The business of a cooperative is managed by the board, which in the case of Alfalfa House is called the Management Committee (MC). Critical for the effective governance of the co-op is an understanding of directors’ duties and responsibilities. While the coordinator/s and other members of staff are focused on operational matters and concerned with specific functions, directors need to take a more strategic or ‘helicopter’ view of the co-op. Most importantly, directors function as trustees for the members in safeguarding their assets in the cooperative.

There are currently five core duties and responsibilities of the co-op's directors.

1. Setting overall direction and guidelines of the cooperative
2. Ensuring that employees are committed to the aims and objectives of the cooperative and are adequately informed about the overall directions and guidelines set by the board
3. Ensuring the cooperative is properly managed by monitoring activities and keeping up-to-date with cooperative affairs
4. Attending regular board meetings and contributing to the board’s deliberations and decisions
5. Contributing via other forums such as sub-committees dealing with policy development and related management or cooperative issues.

These responsibilities encompass three broad areas: Function, Performance and Members’ Interests

MONITOR FUNCTION

1. Ensure the co-op is able to meet its liabilities
2. Ensure that adequate financial control systems are in place
3. Make sure legal requirements are met
4. Ensure proper reporting and accounting standards are adopted

CONTRIBUTE TO CO-OP PERFORMANCE

1. Contribute skills, experience and knowledge to board and co-op
2. Ensure management succession plan is in place
3. Bring the co-op into contact with wider networks including other cooperatives
4. Monitor co-op’s performance in light of stated aims and objectives
5. Preserve the cooperative character of the organisation
6. Contribute to strategic planning and policy formulation
7. Assist coordinator/s in identifying opportunities, anticipating problems and developing strategies
8. Contribute to activities of sub-committees and other appropriate forums
9. Provide adequate supervision and support to members of staff
10. Maintain a questioning, challenging and objective view of proposals and plans
11. Be an active team member – involved, informed, tolerant, interested and committed
12. Continually learn and grow

PROTECT MEMBERS' INTERESTS

1. Make sure members are properly informed
2. Ensure open channels of communication exist with members’ so the board is always aware of members changing needs and priorities
   • Respond to members’ needs
   • Be inclusive – involve and consult with members and staff where appropriate
3. Be accountable and transparent – ensure money is managed prudently and wisely
4. Balance levels of risk and caution
5. Ensure co-op activities increase and grow

Legal Responsibilities
The Act contains provisions that spell out duties, responsibilities and possible penalties for directors and other officers (sections 221-229). These provisions, however, do not by themselves contain a complete code of conduct for directors.

At common law (that is, law made by judges rather than statutory law made by parliament) there are a number of duties, referred to as fiduciary duties, which apply to directors of co-ops as well as other organisations. A fiduciary relationship means that the director occupies a position of trust in relation to the co-op and is bound not to abuse that trust. These common law duties are only briefly summarised below. For more information refer to the booklet Legal Responsibilities of Directors of Cooperatives produced by the NSW Registry of Cooperatives.

Duty of good faith. A director must at all times act honestly, “in good faith”, in the exercise of he/his powers and discharging the duties of her/his office.

Duty of due care, skill and diligence. In performing the functions and exercising the powers of office, a director is obliged to exercise a degree of care, skill and diligence, having regard to what it is reasonable to expect in the circumstances.

Duty to avoid conflict. Directors must not allow themselves to be placed in a position where their duty to the cooperative conflicts with their personal interest.

Duty not to make improper use of information or position. A director is prohibited from making improper use of information acquired, or making improper use of her/his position, to gain personal advantage or to cause detriment to the co-op.

Duty not to fetter discretion. In making decisions on behalf of the co-op, a director must exercise independent judgement and not allow her/himself to be influenced in any way by other interests.

Duty to prevent insolvent trading. A director is not permitted to allow an insolvent organisation to incur further liabilities which cannot be met.

The law does not require perfect decision-making. After all, practically every decision will involve some element of risk, an essential part of any business enterprise. The courts recognise that even the best informed and considered decision by directors may turn out to be wrong. As long as decisions are fully informed and fully considered and are made in good faith and for a proper purpose, a court will not penalise a director.

In summary, a set of characteristics that directors ought to possess to satisfy these requirements include sensitivity to cooperative principles, commercial judgment, legal awareness, conscientiousness, responsibility and integrity.

Chairperson
• Ensure the overall proper functioning of the board
• Maintain a fair balance between the individuals who comprise the MC
• Ensure all directors are able to play a full role within the MC
• See that all directors receive timely and relevant information for proper and informed decision-making

Secretary
• Keep and maintain minute books and other registers of the cooperative and ensure they are kept up-to-date
• Ensure that all relevant documents are filed with the Registrar in accordance with statutory requirements
• Attend to the arrangements for the holding of all meetings (of the MC and members) and ballots.

Treasurer
• Consult with coordinator (bookkeeper) on financial strategies
• Supervise financial accounts and reports