The board of directors meet to exercise all the powers of a co-operative that are not required by law or the rules to be exercised by the co-operative members in a general meeting.
The board needs to meet at least once every three months, and it can be a regular meeting or one called for a special purpose, or by one director notifying each other director. The board meeting can be called or held using any technology that the directors agree upon.
The board can do any of its business outside of meetings by circulating papers by hand, fax, email or other method among all the directors. Decisions outside meetings are made by
a majority of directors giving written approval for a resolution. The approved resolution is to be recorded in the minutes of the meetings of the board within 28 days of the approval of the resolution.
A quorum at a board of directors meeting is 50% of the directors, or more if specified in the rules. The member directors must outnumber the non-member directors by at least one, or by more if required by the rules. No decisions can be made at a meeting without a quorum.
Annual General Meeting
The Annual General Meeting (AGM) is an important yearly event where the co-operative’s leaders report to the entire membership on the previous year’s activities and give details of their plans for the coming year. The co-operative’s rules will determine what information the members will receive at the meeting.
The first AGM is to be held within 18 months of registration. In ensuing years, AGMs are to be held within 5 months of the end of the co-operative’s financial year.
The main business activities usually conducted at an AGM are to elect members of the board of directors and other committees, inform members of co-operative activities, appoint the external auditor (if required), amend rules and set the fees of directors. Decisions about such matters as whether to join a co-operative peak body or other inter-co-operative organisation, merge with another co-operative or wind up the co-operative, are also made at an AGM.
At an AGM, large co-operatives must provide the financial report, directors’ report, and auditor’s report for the financial year that ended before the AGM, and provide a report on the state of affairs of the co-operative and allow questions.
Small co-operatives must provide a report on the state of affairs of the co-operative, and provide a directors’ solvency resolution stating the co-operative can and will be able to pay its debts when due and payable; but small co-operatives only need to provide basic minimum financial statements. Other reports must be provided if directed by 5% or more members or the Registrar.
It is essential that members understand, and discuss, the direction the co-operative is taking. Members must be able to ask questions, make comments on management, receive information and feel they are an important part of the co-operative.
The rules must set out the number or percentage of members that is required to make a quorum at an AGM.
The AGM should not be the only time that members meet. General meetings should be held regularly so that members and directors maintain an understanding of the progress towards goals and the direction the co-operative is taking.
General meetings should be held regularly so that members and directors maintain an understanding of the progress towards goals and the direction the co-operative is taking.
20% or more of active members entitled to vote (unless the rules reduce the percentage required) can requisition a meeting. The requisition to hold the meeting must state the reason for the meeting, be signed by the members requesting the meeting, and be filed at the registered office of the co-operative. The board should call and hold the meeting as soon as practicable, and no longer than 63 days from the date of the requisition.
If the board fails to convene the meeting, the requisitioning members may convene the meeting within 91 days of the requisition.
General meetings and special general meetings can be held at other times as required, with 14 days notice given to members. If members are required to vote on a special resolution at the meeting, they must be given at least 21 days notice of the special resolution.
The minutes of each meeting must be entered into the appropriate book by the secretary within 28 days of the meeting. Either the chairperson who attended the meeting or the chairperson of the next meeting must sign the minutes within a reasonable time.
The right to vote is attached to the membership, not the shareholding. Each active member of a co-operative has one vote at a meeting, except when the votes are tied, and the chairperson can cast a deciding vote if permitted under the rules.
Where there is joint membership, the joint members have one vote between them; the rules decide which one is entitled to vote. If shares are held jointly by two or more members and it isn’t a joint membership, each member holding the shares can vote.
The number of votes per member of a co-operative group may be up to 5 if the rules allow.
Voting at a general meeting of a co-operative can either be by a show of hands or a poll. A poll is needed if required by the chairperson or five members who are at the meeting or represented by proxy.
Proxy voting is permitted at general meetings under Co-operatives National Law, if the rules allow it. A person who is a proxy for one or more members must be an active member (or entitled to represent a member of a co-operative group), can only cast one vote in voting by a show of hands but more than one vote in a poll, unless declared otherwise in the rules.
The rules can limit the number of members a person can act as proxy for on the same question.
A co-operative that has a primary activity of operation of a club and holds a club licence under the Liquor Act 2007 can allow, by its rules, for different classes of membership and restrict the voting rights of the different classes.
A decision made by a vote of members is called a resolution. There are two types of resolution: ordinary and special.
An ordinary resolution is passed by a majority of votes at a general meeting or in a postal ballot. A special resolution is passed by a two-thirds majority at a general meeting and in a postal ballot, or by a three-quarters majority in a special postal ballot.
Directors could decide to conduct a postal ballot, if the rules allow, and as prescribed by the rules; particularly if they are concerned that they may not get a quorum at a general meeting.
The board is required to provide a statement of the details of the proposal on which the ballot is to be held and fix dates for forwarding ballots to members and closing the ballot. A returning officer is appointed by the board. The returning officer cannot be a director, but may be the secretary if no returning officer is appointed. The returning officer prepares a roll of the names, addresses and voting rights of members, marks or codes ballot papers as genuine, and delivers the ballot papers and the board’s statement to every member entitled to vote at least 21 days before the date the ballot closes.
Members vote by marking the ballot papers according to the instructions given, and sending the ballot papers to the returning officer within the time specified. The board decides if a postal ballot is to be a secret ballot, and may be sent and returned by mail or electronic transmission.
After a postal ballot is held, the returning officer counts the votes, declares the result, and forwards the declaration to the chairperson. The co-operative notifies the members in writing of the result as soon as practicable, and the chairperson announces the result at the next general meeting. The secretary makes an entry in the minutes to show the number of formal votes cast for and against the proposal, as well as the number of informal votes.
Resolution for a co-operative with less than 50 members
If the rules allow, and a co-operative has less than 50 members, and all the members have signed a document (or several identical documents) which sets out the terms of a resolution and states the members are in favour of the resolution, the resolution is taken to have been passed at a general meeting, and the document is taken to be a minute of the general meeting.
Special postal ballots and special resolutions
A number of decisions need a special postal ballot to be valid. They include:
Changing a distributing co-operative to a non-distributing co-operative, or vice versa.
Changing a co-operative with share capital to a co-operative without share capital, or vice versa.
A special resolution requiring members to lend money or acquire additional shares.
Acquisition of certain assets from, or disposal to, a director, employee or relative.
A special resolution on the requisition of members.
The maximum permissible level of share interest in a co-operative.
Acquisition of a large asset if its purchase would mean the co-operative would commence an activity that is not one of its primary activities.
Disposal of an asset which would substantially impair or stop the co-operative from carrying on a primary activity.
The sale or lease of the undertaking of the co-operative as a going concern.
The sale or lease of a part of the undertaking that relates to the primary activities.
Certain share offers.
A transfer of engagements.
A transfer of incorporation.
A compromise or arrangement between a co-operative and its members.
A members’ voluntary winding up.
28 days notice must be given before a special postal ballot. Each member receives a disclosure statement approved by the Registrar which explains the financial position of the co-operative, the interests of the directors in the proposal, any compensation or consideration which is to be paid to officers or members in connection with the proposal and any other matters as directed by the Registrar. The Registrar may also require an approved independent report to accompany the disclosure statement.
A special resolution is passed by a two-thirds majority of members at a general meeting or in a postal ballot (if permitted in the rules and law). An exception is a special postal ballot, which requires a three-quarters majority and must be registered with the Registrar before it takes effect.
For a special resolution, 21 days notice must be given to members; the notice must state the special resolution that is intended to be proposed, reasons for it, and the consequences of it being passed. If passed, the special resolution takes effect immediately, unless it is to amend the rules.
Unless the rules state a lesser percentage, 20% of active voting members can requisition a postal ballot or special postal ballot be held for a special resolution. The requisition must state the resolution, the reasons for making it, and the effect of it. The requisition must be signed by the requisitioning members, and be served on the co-operative by being filed at its registered office. The ballot must be conducted within two months of the requisition being served. If the special resolution for which the requisitioned postal ballot is conducted is not passed, the co-operative may recover the expenses of the postal ballot from the members who requisitioned it.