Closing a co-operative

A co-operative may be wound up voluntarily by members on the passing of a special resolution by a special postal ballot in favour of voluntarily winding up. The ballot may also appoint one or more liquidators to wind up the co-operative’s affairs and distribute its assets, and set the remuneration to be paid to the liquidator. The Registrar may exempt a co-operative from compliance. A members’ voluntary winding up starts when the result of the special postal ballot is noted in the minutes by the secretary of the co-operative. A co-operative may also be wound up by a creditors’ voluntary winding up.

The members of the co-operative have limited liability. A member of a co-operative may be liable for any charges payable to the co-operative in accordance with its rules; a member of a co-operative with share capital is also liable to the co-operative for the amount remaining unpaid on the shares held. There are special rules for the liability of members who have cancelled shares, or where the co-operative has purchased the share or repaid some or all of its value to the member within two years of the winding up.

The rules of a non-distributing co-operative provide for the ways in which surplus property is to be distributed when the co-operative is wound up. Members only receive the nominal value of shares (if any) at winding up.

Under Co-operatives National Law, the Registrar may wind up a co-operative if:

  • there are not enough members (unless the Registrar approves fewer members)
  • the co-operative has not started business within a year of registration
  • the co-operative suspends business for more than six months
  • the registration was obtained by mistake or fraud
  • the co-operative exists for an illegal purpose
  • the co-operative has wilfully violated the Act or its rules
  • the Registrar has sent notice that the rules do not contain active membership provisions and the board has not since complied
  • there are, and have been for one month, insufficient directors to form a quorum
  • an inquiry has found it to be in the interests of members or creditors or the public to wind it up
  • the co-operative was formed for a fixed time or event and the Registrar certifies the fixed duration has ended or the event has occurred.

A winding up on a certificate of the Registrar begins when the certificate is given. The Registrar may appoint a liquidator of the co-operative. When the winding up process is complete, the Registrar de-registers the co-operative.

A co-operative may also be deregistered by the Supreme Court in the same way, and for the same reasons, as a company under the Corporations Act.