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Governance briefing

Source: docs/website_content/governance_briefing.md · Rendered 2026-05-09

Governance briefing

How the Bottom Pub Co-op proposes to be governed — and why.

Last reviewed: 2026-05-10. Sources cited inline. See docs/research/citations.md for the full reference list and verification status.

This briefing is the governance counterpart to the legal & licensing briefing and the financial & ASIC briefing. It addresses three questions in legally accurate terms:

  1. What kind of governance does Australian co-operative law actually require?
  2. Why are some of the original proposal’s governance ideas legally non-compliant or operationally unworkable?
  3. What governance structure does the rework propose, and why?

It is not legal advice. It is the law’s plain language and the recognised practice of operating Australian and UK community pubs, with sources cited.

1. The seven International Co-operative Alliance principles

The International Co-operative Alliance (ICA) — the global peak body for co-operatives — sets out the seven principles that define what a co-operative is:

  1. Voluntary and Open Membership
  2. Democratic Member Control
  3. Member Economic Participation
  4. Autonomy and Independence
  5. Education, Training and Information
  6. Co-operation among Co-operatives
  7. Concern for Community

Principle 2 — Democratic Member Control — is the bedrock. The ICA states it directly: “members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.”

These principles are not aspirational mood-music. The Australian Co-operatives National Law explicitly codifies them. A co-operative that doesn’t follow them isn’t a co-operative.

2. The CNL legal foundation — applied in Tasmania

The Co-operatives National Law applies in Tasmania via the Co-operatives National Law (Tasmania) Act 2015. Section 4(1) of that Act applies the CNL as set out in the Appendix to the NSW host Act. Two CNL sections are load-bearing for this briefing:

s.228(1) CNL — Voting attaches to membership, not shareholding

“The right to vote attaches to membership and not shareholding.”

This is the statutory anchor for one-member-one-vote. It rules out weighted voting, capital-based voting, and any structural mechanism that lets larger contributors swing the result.

s.156 CNL — Cancellation of inactive members

The CNL requires every co-op to have a measurable active-membership rule. Section 156 (and the surrounding active-membership provisions) require a co-op to cancel the membership of members who don’t satisfy the rule for a stipulated period. Active membership isn’t a matter of taste — it’s a statutory duty of the co-op.

The detail of what makes a rule legally sufficient lives at the BCCM’s Guide to drafting active membership rules for co-operatives, which frames the standard as SMART: Simple, Measurable, Actionable, Reasonable, Timely. A rule that says “support the pub” is not measurable. A rule that says “spend at least $50 per year at the pub, or volunteer at least four hours, or pay an annual subscription of $X” is.

3. Why investor-reserved board seats and weighted voting are off the table

The original Bottom Pub operating model proposed a 9-person board with “2 of 9 board seats reserved for Investor Members”. That’s incompatible with co-op law on its face:

There are legitimate ways to bring outside capital into a co-op — non-voting Co-operative Capital Units (CCUs) under CNL Part 3.4, debt instruments, debentures, debt from co-op-aware lenders. There is no legitimate way to give capital contributors reserved board seats and call it a co-op. The two options are mutually exclusive.

4. Why complex sociocratic governance is wrong for a single-venue pre-trading pub

The original proposal also proposed a sociocratic governance model — circles, double-linking, separate worker-member and community-member classes, consent decision-making — modelled loosely on the Sociocracy 3.0 / Endenburg tradition.

Sociocracy is conceptually elegant and works well in some settings. It is wrong here for three concrete reasons:

  1. Decision latency. A single-venue rural pub in its first three years of trading has thin margins and operational decisions that cannot wait for a circle to convene by consent. Hospitality moves at the pace of a roster gap and a cellar restock; the governance has to keep up.
  2. Administrative overhead. Maintaining circles, double-links, and consent-tracking is a real ongoing cost in volunteer time. That cost has to be paid by people who are also trying to keep a pub running. The opportunity cost is lost.
  3. Community legibility. “Members own it, professionals run it” is a structure ordinary community members can understand at a public meeting. A multi-stakeholder sociocratic structure — community-member circle, worker-member circle, double-linked through delegates, with consent-based decisions — is conceptually intimidating for people whose primary motivation is “save the pub”. That intimidation is a real cost in community participation.

The published experience of UK community pubs tracked by Plunkett UK shows the dominant pattern: a board of 5–11 elected directors elected by the membership, with delegated management to a professional licensee. (Source: Plunkett UK, Community Pubs: A better form of business report series.) Sociocratic frameworks are not the published norm.

5. The Stage-1 governance structure the rework proposes

The proposed structure is deliberately simple. It keeps the door open to more participatory governance once the business has earned operational credibility.

This is what works for community pubs of comparable scale that are actually trading. It is not novel. It is the recognised default.

6. Director duties and fit-and-proper licensing scrutiny

Under the CNL, co-op directors have fiduciary duties almost identical to the directors’ duties in the Corporations Act 2001 (Cth) — duty of care and diligence, duty of good faith, duty to avoid conflicts of interest, duty not to misuse position or information.

Under the Liquor Licensing Act 1990 (Tas), every director on the board is also legally classified as an associate of the licensee under section 3A(1), because the board exercises significant influence over the business. The Commissioner for Licensing will subject every director to police checks and “fit and proper” scrutiny under s.22(1A). (Detail: legal & licensing briefing, section 1.)

Two practical consequences:

  1. The board cannot be a faceless governance body. Every director’s name is in the licensing application; every director must satisfy the same fit-and-proper test as the licensee.
  2. The director-recruitment process has to factor that in. A potential director who would not satisfy a Commissioner’s fit-and-proper test cannot serve, however well-intentioned. This is a real constraint, and it interacts with other rules (e.g., disclosure of interests, indemnity insurance, the standard of care expected of a community-asset board).

7. Member tiers, share architecture, and what the law allows

A co-op is a single class of member with one vote each. That said, there is some scope to design joining arrangements:

What’s not allowed: tiers that confer voting weight by capital, or “founder veto” provisions, or any structural preference attached to financial contribution. Those are exactly what s.228(1) CNL prohibits.

8. What this briefing does not say

This briefing does not say: this is the constitution. The co-op has not been formed; the rules have not been drafted; the Registrar has not approved anything. The membership threshold has not been set, the board size has not been chosen, and the specific committee structure is a community decision.

What this briefing says is: when the time comes to draft the rules, here is the law’s shape, here is the recognised practice, and here is why the original proposal’s governance ideas don’t fit. A community asked to vote on a co-op deserves to see that shape clearly before it is asked to choose.

The Bottom Pub Co-op · Cygnet, Tasmania Back to the proposal