Director Role Overview

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Abstract

Directors are legally and financially responsible for Thoughtful Foods and are elected from membership by members of the co-op to represent the members. The interests of all members are protected by enforceable legal duties imposed upon directors ensuring they act appropriately in the management of the co-operative. Director duties secure the loyalty of directors to the co-operative. These duties come from three sources:

  1. ‘General law’ – this is the law developed by courts over the years and obligations that stem from this law are fiduciary duties. A fiduciary is a term for a person who has control of the affairs of another.
  2. Legislation – other director duties are set out in the governing statute, the Co-operatives Act 1992 (NSW). This legislation is based largely upon the law governing companies. These duties are referred to as statutory duties.
  3. Co-operative rules – the co-operative’s own rules contain specific duties imposed on directors particularly relevant to each co-operative. These are part of the contract between members, hence are referred to as contractual duties.

Thoughtful Foods is required to have between four and seven directors. At least one director must be part of the current coordinating collective and at least one director must not be a part of the current coordinating collective.

As per the constitution directors are required to meet at least every three months but as often as the board of directors feels is necessary. In practice this means directors typically meet each month to discuss big-picture planning, finances, human resources and logistics and strategy.

Directors also have a set of legal and financial responsibilities which are listed in Director duties below. Directors work with the coordinating collective to ensure the long term solvency and viability of the cooperative. Thoughtful Foods only have active member directors; we do not have independent directors or employee directors.


Requirements

To be considered a director at Thoughtful Foods, you must:

  • Be a current, active member of Thoughtful Foods
  • A natural person
  • Be elected at an AGM or appointed to fill a casual vacancy.
  • Attend monthly meetings, and
    • Send their reports 48 hours before the meeting time to ensure there is time for reading before the meeting, so meeting can focus on discussion, questions and resolving any issues.
    • Read the agenda and all reports and communications prior to the meeting
    • Always RSVP to the meeting facilitator if you will be absent from a meeting.
    • Be added to the rotating meeting roles roster. Take on an even amount of work – ie., if you need someone to do your rostered role one month, offer to pick up that or another person's role when you are able.
  • Have completed all training relevant to their roles including attending parts of coordinator training when first elected (the day of bigger picture stuff), regular refreshers (the organisational mapping workshop)
  • Be willing to commit 5-10 hours a month
  • Display a commitment to broader communication systems. Participate in drop box updates, e-list communication, and read and reply to emails promptly. Notify others beforehand if you may be out of contact for a week or more.
  • Be equally responsible for looking out for areas of concern within the co-op, and for ways to improve systems or expand our positive impact.
  • Take on one or more portfolios, working and being in regular communication with the coordinator counterpart
  • Take on a Grievance Officer Role (At least one female identifying and one male identifying director)


Portfolios

Directors are required to work with their coordinator counterparts with their chosen portfolio. The portfolios and corresponding coordinator roles are as follows:

  • Food Safety/OHS: Working with Maintenance and WHS Coordinator & Groceries Coordinator
  • Treasurer: working with Finance Coordinator
  • People: Working with coordinator liaison
  • Membership: Working with Membership Volunteer and Media & Promotions Coordinator
  • RoundHouse Re-Development (2013 only)
  • Other strategic roles that are designed by consensus on time to time.

A description of portfolio responsibilities can be on the home page of this wiki.

  • Directorial portfolio responsibilities include (but are not limited to):
  • Monthly report at the directors meeting about any changes/issues in their role area
  • Regular liaison with the counterpart coordinator
  • Policy/strategy formation and planning in their role area
  • Some implementation, including communication and training
  • Documenting their role to create or update guidelines and procedures for future directors to refer to.

Legal roles and Responsibilities

Directors are responsible for ensuring Thoughtful Foods meets its legal and financial obligations. Directors are responsible for ensuring the following tasks are completed:

  • Annual AGM – including reporting, organisation, preparation for auditors, lodgement with Registry of Co-operatives etc.
  • Drafting constitutional changes and ensuring we comply with our constitution
  • Registering of business name
  • Tax compliance/ATO reporting
  • Food Safety standards met/inspections passed
  • Ensuring we are compliant with WHS Legislation
  • Ensuring we don’t trade while insolvent

Thoughtful Foods is required by the Registry of Co-operatives to nominate a chairperson and a secretary from the directors collective. Thoughtful Foods is also required to nominate a public officer by the ATO.

See the role descriptions for more info.


Business responsibilities of directors

In broad terms, directors are required to make decisions and formulate plans or policy for their co-operative. The range of decisions to be made for any co-operative will vary depending on the size of the co-operative and its undertakings. It is not possible to list each and every type of activity that a director will be called upon to decide or plan. However, the activities would generally cover the following matters:

  • Development of basic guidelines for the control of the business activities of the co-operative
  • Appointment, supervision and removal of employees including the determination of their pay and description of their responsibilities
  • Calling of special meetings whenever necessary or upon the request of members as provided in the rules
  • Approval of general business arrangements such as entering into contracts with distributors or suppliers
  • Settlement of arrangements for handling funds and the designation of the people who may sign cheques
  • Borrowing of funds for any legal or approved purpose
  • Ensuring that an adequate bookkeeping system is maintained, that regular financial reports and audits are done and that a complete record of board meetings is kept in accordance with accounting standards
  • Ensuring that the organisation establishes and maintains systems of internal control, and supervision and safe custody of appropriate documents
  • Using adequate checks to make certain that employed staff and voluntary officers, the manager, secretary and treasurer are conforming to the policies adopted by the board of directors
  • Exercising prudent decision-making regarding the level of debt entered into
  • Attending and participating in general meetings (including the annual general meeting) of the co-operative
  • Studying operating results in order to determine whether policies should be continued, changed or dropped
  • Taking active and energetic steps to keep members fully informed of the organisation’s activities and problems. However, care must be taken to ensure that individual members’ private and confidential business is not disclosed.

Decision-Making

The Directors Collective uses a consensus model of decision-making. If it is not possible to reach consensus, the decision will be deferred to the net meeting unless it is an urgent decision that cannot be deferred. If consensus cannot be reached at a second meeting the decision in question shall be decided using a 2/3 majority vote. Urgent decisions that cannot be deferred from a first meeting shall be decided using a 2/3 majority rule.

Director duties

There are five major categories of director duties:

1. The duty to act in good faith (honestly) in the interests of the co-operative

The director must take into account the interests of the co-operative and act in those interests rather than for any other motive.

2. The duty to act with reasonable care

Directors are required to act with reasonable care and diligence in all aspects of their activities for the co-operative. Delegating duties is permitted only in circumstances where the person to whom the task is delegated is reliable and skilled to perform the task. However, directors are not automatically freed from responsibility for the consequences of delegated tasks. For example, delegated financial decisions to unqualified or inexperienced persons could leave directors responsible for unsound decisions or acts. Courts have identified the following as minimum standards of care, skill and diligence expected of directors:

  • A director must acquire a basic understanding of the business of the co-operative and must be familiar with the fundamentals of the co-operative’s business.
  • Directors are under a continuing obligation to keep informed about the activities of the co-operative.
  • Detailed inspection of day-to-day activities is not required, however, general monitoring of the co-operative’s business affairs such as regular attendance at board meetings is necessary.
  • Directors should maintain familiarity with the financial status of the co-operative by a regular review of the financial statements. This duty is vital to maintain the statutory duty to prevent insolvent trading.

3. The duty to act for a proper purpose

This duty is connected with the duty to act honestly in the interests of the co-operative. Directors are given powers and discretions to make decisions. If that power is abused or used for an improper purpose, then the director will have breached his or her duty. For example, a decision to schedule a general meeting at an inconvenient time or place in order to limit member participation may amount to an improper use of a director’s power.

4. The duty to retain discretions

This duty is designed to ensure that directors do not abdicate responsibility for decision making by simply fitting in with other persons or the majority. A director has a variety of discretions or powers to make decisions and the co-operative is entitled to have the benefit of each director’s personal effort in making that decision. This duty is closely related to the duty to act with reasonable care especially in delegating.

5. The duty to avoid conflicts of interest

This duty requires the director not to place themselves in a position where there is an actual or substantial possibility of a conflict between personal interests and their duty to act in the interests of the co-operative. There may be circumstances where a co-operative may allow a director to proceed with a transaction or activity, however, proper disclosure and express permission must be obtained.

Statutory duties

The Co-operatives Act 1992 imposes statutory duties on officers (including directors) of co-operatives which mirror the fiduciary duties. A breach of a statutory duty will expose directors to a range of civil and criminal penalties.

Insolvent trading

The most important statutory duty in addition to the duties just mentioned is the duty to prevent the co-operative from trading whilst it is insolvent. This duty carries the risk for directors that they may bear personal responsibility for the debts of the co-operative that were entered into whilst insolvent. The elements of this duty are set out in the Corporations Act 2001 (Cwth) and are applied by the Co-operatives Act 1992 (NSW). Briefly, the duty requires that a director must ensure that the co-operative does not incur a debt in circumstances where:

  • the co-operative is insolvent at the time, or
  • the co-operative becomes insolvent by incurring the debt, or
  • there are reasonable grounds for suspecting that the co-operative is insolvent or would become insolvent.

There are defences available to directors under this duty based upon what constitutes reasonable grounds and other matters.