FAQ: Board of Directors Elections in Cooperatives
As the managing executive team, the board of directors is the most important part of every cooperative. The board of directors election is therefore of great importance. Here we give you answers to the most frequently asked questions about these elections.
General questions about cooperatives' board of directors
1) What legal position does the cooperative’s board of directors have?
Every cooperative needs a board of directors which acts as the managing executive. The board of directors represents the cooperative in and out of court.
2) Do cooperatives need to be incorporated?
They don't have to be, but the majority are incorporated. The procedure and requirements for incorporation vary across federal, state or provincial levels. All details should be clarified with your local business entity registration office.
3) How many directors sit on the board?
Boards of directors in cooperatives are mostly comprised of at least three members. A board of directors typically has more than one member so that the directors can consult and monitor each other more effectively. Directors are typically part of the cooperative’s membership but non-member directors can also offer their independent advice to the board.
4) What is the election process for directors on the board?
The election process depends on the voting procedures used in the cooperative. If members are allowed to vote online or by post, the election period usually starts before the Annual General Meeting (AGM) and ends with the AGM so that the results can be made public at the meeting. Another possibility is that members are only able to vote at the AGM in person, which typically applies for smaller cooperatives. The details about the election process are constituted in the cooperative's bylaws.
Some larger cooperatives have delegate systems in place. Members vote for their representative at regional meetings. These delegates are then allowed to vote for the board of directors on behalf of members. The details about the election process are constituted in the bylaws of the cooperative.
Start now >Who can be elected to the board of directors?
5) Can only members be elected to the board?
A board of directors can be made up of internal members and external directors. The latter option has to be included in the bylaws. Cooperatives tend to include external directors in order to benefit from their previous working experience and independent view on cooperative issues. It can also be the case that only members are able to be elected to the board.
6) Who can nominate candidates and until what deadline?
In general, every member or committee in the cooperative can nominate candidates for the board of directors election. Nominations can be handed in electronically, via post or in person at a cooperatives' branch or headquarters. The nomination period usually starts several weeks before the election. However, every cooperative has specific rules about their nomination procedure which are set out in the bylaws. For example, if the cooperative has a delegate system in place, nominations may only be made by delegates, not directly by members.
7) How long is the term for the board?
There is no single rule governing how long a director can serve on the board. Some cooperatives elect or re-elect a new board annually, but most have a two or three year term. Some terms can even be as long as five years.
8) What responsibilities do board members have?
Board members are elected to run the cooperative on behalf of its members. They usually appoint or elect an executive committee to manage the cooperative. In addition, the board of directors is responsible for the direction of the cooperative and complying with ethical and legal standards.
POLYAS-tip: Download our practical overview of the most frequently asked questions! FAQs about board of directors elections in cooperatives (PDF)
Voting rights
9) Do passive members have voting rights?
The bylaws of the cooperative should define the rights and responsibilities of active and passive members, especially the voting rights. For example, active members can be members who organize the cooperative’s events, whereas passive members simply pay membership fees whilst not becoming involved in organizational matters. There is also the option of corporate members being affiliated with cooperatives. Their duties and rights often differ slightly from regular members.
10) Can Annual General Meetings be held electronically?
Holding an online AGM in cooperatives is legally possible. The criteria for an electronic AGM are written in the bylaws of the cooperative.
11) Is online voting possible in cooperatives?
To make online voting possible and legal in your cooperative, electronic voting has to be specified as an option in the bylaws. Electronic voting can mean using online voting software or a voting machine. A resolution or amendment should be sufficient to include online voting. The specifics of online elections, such as the requirements and processes should also be detailed in the bylaws.
12) How can the bylaws be amended?
The bylaws of a cooperative can be amended at the Annual General Meeting or board meetings, depending on whether all members have the right to vote on amendments or just board members. The details of amending bylaws are often outlined in the federal, state or provincial legislation governing cooperatives.
Read more about how to amend your bylaws!