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Disclosure Statement Builder

Before you start…

You must draft the Constitution first, then the Disclosure Statement, to allow data to be pulled from the Constitution.

About disclosure statements

The disclosure statement has two roles.

  1. It is required for registration of your co-operative. Co-operatives legislation requires that a disclosure statement and the co-operative’s constitution be presented at the formation meeting. The constitution and the disclosure statement are pre-conditions for registration.
  2. It is a marketing tool. The disclosure statement describes the offer of membership and shares. It must be given to each person who wishes to become a member, before they agree to buy any shares.

It should provide the information that your potential members, your target audience, need so they can decide whether to join and buy shares.

The Disclosure Statement Builder assists with the preparation of the disclosure statement for both of these purposes.

Please note that this tool is linked to any standardised rules and the rules that you draft using the Constitution Builder. If you alter these rules, then you will need to make consistent alterations in any disclosure statement that you download after using the Disclosure Statement Builder.

Best practice guidance

Regulatory requirements for disclosure statements do not make any distinction between the size of a share offer or the targeted audience. Best practice guidance suggests that an offer of membership should have regard to the size of the share offer and the timeframe for raising the necessary capital. These features, to some extent, define the target audience.

For example, a co-operative formed to buy an existing business or to construct a large project such as a renewable energy facility, will need to present information to attract a large number of investor members in a short period of time. The target audience may comprise people from a broad geographical area or a particular local community. Their connection is a common interest in the proposed project. The offer of membership and shares for these co-operatives will have a fundraising target and a time frame.

The Disclosure Statement Builder refers to this type of offer as a large public offer.

By contrast, a co-operative of workers or a group of farmers or small businesses wanting to work together and secure jobs or share costs may not have a need for significant start-up capital. These co-operatives often start small and grow as new members continually join. The capital requirements will have been determined as a result of discussions and engagement with a known group of prospective members and an expectation that new members will bring more capital. These offers of membership and shares are continuous offers without a specified fundraising target and time frame.

The Disclosure Statement Builder refers to this type of offer as a small scale offer.

Guidance in the Disclosure Statement Builder will identify information or conditions that are required for both types of offer.

Your disclosure statement must be a ‘living document’. Once your co-operative is registered and after members have joined, whether it is a large public offer or a small scale offer, it will be necessary to update the information in your disclosure statement, if only to reflect the number of shares issued. It may become apparent after the initial period of your offer that there is either further demand for membership or further need for capital. Your co-operative will then need to reconsider what action to take in respect of further membership offers.

How the Disclosure Statement Builder works

The Disclosure Statement Builder helps you draft your document by providing standardised text that complies with legislative requirements and regulatory guidance, as well as text options and guidance for writing your own text when appropriate. Where necessary, rules from your constitution are automatically inserted.

Not counting the Cover page and Summary, there are seven parts to the Disclosure Statement Builder, comprising:

  1. Background and the demand for services
  2. Membership
  3. Share capital
  4. Co-operative business model
  5. Management of the co-operative
  6. Business plan and financial information
  7. Application for membership and shares

General rules about preparing your disclosure statement

The information in the disclosure statement should be tailored to your co-operative. This may require varying degrees of detail and length, depending on your co-operative’s proposed enterprise. You should:

  • Avoid making the disclosure statement too long – focus on information that is material to a person’s decision about whether to join the co-operative and invest in its shares;
  • Use plain language to assist people understand the information;
  • If you include information or opinions that have been prepared by professionals for the purpose of this offer, you must have their written consent to use that information or present their opinion; and
  • Once your document is approved by the Registrar, you should present it in a format, such as PDF, that is easily accessed, downloaded and saved by people who want to become members.

Warning!

There are penalties for making false or misleading statements in a disclosure statement. A disclosure statement will be false and misleading if it contains inaccurate or unfounded statements or if it omits information that is necessary for a person to make a decision about whether to join and buy shares in the co-operative.

You must take all care when making statements about financial matters in your description of the co-operative’s enterprise and its business plan, particularly when making representations or statements based on forecast financial returns. If there are any statements about forecast financial returns, they must be identified as forecasts and be based on reasonable assumptions.