For the hybrid model to work, a co-op must operate under the terms of the NZ Co-operative Companies Act and have no less than 60% of the shares controlled by transacting shareholders. This is the threshold that needs to be observed to retain co-operative status under the legislation. One co-operative that recently adopted this model included a clause in their constitution. The clause states that up to 40% of member votes must be allocated on the basis of the Investor’s shares. Other protections have been designed to help shareholder/members retain the Transacting Shareholder control, while still offering worthwhile rewards to investors.

Some critics of this hybrid model consider that in times of poor performance in the agribusiness sector, solidarity needed among Transacting Shareholders can be quite fragile. In these circumstances, the co-operative would be vulnerable to a takeover by investors and converted to a company. In this scenario, business would be conducted in the interests of its investors rather than its members. Time will be the determinant in whether such fears are justified, or purely speculative.

It is also interesting to note that the NZ Stock Exchange (NZSE) is plotting a course for their own survival and in so doing, have identified co-operatives, along with other types of businesses, as groups to target for listings. At this stage little is known about the plans to include co-operatives in the proposed NZSE Alternative Market. A degree of scepticism exists about the value of such initiatives, as they are inevitably structured to meet the interests of the investor rather than the co-operative or other social economy organisation. If the NZSE were to respect co-operatives and build requirements around the prime elements of co-operatives, it is possible that for ordinary co-operatives (not hybrids) non-equity securities could be listed on the NZSE and, as a consequence, access gained to certain types of capital.

These are important times for developing co-operatives with a need to access capital,s without conceding control of the co-operative to investors. Time will tell whether the NZSE is a help or hindrance to the interests of co-operatives. For more information, visit the web site of the NZ Co-operatives Association at: www.nzco-ops.org.nz