> Co-operatives  > Operating as a co-operative  > Active membership

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• Rules
• Primary activity
• Utilisation of activity
• Regular subscription
• Inactive members

Members must be actively involved with a co-operative for continued membership.

Rules

The board of directors must ensure that the rules contain active membership provisions. (s118)

These specify which of the activities of the co-operative are primary activities, and the manner and extent to which a member is required to maintain a relationship or arrangement with the co-operative in connection with a primary activity. (s116)

Voting by active members
When the rules do not contain active membership provisions, the only members who are eligible to vote on an active membership resolution are those who would be active members if the resolution had already taken effect. (s123)

Primary activity

A co-operative must have at least one primary activity. The activity should contribute to at least 10% of the co-operative's turnover, income, expenses, surplus, or business. (s117, Reg 7)

The primary activity must constitute the basic purpose for which the co-operative exists.

A member's use or support of an activity should be reasonable, when considered in relation to the activities as a whole, in order to retain the right to be a member, including the right to vote. (s119)

Utilisation of activity

A trading co-operative must have provisions that require a member to utilise an activity in connection with a primary activity. (s120) For example, a member of an agricultural trading co-operative may be required to supply (the manner of the relationship or arrangement) so many tonnes (the extent of the relationship or arrangement) of produce to the co-operative in each financial year for marketing by the co-operative.

CBS may consider approving an exception to the active membership provisions, e.g. in the event of:

• cyclic replanting;
  
• a natural disaster; or
  
• something else beyond a member's control.

Any exception would only be granted for a limited period and would need to be specified in the rules. The member would be required to pay a regular subscription during the period of the exception calculated, e.g. on a similar basis to that allowed for a non-trading co-operative - regular subscription). (s120) See page 18 of policy pdf.

Regular subscription

A non-trading co-operative may have provisions that require the payment of a regular subscription by a member to be applied in connection with a primary activity. (s121)

Inactive members

Cancellation of membership and forfeiture of shares
If a member's whereabouts have been unknown for three years or the person has not been an active member at any time during three years, the membership must to be cancelled and any shares held must be forfeited. A shorter period than three years may be provided for in a co-operative's rules. (s126, 127)

The board may defer cancellation of membership for a period of up to 12 months if of the opinion that there were unusual circumstances preventing the member from fulfilling their obligations. (s129)

The board must give at least 28 days notice to the member of the intention to cancel membership, unless the whereabouts are unknown or the amount to be repaid is not more than $50. The Supreme Court may order that membership should not be cancelled if satisfied that cancellation would be unreasonable. (s131, 132)

Repayment of amounts due
When membership is cancelled, any amounts due must be paid to the person within 12 months. However, if it would adversely affect the co-operative's financial position, or the board and the former member agree, the liability may be converted to debt, or appropriated as a donation to the co-operative but only if the former member consents in writing. Any amounts converted to debt must be repaid by the co-operative within 10 years (or any shorter period required by the rules). (s133, 135)

Entitlements of former members of trading co-operatives
If a former member's shares have been forfeited, the person is to be regarded as the holder of the shares. This applies for certain purposes that occur within five years after forfeiture, including for:

• purchase of shares pursuant to a takeover offer,
  
• when the co-operative becomes registered as a company,
  
• a distribution of surplus in a winding up;
  
• a merger. (s138, 139)

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