Winding Up a Co-Operative
Co-Operatives have been around for many years and periodically they outlive their usefulness. But the liquidation of a Co-Operative is somewhat different to the liquidation of a company.
For a start, the liquidation of a Co-Operative is not guided by the Corporations Act. There are a whole set of different rules that apply to co-operatives in different states. So the liquidation is based on the Co-operatives Acts in those various states.
As an example, we have outlined below the process for NSW.
- A Disclosure Statement is sent to the Registry for approval. Once the draft is approved, then the original is lodged with the Registry.
- A Declaration of Solvency is lodged with the Registry.
- Within 5 weeks of the lodgement of the Declaration, a special postal ballot is held. A notice must be sent to all members at least 21 days before holding the ballot. If the co-operative prefers a meeting of members instead, the board of directors must apply for an exemption.
- Once the ballot has been conducted and all votes are counted, a prescribed special resolution form must be lodged with the Registry.
After Appointment the liquidator lodges a number of other Forms with The Registry.
Often a Co-Operative is also a not-for-profit organisation. The co-operative rules will specify that on winding up, any surplus assets are to go to a specified not-for-profit organization. (Because it’s not-for-profit, surplus assets cannot go back to members as a “return”).
At Insolvency Solutions Group we have conducted the liquidation of many Co-Operatives so if you need further advice please give us a call.
If you would like to learn more about Liquidation, please access our full Liquidation guide created by Insolvency Solutions Group’s specialists explaining this in detail.