Page 775 - Week 03 - Tuesday, 21 March 2017
Historically, cooperatives have been at a comparative disadvantage in some areas when compared to corporations. Whereas the commonwealth has jurisdiction over corporations, the regulation of cooperatives has always been a matter for the states and territories. As a result, cooperatives have had to navigate a disarray of state and territory laws. Corporations, on the other hand, are uniformly governed by the federal Corporations Act 2001. As well as having consistent rules across the country, corporations have had some more favourable financial reporting obligations and have been able to access external funding more easily.
The Co-operatives National Law was developed in 2010 in response to the challenges of different regulatory regimes for cooperatives around Australia. Every state and territory except Queensland and the ACT has now adopted the Co-operatives National Law. With this bill, we will be joining their ranks. This step will modernise our regulatory system and contribute to the creation of a seamless national regulatory regime. The bill adopts the Co-operatives National Law by reference to the model law in the equivalent act in New South Wales. The Co-operatives National Law is set out in an appendix to the New South Wales Co-operatives (Adoption of National Law) Act 2012.
The national law was developed to benefit cooperatives by providing them with: freedom to operate in other jurisdictions without separate registration; a modern legislative environment that simplifies financial and governance obligations; and better access to external capital funding.
A single regulatory regime across Australia will reduce compliance costs for cooperatives that trade across borders by removing the need to register in each jurisdiction. Cooperatives will be able to respond more quickly to interstate market demands, and there will be a more mobile workforce in the cooperative sector. Economies of scale will also be achievable in the oversight and operation of cooperatives when there is a homogeneous national framework.
The new system will deliver modern financial and governance frameworks for ACT cooperatives. Financial reporting obligations of cooperatives, particularly small cooperatives, will be clarified and simplified. This is important as it will allow small cooperatives to compete on a more even playing field against small corporations.
The roles of directors and officers will also be more clearly defined, meaning it will be easier for these individuals to comply with their obligations. The changes bring duties of directors and officers in line with directors’ duties under the Corporations Act 2001.
There are significant penalties for offences relating to good faith obligations, use of position and use of information, for which the ACT Supreme Court may order a person to pay a penalty of up to $200,000. In addition, criminal offences attach to breaches of good faith, use of position and use of information contained under division 4, relating to the duties and liabilities of directors, officers and employees.