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Some people are not allowed to direct or manage a cooperative including:
These persons cannot be a director or be involved in the management of a cooperative within five years of being convicted, or released from prison if given a prison sentence.
The directors of cooperatives frequently act as the managers as well. A director in a small cooperative often deals with all aspects of the business, such as buying or leasing premises, doing the banking, ordering goods and services, operating retail outlets, preparing proper accounts and tax returns, paying suppliers and organising insurance.
In larger cooperatives, employees usually manage the day to day work while the directors focus on the long-term business and financial planning, assessing the performance aspects of the business, appointing executives, maintaining good employee relations, researching new opportunities and deciding how much of the profit to distribute among shareholders.
Since a cooperative is a legal 'person', it imposes obligations and duties on its directors and officers. The Tasmanian Cooperatives Act 1999 and the Commonwealth Corporations Act 2001 regulate these obligations and duties. These duties include:
Acting honestly - Theft or misuse of cooperative funds and property is a serious offence, as is taking decisions knowing they could be harmful to the interests of the cooperative.
Acting with care and diligence - this includes making sure that you are adequately informed (get professional advice if necessary), are active at Board meetings in response to directors' proposals and the effects on the cooperative, and aware of management direction.
Not disclosing or misusing inside or confidential information - Officers and employees (or former officers and employees) must not use their position to harm the cooperative, or to gain advantage for themselves or someone else; a director must also disclose any conflict between personal interest and duty as a director. If such a conflict of interest occurs, unless the Board agrees otherwise, the director must not be present when the matter is discussed and decided by the Board.
Keeping proper books and records - Adequate records of accounts must be kept so the business can be properly audited. You must include in your accounts provision for bad and doubtful debts and the valuation of non-current assets. You must also include a director's report containing 'true and fair' and solvency statements attached to all financial statements prepared for members. It is an offence to falsify accounts, accounting records, prescribed documents, or registers.
Directors are also responsible for the following registers:
Dealing with debt - leaving debts owing to non-members if a cooperative fails, is viewed as a failure of duty. You should seek professional advice if the cooperative is finding it difficult to pay its way. Further debt must not be incurred if the directors have reason to believe the cooperative is already insolvent. Voluntary administration may allow the cooperative to restructure its affairs and continue trading. Alternatively, it may have to be wound up. The records and accounts of the cooperative and a statement about the cooperative's business must be made available to an external administrator.
