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Feedback on the proposed amendments will be accepted until Monday 29 February 2016
The Co-operatives Amendment Bill 2015 (the Bill), introduced into the Parliament in November 2015, will amend the Co-operatives Act 2009 (the Act). This is a key step to establish consistency with co-operatives legislation in other states and territories, and as a result allow WA to participate in the Co-operatives National Law, and Western Australia (WA) registered co-operatives to trade nationally.
The Bill will implement a national regulatory scheme and, as a result, has been referred to the Uniform Legislation and Statutes Review Committee (the Committee) for consideration. The Committee is scheduled to table its report in the Parliament on 25 February 2016, after which the Bill will be the subject of debate.
The amendments are not expected to have any significant impact on the day to day operations of co-operatives. Minor changes will be made in relation filing of disclosure statements and the contents of annual reports, and further information will be provided by the Co-operatives Unit at the Department of Commerce prior to commencement of the changes to assist co-operatives with compliance. Co-operatives needing to amend their rules to reflect new requirements of the legislation will be able to make those changes by board resolution without prior approval from the Registrar or a special resolution of members.
Following the amendment of the Act, some changes will also need to be made to the supporting regulations to ensure effective operation of the Act and improve consistency with the regulations which form part of the Co-operatives National Law.
The table below shows the differences identified between the WA regulations and the national regulations and the proposed changes.
Note:
Reg No |
WA Act |
Subject |
Reason amendment is required |
---|---|---|---|
5(2) |
98(7) |
Maximum fine which may be imposed for a breach of the rules. |
The CNR and WA Reg 5(2) both provide for a maximum fine of $1000, but the CNR includes an additional section which limits the fine to $500 where the primary activities of the co-operative are charitable. |
7 |
115 |
Determining primary activities |
WA Reg 7 describes the factors to be considered to determine whether an activity of a co-operative is a primary activity for the purposes of s115 of the WA Act. The provision in the CNR is identical, except it includes as a relevant factor for consideration in the case of a new co-operative, whether it is likely to carry out the activity within two years. This allows additional flexibility for newly formed co-operatives in developing their activities. |
8 |
130 |
Register of cancelled memberships |
WA Reg 8 refers to Schedule 4 clause 5, which describes the particulars that must be included in the register of cancelled memberships maintained by a co-operative. CNR 2.6 contains a similar provision, but there is no equivalent in the WA Regulations to CNR 2.6(2) which specifies the particulars must be retained for the period during which rights subsist in respect of the person. |
9 |
149 |
Certificate of valuation of assets |
WA Reg 9 describes the professional qualifications that must be held by a valuer for the purposes of section 149(c) of the Act. The equivalent provision in the CNR is more comprehensive, allowing for equivalent qualifications in other jurisdictions (which will be required with the participating co-operatives arrangements in the amended Act) and including a requirement of independence. |
N/A |
151(8) |
Fee payable to a person acting on direction of the board with regard to disclosure of interests |
CNR 2.4 provides for the payment of a fee of $50.00 to a person providing a valuation to the Board pursuant to CNL 92(8). There is no equivalent in the current WA Regulations as there is currently no equivalent to 92(8) in the WA Act. |
10 |
200 |
Certificate with regard to conviction/imprisonment |
WA Reg 10 provides a list of authorities who can provide a certificate about a person’s release from prison for the purposes of section 200 of the WA Act (disqualification from acting as a director or taking part in the management of a co-operative). The WA regulation is equivalent to CNR 3.1(2) but the CNR contains an additional provision at 3.1(1) providing for the case of a conviction of an offence under the co-operatives law. |
N/A |
N/A to be added by amendment Bill |
Responsibility of secretary for contravention of specified provisions |
CNR 3.2 specifies a list of offences which pursuant to CNL191, if contravened by the co-operative, also result in a contravention by the Secretary. The maximum penalty is a fine of $500.00. It is a defence if the Secretary has taken reasonable steps to comply. There is no equivalent in the current WA Regulations as there is currently no equivalent to CNL 191 in the WA Act. A list of 12 offences are nominated, they relate to obligations of the co-operative to maintain records and registers and lodge documents and notifications with the Registrar, reflecting the responsibility of the Secretary for undertaking these functions. |
11 |
225 |
Criteria for a determining whether a co-operative is a small co-operative |
Criteria in the CNL for a distributing co-operative are the same as the current WA Reg 11 in relation to assets, revenue and number of employees except, under the WA Regulation, all three criteria must be satisfied. Under the CNR, only two of the three criteria are required. Non-distributing co-operatives are subject to much lower thresholds under the current WA Regulation than the CNR which applies the same test to both distributing and non-distributing co-operatives. The CNR also includes additional provisions relating to calculation of gross revenue and assets and number of employees, but these do not represent any change in practice in Western Australia, they accord with our current interpretation of the Regulation. |
13 |
230 |
Registers to be kept by a co-operative |
WA Reg 13 describes the form in which registers may be kept, and the particulars they must contain – the particulars are set out in schedule 4 to the Regulations, which is referenced by the regulations. CNR 3.3 is the equivalent provision in the CNR, and contains one additional subclause at 3.3(b)(ii) which allows information to be kept in the form of a recording and has no equivalent in the WA regulation. CNR 3.3 also refers to a schedule which describes the particulars registers must contain. It is slightly different to schedule 4 to the WA regulations. |
14 |
232 |
Inspection of registers |
WA Reg 14 describes the registers maintained by a co-operative which must be available for inspection by members, and the fees that a co-operative may charge for copies. CNR 3.4 is similar, but sets the fee with reference to the fee charged by the Registrar for the same document rather than specifying a dollar amount, and includes an additional list of documents that must be available for inspection. |
15 |
234 |
Notice of appointment or cessation of appointment of directors and officers
|
WA Reg 15 describes the particulars which must be provided in a notice of appointment or cessation of appointment of directors. It is equivalent to CNR 3.5(2)(a)-(d) but the CNR includes additional subclauses (e) and (f) which impose an obligation to notify the Registrar of changes of name or address of directors should these details change whilst the individual occupies that role. It is noted the amendments are proposed to the WA Act that would remove any reporting requirements in relation to the directors and officers of subsidiaries of WA co-operatives. |
N/A |
|
Report to be lodged with the Registrar – prescribed particulars |
CNL 281 provides that regulations may provide for a report to the Registrar of ‘prescribed particulars’ in the case of a co-operative with quoted securities. CNR 3.6 provides for those particulars, and requires a report in relation to an issue of securities. There is no equivalent in the WA Regulations, as there is currently no equivalent to CNL 281 in the WA Act. |
16 |
235 |
Annual report to the Registrar |
The sections of the WA Act relating to financial reporting and annual reporting to the Registrar are different to those in the CNL, as the WA Act reads in financial accounting and reporting requirements from the Commonwealth Corporations Law, while the CNL sets out equivalent requirements within the CNL itself. For that reason, the CNL sets out separate reporting requirements for large and small co-operatives, and as part of those provisions, a requirement for ‘an annual return’ for small co-operatives. Section 235 of the WA Act requires an ‘annual report’ including prescribed particulars from all co-operatives, with large co-operatives required to include additional financial information. In both cases, the particulars that must be included in the annual ‘return’ or ‘report’ are prescribed by the regulations. CNR 3.14 describes the contents of the annual return of a small co-operative (and allows for additional matters to be prescribed by local regulations). WA R 16 lists the particulars that are to be included in an annual report to the Registrar. Both the CNR 3.14 and WA R16 require the following particulars:
In addition, CNR 3.14 requires:
Additional details required by WA R16 are:
It is intended the reporting requirements for WA co-operatives will be aligned as closely as possible with those in the co-operatives national law. It is noted the current WA requirements in relation to the timing of the reporting obligation (28 days after the AGM) will be retained. |
N/A |
185 |
Conduct of postal ballots |
CNR 3.9 describes how a postal ballot is to be conducted. The WA regulations do not currently contain any provision in relation to conduct of postal ballots. The WA model rules contain provisions which are a bit different to, but not inconsistent with, CNR 3.9. The following requirements are common to the CNR and the WA Model Rules:
The CNR and the WA Model Rules have the following differences:
Comment is sought from co-operatives in Western Australia as to whether alignment with the CNR would adversely impact their ability to conduct effective postal ballots. It is noted a requirement for a ballot to be ‘independent’ would not preclude a co-operative from conducting its own ballot, but would require the co-operative to ensure any individual with a direct personal interest in the outcome (other than a common interest shared with other members arising from membership) is not involved in supervision of the ballot. |
N/A |
225 |
Small co-operatives -financial statements |
CNR 3.10 lists the requirements of a financial report to members by a small co-operative where there has been no direction by members or the Registrar for the provision of full financial reports. There is currently no equivalent in the WA Regulations. |
N/A |
225 |
Small co-operative - reports where members require audit or review |
CNR 3.11 provides, where members require audit or review, the co-operative must comply with the standards set by the Australian Auditing and Assurance Standards Board. There is currently no equivalent provision in the WA Regulations. |
N/A |
225 |
Small co-operative – disclosures required by notes |
CNR 3.12 describes the disclosures that must be made in the notes to financial statements of a co-operative reporting as a consolidated entity. There is currently no equivalent provision in the WA Regulations. |
N/A |
225 |
Small co-operative – annual report to members |
CNR 3.13 provides that the annual financial report to members must contain the financial statements described in Regulation 3.10. There is currently no equivalent provision in the WA Regulations. |
20 |
255(2) |
Compulsory Loan |
CNL provides a loan may be for a period of seven years, or a lesser period prescribed by the CNR. No period has been prescribed. WA Reg 20 provides for a maximum loan period of 10 years. Comment is sought from WA co-operatives as to whether alignment with the Co-operatives National Law is appropriate. |
N/A |
271(3) |
Application of surplus distribution as a loan to the co-operative |
CNR 3.18 provides, where a distribution of surplus to a member is applied as a loan to the co-operative under the rules of the co-operative, a minimum rate of interest will apply being the cash rate published by the RBA. There is currently no equivalent in the WA Regulations. It is intended the provisions in the WA Act and Regulations with regard to application of a surplus distribution as a loan to the co-operative will be aligned with those in the CNL and CNR. |
25 |
273 |
Acquisition and disposal of assets that require special postal ballots |
WA Reg 25 clauses (1) and (3) prescribe a percentage of 50%. A co-operative must not dispose of or acquire assets that represent greater than that percentage of the total value of the undertaking without holding a special postal ballot of members. The equivalent regulations in the CNR 3.20(1) and (3) prescribe a default percentage of 25%, but provide the rules of a co-operative may increase the percentage up to a maximum of 50%. In the course of previous consultation, WA co-operatives have expressed a preference for retaining the current WA provision. It is intended the agreement of other jurisdictions will be sought to retaining this difference. |
N/A |
|
Requirements to be satisfied before an offer can be made |
CNL 374 provides certain share offers can only be made if approved by the Registrar and members, or in circumstances prescribed by the Regulations. CNR 3.23 describes the circumstances in which an offer can be made without prior approval. There is no equivalent in the WA Regulations. |
35 |
355(1) |
Notice to a dissenting shareholder |
WA Reg 35 provides for notice in a form approved by the Registrar. The equivalent provision in the CNR – CNR 4.3 prescribes a form. |
36 |
357 |
Notice to remaining shareholders |
WA Reg 36 provides for notice in a form approved by the Registrar. The equivalent provision in the CNR – CNR 4.4 prescribes a form. |
37 |
362 |
Out of jurisdiction compromise or arrangement |
WA Reg 37 deals with recognition of the co-operatives laws of other jurisdictions for the purposes of section 338 of the WA Act. The legislation referred to in the regulation is being replaced by the CNL, the regulation will need to be amended accordingly. |
38 |
379 |
Application of the Act and regulations to foreign co-operatives |
WA Reg 38 refers to schedule 8 which contains a list of the provisions in the Act and regulations which apply to participating and non-participating co-operatives. The amendments to the Act, and specifically amendment to the provisions with regard to participating co-operatives, will include application of relevant parts of the Act to participating co-operatives, so the list of provisions at schedule 8 will no longer be required. CNR 5.1 does apply one additional provision to participating co-operatives (requirement to provide particulars to the Registrar on request) and an equivalent provision will need to be added to the WA regulations for consistency. |
N/A |
|
Restrictions on advertising and publicity - shares (participating co-operatives) |
CNR 5.2 provides, where advertising is likely to attract new members from a participating jurisdiction, information must be disclosed. There is no equivalent in the WA Regulations as the provisions in relation to participating co-operatives are new. |
N/A |
|
Restrictions on advertising and publicity - debentures or CCUs (participating co-operatives) |
CNR 5.3 provides, where advertising is likely to attract new investment from a participating jurisdiction, information must be disclosed. There is no equivalent in the WA Regulations as the provisions in relation to participating co-operatives are new. |
N/A |
|
Information to appear on the business and other documents of a participating co-operative |
CNR 5.4 prescribes information that must appear on documents. There is no equivalent in the WA Regulations as the provisions in relation to participating co-operatives are new. |
N?a |
454 |
Contents of Register of co-operatives |
CNR 8.1 prescribes the information that must be included in the register of co-operatives maintained by the Registrar. There is no equivalent provision in the current WA regulations, as the current provision in the Act provides for the register to contain the particulars the Registrar thinks fit (s455) The register must contain the following information:
|
40 |
457 |
Documents available for inspection |
WA Reg 40 contains a list of documents lodged with the Registrar that are not available for inspection/purchase. CNR 8.2 is the equivalent provision and lists documents that are available for inspection. The following documents are specified:
|
41 Sch9 |
4; Sch2 |
Exclusion of holders of prescribed offices |
WA Reg 41 refers to Schedule 9, which includes a list of office holders who are not considered to hold a relevant interest in a share or right to vote for the purposes of Schedule 2 clause 13 to the Act. The Regulation is identical to the equivalent CNR but the Schedule needs to be updated to accurately reflect office holders under the WA Act as amended and the CNL. |
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