Marginal note:Cooperative basis

• 12.1 (1) For the purposes of this Act, a federal credit union is organized and carries on business on a cooperative basis if

  • (a) a majority of its members are natural persons;

  • (b) it provides financial services primarily to its members;

  • (c) membership in the federal credit union is wholly or primarily open, in a non-discriminatory manner, to persons who can use the services of the federal credit union and who are willing and able to accept the responsibilities of membership;

  • (d) each member has only one vote;

  • (e) a delegate has only one vote even though the delegate is a member or represents more than one member;

  • (f) dividends on any membership share are limited to the maximum percentage fixed in the federal credit union’s letters patent or by-laws; and

  • (g) surplus funds arising from the federal credit union’s operations are used

    • (i) to provide for the financial stability of the federal credit union,

    • (ii) to develop its business,

    • (iii) to provide or improve common services to members,

    • (iv) to provide for reserves or dividends on membership shares and shares,

    • (v) for community welfare or the propagation of cooperative enterprises, or

    • (vi) as a distribution to its members as a patronage allocation.

• Marginal note:Restrictions

  (2) Paragraph (1)(c) is subject to any restrictions in the by-laws of the federal credit union on the classes of persons to which membership may be available, as long as the restrictions are consistent with applicable laws with respect to human rights.

Marginal note:Member who is shareholder

12.2 For greater certainty, a member of a federal credit union who is also a shareholder of the federal credit union may exercise the rights given to a shareholder by this Act for all shares held by the member.

• Marginal note:No personal liability — federal credit unions

  (2) The members of a federal credit union are not, as members, liable for any liability, act or default of the federal credit union except as otherwise provided by this Act.

Marginal note:Incorporation of bank

• 22. (1) On the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a bank, other than a federal credit union.

• Marginal note:Incorporation of federal credit union

  (2) On the application of five or more persons, a majority of whom are natural persons, made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a federal credit union.

• (h) if the bank will be a federal credit union, that it will be organized and carry on business on a cooperative basis in accordance with section 12.1; and

• (i) the best interests of the financial system in Canada including, if the bank will be a federal credit union, the best interests of the cooperative financial system in Canada.

• (a.1) in the case of a bank that is to be a federal credit union, a statement that it is a federal credit union;

Marginal note:First members of federal credit union

31.1 The incorporators of a federal credit union are deemed to be its first members.

• Marginal note:Continuance for the purpose of amalgamation

  (3) A local cooperative credit society may, if so authorized by the laws of the jurisdiction in which it is incorporated, apply to the Minister for letters patent continuing it as a federal credit union if it proposes to be continued under this Act for the purpose of amalgamating with another federal credit union in compliance with this Act.

Marginal note:Application for continuance

• 34. (1) If a body corporate applies for letters patent under section 33, sections 23 to 27 apply in respect of the application, with any modifications that the circumstances require.

• Marginal note:Special resolution approval

  (2) If a body corporate applies for letters patent under section 33, the application must be duly authorized by a special resolution.

Marginal note:Power to issue letters patent

• 35. (1) On the application of a body corporate under section 33, the Minister may, subject to this Part, issue letters patent continuing the body corporate as a bank under this Act.

Marginal note:Power to issue letters patent

• 35.1 (1) On the application of a local cooperative credit society under subsection 33(2), the Minister may, subject to this Part, issue letters patent continuing the local cooperative credit society as a federal credit union only if the Minister is of the opinion that the local cooperative credit society has complied with the regulations respecting notice and disclosure requirements.

• Marginal note:Power to issue letters patent

  (2) On the application of a local cooperative credit society under subsection 33(3), the Minister may, subject to this Part, issue letters patent continuing the local cooperative credit society as a federal credit union only if the Minister is of the opinion that

  • (a) the local cooperative credit society has complied with the regulations respecting notice and disclosure requirements; and

  • (b) the federal credit union that results from the amalgamation will satisfy the requirements for incorporation as a federal credit union.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations respecting notice and disclosure requirements for the purpose of subsections (1) and (2).

Marginal note:Effect of letters patent

36. On the day set out in the letters patent continuing a body corporate as a bank,

• Marginal note:Membership shares

  (2) In addition, if the body corporate is continued as a federal credit union,

  • (a) in the case of a body corporate with common shares,

    • (i) its common shares are deemed to be membership shares to which are attached the rights, privileges and restrictions set out in this Act,

    • (ii) the holders of those common shares are deemed to be the members of the federal credit union, and

    • (iii) any agreement made before continuance under which the holders of any common shares of the body corporate have agreed to vote those shares in a manner provided in the agreement is of no effect; and

  • (b) in the case of a body corporate that has members,

    • (i) the membership shares, however designated, of the body corporate are deemed to be membership shares of the federal credit union to which are attached the rights, privileges and restrictions set out in this Act,

    • (ii) the members of the body corporate are deemed to be the members of the federal credit union, and

    • (iii) any agreement made before continuance under which the members of the body corporate have agreed to vote in a manner provided in the agreement is of no effect.

• (a) with respect to any activity described in paragraph (1)(a), 30 days after the date of issue of the letters patent or

  • (i) if the activity is conducted under an agreement existing on the date of issue of the letters patent, the expiry of the agreement, or

  • (ii) if the bank is a federal credit union and an undertaking to cease engaging in the activity has been given under subsection 973.02(1), the cessation date set out in the undertaking in respect of the activity;

Marginal note:Transferring to other federal Acts — banks

• 39.1 (1) A bank that is not a federal credit union may

Marginal note:Transferring to other federal Acts — federal credit union

• 39.2 (1) A federal credit union may

  • (a) apply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act; or

  • (b) apply under the Cooperative Credit Associations Act for letters patent continuing the federal credit union as an association under that Act or amalgamating and continuing the federal credit union as an association under that Act.

• Marginal note:Conditions for approval

  (2) The approval referred to in paragraph (1)(a) may be given only if the Minister is satisfied that

  • (a) the federal credit union has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where its head office is situated, a notice of its intention to apply for the approval;

  • (b) the application has been authorized by a special resolution of the members and, if the federal credit union has issued shares, by a separate special resolution of the shareholders of each class of shares; and

  • (c) the federal credit union does not hold deposits.

• Marginal note:All shares have right to vote

  (3) For the purpose of paragraph (2)(b), each share carries the right to vote in respect of the special resolution, whether or not it otherwise carries the right to vote in respect of any other matter.

• Marginal note:Restriction on other transfers

  (4) A federal credit union may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1).

Marginal note:Act ceases to apply

39.3 If a bank applies for a certificate or letters patent referred to in section 39.1 or 39.2 in accordance with that section and the certificate is given or the letters patent are issued, this Act ceases to apply to the bank as of the day on which the certificate or the letters patent take effect.

• (f) that includes the phrase “credit union” or “coopérative de crédit”, or any abbreviation, combination or derivative of those phrases, unless it is to be a federal credit union and its name also includes the word “bank”, “banque”, “federal” or “fédérale” in conjunction with those phrases; or

• (g) that includes the words “cooperative” or “coopérative”, or any abbreviation, combination or derivative of those words, unless it is to be a federal credit union and its name also includes the word “bank”, “banque”, “federal” or “fédérale” in conjunction with those words.

Marginal note:Name of federal credit union

40.1 Despite any other Act, but subject to paragraphs 40(f) and (g), a bank may be incorporated or formed under this Act with the words “credit union” “coopérative de crédit”, “cooperative” or “coopérative”, or any abbreviation, combination or derivative of those words, in its name, but only if it will be a federal credit union.

• Marginal note:Directions

  (4) If a bank is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 40(a) to (g).

Banks Other Than Federal Credit Unions

Marginal note:First directors’ meeting

• 45. (1) After letters patent incorporating a bank that is not a federal credit union are issued, a meeting of the directors of the bank must be held at which the directors may, subject to this Part,

Marginal note:Calling shareholders’ meeting

• 46. (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a bank in respect of which letters patent were issued under subsection 22(1) from the issue of its shares, the directors of the bank must without delay call a meeting of the shareholders of the bank.

Marginal note:Mandat des premiers administrateurs

47. Le mandat des administrateurs désignés dans la demande de constitution expire à l’élection des administrateurs lors de la première assemblée des actionnaires convoquée en vertu du paragraphe 46(1).

Federal Credit Unions

Meeting of First Directors

Marginal note:Organizational meeting

• 47.01 (1) After letters patent incorporating a federal credit union are issued, a meeting of its first directors must be held at which the first directors may, subject to this Part,

  • (a) adopt forms of certificates for membership shares, forms of share certificates and forms of corporate records;

  • (b) admit persons to membership in the federal credit union and issue or authorize the issuance of membership shares;

  • (c) authorize the issue of shares of the federal credit union;

  • (d) appoint officers;

  • (e) appoint, under subsection 314(1), an auditor or auditors to hold office until the first meeting of members;

  • (f) make banking arrangements; and

  • (g) deal with any other matters necessary to organize the federal credit union.

• Marginal note:Calling directors’ meeting

  (2) A first director may call the meeting referred to in subsection (1) by giving, subject to subsection 181(2), the other directors notice of the time and place of the meeting no fewer than five days before the meeting.

First Meeting of Members

Marginal note:Calling members’ meeting

• 47.02 (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a federal credit union in respect of which letters patent were issued under subsection 22(2) from the issue of its membership shares and shares, the directors of the federal credit union must, without delay, call a meeting of the members of the federal credit union.

• Marginal note:Meeting of members

  (2) At the meeting, the members must

  • (a) make by-laws;

  • (b) elect directors in accordance with this Act and the federal credit union’s by-laws; and

  • (c) appoint an auditor or auditors to hold office until the close of the first annual meeting of the federal credit union.

• Marginal note:Term of office of first directors

  (3) The term of office of the first directors ends at the close of the meeting referred to in subsection (1).

Membership in a Federal Credit Union

Conditions of Membership

Marginal note:Membership governed by by-laws

• 47.03 (1) Subject to the provisions of this Act, membership in a federal credit union is governed by its by-laws.

• Marginal note:Minimum membership shares required

  (2) To be a member of a federal credit union, a person must acquire and hold the minimum number of membership shares required under the federal credit union’s by-laws.

• Marginal note:Member who ceases to hold the minimum

  (3) Subject to any limitations in the federal credit union’s by-laws, including limitations on the rights members may exercise, a member of a federal credit union who ceases to hold enough membership shares to be a member continues to be a member of the federal credit union for the purposes of this Act.

• Marginal note:Ground for expulsion

  (4) For greater certainty, subsection (3) does not prevent holding fewer than the minimum number of membership shares from being set out in the federal credit union’s by-laws as a ground for expulsion under subsection 47.06(1) or section 47.09.

Marginal note:Subscription deemed application

• 47.04 (1) A subscription for the number of membership shares in a federal credit union required by the federal credit union’s by-laws for membership constitutes an application for membership and the issue of a membership share to the applicant constitutes admission to membership.

• Marginal note:Approval required

  (2) Subject to subsection (1), a person becomes a member of a federal credit union when the person’s application for membership is approved by the directors or an employee authorized by the federal credit union and the applicant has complied fully with the federal credit union’s by-laws governing admission of members.

Withdrawal and Termination

Marginal note:Withdrawal of membership

• 47.05 (1) A member of a federal credit union may withdraw from the federal credit union at any time by giving notice in accordance with the by-laws.

• Marginal note:Deemed notice

  (2) A deceased member is deemed to have given notice to the federal credit union of their intention to withdraw on the day of their death.

• Marginal note:Rights of withdrawing member

  (3) The by-laws of a federal credit union must set out the rights of a withdrawing member.

Marginal note:Expulsion

• 47.06 (1) A member of a federal credit union may be expelled from membership, in accordance with the by-laws, by a resolution of the directors on the grounds set out in the by-laws.

• Marginal note:Member’s rights relating to expulsion

  (2) The by-laws of a federal credit union must set out the rights of members who are expelled under subsection (1), and those rights must include

  • (a) the right of a member to receive advance notice of any meeting of the directors at which the board will consider a resolution to expel the member;

  • (b) the right of a member not to be expelled without being given an opportunity to make representations on the matter at the meeting of the directors;

  • (c) the right of an expelled member to appeal the decision of the directors at the next meeting of the members; and

  • (d) the right of the expelled member to be reinstated as a member of the federal credit union if, at the next meeting of the members, the members, by ordinary resolution, set aside the directors’ resolution.

• Marginal note:Procedures to be set out in by-laws

  (3) The by-laws of a federal credit union must set out

  • (a) the procedures to be followed by the directors to provide the advance notice referred to in paragraph (2)(a); and

  • (b) the procedures to be followed relating to the appeal referred to in paragraph (2)(c).

• Marginal note:Notice of decision

  (4) If the directors pass a resolution expelling a member under subsection (1), the federal credit union must, within five days after the passing of the resolution, notify the member of the directors’ decision by registered letter addressed to the member at the member’s recorded address.

Marginal note:Inactivity

47.07 No by-law may provide for the expulsion of a member by reason only of inactivity of the member in relation to the business or affairs of the federal credit union.

Marginal note:Redemption

47.08 No by-law governing the withdrawal of a member from membership or the termination of the membership of a member may authorize a redemption of membership shares in contravention of section 485.

Marginal note:Termination by members

47.09 Unless the by-laws provide otherwise, the membership of a member may be terminated by a special resolution of the members. Section 47.06 applies, with any modifications that the circumstances require, to a termination by the members.

Marginal note:Winding-up proceedings in respect of member

47.1 Despite subsection 47.06(1), a federal credit union may, by written notice to a member, terminate the membership if the member is a body corporate and winding-up proceedings have commenced with respect to it.

General Provisions — Federal Credit Unions

Marginal note:Prohibition

47.11 An entity must not become a member of a federal credit union if, as a result of becoming a member, the majority of the members of the federal credit union would not be natural persons.

Marginal note:Provision of services

47.12 A federal credit union must provide its services primarily to its members.

Marginal note:Right to vote

47.13 Each member of a federal credit union has only one vote on all matters to be decided by the members.

Marginal note:Members under 18

47.14 Subject to the by-laws, a person less than 18 years of age may be admitted to membership in a federal credit union and may vote at meetings of the federal credit union.

Marginal note:Membership not transferable

47.15 No transfer of a membership is valid for any purpose.

Marginal note:Reinstatement — section 47.06

• 47.16 (1) A person whose membership has been terminated under section 47.06 may be reinstated as a member of the federal credit union only by ordinary resolution of the members.

• Marginal note:Reinstatement — section 47.09

  (2) A person whose membership has been terminated under section 47.09 may be reinstated as a member of the federal credit union only by special resolution of the members.

Marginal note:Transfer of membership shares

47.17 No transfer of membership shares in a federal credit union is valid unless the transfer is approved by resolution of the directors.

Marginal note:Obligation to have at least five members

• 47.18 (1) A federal credit union must ensure that at all times it has at least five members.

• Marginal note:Membership too low

  (2) If the membership of a federal credit union is reduced to fewer than five members, the federal credit union must, without delay, take the steps that are necessary to

  • (a) make an application referred to in subsection 39.2(1) or section 216.08; or

  • (b) liquidate and dissolve the federal credit union under Part VI.

Marginal note:Exemption

47.19 The Minister may, subject to any terms and conditions that the Minister considers appropriate, exempt any entity or federal credit union from the application of sections 47.11, 47.12 and 47.18.