Club Rules – CNL

Club Rules – CNL

 

Dear Member

The rules of the club cover membership, general meetings, resolutions, board of directors, rules,  administrative matters, accounting & financial matters and winding up. These rules are fundamentally the same for all co-operatives.

By-laws cover the day to day activities of the co-operative such as slipways, work berths, moorings, safety, etc. and are unique to each co-operative.

The Registrar of Co-operatives over several years lobbied to equalise the differences between the operation of a Company and the operational limitations of a Co-operative without changing the fundamentals of what a co-operative is.  To achieve this a new national co-operative law was introduced in 2012 replacing the individual State legislation.

The members at the February 2015 SGM moved that a subcommittee be formed to evaluate and report back to the Board on the options with the introduction of the new law.  The recommendation communicated to members was to move to the new rules under the Co-operative National Law 2012 (CNL).

To move the club from its existing rules under the old Co-operative Act 1992 to the new rules under the CNL the drafts of the new rules are being circulated to members for review, comment and feedback.

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Process used to create the first draft:

  • The model rules issued by the Registrar are a template and into this template information has been added, changed or deleted to build up model rules for our co-operative. The Registrar has issued supporting documentation to help  co-operatives through this process.
  • The aim of the adoption of the new model rules is to do so with minimal changes, while at the same time maintaining what current rules we have that are important to our co-operative’s culture.
  • Members feedback received will be included in the following drafts and all written feedback received will receive a separate response.

Process for eventual adoption of new rules:

  • Members are invited to send their written feedback on the draft rules to paqclub@tpg.com.au and then meetings and/or correspondence with members will be had.
  • It is envisaged multiple drafts will then be circulated and a repeat of the feedback process will occur. This process will deliver a document that has enabled all members and equal chance to comment on and address any rule.
  • The final draft will then be sent to the Co-operative Registrar for pre-approval (a registrar requirement)
  • To finally adopt the new model rules a successful special resolution passed by the members will be required.

Update on differences

It is important that members read through these new rules and where they feel a rule needs review or has a concern to write to the Secretary. It is also important that members understand the process that has been used to create these new rules. A template was supplied by the Registrar of Co-operatives based on the new Co-operative National Law (CNL). With this template was a set of colour coded instructions where you insert, delete or choose from multiple options. Where an insert was required it was usually self-explanatory (like Name of co-op) or has been taken from the old rules (eg primary activity of co-op) and cut and pasted; a deletion is usually the extra notes the Registrar has supplied though the document which can be removed from the draft document; and where you need to choose usually two sets of wording have been supplied in the template and the one relevant to our co-op has been selected.

There has been no exercise to take every old rule and transfer it to the new rules. This is not possible because the Co-operative Act 1992 and the CNL 2012 are two completely different documents. The aim and focus, as communicated to members when this process started, has been to have minimal changes to the CNL rules template and only change where it was necessary to transfer the culture of the PAC. Examples of culture changes are election of executive management and Audit (refer below).

The major changes between the old Act and the CNL are:

  • The CNL is written in a contemporary or modern style minimalising the wording required in the new rules
  • Disputes previously could only be between members and now can also be between members and directors or the co-op. This culture has not been transferred as it is recognised in today’s environment open management and accountability is important. The result of this change is your directors now are accountable for more risk
  • The new CNL allows for a non-member to now be a director, provided always that the majority of directors must be members.
  • The new CNL allows for a CEO to be appointed, again if the members decided
  • The new CNL allows for executive management to be appointed by the board not the members. This has been changed to reflect the current culture where the members elect the executive management (president, secretary, treasurer)
  • As a small co-op an audit is not required under the CNL. This has been changed in this first draft of the rules to reflect the current culture which requires an audit. Members in formalising this draft of the rules or in any future year can at any time elect not to have an audit and select a review instead.

The main differences between the new draft rules circulated to the template rules are:

  • The clubs current process in becoming a member and completing an application form to go onto a waiting list was not in the template rules and has been added
  • Life members has been included in the new draft rules.

Differences between the old rules and the new draft rules

  • Definitions are in the CNL and have not been copied not as in the old rules copied from the Act and replicated into the old rules
  • Similarly sections of the old Act could be found in the old club rules. The CNL template rules reference sections of the CNL relevant to each rule removing the requirement to copy the CNL words again into the new rules.
  • The process of appointment of life members has been moved to the by-laws
  • Members membership shares have been identified separately to all other shares
  • Previously sections of the rules which had no impact on the current operations of the co-op were deleted. In this draft of the new rules these sections remain and continue to have no impact on the operation but minimise the need for updating the rules when future registrar changes occur
  • Fines use to be a fixed amount in the old rules and required a rule change as this amount changed in the Regulations. Now fines just reference to the Regulations not requiring a rule change each time the Registrar amends these amounts.
  • Standing orders at general meetings are not in the new CNL or Rules. The clubs existing standing orders will be transferred to the clubs by-laws.
  • Suspension of facility, in the old rules, is not in the CNL or template rules and will be transferred to the clubs by-laws

What has changed on the CNL Rules from the first draft outlined by the Registrars template.

  • The purpose and active member clauses have been transferred from the old rules to the new CNL draft Rules.
  • For old rules transferred to the new CNL draft rules that referred to ‘society’ have been changed to ‘co-operative’
  • The Clubs current Rules require an audit of the accounts annually. The New CNL gives a small co-op like the PAC the option to not be audited every year. The new CNL Rule in relation to auditing remain the same as the current Rule and it is for the members at a future meeting to decide if this should change.
  • Some processes like the electing of directors has been transferred across to the CNL rules keeping the current culture used by the Club.
  • There was member feedback on clauses to be deleted. The Board announced at the beginning of this process that the aim is to transition to the new CNL rules using the Registrars Template with minimal changes.  There is no template provided by the Registrar to delete rules and the flow on impact of such on the CNL Regulations and or the Law and that may only be known when the circumstance occurs in the future.  If a Rule is to be deleted then that is for the members to decide at a future meeting.  What is clear at this time is none of the Clauses that have been requested to be deleted have any impact on the current operation of your co-operative.  That is, they are merely identifying the process or procedure to do something.  Until the Members decide to make a change these Rules lie dormant within our Rules.  The benefit of this is that with the new CNL being introduced there are sure to be Registrar updates and these updates will be easily integrated as we have made minimal changes.
  • The Registrars template allowed for the appointment of a CEO by the Board. This was changed to be ‘with the agreement of members’.  The Board agrees that any such change to the workings of the Co-operative must be driven by the members not the board.

These above lists are not meant to be a complete list but a guide to the major differences and approaches that have been taken in the process of creating this first draft of the new rules.

A member may ask has any rule changed? The answer to this is that all the rules have changed because this is a new set of rules under the CNL, but the principals, controlled by the rules – membership, general meetings, board of directors, accounting and finance, winding-up, etc., remain the same in the old and new rules, for us and all other co-operatives.

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Changes included in Drafts

All changes are in mark-up and indicated by a vertical line in the left margin.

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Changes between the fifth and sixth drafts

Rule 3A copied from the old club rules was moved by the registrar from Rule 4 to its own Rule heading now 3A.

After enquiries with the Registrar, the Registrar advised the Club that its old Rule 18 (now rule 4 in the CNL Rules) was not as the Registrar had on file.  The Club’s earliest electronic copy of the Rules is 2002 and there has been no change to the Rule 18 since the date of Registration and from 2002 Rule 18 has been different to Rule 18 as filed with the Registrar in 2000.

Rule 18 was required to have two parts under the old Act. Part 1 (which was missing from the Clubs copy since 2002) is to state the primary activity of the Club.  Part 2 is to state the Active Membership Requirements.

Rule 18 as provided by the Registrar has been updated for references and definitions to the new Law and transferred to the new CNL Rules as Rule 4.  Rule 18 from the old Rules must remain the same in the new CNL Rules.  Any change to the fundamentals of this rule require approval from the Registrar prior to presentation to the Members for voting or adoption.  This new Rule 4 has been sent to the Registrar to confirm that the fundamentals have remained as per the registered copy of Rule 18 and that no further approval would be required.

Rule 6 was expanded by the Registrar and these changes have been incorporated into the sixth draft. This rule also had reference to the CPI and this has been removed as if the CPI is above 5% member approval would still be required.

Rule 53A has also been included by the Registrar and comes into play if ever the Board of directors fell below the number required for a quorum.  Without this rule the Board would be unable to act in any capacity and there is no other mechanism in the Rules to correct that position.

Rule 58(1) has also been revised by the Registrar consolidating that Rule changes under the new CNL can only be by the members or by the Board in special circumstances as the Law requires. These changes have been adopted in the sixth draft.

A new table of contents has been generated and other changes are self-explanatory or grammatical in nature.

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Changes between the sixth and seven drafts

In the seventh draft the bankruptcy and mental incapacity clause has been updated. While this clause was in the PAC Rules, since originally drafted, it has gone unnoticed. This clause would result in a member losing their membership status. After comments from members were received, the committee and Board agreed the wording of this clause was not consistent with the spirit of our club. Also, feedback from the Registrar suggested the movement of the life Membership provision into its own clause.

Changes between the seven and eighth drafts

The ‘Table of Contents’ has been updated. R33 has been updated to include what is the current ordinary business of the annual general meeting.  R64 has been changed to reflect the current process of payment approval and R65, as a small co-op, we have a choice to appoint an auditor. As mentioned in earlier drafts the Club currently has its accounts audited and this status remains with the change to these new rules, although there is no legal requirement.  It is then for members in the future to decide if they would want to change from this position.

Changes between the eighth and final draft

The Club has received the approval of the Registrar, with one addition – refer below This is now the final draft for presentation to members to adopt or reject.

The change, underlined in the below rule, focused on the Active Membership Provision Requirement in Clause 4(2). This was to cover not only the year a member joined but the ongoing process of membership renewal on an annual basis.

 (2) Active membership requirements

A member must pay the regular subscription to establish and maintain active membership of the co-operative, but a member who is a life member shall be deemed to be an active member without payment of such fee. 

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