A Cooperative is a legal structure for a business which brings together multiple people or businesses as shareholders, who own and control the Cooperative and where benefits are derived and distributed equitably back to shareholders on the basis of use (how much you spend with the Co-op’s Suppliers).
Shareholders own the Cooperative, have a say in how its run and share in its profits.
Some of New Zealand’s largest companies are Co-operatives. Fonterra, Southern Cross Health Society, Foodstuffs, Farmlands. the Cooperative Bank and FMG (just to name a few).
The Cooperative business model is well proven to bring businesses or individuals together to gain the benefits of using their combined buying power to negotiate better deals for members.
The amount to join the Cooperative is a one-off price of $1,000 for 1,000 shares, and there is no obligation to pay any additional fee each year.
That said, to legally remain a Cooperative company shareholder, you will need to have at least one transaction with a cooperative supplier each year. The Board does have the ability to set a minimum purchase requirement to be a member, but at the present time, this has not been set.
Combined Building Supplies Cooperative is focused on the Construction sector across New Zealand.
To become a “Transacting Shareholder” (member) you need to be involved in building or some other aspect of the construction industry.
Our members include: Builders (both residential and commercial, new builds or renovations), Electricians, Plumbers, Painters, Plasterers, Property Developers and Landscape Gardeners.
You might be a sole trader, partnership or a limited liability company. There is no restriction in this manner.
Each member needs to be approved to make sure they are a valid ‘Transacting Shareholder’ (ie, in the building industry, buying materials). Once we have your application, we review it, and if we have any questions, we’ll come back to you.
Share applications are put up for approval to the CBS Co-op Board every week. Once your application is approved, we go through the process of issuing the shares to you.
Generally, it takes less than two weeks from submitting an application to receive your welcome pack.
Take a look on the “Suppliers” page of our website cbscoop.co.nz/suppliers which sets out a list of our current suppliers, and some information on those suppliers. We are continuing to add suppliers and will be updating regularly with details of new suppliers.
We give our suppliers a list of our members so that they are able to apply the discounts to your account. We do recommend, just to make sure, that you do tell the supplier you are a CBS Co-op member when ordering or setting up the account.
In addition, we will issue you with a Share Certificate (with a unique membership number) and Membership Card that you can use when setting up accounts with Suppliers.
There are two ways of getting the benefit from your Cooperative shareholding:
- The preferential pricing (up front discount) we have negotiated for you; and
- The end-of-year rebate out of the profits of the Cooperative.
To get the greatest benefit from your membership, it is important that you pay your accounts with the suppliers on time. This maximises the rebates that the cooperative – and therefore you – will receive.
We want to be clear – it is not mandatory for you to be exclusive to our suppliers in ordering your materials, but, in essence, the more you support the suppliers, the greater the benefits you will receive.
CBS Co-op’s end of financial year occurs on 31 March. Shortly after this date, the accounts are prepared and an Annual General Meeting (AGM) will be held. (The actual date will be confirmed closer to the time.)
The value of the annual rebate will be announced as part of those accounts and will be paid following the AGM. It will be calculated as a percentage of the total amount you transact with the cooperative suppliers, so the more you spend with the suppliers, the greater your share of this rebate will be.
There are circumstances where Members can request the surrender of their shares. These are clearly set out in the Cooperatives disclosure document. The Board is not required to accept a request to surrender shares except in certain limited circumstances, including:
- if you have not been a Transacting Shareholder for the past five years; or
- on your death, when your personal representative may request a surrender of your Shares.
This is important to protect the capital base of the CBS Cooperative. A significant portion of the funds raised from the issue of shares is used to fund legal advice and the cost of recruiting members and onboarding them.
Alternatively, a member can transfer or sell their shares to any person who is, or will become, a Transacting Shareholder of CBS Co-op (requires CBS Board approval that they are eligible to become members).
If an existing member wishes to sell or transfer their shares to another individual or business, they can do so provided they receive approval of the buyer (e.g. in business as builder / tradie) by the CBS Board and complete a signed transfer form. The price of the sale of shares is determined by the buyer / seller (not CBS).
As a shareholder, you would not be legally bound for any costs or other liabilities if there were any problems with the cooperative.
If you were to become a Board member at some stage (and the Cooperative does want to have a majority of the Board as transacting shareholders from the first AGM (in 2019)), then you would be personally legally liable for a range of possible infringements, but not as a shareholder.
As a shareholder, the only financial risk you could have, if the Cooperative business did fail, or was performing poorly, is that you may not be able to get the price you originally paid for your share refunded. But you wouldn’t have to pay out any additional amounts.
We have prepared disclosure documents setting out the terms of membership and giving you more information.
You can download those documents and an application form cbscoop.co.nz