Published: 31 December 2011
There is a mistaken, but commonly held, view that members of a co-operative boards do not have the same legal duties as directors of for-profit companies. Co-operative board members are obliged to comply with general law and legislative requirements. These legal obligations are not dependent on the size of the co-operative or experience of the board. It is a fundamental aspect of good governance that all board members understand that their role on the board is first and foremost to act in the interests of the co-operative as a whole.
This arises by virtue of what is known as the ‘fiduciary relationship’ between each board member and the co-operative. The fiduciary relationship is a general law notion and simply dictates that board members must always and unwaveringly act in the best interests of the co-operative and must act honestly, fairly, loyally, in good faith, and with integrity. Another essential aspect of good governance is that board members maintain confidentiality in respect of all Board matters and discussions. Confidentiality forms the basis of trust and encourages an open and honest forum for discussion. Board members have a right to freely express their views without fear of being named outside the board meeting as taking a particular position.
The public record of the board meeting does not disclose:
(a) The particular positions adopted by specific directors in discussions at board meetings.
(b) Any confidential information related to the interests of individuals, groups or organisations
(c) Commercial sensitive information.
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