Role of the board of directors for a co-operative

The board of directors is a panel of people elected to represent the members of a co-operative. They are in charge of the co-operative’s daily business and make most of the decisions for the general operation of the co-operative.

The board has certain obligations and duties under the Co-operatives National Law (Queensland), which are consistent with the requirements under the Corporations Act 2001.

Directors

The directors each play a significant role in running the co-operative. Think about how many directors you will need to keep operations running smoothly. A co-operative must have at least 3 directors.

Positions

The board is made up of directors. Directors agree among themselves who will be the chairperson and deputy chairperson. Some directors may have other roles.

A secretary or treasurer does not have to be a director.

You need to decide what positions form part of the board. You must have a chairperson (‘the chair’) and the other positions are optional. They might include:

• deputy chairperson
• secretary
• treasurer.

Non-member directors

Usually, the directors will need to be members of your co-operative. As an exception, you can choose to elect an employee or another qualified person to be a director. They become your non-member directors. Only the member directors can appoint a non-member director.

Make sure that a non-member director is qualified and experienced before you elect them. The election process must be specified in your rules.

Responsibilities

Your directors must show due care and diligence in undertaking their duties. They need to operate according to your rules and the law.

Penalties apply for breaking the law.

Daily business

The board must take ultimate charge of all business activities. They will need to act in good faith in:

• appointing, supervising and removing employees
• determining pay levels for employees
• creating position descriptions
• establishing and maintaining systems of internal control
• making sure that important documents are kept safe and secure
• entering into contracts with distributors or suppliers
• planning the handling of funds, such as assigning officers to sign cheques.

Financial affairs

The directors must also show care in managing your co-operative's finances including when:

• borrowing funds for any legal and approved purpose
• maintaining an adequate bookkeeping system
• organising financial reports and audits
• making decisions about debt level
• declaring if they have a personal interest in a proposed contract
• paying any debts on time to prevent insolvent trading.

Meeting arrangements

The directors need to make sure that the cooperative holds its meetings as needed. They must:

• call an annual general meeting (AGM)
• send their annual reports to all members before the AGM
• call special meetings when necessary or when members request them
• appoint someone to take the minutes at all meetings (board meetings or general meetings).

Members’ best interests

Directors must put members’ interests first. This means they must:

• serve to the best of their ability and capacity
• impartially represent members´ interests
• select appropriate staff
• not overly interfere with their staff’s duties
• use sound judgement in adopting policies, making sure to thoroughly analyse the options
• make sure that employees and volunteers follow the co-operative’s policies
• study operating results to check that they’re working
• change or abandon policies that don’t work
• fully inform members of all activities, including any problems
• take care with each individual member’s private business.

Elections

Your rules must set out how to elect your board of directors.

Depending on your rules, the chairperson may be elected:

• by the board
• at a general meeting.

You must fill out a notice of appointment or cessation of directors and officers form and lodge the form with us, within 28 days of appointing new directors or officers.

Board meetings

Any board member can call a board meeting. To do this, they must give individual notice to every other board member. Meetings may occur in person or by another means, such as a teleconference.

Your rules must set out how many board members you need to form a quorum. The law requires that a quorum:

• is at least half your total number of directors
• needs to have more member directors present than non-member directors.

Resignation and dismissal

Your rules must set out how a member of the board can:

• resign
• be removed from office.

Directors must vacate office if:

• they resign in writing
• they do not attend 3 consecutive board meetings
• they have been convicted of certain crimes within the past 5 years
• they’ve been in jail for these crimes at any stage in the past 5 years
• their qualifications are no longer current
• we appoint an administrator
• the members pass an ordinary resolution to remove them from office.

You must fill out a notice of appointment or cessation of directors and officers form and lodge the form with us, within 28 days of their resignation or dismissal.

Dismissing the entire board

You can only remove an entire board by ordinary resolution if they were collectively responsible for a specific decision.

Otherwise, you will need separate special resolutions for each director.

Learn more about the roles and duties of directors and officers.