertaking; (b) acquire from or dispose of to a director or employee of the co-operative, or a relative, within the meaning of the Corporations Act, of a director or employee of the co-operative or of the spouse (or de facto partner) of a 15 director or employee of the co-operative, property the value of which represents the percentage prescribed by the regulations, or more, of the total value of all the assets of the co-operative that relate to its primary activities; 20 (c) acquire an asset the value of which represents the percentage prescribed by the regulations, or more, of the total value of the assets of the co-operative, if the acquisition would result in the co-operative starting to carry on an activity that is not one of its primary 25 activities. Penalty: a fine of $6 000. (3) If a co-operative contravenes this section, each person who is a member of the board of the co-operative is taken to have committed an offence unless the person satisfies the court that 30 he or she used all due diligence to prevent the contravention by the co-operative. Penalty: a fine of $6 000. page 160

Co-operatives Bill 2007 Funds and property Part 10 Acquisition and disposal of assets Division 6 s. 273 (4) The Registrar may, by order published in the Gazette, exempt a co-operative from compliance with a provision of this section and section 186 in relation to any matter to which this section applies. page 161

Co-operatives Bill 2007 Part 11 Restrictions on the acquisition of interests in co-operatives Division 1 Restrictions on share and voting interests s. 274 Part 11 -- Restrictions on the acquisition of interests in co-operatives Division 1 -- Restrictions on share and voting interests 274. Application of Part 5 This Part applies to -- (a) distributing co-operatives; and (b) non-distributing co-operatives with a share capital. 275. Notice required to be given of voting interest (1) A person, whether or not a member of the co-operative, must 10 give notice to a co-operative within 5 business days after becoming aware that the person has a relevant interest in the right to vote of a member of the co-operative. Penalty: a fine of $2 000. (2) A person, whether or not a member of the co-operative, who has 15 ceased to have a relevant interest in the right to vote of a member of a co-operative must give notice to the co-operative within 5 business days after becoming aware of the fact. Penalty: a fine of $2 000. (3) Section 171 provides for the effect of a person having a relevant 20 interest in the right to vote of a member of a co-operative. 276. Notice required to be given of substantial share interest (1) A person must give notice to a co-operative within 5 business days after becoming aware that the person has a substantial share interest in the co-operative. 25 Penalty: a fine of $2 000. (2) A person who has a substantial share interest in a co-operative must give notice to the co-operative within 5 business days after page 162

Co-operatives Bill 2007 Restrictions on the acquisition of interests in co-operatives Part 11 Restrictions on share and voting interests Division 1 s. 277 becoming aware that a substantial change has occurred in the share interest. Penalty: a fine of $2 000. (3) A person who has ceased to have a substantial share interest in a 5 co-operative must give notice to the co-operative within 5 business days after becoming aware that the person has ceased to have the interest. Penalty: a fine of $2 000. (4) A person has a "substantial share interest" in a co-operative if 10 the nominal value of the shares in the co-operative in which the person has a relevant interest represents 5% or more of the nominal value of the issued share capital of the co-operative. (5) A "substantial change" takes place in a person's share interest in a co-operative if there is an increase or decrease in the 15 number of shares in the co-operative in which the person has a relevant interest and the increase or decrease represents at least 1% of the nominal value of the issued share capital of the co-operative. 277. Requirements for notices 20 A notice required under this Division must -- (a) be in the form approved by the Registrar; and (b) state the particulars, prescribed by the regulations, of the interest or change being notified. 278. Maximum permissible level of share interest 25 (1) A person cannot have a relevant interest in shares of a co-operative the nominal value of which is more than 20% of the nominal value of the issued share capital of the co-operative. (2) The Registrar, by order published in the Gazette, may specify a maximum greater than 20% as the maximum permissible level 30 of share interest for the purposes of subsection (1) for a particular co-operative. page 163

Co-operatives Bill 2007 Part 11 Restrictions on the acquisition of interests in co-operatives Division 1 Restrictions on share and voting interests s. 279 (3) Unless an order under subsection (2) is in force, a co-operative, by its rules, may specify a maximum less than 20% as the maximum permissible level of share interest for the purposes of subsection (1) for that co-operative. 5 (4) The maximum permissible level of share interest applying under this section may be increased for a particular person by special resolution of the co-operative concerned passed by a special postal ballot. (5) A resolution under subsection (4) does not have effect unless -- 10 (a) it is approved by the Registrar; or (b) the person concerned is another co-operative. (6) The Registrar's approval of the resolution may be given on conditions. 279. Transitional provision 15 (1) This section applies to a member of a transferred co-operative whose relevant interest in the shares of that co-operative immediately before the transfer day was more than the maximum permissible level of share interest for the purposes of section 278(1). 20 (2) The maximum permissible level of share interest for the purposes of section 278(1) for the member is the level of the member's relevant interest in the shares immediately before the transfer day. (3) In relation to a particular co-operative, this section ceases to 25 operate 6 months after the transfer day. 280. Shares to be forfeited to remedy contravention (1) If a person has a relevant interest in a share of a co-operative in contravention of this Division that is not remedied within 14 days of a notice of that contravention being issued by the 30 board, the board of the co-operative must declare to be forfeited page 164

Co-operatives Bill 2007 Restrictions on the acquisition of interests in co-operatives Part 11 Restrictions on share and voting interests Division 1 s. 281 enough of the shares in which the person has a relevant interest to remedy the contravention. (2) The shares to be forfeited are -- (a) the shares nominated by the person for the purpose; or 5 (b) in the absence of such a nomination, the shares in which the person has had a relevant interest for the shortest time. (3) A declaration of the board that shares are forfeited operates to forfeit the shares concerned. 10 (4) On forfeiture of the shares, section 295(1)(b) ceases to apply in relation to the contravention. (5) Sections 127 to 129 apply to shares forfeited under this section as if the shares had been forfeited under Part 6. 281. Powers of board in response to suspected contravention 15 (1) If the board of a co-operative is satisfied on reasonable grounds that a person has contravened section 278 in relation to the co-operative, the board may do either or both of the following -- (a) refuse to register a share transfer involving the person; 20 (b) suspend a stated right or entitlement that a person has as a member of the co-operative or attaching to any shares of the co-operative in which the person has a relevant interest. (2) The board may request a person who it suspects has a relevant 25 interest in shares of the co-operative to give specified information to the board about the interest. (3) A failure by a person to comply with a request under subsection (2) is a reasonable ground for being satisfied that the person has contravened section 278. page 165

Co-operatives Bill 2007 Part 11 Restrictions on the acquisition of interests in co-operatives Division 1 Restrictions on share and voting interests s. 282 282. Powers of Supreme Court in relation to contravention (1) If a person has contravened section 278 in relation to a co-operative, the Supreme Court may, on the application of the co-operative or the Registrar, make any order it considers 5 appropriate. (2) Without limiting subsection (1), an order may include -- (a) a remedial order; and (b) for the purpose of securing compliance with any other order made under this section, an order directing the 10 co-operative or any other person to do or refrain from doing a specified act. (3) An order may be made whether or not the contravention continues. (4) Proof to the satisfaction of the Supreme Court at the hearing of 15 an application that -- (a) a person has a relevant interest in a share of a co-operative because an associate of the person has a relevant interest in a share; and (b) the associate became entitled to the relevant interest 20 within 6 months before the application was filed with the Supreme Court, is evidence that the associate was an associate of the person from the time the person first had the relevant interest until the date of the hearing. 25 283. Co-operative to notify Registrar of interest over 20% (1) A co-operative must notify the Registrar in writing within 14 days after the board becomes aware that -- (a) a particular person has a relevant interest in shares of the co-operative the nominal value of which is more than 30 20% of the nominal value of the issued share capital of the co-operative; or page 166

Co-operatives Bill 2007 Restrictions on the acquisition of interests in co-operatives Part 11 Restrictions on share and voting interests Division 1 s. 284 (b) there has been a change in the number of shares in which that person holds a relevant interest. (2) The notification must give details of the relevant interest concerned or of the change concerned. 5 284. Co-operative to keep register (1) A co-operative must keep a register of notifiable interests. (2) The co-operative must enter in the register in alphabetical order the names of persons from whom the co-operative has received notice under this Division together with the information 10 contained in the notice. (3) The register must be open for inspection -- (a) by a member in accordance with section 232; and (b) by any other person on payment of the fee (if any) that the co-operative may require, being not more than the 15 maximum fee prescribed by the regulations. 285. Unlisted companies to provide list of shareholders etc. (1) This section applies to a company, within the meaning of the Corporations Act, that is not a listed corporation, within the meaning of that Act. 20 (2) A company to which this section applies that is a member of a co-operative must give to the co-operative a list showing -- (a) the name of each member of the company as at the end of the financial year of the company and the number of shares in the company held by each member; and 25 (b) the name of each person who has a relevant interest, within the meaning of the Corporations Act, in a share of the company together with details of the interest; and (c) the name of each person who is an associate, within the meaning of the Corporations Act, of the company. page 167

Co-operatives Bill 2007 Part 11 Restrictions on the acquisition of interests in co-operatives Division 1 Restrictions on share and voting interests s. 286 (3) A list under subsection (2) must be given within 28 days after a written request for the list is made to the company by the co-operative or the Registrar. (4) The details to be shown on the list are the details as at the date 5 specified in the request. (5) The Registrar may make a request under subsection (3) if the Registrar is of the opinion that the company is or may be involved in a suspected contravention of a provision of this Division. 10 286. Excess share interest not to affect loan liability (1) This section applies if a co-operative has made a loan to a member and the member had or has a relevant interest in shares of the co-operative in contravention of this Division. (2) Until the amount lent to the member has been repaid to the 15 co-operative, with any interest payable, the member is liable to make to the co-operative the payments that the member would be liable to make if all the shares concerned were lawfully held by the member. (3) Security for the repayment of the loan is not affected by a 20 contravention of this Division. 287. Extent of operation of Division This Division -- (a) applies to all individuals, whether resident in this State or in Australia or not and whether Australian citizens or 25 not, and to all bodies, whether incorporated or not, and whether carrying on business in this State or in Australia or not; and (b) extends to acts done or omitted to be done outside this State, whether in Australia or not. page 168

Co-operatives Bill 2007 Restrictions on the acquisition of interests in co-operatives Part 11 Restrictions on certain share offers Division 2 s. 288 288. Registrar may grant exemption from Division The Registrar may, by order published in the Gazette, exempt a person from the operation of this Division. Division 2 -- Restrictions on certain share offers 5 289. Share offers to which Division applies This Division applies to the following offers to purchase shares in a co-operative -- (a) an offer made as part of a proposal for, or that is conditional on, the sale of the undertaking or part of the 10 undertaking, as a going concern, of the co-operative; (b) an offer made as part of a proposal for, or that is conditional on, the registration of the co-operative as a company under the Corporations Act; (c) an offer made as part of a proposal for, or that is 15 conditional on, the winding-up of the co-operative; (d) an offer that would result in a contravention of section 278 were the offeror to be registered, immediately after the offer is made, as the holder of the shares that are the subject of the offer. 20 290. Offer to be approved by special resolution using special postal ballot Any offer to which this Division applies must be approved by special resolution by means of a special postal ballot. 291. Some offers totally prohibited if they discriminate 25 An offer referred to in section 289(a) to (d) cannot discriminate between members who are active members and members who are not active members. page 169

Co-operatives Bill 2007 Part 11 Restrictions on the acquisition of interests in co-operatives Division 2 Restrictions on certain share offers s. 292 292. Offers to be submitted to board first (1) Any proposal to make an offer to which this Division applies must in the first instance be submitted to the board of the co-operative. 5 (2) In order for the board to consider putting a proposed offer to a special postal ballot, arrangements satisfactory to the board must have been made for payment to the co-operative of the expenses involved in holding the ballot. (3) The board may require payment in advance under 10 subsection (2). (4) A requisition for a special postal ballot for the purposes of this Division cannot be served unless and until the board has had a reasonable opportunity to consider the proposed offer concerned. 15 (5) For the purposes of subsection (4), a period of 28 days is a reasonable opportunity for considering a proposed offer but the Registrar may extend that period in a particular case, whether before or after the end of the 28 days, by written notice to the co-operative. 20 293. Announcements of proposed takeovers concerning proposed company (1) This section applies to an offer to purchase shares in a co-operative made as part of a proposal for, or that is conditional on, the registration of the co-operative as a company 25 (the "proposed company") under the Corporations Act. (2) A person must not make a public announcement to the effect that the person proposes, or that the person and another person or other persons together propose, to make takeover offers, or to cause a takeover announcement to be made, in relation to the 30 proposed company if -- (a) the person knows that the announcement is false or is recklessly indifferent as to whether it is true or false; or page 170

Co-operatives Bill 2007 Restrictions on the acquisition of interests in co-operatives Part 11 Restrictions on certain share offers Division 2 s. 293 (b) the person has no reasonable grounds for believing that the person, or the person and the other person or persons, will be able to perform obligations arising under the scheme or announcement or under the 5 Corporations Act in relation to the scheme or announcement if a substantial proportion of the offers or the offers made under the announcement are accepted. Penalty: a fine of $20 000 or imprisonment for 5 years. (3) If a person makes a public announcement to the effect that the 10 person proposes, or that the person and another person or other persons together propose, to make a takeover bid in relation to the proposed company, the person must proceed to make a takeover bid in relation to shares in the company in accordance with the public announcement within 2 months after the day on 15 which the company is incorporated. Penalty: a fine of $10 000 or imprisonment for 2 years. (4) A person is not liable to be convicted of more than one offence under subsection (3) for any one public announcement. (5) A person who contravenes this section, whether or not the 20 person is convicted of an offence for the contravention, is liable to pay compensation to a person who suffered loss as a result of entering into a share transaction in reliance on the public announcement concerned. (6) The amount of that compensation is the difference between the 25 price of the shares at which the transaction was entered into and the price of the shares at which the transaction would have been likely to have been entered into if the person had not made the public announcement. (7) A person does not contravene subsection (3) and is not liable to 30 pay compensation for the contravention if it is proved that the person could not reasonably have been expected to make the takeover bid concerned -- (a) as a result of circumstances that existed when the public announcement was made but of which the person had no page 171

Co-operatives Bill 2007 Part 11 Restrictions on the acquisition of interests in co-operatives Division 2 Restrictions on certain share offers s. 294 knowledge and could not reasonably have been expected to have knowledge; or (b) as a result of a change in circumstances after the announcement was made, other than a change in 5 circumstances caused directly or indirectly by the person. (8) Expressions used in this section have the same meanings as in the Corporations Law section 746 as applying on 12 March 2000. 10 294. Additional disclosure requirements for offers involving conversion to company If an offer is part of a proposal for, or is conditional on, the registration of the co-operative as a company under the Corporations Act, the disclosure statement required to be sent to 15 members for the purposes of the special postal ballot relating to the offer must contain the following additional information -- (a) full particulars of any proposal by which a director will acquire a relevant interest in a share of the company to be formed; 20 (b) other information that is material to the making of a decision by a member whether or not to agree to the making of the offer, being information that is within the knowledge of the directors and has not previously been disclosed to the members; 25 (c) other information that the Registrar directs. 295. Consequences of prohibited offer (1) If a person makes an offer to purchase shares in a co-operative in contravention of this Division -- (a) the person cannot be registered as the holder of the 30 shares concerned; and page 172

Co-operatives Bill 2007 Restrictions on the acquisition of interests in co-operatives Part 11 Restrictions on certain share offers Division 2 s. 296 (b) if the transfer of the shares is registered, the person cannot vote at a meeting of, or in a postal ballot conducted by, the co-operative. (2) A vote cast by or for a member when the member cannot vote 5 because of this section must be disregarded. 296. Registrar may grant exemptions The Registrar may, by order published in the Gazette, exempt a person or co-operative from compliance with a provision of this Division and section 186 in relation to a matter to which this 10 Division applies. page 173

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 1 Mergers and transfers of engagements s. 297 Part 12 -- Merger, transfer of engagements, winding-up Division 1 -- Mergers and transfers of engagements 297. Application of Division 5 This Division does not apply to a merger or transfer of engagements to which Part 14 applies. 298. Mergers and transfers of engagements of local co-operatives Any 2 or more co-operatives may consolidate all or any of their assets, liabilities and undertakings by way of merger or transfer 10 of engagements approved under this Division. 299. Requirements before application can be made (1) Before co-operatives can apply for approval under this Division of a merger or transfer of engagements, the proposed merger or transfer must have been approved by each of the co-operatives 15 by -- (a) a special resolution passed by means of a special postal ballot; or (b) if permitted by subsection (2), a resolution of the board of the co-operative. 20 (2) The proposed merger or transfer of engagements may be approved by resolution of the board of a co-operative if the Registrar consents to that procedure applying in the particular case. 300. Disclosure statement required 25 (1) A special resolution by which members of a co-operative approve a merger or transfer of engagements is not effective for the purposes of this Division unless this section has been complied with. page 174

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Mergers and transfers of engagements Division 1 s. 300 (2) Each co-operative must send to each of its members a disclosure statement approved by the Registrar stating -- (a) the financial position of each co-operative concerned in the proposed merger or transfer of engagements as 5 shown in financial statements that have been prepared as at a date that is not more than 6 months before the date of the statement; and (b) any interest that any officer of each co-operative has in the proposed merger or transfer of engagements; and 10 (c) any compensation or other consideration proposed to be paid, or any other incentive proposed to be given, to any officer or member of each co-operative in relation to the proposed merger or transfer of engagements; and (d) whether the proposal is a merger or transfer of 15 engagements and the reason for the merger or transfer of engagements; and (e) in the case of a transfer of engagements, whether it is a total or partial transfer of engagements; and (f) other information that the Registrar directs. 20 (3) The disclosure statement must be sent to the members of each co-operative so that it will, in the ordinary course of post, reach each member who is entitled to vote on the special resolution not later than 21 days before the day on or before which the ballot papers must be returned by members voting in the special 25 postal ballot. (4) The Registrar may, by order published in the Gazette, exempt a co-operative from complying with this section. (5) The Registrar may approve a disclosure statement on any conditions he or she considers appropriate. page 175

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 1 Mergers and transfers of engagements s. 301 301. Making an application (1) An application for approval of a merger or transfer of engagements under this Division must be made to the Registrar in the way and form required by the Registrar. 5 (2) An application for approval of a merger must be accompanied by 2 copies of the proposed rules of the merged co-operative and any other particulars required by the Registrar. 302. Approval of merger (1) The Registrar must approve a merger pursuant to an application 10 under this Division if satisfied that -- (a) this Division has been complied with in relation to the application; and (b) the proposed rules of the merged co-operative are consistent with this Act and may reasonably be 15 approved; and (c) the certificates of registration of the co-operatives have been surrendered to the Registrar; and (d) there is no good reason why the merged co-operative and its rules should not be registered. 20 (2) On approving an application for merger, the Registrar must -- (a) cancel the registration of the co-operatives involved in the merger; and (b) register the merged co-operative and its rules; and (c) issue to the merged co-operative a certificate of 25 registration under this Act. (3) A merger takes effect on the issue of the certificate of registration for the merged co-operative. page 176

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Mergers and transfers of engagements Division 1 s. 303 303. Approval of transfer of engagements (1) The Registrar must approve a transfer of engagements pursuant to an application under this Division if satisfied that -- (a) this Division has been complied with in relation to the 5 application; and (b) the rules or proposed rules of the transferee co-operative are adequate; and (c) in the case of a total transfer of engagements from a co-operative, the certificate of registration of the 10 co-operative has been surrendered to the Registrar; and (d) there is no good reason why the transfer of engagements should not take effect. (2) A transfer of engagements takes effect on the day specified in the approval of the Registrar. 15 304. Transfer of engagements by direction of Registrar (1) The Registrar may, with the approval of the Minister, direct a co-operative -- (a) to transfer its engagements to a co-operative approved by the Registrar; and 20 (b) within a period specified by the Registrar when giving the direction or a further period allowed by the Registrar, to enter into an agreement approved by the Registrar to give effect to the transfer of engagements directed. 25 (2) The Registrar cannot give such a direction to a co-operative unless the necessary grounds exist for the giving of the direction, as referred to in section 336(2). (3) The transfer of engagements must make provision, in a way approved by the Registrar, for the members of the transferor 30 co-operative who wish to do so to become members of the transferee co-operative. page 177

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 2 Transfer of incorporation s. 305 (4) If a co-operative fails to comply with a direction under this section, the Registrar may elect to treat the failure as the necessary grounds -- (a) for winding-up the co-operative on a certificate of the 5 Registrar; or (b) for appointing an administrator of the co-operative. (5) The Registrar must notify the co-operative of the Registrar's decision under subsection (4). (6) The Registrar may revoke a direction under this section at any 10 time up until the co-operative has agreed pursuant to the direction to transfer its engagements. (7) A transfer of engagements directed under this section takes effect on a day notified by the Registrar in the Gazette. (8) An officer of a co-operative must not -- 15 (a) fail to take all reasonable steps to secure compliance by the co-operative with a direction given under this section; or (b) by a wilful act or omission be the cause of a failure by the co-operative to comply with a direction. 20 Penalty: a fine of $2 000. Division 2 -- Transfer of incorporation 305. Application for transfer (1) A co-operative, if approved under this Division, may apply to become registered or incorporated as one of the following 25 corporations -- (a) a company under the Corporations Act; (b) an incorporated association under the Associations Incorporation Act 1987; (c) a corporation that is incorporated, registered or 30 otherwise established under a law that is a law of a place page 178

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Transfer of incorporation Division 2 s. 306 outside this State and that is prescribed by the regulations. (2) For the purposes of subsection (1)(a), an application is to be made in accordance with the Corporations Act section 601BC 5 for registration as a company under Part 5B of that Act. (3) For the purposes of the Corporations Act section 601BC(8)(d), a co-operative is authorised by this Act to transfer its incorporation. 306. Requirements before application can be made 10 (1) Before an application is made under section 305, the co-operative must, by special resolution passed by means of a special postal ballot -- (a) approve the proposed application; and (b) determine under what name the co-operative is to apply 15 to be incorporated or registered; and (c) adopt a constitution or replaceable rules or rules that may be necessary or considered desirable. (2) The name applied for need not be the same as that of the co-operative and cannot include the word "co-operative" or 20 "cooperative" or another word importing a similar meaning. (3) The regulations may provide that a co-operative is exempt from compliance with a provision of this section and section 186 in relation to a matter to which this section applies. 307. Meaning of "new body" and "transfer" 25 The registration or incorporation of a co-operative as a corporation as a result of an application under this Division is referred to in this Division as its "transfer" and the corporation concerned is referred to in this Division as the "new body". page 179

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 2 Transfer of incorporation s. 308 308. New body ceases to be registered as co-operative On the transfer of a co-operative under this Division, it ceases to be registered as a co-operative under this Act. 309. Transfer not to impose greater liability etc. 5 (1) The constitution or replaceable rules or rules adopted for the purposes of the transfer cannot be such as to -- (a) impose on the members of the new body who were members of the co-operative at the date of transfer any greater or different liability to contribute to the assets of 10 the new body than the liability to which they were subject as members of the co-operative; or (b) deprive a member of the new body of preferential rights to dividend or capital to which the member was entitled as a member of the co-operative at the date of transfer. 15 (2) In subsection (1), "member" includes former shareholder of a co-operative, whose shares have been forfeited within 2 years of the transfer. (3) The transfer must result in all persons who were members of the co-operative at the date of transfer becoming members of the 20 new body. (4) In the case of a transfer of a co-operative that has a share capital to a new body that has a share capital, the transfer must result in every member of the co-operative at the date of transfer who held shares in the co-operative being the holder of shares in the 25 capital of the new body equal in number and nominal value to the shares held by the member as a member of the co-operative. 310. Effect of new certificate of registration A certificate of registration or incorporation as the new body issued by the appropriate officer under the law applicable to the 30 new body is evidence that all the requirements of this Division about registration or incorporation have been complied with. page 180

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Winding-up and deregistration Division 3 s. 311 311. New body must give copy of new certificate of registration or incorporation to Registrar On the transfer of a co-operative under this Division, the new body must immediately give the Registrar a copy of its new 5 certificate of registration or incorporation. Penalty: a fine of $1 000. 312. New body is a continuation of the co-operative (1) When a co-operative transfers to a new body, the corporation constituted by the new body is taken to be the same entity as the 10 corporation constituted by the co-operative. (2) Without limiting subsection (1), Division 6 applies to a transfer under this Division. Division 3 -- Winding-up and deregistration 313. Methods of winding-up 15 (1) A co-operative may be wound-up voluntarily or by the Supreme Court or on a certificate of the Registrar. (2) In the case of a winding-up voluntarily or by the Supreme Court, the co-operative may be wound-up in the same way and in the same circumstances as a company under the Corporations 20 Act may be wound-up. 314. Winding-up on Registrar's certificate (1) A co-operative may be wound-up on a certificate of the Registrar only if the necessary grounds for taking the action exist, as referred to in section 336. 25 (2) A winding-up on a certificate of the Registrar starts when the Registrar gives the certificate to the co-operative. page 181

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 3 Winding-up and deregistration s. 315 (3) On the giving of a certificate, the Registrar may appoint a person to be the liquidator of the co-operative. (4) The liquidator need not be a registered liquidator under the Corporations Act. 5 (5) The liquidator must, within 10 days after appointment, give notice of his or her appointment in the Gazette. (6) The liquidator must give the security prescribed by the regulations and is entitled to receive the fees fixed by the Registrar. 10 (7) Any vacancy occurring in the office of liquidator is to be filled by a person appointed by the Registrar. 315. Method of deregistration A co-operative may be deregistered in the same way and in the same circumstances as a company under the Corporations Act 15 may be deregistered. 316. Application of Corporations Act to winding-up and deregistration The winding-up or deregistration of a co-operative, and a deregistered co-operative, are declared to be applied 20 Corporations legislation matters for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the provisions of the Corporations Act Parts 5.4, 5.4A, 5.4B, 5.5, 5.6, 5.7 and 5A.1, subject to the following modifications -- (a) a reference in the provisions to a special resolution or an 25 extraordinary resolution is to be read as a reference to a special resolution within the meaning of this Act; (b) a reference in the provisions to ASIC is to be read as a reference to the Registrar; page 182

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Winding-up and deregistration Division 3 s. 316 (c) section 513B is to be considered to be amended by inserting after paragraph (d) -- " (da) if the winding-up is on the certificate of the 5 Registrar -- on the date that the certificate is given; or "; (d) section 516 is to be considered to be amended by inserting after "past member" -- 10 " together with any charges payable by him or her to the co-operative in accordance with the rules "; (e) a reference in the provisions to a registered liquidator is 15 to be read as including a reference to a person approved or appointed by the Registrar as a liquidator of a co-operative; (f) a reference in the provisions to the Corporations Act Part 2F.1 is to be read as a reference to Part 4 Division 5 20 of this Act; (g) for the purposes of the application of the provisions to a winding-up on the certificate of the Registrar, the winding-up is taken to be a voluntary winding-up, but the Corporations Act section 490 does not apply; 25 (h) the provisions are to be read subject to sections 67 and 322 of this Act for the purposes of determining the liability of members and former members to contribute on a winding-up of a co-operative; (i) any other modifications, within the meaning of the 30 Corporations (Ancillary Provisions) Act 2001 Part 3, that are prescribed by the regulations. page 183

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 3 Winding-up and deregistration s. 317 317. Restrictions on voluntary winding-up (1) A co-operative may be wound-up voluntarily only -- (a) by a creditors' voluntary winding-up; or (b) if a special resolution is passed by means of a special 5 postal ballot in favour of voluntary winding-up. (2) A regulation may exempt a co-operative from compliance with a provision of this section or section 186. (3) When a special postal ballot referred to in subsection (1)(b) is held, the members may, by means of the same ballot, by simple 10 majority -- (a) appoint one or more liquidators to wind-up the affairs and distribute the assets of the co-operative; and (b) fix the remuneration to be paid to the liquidator. 318. Start of members' voluntary winding-up 15 A members' voluntary winding-up of a co-operative starts when the result of the special postal ballot is noted in the minute book by the secretary of the co-operative. 319. Distribution of surplus -- non-distributing co-operatives (1) In this section -- 20 "surplus property" means property of the co-operative that remains after satisfaction of the debts and liabilities of the co-operative and the costs, charges and expenses of the winding-up. (2) On a winding-up of a non-distributing co-operative, the surplus 25 property of the co-operative must be distributed as required by the rules of the co-operative. (3) The rules of a non-distributing co-operative must make provision for the way in which the surplus property of the co-operative is to be distributed in a winding-up. page 184

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Winding-up and deregistration Division 3 s. 320 320. Liquidator -- vacancy may be filled by Registrar If a co-operative is being wound-up voluntarily and a vacancy occurs in the office of liquidator that in the opinion of the Registrar is unlikely to be filled in the way provided by the 5 Corporations Act, as applied by this Division, the Registrar may appoint a person to be liquidator. 321. Review of liquidator's remuneration A member or creditor of a co-operative or the liquidator may at any time before the completion of the winding-up of the 10 co-operative apply to the Supreme Court to review the amount of the remuneration of the liquidator. 322. Liability of member to contribute in a winding-up where shares forfeited etc. (1) If a person's membership of a co-operative is cancelled under 15 Part 6 within 2 years before the start of the winding-up of the co-operative, the person is liable on the winding-up to contribute to the property of the co-operative the nominal value of any shares forfeited in connection with that cancellation, being their nominal value immediately before cancellation. 20 (2) If under section 163 a co-operative -- (a) purchases a share of a member in the co-operative; or (b) repays to a member the whole or any part of the amount paid up up to the stated nominal value on a share held by a member, 25 within 2 years before the start of the winding-up of the co-operative, the member or former member is liable on the winding-up to contribute to the property of the co-operative the amount paid by the co-operative to the member or former member in respect of the purchase or repayment together with 30 any amount unpaid on the shares immediately before the purchase or repayment. page 185

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 4 Administration of co-operative -- application of Corporations Act s. 323 (3) If a person contributes to the property of a co-operative under a liability under this section, the amount contributed is, for the purposes of the winding-up, to be treated as having been paid up by the person on shares of the co-operative. 5 (4) The liability of a member or former member of a co-operative under this section is in addition to any other liability of the member or former member to contribute to the property of the co-operative on a winding-up of the co-operative. Division 4 -- Administration of co-operative -- application of 10 Corporations Act 323. Application of Corporations Act to administration of co-operative A co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations 15 (Ancillary Provisions) Act 2001 Part 3 in relation to the provisions of the Corporations Act Part 5.3A and Part 5.9 Division 3, subject to the following modifications -- (a) the provisions are to be read as if a co-operative were a company; 20 (b) a reference in the provisions to the Corporations Act sections 128 and 129 is to be read as a reference to sections 41 to 43, and section 45 of this Act; (c) a reference in the provisions to ASIC is to be read as a reference to the Registrar; 25 (d) any other modifications, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3, that are prescribed by the regulations. Division 5 -- Appointment of administrator 324. Appointment of administrator 30 (1) The Registrar may, by written notice, appoint an administrator to conduct the affairs of a co-operative. page 186

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Appointment of administrator Division 5 s. 325 (2) A notice of appointment must state -- (a) the date of appointment; and (b) the appointee's name; and (c) the appointee's business address. 5 (3) If the appointee's name or business address changes, the appointee must immediately give written notice of the change to the Registrar. (4) The Registrar cannot appoint an administrator unless the necessary grounds for taking the action exist, as referred to in 10 section 336(2). 325. Effect of appointment of administrator (1) On the appointment of an administrator of a co-operative -- (a) the directors of the co-operative cease to hold office; and (b) all contracts of employment with the co-operative are 15 terminated; and (c) all contracts for the provision of secretarial or administrative services for the co-operative are terminated; and (d) the administrator may terminate any contract for 20 providing other services to the co-operative. (2) An administrator of a co-operative has the functions of the board of the co-operative, including the board's powers of delegation. (3) A director of a co-operative cannot be appointed or elected 25 while the administrator is in office except as provided by this Division. 326. Revocation of appointment (1) An administrator holds office until the administrator's appointment is revoked. page 187

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 5 Appointment of administrator s. 326 (2) The Registrar may, by written notice, revoke the appointment of an administrator. (3) When a liquidator of a co-operative is appointed, the appointment of any administrator of the co-operative is 5 automatically revoked. (4) Immediately on the revocation of an administrator's appointment, the administrator must prepare and submit a report to the Registrar showing how the administration was carried out, and for that purpose an administrator has access to the 10 co-operative's records. (5) On giving the report and accounting fully for the administration of the co-operative to the satisfaction of the Registrar, the administrator is released from any further duty to account for the administration of the co-operative other than on account of 15 fraud, dishonesty, negligence or wilful failure to comply with this Act. (6) Before revoking the appointment of an administrator of a co-operative, the Registrar must -- (a) appoint another administrator; or 20 (b) appoint a liquidator; or (c) ensure that directors of the co-operative have been elected in accordance with the rules of the co-operative at a meeting called by the administrator in accordance with those rules; or 25 (d) appoint directors of the co-operative. (7) Directors elected or appointed under subsection (6) -- (a) take office on revocation of the administrator's appointment; and (b) in the case of directors appointed under subsection (6), 30 hold office until the next annual general meeting of the co-operative after the revocation of that appointment. page 188

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Appointment of administrator Division 5 s. 327 327. Expenses of administration (1) The expenses of and incidental to the conduct of a co-operative's affairs by an administrator are payable from the co-operative's funds. 5 (2) The expenses of conducting a co-operative's affairs include -- (a) if the administrator is not an officer or employee of the public service, remuneration of the administrator at a rate approved by the Registrar; or (b) if the administrator is an officer or employee of the 10 public service, the amount that the Registrar certifies should be paid to the State as repayment of the administrator's remuneration. (3) An amount certified under subsection (2)(b) may be recovered in a court of competent jurisdiction as a debt payable to the 15 State. (4) An administrator has, in relation to the expenses referred to in subsection (1), the same priority on the winding-up of a co-operative as the liquidator of the co-operative has, as set out in the Corporations Act Part 5.6. 20 328. Liabilities arising from administration (1) If a co-operative incurs loss because of fraud, dishonesty, negligence or wilful failure to comply with this Act or the rules of the co-operative by an administrator, the administrator is liable for the loss. 25 (2) An administrator is not liable for loss that is not a loss to which subsection (1) applies but must account for the loss in a report given under section 326. page 189

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 5 Appointment of administrator s. 329 329. Additional powers of Registrar (1) If the Registrar appoints directors of a co-operative under section 326, the Registrar may, by written notice given to the co-operative, specify -- 5 (a) a time during which this section is to apply in relation to the co-operative; and (b) the terms on which all or any of the directors hold office; and (c) the rules that are to be the co-operative's rules. 10 (2) While this section applies to a co-operative, the Registrar may -- (a) remove and appoint directors; and (b) vary, revoke or state new terms in place of all or any of the terms specified under subsection (1); and 15 (c) amend all or any of the rules specified under subsection (1). (3) The Registrar may, by written notice given to the co-operative, extend the time for which this section is to apply to a co-operative. 20 (4) A rule specified by the Registrar under this section to be a rule of a co-operative -- (a) cannot be altered except in the way set out in this section; and (b) if it is inconsistent with another rule of the co-operative, 25 prevails over the other rule, and the other rule is to the extent of the inconsistency inoperative; and (c) has the same evidentiary value as is by this Act accorded to the co-operative's rules and to copies of them. 330. Stay of proceedings 30 (1) If the Registrar appoints an administrator to conduct a co-operative's affairs, a person cannot begin or continue page 190

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Effect of merger etc. on property, liabilities etc. Division 6 s. 331 proceedings in a court against the co-operative until the administrator's appointment is revoked except with the leave of the Supreme Court and, if the Supreme Court grants leave, in accordance with any terms that the Supreme Court imposes. 5 (2) A person intending to apply for leave of the Supreme Court under subsection (1) must give the Registrar at least 10 days notice of intention to apply. (3) On the hearing of an application under subsection (1), the Registrar may be represented and may oppose the application. 10 331. Administrator to report to Registrar On the receipt of a request from the Registrar, the administrator of a co-operative must, without delay, prepare and give to the Registrar a report showing how the administration is being carried out. 15 Division 6 -- Effect of merger etc. on property, liabilities etc. 332. How this Division applies to a merger (1) This Division applies to a merger of co-operatives under this Part. (2) In the application of this Division to a merger -- 20 "new body" means the co-operative that results from the merger; "original body" means each co-operative that is a party to the merger; "relevant day" means the day on which the merged 25 co-operative is registered under this Act. 333. How this Division applies to a transfer of engagements (1) This Division applies to a transfer of the engagements of a co-operative to another co-operative under Division 1. page 191

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 6 Effect of merger etc. on property, liabilities etc. s. 334 (2) In the application of this Division to a transfer of engagements -- "new body" means the co-operative to which the engagements are transferred; 5 "original body" means the co-operative that transfers its engagements; "relevant day" means the day on which the transfer of engagements takes effect. 334. How this Division applies to a transfer of incorporation 10 (1) This Division applies to a transfer of incorporation under Division 2. (2) In the application of this Division to such a transfer -- "new body" means the corporation that results from the transfer; 15 "original body" means the co-operative that transfers its incorporation; "relevant day" means the day on which the transfer takes effect. 335. Effect of merger etc. on property, liabilities etc. 20 (1) In this section -- "assets" means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description (including money), and includes securities, choses in action and documents; 25 "instrument" means an instrument (other than this Act) which creates, modifies or extinguishes rights or liabilities (or would do so if lodged, filed or registered in accordance with any law), and includes any judgment, order and process of a court; 30 "liabilities" means liabilities, debts and obligations (whether present or future and whether vested or contingent). page 192

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Effect of merger etc. on property, liabilities etc. Division 6 s. 335 (2) On and from the relevant day for an event to which this Division applies -- (a) the assets of the original body vest in the new body without the need for a conveyance, transfer, assignment 5 or assurance; and (b) the rights and liabilities of the original body become the rights and liabilities of the new body; and (c) all proceedings by or against the original body that are pending immediately before the relevant day are taken 10 to be proceedings pending by or against the new body; and (d) an act, matter or thing done or omitted to be done by, to or in relation to the original body before the relevant day is, to the extent to which that act, matter or thing has any 15 force or effect, taken to have been done or omitted by, to or in relation to the new body; and (e) a reference in an instrument or document of any kind to the original body is to be read as, or as including, a reference to the new body. 20 (3) The operation of this section cannot be regarded -- (a) as a breach of contract or confidence or otherwise as a civil wrong; or (b) as a breach of any contractual provision prohibiting, restricting or regulating the assignment or transfer of 25 assets, rights or liabilities; or (c) as giving rise to a remedy by a party to an instrument, or as causing or permitting the termination of an instrument, because of a change in the beneficial or legal ownership of an asset, right or liability. page 193

Co-operatives Bill 2007 Part 12 Merger, transfer of engagements, winding-up Division 7 Miscellaneous s. 336 Division 7 -- Miscellaneous 336. Grounds for winding-up, transfer of engagements, appointment of administrator (1) This section applies to the following actions -- 5 (a) a direction by the Registrar to a co-operative to transfer its engagements under section 304; (b) the appointment of an administrator of a co-operative under Division 5; (c) the winding-up of a co-operative on a certificate of the 10 Registrar under section 314. (2) The necessary grounds for taking action to which this section applies exist if the Registrar certifies that -- (a) the number of members is reduced to less than the minimum number of persons allowed under section 65; 15 or (b) the co-operative has not commenced business within one year of registration or has suspended business for more than 6 months; or (c) the registration of the co-operative has been obtained by 20 mistake or fraud; or (d) the co-operative exists for an illegal purpose; or (e) the co-operative has wilfully, and after notice from the Registrar, violated the provisions of this Act or of the rules of the co-operative; or 25 (f) the board of the co-operative has, after notice from the Registrar, failed to ensure that the rules of the co-operative contain active membership provisions in accordance with Part 6; or (g) there are, and have been, for one month immediately 30 before the date of the Registrar's certificate, insufficient directors of the co-operative to form a quorum in accordance with the rules of the co-operative; or page 194

Co-operatives Bill 2007 Merger, transfer of engagements, winding-up Part 12 Miscellaneous Division 7 s. 337 (h) after an inquiry under this Act into the affairs of a co-operative or the working and financial condition of a co-operative, that in the interests of members or creditors of the co-operative or the public the action 5 concerned should be taken. (3) Alternatively, the necessary grounds for winding-up a co-operative on a certificate of the Registrar exist if the Registrar certifies that -- (a) the period, if any, fixed for the duration of the 10 co-operative by its rules has ended; or (b) an event, to be specified in the certificate, has occurred on the occurrence of which the regulations or the rules provide that the co-operative is to be wound-up. (4) The Registrar cannot certify under this section as to any matter 15 unless the matter has been proved to the Registrar's satisfaction. 337. Application of Corporations Act for insolvent co-operatives A co-operative is declared to be an applied Corporations legislation matter for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the 20 provisions of the Corporations Act Part 5.7B, subject to the following modifications -- (a) the provisions are to be read as if a co-operative were a company; (b) a reference in the provisions to a provision of the 25 Corporations Act sections 286 to 290, as applied under section 225 of this Act, is to be read with any modifications prescribed by the regulations; (c) any other modifications, within the meaning of the Corporations (Ancillary Provisions) Act 2001 Part 3, 30 that are prescribed by the regulations. page 195

Co-operatives Bill 2007 Part 13 Arrangements and reconstructions Division 1 General requirements s. 338 Part 13 -- Arrangements and reconstructions Division 1 -- General requirements 338. Requirements for binding compromise or arrangement (1) A compromise or arrangement is binding only if it is approved 5 by order of the Supreme Court after having been agreed to -- (a) if the compromise or arrangement is between the co-operative and any of its creditors, at a court ordered meeting by a majority in number of the creditors concerned who are present and voting (in person or by 10 proxy), being a majority whose debts or claims against the co-operative amount to at least 75% of the total of the debts and claims of all those creditors who are present and voting (in person or by proxy); or (b) if the compromise or arrangement is between the 15 co-operative and any of its members, by the members concerned, by special resolution passed by means of a special postal ballot. (2) The court ordered meeting referred to in subsection (1)(a) is a meeting called in accordance with an order of the Supreme 20 Court under this Part. (3) The Supreme Court may grant its approval to a compromise or arrangement subject to the alterations or conditions it considers appropriate. (4) An order of the Supreme Court approving a compromise or 25 arrangement does not have effect until an office copy of the order is lodged with the Registrar. (5) On the copy being lodged, the order takes effect from the date of lodgment or an earlier date the Supreme Court specifies in the order. page 196

Co-operatives Bill 2007 Arrangements and reconstructions Part 13 General requirements Division 1 s. 339 339. Supreme Court ordered meeting of creditors (1) In this section -- "appropriate person", in relation to an application for an order, means -- 5 (a) the co-operative; or (b) a member of the co-operative; or (c) one of the creditors concerned; or (d) in the case of a co-operative being wound-up, the liquidator. 10 (2) If a compromise or arrangement is proposed between a co-operative and any of its creditors, the Supreme Court may on application by an appropriate person order a meeting or meetings of the creditors concerned. (3) The meeting must be convened in the way and be held in the 15 place or places, in this State or elsewhere, that the Supreme Court directs. (4) In considering whether to make an order for a meeting to be held in another jurisdiction, the Supreme Court may have regard to where creditors concerned reside. 20 340. Registrar to be given notice and opportunity to make submissions The Supreme Court may, on the application of an appropriate person as defined in section 339(1), make an order under this Division approving a compromise or arrangement if the Court is 25 satisfied that -- (a) at least 14 days notice of the hearing of the application for the order, or a shorter period of notice the Court or the Registrar permits, has been given to the Registrar; and page 197

Co-operatives Bill 2007 Part 13 Arrangements and reconstructions Division 1 General requirements s. 341 (b) the Registrar has had a reasonable opportunity to examine -- (i) the terms of that compromise or arrangement; and 5 (ii) the explanatory statement to be sent to creditors or members under section 349, and make submissions to the Court. 341. Results of 2 or more meetings If the Supreme Court orders 2 or more meetings of creditors to 10 be held in relation to a proposed compromise or arrangement -- (a) the meetings are taken to form a single meeting; and (b) the votes in favour of the proposed compromise or arrangement cast at each of the meetings are to be added; and 15 (c) the votes against the proposed compromise or arrangement cast at each of the meetings are to be added. 342. Persons disqualified from administering compromise etc. Except with the leave of the Supreme Court, a person cannot be 20 appointed to administer, and cannot administer, a compromise or arrangement approved under this Act between a co-operative and any of its creditors or members, whether by the terms of the compromise or arrangement or under a power given by the terms of a compromise or arrangement, if the person -- 25 (a) is a mortgagee of property of the co-operative; or (b) is an auditor or an officer of the co-operative; or (c) is an officer of a corporation that is a mortgagee of property of the co-operative; or (d) is not a registered liquidator under the Corporations Act 30 unless the person is a corporation authorised by or under a law of this State to administer the compromise or arrangement concerned; or page 198

Co-operatives Bill 2007 Arrangements and reconstructions Part 13 General requirements Division 1 s. 343 (e) is an officer of a corporation related to the co-operative; or (f) unless the Registrar directs in writing that this paragraph does not apply in relation to the person in relation to the 5 co-operative, has at any time within the last 12 months been an officer or promoter of the co-operative or of a related corporation of the co-operative. 343. Application of Schedule 4 to person appointed Schedule 4 clauses 16, 18(2) and (4), 19, 23 and 25 apply to a 10 person appointed to administer a compromise or arrangement as if the appointment were an appointment of the person as a receiver and manager of property of the co-operative and as if a reference to a receiver were a reference to that person. 344. Application of Corporations Act to person appointed 15 A person appointed to administer a compromise or arrangement is declared to be an applied Corporations legislation matter for the purposes of the Corporations (Ancillary Provisions) Act 2001 Part 3 in relation to the Corporations Act section 536 as if -- 20 (a) the appointment were an appointment as a liquidator of the co-operative; and (b) a reference in the section to a liquidator were a reference to that person; and (c) a reference in that section to ASIC were a reference to 25 the Registrar. 345. Copy of order to be attached to rules (1) A co-operative must ensure that a copy of an order of the Supreme Court approving a compromise or arrangement is attached to each copy of the rules of the co-operative issued 30 after the order is made. Penalty: a fine of $2 000. page 199

Co-operatives Bill 2007 Part 13 Arrangements and reconstructions Division 1 General requirements s. 346 (2) The Supreme Court may, by order, exempt a co-operative from compliance with this section or determine the period during which the co-operative must comply. 346. Directors to arrange for reports 5 (1) When a compromise or arrangement (whether or not for the purposes of or in connection with a scheme for the reconstruction of a co-operative or the merger of any 2 or more co-operatives) has been proposed, the directors of the co-operative must -- 10 (a) if a meeting of the members of the co-operative by resolution so directs, instruct the accountants or legal practitioners or both named in the resolution to report on the proposals and send their report or reports to the directors as soon as practicable; and 15 (b) make any report or reports so obtained available at the registered office of the co-operative for inspection by the members and creditors of the co-operative at least 7 days before the day of the meeting ordered by the Supreme Court or the holding of the special postal 20 ballot, as appropriate. (2) If subsection (1) is not complied with, each director of the co-operative commits an offence. Penalty: a fine of $2 000. 347. Power of Supreme Court to restrain further proceedings 25 (1) If a proposed compromise or arrangement is between a co-operative and any of its creditors and no order has been made or resolution passed for the winding-up of the co-operative, the Supreme Court may restrain further proceedings in an action or other civil proceeding against the co-operative except by leave 30 of the Supreme Court and subject to such terms as the Supreme Court imposes. page 200

Co-operatives Bill 2007 Arrangements and reconstructions Part 13 Explanatory statements Division 2 s. 348 (2) The Supreme Court's power under this section is in addition to any of its other powers and cannot be exercised except on application by the co-operative or of any creditor or member of the co-operative. 5 348. Supreme Court need not approve compromise or arrangement takeovers (1) The Supreme Court need not approve a compromise or arrangement unless -- (a) it is satisfied that the compromise or arrangement has 10 not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Part 11 Division 2; and (b) there is produced to the Supreme Court a statement in writing by the Registrar stating that the Registrar has no 15 objection to the compromise or arrangement. (2) The Supreme Court need not approve a compromise or arrangement merely because a statement by the Registrar stating that the Registrar has no objection to the compromise or arrangement has been produced to the Supreme Court. 20 Division 2 -- Explanatory statements 349. Explanatory statement required to accompany notice of meeting etc. (1) An explanatory statement must accompany every notice -- (a) that is sent to a creditor of a co-operative calling a court 25 ordered meeting to obtain agreement to a compromise or arrangement; or (b) that is sent to a member of a co-operative for the purpose of the conduct of the special postal ballot to obtain agreement to the compromise or arrangement. 30 (2) In every notice of a meeting referred to in subsection (1) that is given by advertisement there must be included either a copy of page 201

Co-operatives Bill 2007 Part 13 Arrangements and reconstructions Division 2 Explanatory statements s. 349 the explanatory statement or notification of the place at which and the way in which creditors entitled to attend the meeting may obtain copies of the explanatory statement. (3) The explanatory statement must -- 5 (a) explain the effect of the compromise or arrangement and, in particular, state -- (i) material interests of the directors, whether as directors, members or creditors of the co-operative or otherwise; and 10 (ii) the effect on those interests of the compromise or arrangement in so far as that effect is different from the effect on the like interests of other persons; and 15 (b) set out -- (i) the information prescribed by the regulations; and (ii) other information that is material to the making of a decision by a creditor or member whether or 20 not to agree to the compromise or arrangement, is within the knowledge of the directors and has not previously been disclosed to the creditors or members. (4) Subsection (1)(a) does not apply in the case of a creditor whose 25 debt does not exceed $200 unless the Supreme Court orders otherwise. (5) The notice calling the meeting that is sent to a creditor referred to in subsection (1)(a) must specify a place at which a copy of the explanatory statement can be obtained on request. 30 (6) The co-operative must comply with a request under subsection (5) as soon as practicable. page 202

Co-operatives Bill 2007 Arrangements and reconstructions Part 13 Explanatory statements Division 2 s. 350 350. Requirements for explanatory statement (1) An explanatory statement must be as approved by the Registrar. (2) If the compromise or arrangement affects the rights of debenture holders, the explanatory statement must specify -- 5 (a) any material interests of the trustees for the debenture holders, whether as such trustees, as members or creditors of the co-operative or otherwise; and (b) the effect on those interests of the compromise or arrangement to the extent that that effect is different 10 from the effect on the like interests of other persons. (3) If a notice given by advertisement includes a notification that copies of the explanatory statement can be obtained in a particular way, the co-operative must give a copy of the statement free of charge to each creditor or member entitled to 15 attend the meeting or vote in the ballot who applies for it in that way. (4) Each person who is a director or trustee for debenture holders must give notice to the co-operative of such matters relating to the person as are required to be included in the explanatory 20 statement. 351. Contravention of Division -- offence by co-operative (1) If a provision of this Division is contravened, the co-operative concerned and any other person involved in the contravention commits an offence. 25 Penalty: a fine of $2 000. (2) It is a defence to a prosecution for an offence under subsection (1) if it is proved that the contravention was due to the failure of a person, other than the defendant, who is a director of the co-operative or a trustee for debenture holders of 30 the co-operative, to supply for the purposes of the explanatory statement particulars of the person's interests. page 203

Co-operatives Bill 2007 Part 13 Arrangements and reconstructions Division 3 Facilitating reconstructions and mergers s. 352 Division 3 -- Facilitating reconstructions and mergers 352. Provisions for facilitating reconstructions and mergers (1) In this section -- "co-operative" includes a foreign co-operative; 5 "liabilities" includes duties of any description, including duties that are of a personal character or are incapable under the general law of being assigned or performed vicariously; "property" includes rights and powers of any description, including rights and powers that are of a personal character 10 and are incapable under the general law of being assigned or performed vicariously. (2) This section applies if an application is made to the Supreme Court under this Part for the approval of a compromise or arrangement and it is shown to the Court that -- 15 (a) the compromise or arrangement has been proposed for the purposes of a scheme for the reconstruction of a co-operative or the merger of a co-operative with another co-operative or with another corporation; and (b) under the scheme all or part of the undertaking or of the 20 property of a co-operative concerned in the scheme (the "transferor") is to be transferred to another corporation (the "transferee") and the transferee is not a company within the meaning of the Corporations Act. (3) If this section applies, the Supreme Court may, either by the 25 order approving the compromise or arrangement or by a later order provide for any one or more of the following -- (a) the transfer to the transferee of all or part of the undertaking and the property or liabilities of the transferor; 30 (b) the allotting or appropriation by the transferee of shares, debentures, co-operative capital units, policies or other interests in the transferee that, under the compromise or page 204

Co-operatives Bill 2007 Arrangements and reconstructions Part 13 Facilitating reconstructions and mergers Division 3 s. 352 arrangement, are to be allotted or appropriated by the transferee to or for a person; (c) the continuation by or against the transferee of legal proceedings pending by or against the transferor; 5 (d) the deregistration, without winding-up, of the transferor; (e) the provision to be made for any persons who, within the time and in the way the Court directs, dissent from the compromise or arrangement; (f) the transfer or allotment of any interest in property to a 10 person concerned in the compromise or arrangement; (g) the incidental, consequential and supplemental matters necessary to ensure that the reconstruction or merger is fully and effectively carried out. (4) If an order made under this section provides for the transfer of 15 property or liabilities, then, by virtue of the order -- (a) the property is transferred to and vests in the transferee free, in the case of a particular property if the order so directs, from a charge that is under the compromise or arrangement to cease to have effect; and 20 (b) the liabilities are transferred to and become the liabilities of the transferee. (5) If an order is made under this section, each body to which the order relates must, within 14 days after the making of the order, lodge with the Registrar an office copy of the order. 25 (6) If the Registrar is required by the Court to appear and assist the Court in making an order under this section, the Court may make an award of costs to the Registrar for the appearance. page 205

Co-operatives Bill 2007 Part 13 Arrangements and reconstructions Division 4 Acquisition of shares of dissenting shareholders s. 353 Division 4 -- Acquisition of shares of dissenting shareholders 353. Definitions In this Division -- "dissenting shareholder", in relation to a scheme or contract, 5 means a shareholder who has not assented to the scheme or contract or who has failed to transfer the shareholder's shares under the scheme or contract; "excluded shares", in relation to a scheme or contract involving a transfer to a person of shares in a class of 10 shares in a co-operative, means shares in the class that, when the offer relating to the scheme or contract is made, are held by -- (a) in any case, the person or a nominee of the person; or (b) if the person is a corporation, a subsidiary of the 15 body. 354. Schemes and contracts to which Division applies