The directors, other officers and employees are required to be honest and act in good faith, and:
not to use information acquired in their duties, nor to use their position, recklessly or with intent for personal gain or for personal or indirect advantage or to the detriment of the cooperative
to declare the nature and extent of any interest in proposed or current contracts
to exercise a reasonable degree of care and diligence
to make every business judgement in good faith for a proper purpose, without a material personal interest, having informed themselves to an extent they feel is appropriate, and for what they believe to be the best interests of the co-operative.
Criminal penalties of up to $200,000 or five years in prison, or both, may apply for serious breaches of duties.
Persons not permitted to be directors
People who are not permitted to be directors include:
the auditor of the co-operative and any employer, employee or partner of the auditor
a person who has been convicted of a criminal offence
a person disqualified from managing corporations under the Corporations Act 2001
a person disqualified from managing co-operatives under co-operatives law during the first five years after the conviction or release from prison.
Penalties of up to $24,000 or two years’ imprisonment, or both, may apply.
Concealment, destruction, mutilation or falsification
Any current or former officer, employee or member who engages in conduct that results in the concealment, destruction, mutilation or falsification of any securities of, or belonging to, the cooperative, or any books affecting or relating to affairs of the co-operative, or any record required to be sent, kept or delivered under Co-operatives National Law is guilty of an offence and may be penalised $10,000 or imprisoned for two years, or both.
Falsification and failure to record
Similar penalties apply to any current or former officer, employee or member who is guilty of falsification of books or computerised records, when the person knows they will be false or misleading, or who fails to record or store information when they have a duty to, with the intent to falsify an entry or render false or misleading information affecting or relating to affairs of a co-operative. It is a defence if the person proves that they acted honestly.
Fraud or misappropriation
A person may not, by false representation or imposition, obtain possession of property of a cooperative or, if property of a co-operative is in his possession, withhold or misapply it or wilfully apply part of it to purposes not authorised by the rules or Law. A penalty of up to $6,000 applies.
Offering or paying commission
A person must not offer or pay commission, fee or reward to an officer of a co-operative in relation to a transaction or proposed transaction between the person and the co-operative. The officer must not accept such a commission, fee or reward. A penalty of up to $6,000 or 6 months imprisonment, or both, applies. An officer found guilty is also liable to pay the co-operative double the value or amount of the commission, fee or reward.
False or misleading statements
False or misleading statements in relation to an application, request, or demand for money made to or from a co-operative can attract a penalty of up to $6,000 or 6 months imprisonment, or both. A person must not knowingly give false or misleading information or statements in a material particular, or provide information or statements by another person knowing it to be false or misleading in a material particular, to a co-operative or its officer, employee or agent.
A person must not make or authorise the making of a statement in a document for the purposes of Co-operatives National Law or filed with the Registrar knowing it to be false or misleading in a material particular, or omit, or authorise the omission of, anything knowing that the omission makes the document false or misleading in a material particular.
Notice of conviction for an offence
If a co-operative or officer is convicted of an offence against the Co-operatives National Law or corresponding law, the co-operative must give each member notice of the conviction, the penalty imposed and the nature of the offence within 28 days of the conviction.