Part 2 – Australian co-operative types and active membership

Part 2 examines the nature of the co-operative legal model and provides some comparative analysis of co-operatives and companies under Australian law. It describes the different types of co-operative that might be formed under the CNL including the limitations on non-distributing co-operatives and the impact of these limitations on fundraising to inform the choice of legal model. This Part also closely examines and explains the requirement under Australian law for co-operatives to have active membership requirements in their rules and includes guidance for co-operatives on how to draft this requirement in the form of a ‘SMART’ active membership clause.

Co-operatives are autonomous legal entities formed by people to serve their needs or the needs of their community. They are democratically controlled and operate on the basis of open membership and economic participation.

The CNL enables the incorporation of two categories of co-operative.

The reasons for choosing a distributing or non-distributing co-operative form will differ between communities.

A defining feature of Australian co-operatives is the mandatory requirement for an express active membership requirement in its rules.

The CNL describes the general nature of an active membership requirement.  The Registrar of Co-operatives provides some guidance on how to draft an active membership rule.

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