Co-operatives
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New uniform laws for co-operatives, known as the Co-operatives National Law (CNL), are proposed to commence in Victoria and New South Wales in March 2014 with other States and Territories to follow. You can read more about the Australian Uniform Co-operatives Legislative Agreement which outlines the introduction and operation of the CNL here.
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A co-operative is a type of incorporated legal structure that may be suitable for some Victorian not-for-profit organisations (see Choosing the right legal structure).
This page provides information on setting up (incorporating) a group as a co-operative in Victoria. The information on this website is intended as a guide only, and is not legal advice. If you or your organisation has a specific legal issue, you should seek legal advice before making a decision about what to do.
*NOTE* There are new laws regulating charities and a new regulator for charities - the Australian Charities and Not-for-profits Commission (ACNC). If your group is registered as a charity, or plans to register as a charity, these changes will affect your group. For more information go to the PilchConnect information page on the ACNC here.
What is a co-operative?
A co-operative is a group of people that has formed to benefit its own members (rather than the broader community) through its activities. For example, its purpose may be to provide particular goods or services to its own members or to pursue community-based objectives that will benefit all its members equally.
There are 7 main principles by which cooperatives run, which are:
- voluntary and open membership
- democratic member control
- member economic participation
- autonomy and independence
- education, training and information for members and others
- co-operation among cooperatives
- concern for the community
What laws regulate co-operatives?
In Victoria, a co-operative can be (but does not have to be) incorporated under the Co-operatives Act 1996 (Vic). This legislation, which is administered by Consumer Affairs Victoria (CAV) requires equal, active and open participation by all the members of the co-operative.
Certain provisions of the Commonwealth Corporations Act 2001 (Cth) may apply to some co-operatives, in limited cases as set out in the Co-operatives Act
If a co-operative is not incorporated, then it is essentially an unincorporated group.
If a co-operative is incorporated under Victoria's Co-operatives Act 1996, then (similarly to a company and an incorporated association) it has its own legal personality that is separate from the personalities of its members. A co-operative therefore has rights, responsibilities and liabilities of its own and its members have limited liability. And because an incorporated co-operative is a legal entity in its own right, it can also outlive its members (that is, it can continue even if members die or leave, so long as it always has at least five members).
Are all types of co-operatives suitable for not-for-profit groups?
No. Co-operatives can be structured so that the profits are put back into the co-operative or distributed to members. Only co-operatives that are structured so that the profits are put back into the co-operative itself (rather than distributed to members) are suitable for not-for-profit groups (for more information about the term 'not-for-profit', see Getting Started > Before you Start).
How do we set up a co-operative in Victoria?
Before setting up as a co-operative, make sure it is the most appropriate legal structure for your organisation. A co-operative is not the most common legal structure so you should be sure of why it best suits the particular needs of your group. The principles of co-operatives require that all members be involved and this sometimes causes difficulties if an organisation grows.
There are resources to help co-operatives to set up on CAV's website. It includes a Guide to Forming and Running a Co-operative. Links to these resources have been included in the Related Resources below.
Consumer Affairs Victoria (CAV) - incorporating regulator
Australian Charities and Not-for-Profit Commission - Charitable regulator