Board of directors |
The board of directors manages the business of the cooperative. The number of directors depends on the size of the cooperative and its activities. Usually there are at least three directors.
The cooperative decides what positions form part of the board, but there must be a designated chair. Other positions such as treasurer or deputy chair are optional.
The powers and duties of the directors are regulated by both the rules of the cooperative and the Act.
The majority of directors must be members of the cooperative. However, an employee or another qualified person may become a director. They are called independent directors. Only member directors can appoint independent directors.
Directors´ responsibilities
Not all responsibilities are specified in the Act, but the broad list below outlines their general responsibilities. Penalties apply for breaking the law.
Directors must:
- develop basic guidelines for the control of business activities
- appoint, supervise and remove employees, and determine their pay and position description
- call special meetings when necessary or when members request
- approve general business arrangements, such as entering into contracts with distributors or suppliers
- settle arrangements for handling funds and designate people who may sign cheques
- borrow funds for any legal and approved purpose
- maintain an adequate bookkeeping system, and organise regular financial reports and audits, and have someone keep board meeting minutes
- ensure the organisation establishes and maintains systems of internal control, and supervision and safe custody of appropriate documents
- exercise prudent decision-making regarding the cooperative´s debt level
- be loyal and honest, and act in good faith
- declare any interest in proposed contracts
- exercise a reasonable degree of care and diligence
- ensure the cooperative pays its debts on time to prevent insolvent trading.
Directors´ responsibilities to members include to:
- serve to the best of their ability and capacity
- impartially represent members´ interests
- select appropriate staff and oversee activities without unnecessary interference
- adopt policies and procedures along sound business lines, after studying and analysing available facts and ensuring they are compatible with the organisation´s objectives
- use adequate checks to ensure that employed staff and voluntary officers, the secretary, manager and treasurer conform to cooperative policies
- study operating results to determine whether they should continue, change or drop policies
- take active steps to fully inform members of the organisation´s activities and problems. They should also take care with individual members´ private and confidential business
- provide high-quality, reliable service that puts members´ interests first.
Appointing the board
The rules of the cooperative describe the process for electing members of the board of directors.
When electing members to the board, consider the directors´ duties and determine whether the members who wish to be elected are capable of performing the role.
The chair of the board may be elected by the board or at a general meeting of the cooperative. The cooperative´s rules determine how the chair is elected, holds office, retires or is removed from office.
Meetings of the board
A single board member can call a board meeting by giving individual notice to every other board member. Meetings may occur in person or by another means such as a teleconference.
To obtain a quorum for board meetings, at least half the number of directors must be present, or a greater number if specified in the rules. Member directors must outnumber independent directors by at least one, or as stated in the rules.
Removing a member of the board
The rules of the cooperative determine how a member of the board can be removed from or vacate office.
Directors must vacate office according to the rules, or if:
- they are disqualified under section 208 of the Act
- they do not attend three consecutive ordinary meetings of the board
- they resign in writing
- a special resolution removes them from office
- they are no longer qualified
- an administrator of the cooperative´s affairs is appointed under the Act.
Removing or changing directors and officers
The cooperative must notify us if it appoints or removes directors and officers, or if they resign.
Submit Cooperatives Form 14 - Notice of appointment or cessation of appointment of directors and officers (PDF, 225 KB) to us within 28 days of the appointment, or of the director or officer leaving office.
The cooperative can remove an entire board by special resolution if they are being removed because they were collectively responsible for a decision. Otherwise the cooperative should consider separate special resolutions for each director.
Last reviewed 09/12/2011 |
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