Short Title

Marginal note:Short title

1 This Act may be cited as the Canada Cooperatives Act.

PART 1Interpretation and Application

Interpretation

Marginal note:Definitions

• 2 (1) The definitions in this subsection apply in this Act.

  affairs

  affairs means the relationship between a cooperative and its affiliates and their members, shareholders, directors and officers, but does not include the business carried on by those bodies corporate. (affaires internes)

  affiliate

  affiliate means an affiliated body corporate within the meaning of subsection (2). (groupe)

  articles

  articles means the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of continuance, articles of reorganization, articles of arrangement, articles of dissolution, articles of revival and articles of correction, and includes any amendments to any of them. (statuts)

  associate

  associate, in respect of a relationship with a person, means

  • (a) a body corporate of which the person beneficially owns or controls, directly or indirectly, shares or securities currently convertible into shares carrying more than ten per cent of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase such shares or such convertible securities;

  • (b) a cooperative entity of which the person beneficially owns more than ten per cent of the voting rights that can be cast at a meeting of the cooperative entity;

  • (c) an unincorporated entity of which the person beneficially owns more than ten per cent of the ownership interests;

  • (d) a partner of the person acting on behalf of the partnership of which they are partners;

  • (e) a trust or an estate or succession in which the person has a substantial beneficial interest or serves as a trustee, administrator, executor or liquidator of a succession or in a similar capacity;

  • (f) a spouse of the person or an individual who is cohabiting with the person in a conjugal relationship, having so cohabited for a period of at least one year;

  • (g) a child of the person or of the spouse or individual referred to in paragraph (f); and

  • (h) a relative of the person or of the spouse or individual referred to in paragraph (f), if that relative has the same residence as the person. (liens)

  auditor

  auditor includes a firm of accountants. (vérificateur)

  bearer

  bearer, in respect of a security, means the person who is in possession of a security that is payable to bearer or endorsed in blank. (porteur)

  beneficial ownership

  beneficial ownership includes

  • (a) in Quebec, the rights of a beneficiary of a trust that owns property, and ownership of property through one or more administrators of the property of others, mandataries or other legal representatives; and

  • (b) in the rest of Canada, ownership of property through one or more trustees, legal representatives, agents or other intermediaries. (véritable propriétaire)

  body corporate

  body corporate includes a cooperative, a cooperative entity, a company or any other body corporate wherever or however incorporated. (personne morale)

  call

  call means an option transferable by delivery, to demand delivery of a specified number or amount of securities at a fixed price within a specified time but does not include an option or right to acquire securities of the cooperative that granted the option or right to acquire. (option d’achat)

  cooperative

  cooperative means a body corporate that is incorporated under this Act and not discontinued under this Act. (coopérative)

  cooperative entity

  cooperative entity means a body corporate that, by the law under which it is organized and operated, must be organized and operated on — and is organized and operated on — cooperative principles. (entité coopérative)

  court

  court means the court of first instance of superior jurisdiction of a province. (tribunal)

  debt obligation

  debt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured. (titre de créance)

  delegate

  delegate means an individual who is appointed or elected to represent a member at a meeting of members. (délégué)

  Director

  Director means the Director appointed under section 371. (directeur)

  director

  director means an individual occupying the position of director, by whatever name called, of a cooperative, and “board of directors” or “directors” refers to the directors as a body. (administrateur)

  distributing cooperative

  distributing cooperative means, subject to subsections 4(4) and (5), a distributing cooperative as defined in the regulations. (coopérative ayant fait appel au public)

  entity

  entity means a body corporate, a trust, a partnership, a fund or an unincorporated organization. (entité)

  federation

  federation means a cooperative whose membership is composed substantially of other cooperative entities, federations or leagues of cooperative entities. (fédération)

  firm of accountants

  firm of accountants means a partnership whose partners and accountant employees are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting. (cabinet de comptables)

  former Act cooperative

  former Act cooperative means a cooperative that was incorporated under the Canada Cooperative Associations Act. (coopérative sous le régime de l’ancienne loi)

  holder

  holder means

  • (a) in respect of a security certificate, the person in possession of the certificate issued or endorsed to the person or to bearer or in blank;

  • (b) in respect of the ownership of a membership share, the person referred to in section 5; and

  • (c) in respect of the ownership of an investment share, the person referred to in section 6. (détenteur)

  incapable

  incapable, in respect of an individual, means that the individual is found, under the laws of a province, to be unable, other than by reason of minority, to manage their property or is declared to be incapable by any court in a jurisdiction outside Canada. (incapable)

  incorporated

  incorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, includes a body corporate that is continued by or under any such Act. (constitué)

  incorporator

  incorporator means a person who signs articles of incorporation. (fondateur)

  individual

  individual means a natural person. (particulier)

  issuer

  issuer, in respect of a security, means the entity that issues the security. (émetteur)

  investment share

  investment share means a share in the capital of a cooperative that is not a membership share. (part de placement)

  meeting of a cooperative

  meeting of a cooperative means

  • (a) a meeting of members of a cooperative, or of a class of members of a cooperative, or

  • (b) a meeting of the holders of investment shares of a cooperative, or a class or series of investment shares,

  as the context permits. (assemblée d’une coopérative)

  member

  member means a member of a cooperative, but does not include an auxiliary member. (membre)

  member loan

  member loan means a loan required by the cooperative from its members as a condition of membership or to continue membership in the cooperative, and, for the purpose of Parts 8, 16, 17, 18.1 and 19 and subsection 163(2), a member loan is deemed to be a membership share issued at par value. (prêt de membre)

  membership share

  membership share means a share described in section 118. (part de membre)

  Minister

  Minister means the member of the Queen’s Privy Council for Canada that is designated by the Governor in Council as the Minister for the purposes of this Act. (ministre)

  officer

  officer includes the chairperson of the board of directors, a vice-chairperson of the board of directors, the president, a vice-president, the secretary, an assistant secretary, the treasurer, an assistant treasurer and the general manager of a cooperative, and any other individual designated as an officer of the cooperative by by-law or by resolution of the directors, or any other individual who performs functions for the cooperative similar to those normally performed by an individual occupying any such office. (dirigeant)

  ordinary resolution

  ordinary resolution means a resolution passed by a majority — or any greater number set out in the articles or a unanimous agreement — of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution. (résolution ordinaire)

  patronage return

  patronage return means an amount that the cooperative allocates among and credits or pays to its members or to its member and non-member patrons based on the business done by them with or through the cooperative. (ristourne)

  person

  person means an individual or an entity, and includes a personal representative. (personne)

  personal representative

  personal representative means a person who stands in place of and represents another person including, but not limited to, a trustee, an executor, an administrator, a liquidator of a succession, an administrator of the property of others, a guardian or tutor, a curator, a receiver or sequestrator, an agent or mandatary or an attorney. (représentant personnel)

  prescribed

  prescribed means prescribed by regulation. (Version anglaise seulement)

  prior legislation

  prior legislation means the Canada Cooperative Associations Act, chapter 6 of the Statutes of Canada, 1970-71-72. (législation antérieure)

  proxy

  proxy means a completed and executed or, in Quebec, signed form of proxy by means of which a shareholder appoints a proxyholder to attend and act on the shareholder’s behalf at a meeting of the shareholders. (procuration)

  put

  put means an option transferable by delivery, to deliver a specified number or amount of securities at a fixed price within a specified time. (option de vente)

  redeemable

  redeemable, with respect to an investment share issued by a cooperative, means that the share is one

  • (a) that the cooperative may acquire or redeem on the demand of the cooperative; or

  • (b) that the cooperative is required by its articles to acquire or redeem at a specified time or on the demand of the holder. (rachetable)

  security

  security includes an investment share, a debt obligation of a cooperative and a certificate evidencing such a share or debt obligation and, for the purposes of section 173 and Parts 18.1 and 19, includes a membership share. (valeur mobilière)

  security interest

  security interest means an interest or right in or charge on property of a cooperative to secure payment of a debt or the performance of an obligation of the cooperative. (sûreté)

  send

  send includes deliver. (envoyer)

  series

  series, in respect of investment shares, means a division of a class of those shares. (série)

  share

  share means a membership share or an investment share. (part)

  shareholder

  shareholder means a person described in section 6. (détenteur de parts de placement)

  special resolution

  special resolution means a resolution passed by not less than two thirds — or any greater number set out in the articles or a unanimous agreement — of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution. (résolution spéciale)

  unanimous agreement

  unanimous agreement means an agreement in writing among all members and all shareholders, if any, that contains a provision referred to in subsection 115(1). (convention unanime)

• Marginal note:Affiliates

  (2) For the purposes of this Act,

  • (a) a body corporate is affiliated with another body corporate if one of them is a subsidiary of the other, if both are subsidiaries of the same body corporate or if each of them is controlled by the same person; and

  • (b) if two bodies corporate are affiliated with the same body corporate at the same time, they are deemed to be affiliated with each other.

• Marginal note:Minors

  (3) For the purposes of this Act, the word minor has the same meaning as in the applicable provincial law and, in the absence of any such law, has the same meaning as the word child in the United Nations Convention on the Rights of the Child, adopted in the United Nations General Assembly on November 20, 1989.

Purpose and Application

Marginal note:Purposes of Act

• 3 (1) The purposes of this Act are

  • (a) to set out the law applicable to the business endeavours of persons who have associated themselves in a democratic manner to carry on a common purpose; and

  • (b) to advance the cause of uniformity of cooperative business law in Canada.

• Marginal note:Carrying on business in more than one place

  (2) No cooperative may be incorporated under this Act unless

  • (a) it will carry on its undertaking in two or more provinces; and

  • (b) it will have a fixed place of business in more than one province.

• Marginal note:Application

  (3) This Act applies to cooperatives incorporated under this Act that have not been discontinued.

• Marginal note:Non-application of certain Acts

  (4) No provision of the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act or the Winding-up and Restructuring Act applies to a cooperative.

• Marginal note:Limitation on business that can be carried on

  (5) No cooperative may carry on the business of

  • (a) a bank;

  • (b) a company to which the Insurance Companies Act applies;

  • (c) a company to which the Trust and Loan Companies Act applies; or

  • (d) an association to which the Cooperative Credit Associations Act applies.

• Marginal note:Prohibition on granting degrees

  (6) No cooperative may carry on business as a degree-granting educational institution unless expressly authorized to do so by a federal or provincial agent that by law has the power to confer degree-granting authority on an educational institution.

Marginal note:Control

• 4 (1) For the purposes of this Act,

  • (a) a person controls a body corporate if securities of the body corporate to which are attached more than fifty per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate; and

  • (b) a person controls a cooperative entity if the person has the right to exercise more than fifty per cent of the votes that may be cast at an annual meeting or to appoint or elect a majority of the directors.

• Marginal note:Holding body corporate

  (2) A body corporate is the holding body corporate of another if that other body corporate is its subsidiary.

• Marginal note:Subsidiary

  (3) A body corporate is a subsidiary of another body corporate if

  • (a) it is controlled by

    • (i) that other body corporate,

    • (ii) that other body corporate and one or more bodies corporate each of which is controlled by that other body corporate, or

    • (iii) two or more bodies corporate each of which is controlled by that other body corporate; or

  • (b) it is a subsidiary of a body corporate that is a subsidiary of that other body corporate.

• Marginal note:Exemptions — on application by cooperative

  (4) On the application of a cooperative, the Director may determine that the cooperative is not or was not a distributing cooperative if the Director is satisfied that the determination would not be prejudicial to the public interest.

• Marginal note:Exemptions — classes of cooperatives

  (5) The Director may determine that a class of cooperatives are not or were not distributing cooperatives if the Director is satisfied that the determination would not be prejudicial to the public interest.

• (6) [Repealed, 2001, c. 14, s. 138]

Share Ownership

Marginal note:Membership share ownership

5 A member is a holder of a membership share of a cooperative when, according to the members’ register of the cooperative, the member is the owner of the membership share or is entitled to be entered in the members’ register or like record of the cooperative as the owner of the membership share.

Marginal note:Investment share ownership

6 A person is a shareholder of a cooperative when, according to the securities register of the cooperative, the person is the owner of an investment share or is entitled to be entered in the securities register or like record of the cooperative as the owner of the investment share.

Cooperative Basis

Marginal note:Cooperative basis

• 7 (1) For the purposes of this Act, a cooperative is organized and operated, and carries on business, on a cooperative basis if

  • (a) membership in the cooperative is open, in a non-discriminatory manner, to persons who can use the services of the cooperative and who are willing and able to accept the responsibilities of membership;

  • (b) each member or delegate has only one vote;

  • (c) no member or delegate may vote by proxy;

  • (d) interest on any member loan is limited to a maximum percentage fixed in the articles;

  • (e) dividends on any membership share are limited to the maximum percentage fixed in the articles;

  • (f) to the extent feasible, members provide the capital required by the cooperative, with the return paid on member capital not to exceed the maximum percentage specified in the articles;

  • (g) surplus funds arising from the cooperative’s operations are used

    • (i) to develop its business,

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

    • (iii) to provide for reserves or the payment of interest on member loans or dividends on membership shares and investment shares,

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

    • (v) as a distribution among its members as a patronage return; and

  • (h) it educates its members, officers, employees and the public on the principles and techniques of cooperative enterprise.

• Marginal note:Restrictions

  (2) Paragraph (1)(a) is subject to any restrictions on the classes of persons to which membership may be available that may reasonably relate to any business restriction set out in the articles of the cooperative and to the reasonable commercial ability of the cooperative to provide services to prospective members, as long as the restrictions are consistent with applicable laws with respect to human rights.

• Marginal note:Exception

  (3) Despite paragraph (1)(b),

  • (a) the articles of a federation may provide that the members or delegates of the federation have more than one vote;

  • (b) if, before the coming into force of this subsection, the articles of association or charter by-laws of a former Act cooperative provide that a member or delegate of the former Act cooperative has more than one vote, the articles filed under subsection 379(2) may contain the same provisions with respect to voting rights of members or delegates;

  • (c) any provision referred to in paragraph (b) is deemed to be contained in the articles of the cooperative until it complies with subsection 379(2); and

  • (d) the articles of a cooperative may provide that subject to the conditions stated in the articles, a cooperative entity may have more than one vote in a cooperative.

PART 2Incorporation, Structure and Organization

Incorporators

Marginal note:Incorporators

• 8 (1) An application for incorporation of a cooperative may be made by a minimum of three persons, or by one or more cooperative entities, who intend to be members of the cooperative.

• Marginal note:Persons not to be incorporators

  (2) An application under subsection (1) is not to be made by

  • (a) an individual who is less than eighteen years of age;

  • (b) an individual who is incapable; or

  • (c) an individual or body corporate that has the status of bankrupt.

Capital Structure

Marginal note:Capital structure

9 A cooperative may be incorporated with or without membership shares and with or without the power to issue investment shares.

Application for Incorporation

Marginal note:Application

10 An application for incorporation is made by sending the following to the Director:

• (a) articles of incorporation;

• (b) a notice of registered office in accordance with section 30;

• (c) a notice of directors in accordance with section 81; and

• (d) and (e) [Repealed, 2018, c. 8, s. 49]

• (f) any other information that the Director may require to make a decision under section 12.

Articles of Incorporation

Marginal note:Articles

• 11 (1) Articles of incorporation must be in the form fixed by the Director and contain the following particulars:

  • (a) the name of the cooperative;

  • (b) the place in Canada where its proposed registered office will be located;

  • (c) [Repealed, 2018, c. 8, s. 50]

  • (d) the number of directors or the minimum and maximum number of directors;

  • (e) any restriction on the businesses that the cooperative may carry on;

  • (f) any restriction on the class of membership in the cooperative;

  • (g) a statement that the cooperative will be organized and operated and will carry on business on a cooperative basis;

  • (h) a statement that the cooperative will carry on its undertaking in two or more provinces and will have a fixed place of business in more than one province;

  • (i) whether the cooperative is to be incorporated with or without membership share capital, and, if there is to be no membership share capital, a statement that the interest or right of each member as member is, subject to subsection 7(3), the same as that of every other member;

  • (j) if there is to be membership share capital, whether the number of membership shares to be issued is unlimited or limited, and if limited, the maximum number of membership shares that may be issued, and, if the membership shares are to have a par value, their par value and, if they are not to have par value, whether the membership shares are to be issued, purchased, redeemed or otherwise acquired at a fixed price or at a price determined in accordance with a formula, and if so, the particulars of the formula;

  • (k) any provision for a maximum rate of return that may be paid on member loans or membership shares;

  • (l) whether there is to be investment share capital and, if so, the particulars of it;

  • (m) any provisions for the distribution of the property of the cooperative on its dissolution and, in the case of a cooperative to which Part 20 or 21 applies, the provisions for that distribution of property in accordance with the applicable Part; and

  • (n) any provision by which the members, other than by means of a unanimous agreement, restrict, in whole or in part, the powers of the directors to manage the business of the cooperative.

• Marginal note:Additional provisions

  (2) The articles may set out any provisions that could be set out in the by-laws of the cooperative and if they do, any reference in this Act to the by-laws of the cooperative is also a reference to those provisions of the articles.

• Marginal note:Special majorities

  (3) Subject to subsection (4), the articles or a unanimous agreement may require a greater number of votes of directors, members or shareholders than is required by this Act to effect an action.

• Marginal note:Voting number

  (4) Neither the articles nor a unanimous agreement may require, in order to remove a director or delegate, that more than a majority of the votes cast by or on behalf of the persons who are entitled to vote be so cast.

• (5) [Repealed, 2018, c. 8, s. 50]

Incorporation

Marginal note:Issuance of certificate of incorporation

• 12 (1) The Director must issue a certificate of incorporation for a cooperative if the Director is satisfied that

  • (a) the articles are in accordance with section 11 and, if applicable, section 353 and subsection 359(2);

  • (b) the cooperative will be organized and operated and will carry on business on a cooperative basis;

  • (c) the cooperative will comply with Part 20 or 21, if applicable; and

  • (d) a notice that is required to be given under subsection 30(2) or 81(1) indicates that the cooperative, if it came into existence, would be in compliance with the Act.

• Marginal note:Reliance on articles

  (2) For the purposes of paragraphs (1)(b) and (c), the Director may rely on the articles required by section 10.

Marginal note:Date of existence and effect

13 On the day set out in its certificate of incorporation, a cooperative comes into existence and the incorporators become members of the cooperative.

By-laws

Marginal note:Adoption of by-laws

14 Without delay after the issuance of the certificate of incorporation, a meeting of the members must be held to make by-laws for the cooperative.

Marginal note:By-laws — mandatory provisions

• 15 (1) The by-laws of a cooperative must provide for

  • (a) the qualifications of members and the procedures for acceptance of members;

  • (b) the rights of joint members, if any;

  • (c) the membership obligations of members, including any obligation to use the services of the cooperative and any fees to be paid by members;

  • (d) if the cooperative has auxiliary members, the rights and obligations of auxiliary members and the conditions for their acceptance by the cooperative as auxiliary members, including

    • (i) the relationship an individual must have with the cooperative in order to be an auxiliary member, and

    • (ii) the services of the cooperative that may be available to auxiliary members;

  • (e) whether the interest or right of a member in the cooperative may, subject to section 46, be transferred or assigned, and any conditions or restrictions that apply to such a transfer or assignment;

  • (f) the selection, qualifications, term of office and removal of directors and members of committees of directors;

  • (g) the distribution of any surplus earnings arising from the operations of the cooperative;

  • (h) if the cooperative is to act as an agent or mandatary for its members, a definition of that relationship;

  • (i) subject to sections 39 and 40 and Parts 20 and 21, the conditions on which membership is terminated, whether by withdrawal or by involuntary termination, if it may be terminated otherwise than as provided for in this Act, and the determination of the value and disposition of the member’s interest or right in the cooperative on termination; and

  • (j) if the cooperative wishes to permit members or shareholders to attend a meeting of the cooperative by means of a communication facility referred to in subsection 48(3), the ways in which votes must be held.

• Marginal note:By-laws — other provisions

  (2) The by-laws of a cooperative may provide for

  • (a) the representation of members by delegates and, if so,

    • (i) the designation of the classes or regional groups of members, if any, who may be represented by delegates,

    • (ii) the procedure for altering classes or regional groups of members, if applicable, and

    • (iii) the powers, duties, selection, voting rights and procedures for the removal of delegates;

  • (b) the division of members into classes or regional groups and, if so,

    • (i) the qualifications for membership in each class or regional group,

    • (ii) the conditions precedent to membership in each class or regional group,

    • (iii) the method, time and manner of withdrawing from a class or regional group or transferring membership from one class or regional group to another and any applicable conditions on a transfer, and

    • (iv) the conditions on which membership in a class or regional group ends;

  • (c) the referral of disputes between a member and the cooperative to a process of dispute resolution; and

  • (d) any other matter that the members consider necessary or desirable.

Marginal note:Binding effect of by-laws and articles

16 The articles and by-laws of a cooperative bind it and its members to the same extent as if they

• (a) had been signed by the cooperative and every member; and

• (b) contained undertakings by every member and the successors, assigns and personal representatives of every member to observe all the provisions of the articles and by-laws.

Marginal note:Copies

• 17 (1) Each member and shareholder may on request, not more than once in each calendar year, receive free of charge one copy of the articles, the by-laws and any unanimous agreement, and one copy of any amendments to the articles, the by-laws and any unanimous agreement, of the cooperative.

• Marginal note:Copies

  (2) The cooperative must provide each creditor, and, where the cooperative is a distributing cooperative, any other person, on payment of a reasonable fee, with a copy of the articles, the by-laws and any unanimous agreement of the cooperative.

Cooperative Basis

Marginal note:Cooperative basis

• 18 (1) Every cooperative must be organized and operated and must carry on business on a cooperative basis.

• Marginal note:Complaint

  (2) A person may make an application to the court in accordance with section 329 if the person has a complaint that

  • (a) a cooperative is not organized, operated or carrying on business on a cooperative basis; or

  • (b) in the case of a cooperative to which Part 20 or 21 applies, the cooperative is not complying with the applicable Part.

Pre-incorporation Contracts

Marginal note:Pre-incorporation contracts

• 19 (1) Subject to this section, a person who enters into, or purports to enter into, a written contract in the name of or on behalf of a cooperative before it comes into existence is personally bound by the contract and is entitled to its benefits, unless the contract expressly provides otherwise.

• Marginal note:Adoption by cooperative

  (2) A cooperative may, within a reasonable time after it comes into existence, adopt a contract that was made in its name or on its behalf before it came into existence by any act or conduct that signifies the cooperative’s intention to be bound by the contract.

• Marginal note:Effect of adoption

  (3) If a cooperative adopts a contract under this section,

  • (a) the cooperative is bound by the contract and entitled to its benefits as of the date of the contract; and

  • (b) the person who originally entered into the contract ceases to be bound by the contract or to be entitled to its benefits, subject to an order made under subsection (4).

• Marginal note:Court order

  (4) Whether or not a cooperative has adopted a contract, the court may, on application by a party to the contract,

  • (a) make an order respecting the nature and extent of the obligations and liability under the contract of the cooperative and the person who entered into or purported to enter into the contract by or on behalf of the cooperative; and

  • (b) make any other order that the court considers just in the circumstances.

Name

Marginal note:Required name

• 20 (1) A cooperative must have the word “cooperative”, “co-operative”, “coop”, “co-op”, “coopérative”, “united” or “pool”, or another grammatical form of any of those words, as part of its name.

• Marginal note:Use of abbreviation

  (2) A cooperative that has the word “cooperative”, “co-operative”, “coop”, “co-op” or “coopérative”, or another grammatical form of any of those words, as part of its name may use and be legally designated by any of those words or forms.

• Marginal note:Business restriction

  (3) If the business of a cooperative is restricted by its articles or by a resolution of its members to a specific business purpose, the cooperative must have as part of its name one or more words that suggest the nature of the restriction.

• Marginal note:Alternate form

  (4) The name of a cooperative may be set out in its articles in an English form, a French form, an English form and a French form, or a combined English and French form, so long as the combined form meets the prescribed criteria. The cooperative may use and be legally designated by any such form.

• (5) [Repealed, 2001, c. 14, s. 144]

• Marginal note:Identification outside Canada

  (6) A cooperative may set out in its articles its name in any language form and, if it does, it may use and be legally designated outside Canada by its name in that form.

• Marginal note:Publication of name

  (7) A cooperative must set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for things or services made by or on behalf of the cooperative and in all documents filed with the Director under this Act.

Marginal note:Other name

21 Subject to subsection 20(3) and section 23, a cooperative may carry on business or identify itself by a name or style other than as set out in its articles.

Marginal note:Reservation of name

22 The Director may, on request, reserve for a prescribed period a name for an intended cooperative or for a cooperative that intends to change its name.

Marginal note:Prohibited names

23 A cooperative must not be incorporated or continued as a cooperative under this Act with, change its name to, or have, carry on business under or identify itself by a name that is prohibited by the regulations or that does not meet the prescribed requirements.

Marginal note:Direction to change name

• 24 (1) The Director may direct a cooperative to change its name in accordance with section 289 if, through inadvertence or otherwise, the cooperative acquires a name that is prohibited by the regulations or that does not meet the prescribed requirements.

• Marginal note:Revocation of name

  (2) If a cooperative has not followed a directive under subsection (1) or (3) within the prescribed period, the Director may revoke the name of the cooperative and assign a new name to it and, until changed in accordance with section 289, the name of the cooperative is the name assigned by the Director.

• Marginal note:Undertaking to change name

  (3) If a cooperative acquires a name as a result of a person undertaking to dissolve or to change names, and the undertaking is not honoured, the Director may direct the cooperative to change its name in accordance with section 289, unless the undertaking is honoured within the period specified in subsection (2).

• (4) [Repealed, 2018, c. 8, s. 53]

• (5) [Repealed, 2018, c. 8, s. 53]

Marginal note:Certificate of amendment

• 24.1 (1) If the Director assigns a new name to a cooperative under subsection 24(2), the Director must issue a certificate of amendment showing the new name of the cooperative and must publish a notice of the change of name as soon as practicable in a publication generally available to the public.

• Marginal note:Effect of certificate

  (2) The articles of the cooperative are amended accordingly on the date shown in the certificate of amendment.

Marginal note:Prohibition on use of name

25 Every entity, other than a cooperative incorporated under this Act or a body corporate incorporated by or under the authority of another Act of Parliament or an Act of the legislature of a province, is guilty of an offence if the entity uses or authorizes the use of the word “cooperative”, “co-operative”, “co-op”, “coop”, “coopérative” or “pool”, or another grammatical form of any of those words, as part of its name or in any manner in connection with the conduct of its business so that the entity could reasonably be considered to be holding itself out as carrying on business as a cooperative entity.

PART 3Capacity and Powers

Marginal note:Legal capacity

• 26 (1) Subject to this Act, a cooperative

  • (a) has the capacity and the rights, powers and privileges of a natural person; and

  • (b) may carry on business throughout Canada.

• Marginal note:By-laws not required to confer powers

  (2) It is not necessary for a cooperative to pass a by-law in order to confer any particular power on a cooperative or its directors.

Marginal note:Powers outside the jurisdiction

• 27 (1) Subject to this Act, a cooperative has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.

• Marginal note:Business restriction

  (2) No cooperative and no subsidiary of a cooperative may carry on any business contrary to a restriction set out in the articles of the cooperative.

• Marginal note:Validity of acts

  (3) No act of a cooperative, including a transfer of property, is invalid by reason only that the act is contrary to its articles or this Act.

• Marginal note:Constructive notice

  (4) A member of a cooperative is deemed to have knowledge of the content of the articles and by-laws of the cooperative.

• Marginal note:No constructive notice

  (5) Subject to subsection (4), no person is deemed to have knowledge of the content of a document by reason only that it is filed with the Director or is available for inspection at the cooperative.

Marginal note:Assertions

• 28 (1) No cooperative and no guarantor of an obligation of a cooperative may assert against a person dealing with the cooperative or against a person who acquired rights from the cooperative that

  • (a) the cooperative’s articles, by-laws or any unanimous agreement have not been complied with;

  • (b) the persons named in the most recent notice of directors filed with the Director are not the directors;

  • (c) the place named in the most recent notice of registered office filed with the Director is not the registered office;

  • (d) a person held out as a director, an officer, an agent or a mandatary of the cooperative has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the cooperative or usual for a director, officer, agent or mandatary;

  • (e) a document issued by a director, officer, agent or mandatary of the cooperative with actual or usual authority to issue it is not valid or genuine; or

  • (f) a sale, lease or exchange of all or substantially all of the property of the cooperative was not authorized.

  • (g) [Repealed, 2001, c. 14, s. 145]

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of a person who has, or ought to have, knowledge of a situation described in that subsection by virtue of their relationship to the cooperative.

Marginal note:No personal liability

29 The members and shareholders of a cooperative, by reason only of being members or shareholders, are not liable for any liability, act or default of the cooperative, except as provided in this Act.

PART 4Registered Office and Records

Registered Office

Marginal note:Place of registered office

• 30 (1) A cooperative must maintain a registered office in the place set out in its articles.

• Marginal note:Notice of registered office

  (2) A notice of registered office in the form that the Director fixes must be sent to the Director together with any articles that designate or change the place of the registered office of the cooperative.

• Marginal note:Change of address

  (3) The directors may change the address of the registered office within the place specified in the articles.

• Marginal note:Notice of change of address

  (4) A cooperative must send to the Director, within fifteen days after any change of address of its registered office, a notice in the form that the Director fixes.

Records

Marginal note:Record keeping

• 31 (1) A cooperative must prepare and maintain the following records at its registered office or at any other place in Canada designated by the directors:

  • (a) the cooperative’s articles and by-laws, including any amendments and a copy of any unanimous agreement;

  • (b) the minutes of meetings of the members and shareholders;

  • (c) copies of all notices of directors and notices of change of directors;

  • (d) a list of its members, setting out their names and addresses, the number of any membership shares owned and the amount of any member loans;

  • (e) a list of its shareholders, setting out their names and addresses and the number of investment shares owned;

  • (f) a register of its directors, setting out the names and addresses of the individuals who are or who have been directors and the dates on which they became or ceased to be directors; and

  • (g) if the cooperative issues securities in registered form, a securities register that complies with section 186.

• Marginal note:Other records

  (2) In addition to the records specified in subsection (1), a cooperative must prepare and maintain adequate

  • (a) accounting records;

  • (b) records containing minutes of meetings and resolutions of directors and any committee of directors; and

  • (c) records sufficient for the purpose of calculating patronage returns, that show for each member particulars of the transactions between the cooperative and the member.

• Marginal note:When records or registers kept outside Canada

  (3) Despite subsection (1), but subject to the Income Tax Act, the Excise Tax Act, the Customs Act and any other Act administered by the Minister of National Revenue, a cooperative may keep all or any of its records mentioned in paragraphs (1)(a), (b), (c), (f) and (g) and (2)(a) and (b) at a place outside Canada, if

  • (a) the records are available for inspection, by means of a computer terminal or other technology, during regular office hours at the registered office or another office in Canada designated by the directors; and

  • (b) the cooperative provides the technical assistance to facilitate an inspection referred to in paragraph (a).

• Marginal note:Retention of accounting records

  (4) Subject to any other Act of Parliament and to any Act of the legislature of a province that provides for a longer retention period, a cooperative must retain the accounting records referred to in paragraph (2)(a) for a period of six years after the end of the financial year to which they relate.

• Marginal note:Records of continued cooperatives

  (5) For the purposes of paragraph (1)(b) and subsections (2) to (4), if a body corporate is continued under this Act, “records” includes similar records required by law to be maintained by the body corporate before it was so continued.

Marginal note:Form of records

• 32 (1) Any register or record required by this Act must be prepared and maintained in a form that is capable of reproducing any required information in intelligible written form within a reasonable time, including

  • (a) a bound or loose-leaf form;

  • (b) a photographic form;

  • (c) a system of mechanical or electronic data processing; or

  • (d) any other information storage device.

• Marginal note:Precautions

  (2) A cooperative and its agents and mandataries must take reasonable precautions respecting the registers and records required by this Act to

  • (a) prevent their loss or destruction;

  • (b) prevent the falsification of entries in them; and

  • (c) facilitate the detection and correction of inaccuracies in them.

• Marginal note:Records open to directors’ inspection

  (3) The records described in section 31, other than those described in paragraph 31(2)(c), must be open for inspection by the directors at any reasonable time.

• Marginal note:Inspection and copying of records by members, creditors and shareholders

  (4) Members, creditors and shareholders of the cooperative, their personal representatives and the Director may examine the records referred to in paragraphs 31(1)(a), (b), (c) (f) and (g) during the usual business hours of the cooperative and may take extracts from the records, free of charge, or have copies of them made after payment of a reasonable fee.

Lists

Marginal note:Lists

• 33 (1) Members, shareholders and creditors of a cooperative and their personal representatives and, where the cooperative is a distributing cooperative, any other person, may request that the cooperative provide them with a list of members or shareholders, no later than ten days after the cooperative receives the affidavit referred to in subsection (2) and after payment of a reasonable fee.

• Marginal note:Affidavit

  (2) A request under subsection (1) must be accompanied by an affidavit containing

  • (a) the name and address of the applicant; and

  • (b) an undertaking that the list of members or shareholders will not be used except as permitted by subsection (5).

• Marginal note:Request by Director

  (3) The Director may request that the cooperative provide him or her with a list of members or shareholders, no later than ten days after the cooperative receives the request and after payment of a reasonable fee.

• Marginal note:Contents of list

  (4) The list of members or shareholders provided under subsection (1) or (3) must set out in alphabetical order the names and addresses of the members or shareholders of the cooperative as of a date not more than ten days before the receipt of the affidavit referred to in subsection (2) or the request referred to in subsection (3).

• Marginal note:Permitted uses of list

  (5) A list obtained under subsection (1) must not be used by any person except in connection with

  • (a) an effort to influence voting at a meeting of the cooperative; and

  • (b) any other matter relating to the affairs of the cooperative.

• Marginal note:Non-inclusion of name on request

  (6) A member or shareholder may advise the cooperative in writing that their name is not to be included in a list prepared by the cooperative further to a request under subsection (1), in which case the cooperative must not include that name in the list but must mention on the list that the list is incomplete.

Corporate Seal

Marginal note:Corporate seal

• 34 (1) A cooperative may but need not adopt a corporate seal and may change a corporate seal that is adopted.

• Marginal note:Validity of unsealed documents

  (2) A document executed or, in Quebec, signed on behalf of a cooperative is not invalid merely because a corporate seal is not affixed to it.

PART 5Membership

Conditions for Membership

Marginal note:By-laws govern

35 Subject to this Act and any provision in the articles, membership in a cooperative is governed by its by-laws.

Marginal note:Application for membership

• 36 (1) No person may be admitted to membership in a cooperative until

  • (a) the person has applied for membership in writing;

  • (b) the application has been approved by the directors; and

  • (c) the person has complied with the membership provisions required by the by-laws, including subscribing for any minimum number of membership shares, paying any minimum amount on account of the subscription price of the shares or paying any minimum amount on account of a member loan.

• Marginal note:Effective date of membership

  (2) If all the conditions set out in subsection (1) have been met within six months after the date on which the cooperative receives the application for membership, the directors may make the admission of the member into membership effective as of the date of the application or as of any date after that date but before the end of the six months.

Marginal note:Right to vote

• 37 (1) Subject to subsection (2) and subsection 7(3), a member has one vote on all matters to be decided by the members.

• Marginal note:Delegates

  (2) If the by-laws provide that the voting rights of a member are vested in one or more delegates to be elected or appointed by the members, the delegates so elected or appointed may exercise all or any of those rights.

• Marginal note:When delegation permitted by by-laws

  (3) When in this Act reference is made to a meeting of members and the cooperative has a by-law providing for the appointment of delegates, a reference in this Act to a meeting of members is to be construed as a reference to a meeting of delegates.

Marginal note:Members under eighteen years of age

• 38 (1) Subject to the by-laws, a person less than eighteen years of age may be admitted to membership in a cooperative and may vote at meetings of the cooperative.

• Marginal note:Minors

  (2) The articles and by-laws of a cooperative, and any unanimous agreement, are binding on a member who is less than eighteen years of age.

Withdrawal from Membership

Marginal note:Withdrawal of membership

• 39 (1) Unless the by-laws provide otherwise, this section applies to the voluntary withdrawal of a member from membership in a cooperative.

• Marginal note:Written notice

  (2) A member may withdraw from membership in a cooperative by written notice to the cooperative. Any such withdrawal is effective on the later of the date stated in the notice and the date on which the cooperative receives the notice.

• Marginal note:Redemption of membership shares and repayment of amounts owing on withdrawal

  (3) Subject to section 149, the cooperative must, no later than one year after the effective date of a notice of withdrawal, redeem all membership shares held by the withdrawing member at the redemption price determined in accordance with section 146 and repay to the member all member loans, all other amounts held to the member’s credit and all amounts outstanding on loans made to the cooperative by the member, together with any interest accrued on those amounts up to the date of the payment.

• Marginal note:Redemption and repayment more than one year after withdrawal

  (4) Despite subsection (3), if the directors determine that the redemption of membership shares, or the repayment of membership loans, of a withdrawing member would adversely affect the financial well-being of the cooperative, the directors may direct that the redemption and repayment referred to in subsection (3) take place after the end of the one year period.

• Marginal note:Withdrawal not to have certain effects

  (5) Unless the directors determine otherwise,

  • (a) the withdrawal of a member from the cooperative does not release the member from any debt or obligation to the cooperative or contract with the cooperative; and

  • (b) the cooperative need not, despite subsection (3), repay to the member amounts outstanding on loans made to the cooperative that have a fixed maturity date until that date has arrived.

Termination of Membership

Marginal note:Termination of membership by directors

• 40 (1) This section sets out the rights and procedures that apply to termination of membership. The by-laws of a cooperative may derogate from this section, but only in respect of the manner in which the membership of members may be terminated.

• Marginal note:Special resolution of directors

  (2) The directors may by special resolution order the termination of the membership of a member but, if the cooperative is in breach of section 149 — or if making the payment referred to in subsection (7) would put the cooperative in breach of section 149 — the termination is not effective until the cooperative is no longer in breach.

• Marginal note:Written notice

  (3) Not more than ten days after the date on which a special resolution is made, the secretary of the cooperative must give written notice to the member of the termination and the reasons for it. Subject to subsections (4) and (5), the effective date of the termination is the later of the date specified in the written notice and thirty days after the member receives the notice.

• Marginal note:Appeal

  (4) A member whose membership has been terminated may appeal from the decision of the directors to the next meeting of members by giving written notice to the secretary of the member’s intention to appeal no later than thirty days after receiving notice of the special resolution.

• Marginal note:Effect of notice of appeal

  (5) If a member gives a notice of appeal, the effect of the special resolution is suspended until the vote of the members under subsection (6).

• Marginal note:Resolution of members

  (6) If a member appeals the termination of membership, a vote of members must be taken at the next meeting of members as to whether the member’s membership should be terminated as of the effective date referred to in subsection (3). The vote is by majority of the members present at the meeting, unless a greater proportion is specified in the articles, the by-laws or a unanimous agreement.

• Marginal note:Effect of termination of membership

  (7) Subject to section 149, if a member’s membership is terminated, a cooperative must, no later than one year after the date of the special resolution, redeem all membership shares held by the member at the redemption price determined in accordance with section 146, and repay to the member all member loans and all other amounts held to the member’s credit and all amounts outstanding on loans made to the cooperative by the member, together with any interest accrued on those amounts up to the date of the payment.

• Marginal note:Termination of membership not to have certain effects

  (8) Unless the directors determine otherwise, the termination of the membership of a member does not release the member from any debt or obligation to the cooperative or contract with the cooperative.

• Marginal note:If address of member unknown

  (9) If the address of a member whose membership has been terminated by the directors is unknown to the cooperative after all reasonable efforts have been made to ascertain it and two years have elapsed since the effective date referred to in subsection (3), the cooperative must transfer all amounts owing under subsection (7) to a reserve fund, but those amounts do not, despite subsection (7), include any interest that would have accrued after the end of the two years.

• Marginal note:Amounts paid to entitled persons

  (10) If any amounts are transferred to a reserve fund under subsection (9), the cooperative must pay those amounts to any person who, no later than ten years after the transfer, shows evidence of entitlement satisfactory to the cooperative. If no person appears to show that evidence within the ten years, the amounts become the property of the cooperative.

Limitation

Marginal note:Limitation on by-law

41 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 or member loans in contravention of section 149.

Termination of Membership by Members

Marginal note:Termination by members

42 Unless the by-laws provide otherwise, the membership of a member may be terminated by a special resolution of the members. Section 40 applies, with any modifications that the circumstances require, to a termination by the members.

Other Terminations

Marginal note:Termination of inactive membership

• 43 (1) A cooperative may, by written notice to a member, terminate the membership if the member

  • (a) is a body corporate and winding-up proceedings have commenced with respect to it; or

  • (b) failed, during a period of two consecutive years, to transact any business with the cooperative.

• Marginal note:Provisions not to apply

  (2) Section 40, other than subsections 40(7) to (10), does not apply to a termination under this section.

Marginal note:Non-profit housing cooperatives

44 If the membership of a person in a non-profit housing cooperative is terminated, any right of the person to possession or occupancy of residential premises acquired by virtue of membership in the cooperative is subject to Part 20.

Marginal note:Re-admission

45 A person whose membership has been terminated under section 40 or 42 may be re-admitted to membership only by special resolution of the members.

Marginal note:Transfer

46 No transfer of a membership, a member loan or a membership share in a cooperative is valid for any purpose unless it is approved by the directors and the transferee has otherwise complied with the articles and by-laws of the cooperative and, if applicable, become a party to a unanimous agreement.

Marginal note:If membership too low

47 If the membership of a cooperative is reduced to a number less than the number of members required for incorporation, and if after thirty days notice remains at less than that number, the Director may require the cooperative

• (a) to apply for a certificate of continuance under the Canada Business Corporations Act, if it was incorporated with membership capital; or

• (b) to be liquidated or dissolved under Part 17.

PART 6Corporate Governance

Meetings

Marginal note:Place of members’ meetings

• 48 (1) Meetings of the members of a cooperative are to be held at the place in Canada provided for in the by-laws or, in the absence of such a provision, at any place in Canada that the directors may determine.

• Marginal note:Place of shareholders’ meetings

  (2) Meetings of the shareholders must be held at the place set out in the articles. If the articles do not set out such a place, the meetings are to be held at the place in Canada that the directors determine, unless all the shareholders entitled to vote at the meeting agree that the meeting is to be held at another place that is not in Canada.

• Marginal note:Participation in meeting by electronic means

  (3) Unless the by-laws provide otherwise, a member or shareholder may participate in a meeting of the cooperative, in accordance with the regulations, if any, by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the cooperative makes available such a communication facility.

• Marginal note:Meeting held by electronic means

  (3.1) If the directors of a cooperative, or any other person, call a meeting of the cooperative pursuant to this Act, those directors or that person, as the case may be, may determine that the meeting shall be held, in accordance with the regulations, if any, entirely by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the by-laws so provide.

• Marginal note:Presence

  (4) A person participating in a meeting referred to in subsection (3) is deemed to be present at the meeting.

Marginal note:Calling members’ meetings

• 49 (1) After holding the organizational meeting referred to in section 82, the directors must call a meeting of the members without delay.

• Marginal note:Business at first meeting

  (2) The members, at their first meeting, must

  • (a) adopt by-laws for the cooperative;

  • (b) elect directors in accordance with subsection 81(3); and

  • (c) subject to subsection 254(1), appoint an auditor to hold office until the close of the first annual meeting of members.

Marginal note:Calling meetings of the members

• 50 (1) The directors must call the first annual meeting of members not later than eighteen months after the cooperative comes into existence and an annual meeting of members must be held not later than the earlier of

  • (a) fifteen months after holding the last annual meeting, and

  • (b) six months after the end of the preceding financial year.

• Marginal note:Special meetings

  (2) The directors may at any time call a special meeting of the members or of the shareholders.

• Marginal note:Order to delay calling of annual meeting

  (3) Despite subsection (1), the cooperative may apply to the court for an order extending the time for calling an annual meeting.

Marginal note:Record date

• 51 (1) The directors may, within the prescribed period, fix in advance a date as the record date for the determination of the members or shareholders who are entitled to receive payment of a dividend or for any other purpose except the right to receive notice of, or to vote at, a meeting.

• Marginal note:Record date — members’ meetings

  (2) For the purpose of determining the persons who are entitled to receive notice of, or to vote at, a meeting of members, the record date is

  • (a) the day before the day on which the notice is given; or

  • (b) if no notice is given, the day of the meeting.

• Marginal note:Record date — notice of shareholders’ meetings

  (3) For the purpose of determining the shareholders who are entitled to receive notice of a meeting of the shareholders, the directors may, within the prescribed period, fix in advance a date as the record date for that determination.

• Marginal note:Record date — voting at shareholders’ meetings

  (4) For the purposes of determining the shareholders who are entitled to vote at a meeting of shareholders, the directors may, within the prescribed period, fix in advance a date as the record date for that determination.

• Marginal note:If no record date fixed

  (5) If no record date is fixed under subsection (1) or (3), the record date

  • (a) for the determination of members or shareholders for any purpose, other than to establish the right of a member or shareholder to receive notice of a meeting or to vote, is the day on which the directors pass the resolution relating to the particular purpose; and

  • (b) for the determination of shareholders who are entitled to receive notice of a meeting is

    • (i) the day before the day on which the notice is given, or

    • (ii) if no notice is given, the day of the meeting.

• Marginal note:If record date fixed

  (6) If a record date with respect to shareholders is fixed under this section, unless notice of the date is waived by each shareholder whose name is set out in the securities register at the close of business on the day the directors fix the record date, notice of the record date must be given within the prescribed period

  • (a) by advertisement in a newspaper published or distributed in a place where the cooperative has its registered office and in each place in Canada where it has a transfer agent or where a transfer of its investment shares may be recorded; and

  • (b) by written notice to each stock exchange in Canada on which the investment shares of the cooperative are listed for trading.

Marginal note:Notice of meetings

• 52 (1) Notice of the time and place of a meeting of a cooperative must be sent within the prescribed period

  • (a) to each person who is entitled to vote at the meeting;

  • (b) to each director; and

  • (c) to the auditor of the cooperative, if any.

• Marginal note:Exception

  (1.1) In the case of a cooperative that is not a distributing cooperative, the notice may be sent within a shorter period if so specified in the articles or the by-laws.

• Marginal note:Publication

  (2) Notice of the time and place of a meeting of the holders of investment shares of any class that is publicly traded on a recognized stock exchange in Canada may be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the registered office of the cooperative is situated and in each place in Canada where the cooperative has a transfer agent or where a transfer of the investment shares may be recorded.

• Marginal note:By-laws may specify manner of giving notice to members

  (3) The by-laws of a cooperative may derogate from this section, but only in respect of the manner in which notice of a meeting of members may be given to members.

Marginal note:Notice not required

53 A notice of a meeting of a cooperative need not be sent to a shareholder who was not registered on the records of the cooperative or its transfer agent on the record date fixed or determined under section 51.

Marginal note:Failure to receive notice

54 Failure to receive notice of a meeting does not deprive a person of a right to vote at the meeting to which the person is otherwise entitled.

Marginal note:Notice when adjournment

• 55 (1) If a meeting of a cooperative is adjourned for less than thirty days, it is not necessary, unless the by-laws provide otherwise, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.

• Marginal note:Notice of adjournment — meetings of members

  (2) If a meeting of members is adjourned by one or more adjournments for a total of thirty days or more, notice of the adjourned meeting must be given as for the original meeting.

• Marginal note:Notice of adjournment — meetings of shareholders

  (3) If a meeting of shareholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the adjourned meeting must be given as for the original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 165(1) does not apply.

Marginal note:Special business

• 56 (1) All matters dealt with at a special meeting of a cooperative and all matters dealt with at an annual meeting, except consideration of the financial statements, the auditor’s report, the business of the cooperative, the election of directors, the remuneration of directors and the re-appointment of the incumbent auditor, are special business.

• Marginal note:Notice if special business is to be transacted

  (2) Notice of a meeting of a cooperative at which special business is to be transacted must

  • (a) state the nature of the special business in sufficient detail to permit the recipient to form a reasoned judgement with respect to the special business; and

  • (b) contain the text of any special resolution to be submitted to the meeting.

Marginal note:Waiver of notice

• 57 (1) A person who is entitled to attend a meeting of a cooperative may waive notice of the meeting in any manner.

• Marginal note:Attendance is waiver

  (2) Attendance at a meeting of a cooperative is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called.

Proposals

Marginal note:Proposals

• 58 (1) A member may

  • (a) submit to the cooperative notice of any matter that the member proposes to raise at an annual meeting; and

  • (b) discuss at the meeting any matter in respect of which the member would have been entitled to submit a proposal.

• Marginal note:Proposals by members or directors to amend articles

  (2) Any member or director may, in accordance with section 290, make a proposal to amend the articles.

• Marginal note:Proposals by other persons to amend articles

  (2.1) Any other person may, in accordance with section 290, make a proposal to amend the articles if the person

  • (a) has been, for at least the prescribed period, the registered holder or the beneficial owner of at least the prescribed number of outstanding investment shares of the cooperative; or

  • (b) has the support of persons who, in the aggregate, and including or not including the person that submits the proposal, have been, for at least the prescribed period, the registered holders, or the beneficial owners of, at least the prescribed number of outstanding investment shares of the cooperative.

• Marginal note:Information to be provided

  (2.2) A proposal submitted by a person described in paragraph (2.1)(a) must be accompanied by the following information:

  • (a) the name and address of the person and of the person’s supporters, if applicable; and

  • (b) the number of investment shares held or owned by the person and by the person’s supporters, if applicable, and the date the investment shares were acquired.

• Marginal note:Information not part of proposal

  (2.3) The information provided under subsection (2.2) does not form part of the proposal or of the supporting statement referred to in subsection (3) and is not included for the purposes of the prescribed maximum word limit set out in subsection (3).

• Marginal note:Proof may be required

  (2.4) If requested by the cooperative within the prescribed period, a person who submits a proposal must provide proof, within the prescribed period, that the person meets the requirements of subsection (2.1).

• Marginal note:Proposal and statement to accompany notice of meeting

  (3) A proposal submitted for consideration at a meeting must be attached to the notice of the meeting, together with, if requested by the person making the proposal, a statement in support of the proposal and the name and address of person making the proposal. The statement and the proposal must together not exceed the prescribed maximum number of words.

• Marginal note:Exceptions

  (4) A cooperative need not comply with subsection (3) if

  • (a) the proposal is not submitted to the cooperative within the prescribed period;

  • (b) it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the cooperative or its directors, officers, members or security holders;

  • (c) not more than the prescribed period before the receipt of a proposal, a person failed to present, at a meeting, a proposal that, at the person’s request, had been attached by the cooperative to the notice of the meeting;

  • (d) substantially the same proposal was attached to a notice of meeting relating to a meeting of the cooperative held not more than the prescribed period before the receipt of the proposal and the proposal did not receive the prescribed minimum amount of support at the meeting; or

  • (e) the rights conferred by subsections (1) and (2) are being abused to secure publicity.

• Marginal note:Cooperative may refuse to include proposal

  (4.1) If

  • (a) a person described in subsection (2.1) makes a proposal and fails to continue to hold or own the number of investment shares referred to in that subsection up to and including the day of the meeting, or

  • (b) a member makes a proposal and, prior to the meeting, withdraws from membership in accordance with section 39,

  the cooperative is not required to include in the notice of a meeting, or attach to it, any proposal submitted by that person for any meeting held within the prescribed period following the date of the meeting.

Marginal note:Liability for circulation

59 No cooperative or person acting on behalf of a cooperative incurs any liability by reason only of circulating a proposal or statement in accordance with section 58.

Marginal note:Refusal to include proposal

• 60 (1) If a cooperative refuses to include a proposal in a notice of a meeting referred to in section 52, the cooperative must, within the prescribed period after the day on which it receives the proposal or the day on which it receives the proof of ownership under subsection 58(2.4), as the case may be, notify in writing the person submitting the proposal of its intention to omit the proposal from the notice and of the reasons for the refusal.

• Marginal note:Restraining order by court

  (2) On the application of a person submitting a proposal who claims to be aggrieved by a cooperative’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order it thinks fit.

• Marginal note:Order to omit proposal from notice

  (3) A cooperative or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the cooperative to omit the proposal from a notice of meeting, and the court, if it is satisfied that subsection 58(4) applies, may make any order that it thinks fit.

Lists

Marginal note:List of persons entitled to receive notice

• 61 (1) A cooperative must prepare an alphabetical list of its members as of the record date established under subsection 51(2) or, if the by-laws provide for delegates, of the delegates, who are entitled to receive notice of and vote at a meeting of members.

• Marginal note:Entitlement to vote — members’ meetings

  (2) Subject to subsection 7(3), a member or delegate whose name appears on the list referred to in subsection (1) is entitled to one vote at a meeting of members.

• Marginal note:List of shareholders entitled to vote

  (3) If a record date for voting is fixed under subsection 51(4), a cooperative must prepare, no later than ten days after the record date, an alphabetical list of shareholders who are entitled to vote as of the record date at a meeting of shareholders that shows the number of investment shares held by each shareholder.

• Marginal note:Entitlement to vote

  (4) A shareholder named in the list referred to in subsection (3) is entitled to vote the investment shares opposite their name at the meeting to which the list relates.

• Marginal note:List of shareholders entitled to receive notice

  (5) If a record date for voting is not fixed under subsection 51(4), a cooperative must prepare, not later than 10 days after the record date for notice of a meeting that is fixed under subsection 51(3) or not later than the record date that is referred to in subsection 51(5), as the case may be, an alphabetical list of shareholders who are entitled to receive notice of a meeting of shareholders as of the record date that shows the number of shares held by each shareholder.

• Marginal note:Entitlement to vote

  (6) A shareholder whose name appears on the list referred to in subsection (5) is entitled to vote the investment shares shown opposite their name at the meeting to which the list relates, except to the extent that

  • (a) the shareholder has transferred the ownership of any of those investment shares after the record date, and

  • (b) the transferee of those investment shares demands, not later than ten days before the meeting, or any shorter period that the by-laws of the cooperative provide, that the transferee’s name be included in the list before the meeting and produces properly endorsed investment share certificates or otherwise establishes that the transferee owns the investment shares,

  in which case the transferee may vote the shares at the meeting.

• Marginal note:Examination of list

  (7) A person who is entitled to vote at a meeting of a cooperative may examine a list that relates to the meeting

  • (a) during usual business hours at the registered office of the cooperative or at the place where its records of members and shareholders are maintained; and

  • (b) at the meeting for which the list was prepared.

Procedure

Marginal note:Quorum

• 62 (1) Unless the by-laws provide otherwise, a quorum is present at a meeting of the cooperative if persons holding a majority of the voting rights that may be exercised at the meeting are present in person or represented in a manner provided for by this Act or permitted by the by-laws.

• Marginal note:Opening quorum sufficient

  (2) If a quorum is present at the opening of a meeting, the persons who are present and entitled to vote may, unless the by-laws provide otherwise, proceed with the business of the meeting even though a quorum is not present throughout the meeting.

• Marginal note:Adjournment

  (3) If a quorum is not present at the opening of a meeting, the persons who are present and entitled to vote may adjourn the meeting to a fixed time and place but may not transact any other business.

Marginal note:Representative

• 63 (1) If an entity is entitled to vote at a meeting of a cooperative, the cooperative must recognize any individual authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of the cooperative.

• Marginal note:Powers of representative

  (2) An individual who is authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were an individual.

Marginal note:Joint voting — members

• 64 (1) Unless the by-laws provide otherwise, each joint member may vote at a meeting of members.

• Marginal note:Joint voting — shareholders

  (2) Unless the articles provide otherwise, if two or more persons hold investment shares jointly, one of those holders present at a meeting of shareholders may, in the absence of the others, vote the investment shares, but if two or more of those persons who are present vote, in person or by proxy, they vote as one on the investment shares jointly held by them.

Marginal note:Voting by show of hands

• 65 (1) Unless the by-laws provide otherwise, voting at a meeting of a cooperative takes place by a show of hands except when a ballot is demanded by a person who is entitled to vote at the meeting.

• Marginal note:Ballot

  (2) A person who is entitled to vote at a meeting may demand a ballot either before or after a vote by show of hands.

• Marginal note:Electronic voting

  (3) Despite subsection (1), unless the by-laws provide otherwise, any vote referred to in subsection (1) may be held, in accordance with the regulations, if any, entirely by means of a telephonic, electronic or other communication facility, if the cooperative makes available such a communication facility.

• Marginal note:Voting while participating electronically

  (4) Unless the by-laws otherwise provide, a member or shareholder participating in a meeting of the cooperative under subsection 48(3) or (3.1) and entitled to vote at that meeting may vote, in accordance with the regulations, if any, by means of the telephonic, electronic or other communication facility that the cooperative has made available for that purpose.

Marginal note:Resolution in lieu of meeting

• 66 (1) Unless the by-laws provide otherwise, and except when a written statement is submitted under section 89 or subsection 260(4), a resolution in writing signed by all the persons who are entitled to vote on that resolution at a meeting of the cooperative is as valid as if it had been passed at such a meeting.

• Marginal note:Resolution

  (2) Unless the by-laws provide otherwise, and except when a written statement is submitted under section 89 or subsection 260(4), a resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of a cooperative, and signed by all the persons who are entitled to vote at the meeting, satisfies all the requirements of this Act relating to meetings.

• Marginal note:Copies of resolutions

  (3) A copy of every resolution referred to in subsection (1) must be kept with the minutes of the meeting.

Marginal note:Evidence

67 Unless a ballot is demanded, an entry in the minutes of a meeting to the effect that the chairperson of the meeting declared a resolution to be carried or defeated is, in the absence of evidence to the contrary, proof of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

Marginal note:One shareholder meeting

68 If a cooperative has only one shareholder, or only one holder of any class or series of investment shares, the shareholder present in person or represented by proxy constitutes a meeting of the shareholders or a meeting of shareholders of that class or series.

Requisitions

Marginal note:Requisition of meeting

• 69 (1) Two or more persons who together hold not less than five per cent of the voting rights that could be exercised at a meeting of a cooperative may requisition the directors to call such a meeting for the purposes stated in the requisition.

• Marginal note:Form

  (2) The requisition

  • (a) must state the business to be transacted at the meeting and be sent to each director and to the registered office of the cooperative; and

  • (b) may consist of several documents of like form, each signed by one or more persons who are entitled to vote at the meeting.

• Marginal note:Directors calling meeting

  (3) On receipt of the requisition, the directors must call a meeting to transact the business stated in the requisition unless

  • (a) the directors have called a meeting and given notice of it under section 52;

  • (b) the business of the meeting as stated in the requisition includes matters described in any of paragraphs 58(4)(b) to (e); or

  • (c) the business of the meeting as stated in the requisition includes a matter

    • (i) in the case of a requisition by a member, outside the powers of the members, and

    • (ii) in the case of a requisition by a shareholder, outside the powers of the shareholders.

• Marginal note:Member or shareholder calling meeting

  (4) If the directors do not call a meeting within twenty-one days after receiving the requisition, any person who signed the requisition may call the meeting unless any of paragraphs (3)(a) to (c) applies.

• Marginal note:Procedure

  (5) A meeting called under this section must be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws, a unanimous agreement and this Act.

• Marginal note:Reimbursement

  (6) Unless the persons who are present and entitled to vote at a meeting called under subsection (4) resolve otherwise, the cooperative must reimburse the persons who signed the requisition for the expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

Other Methods of Calling Meetings

70 [Repealed, 2001, c. 14, s. 157]

Marginal note:Meeting called by court

• 71 (1) A court, on the application of a director or a person who is entitled to vote at a meeting, may order a meeting of a cooperative to be called, held and conducted within the time and in the manner that the court directs, if

  • (a) it is not feasible to call the meeting within the time or in the manner in which those meetings are to be called;

  • (b) it is not feasible to conduct the meeting in the manner required by this Act or the by-laws; or

  • (c) the court thinks the meeting should be called, held and conducted in the manner it directs for any other reason.

• Marginal note:Varying quorum

  (2) Without restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted under this section.

• Marginal note:Valid meeting

  (3) A meeting called, held and conducted under this section is for all purposes a meeting duly called, held and conducted.

Marginal note:Court review of election

• 72 (1) A cooperative, a director or any person who is entitled to vote in the election or appointment of a director or an auditor may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the cooperative.

• Marginal note:Powers of court

  (2) On an application under subsection (1), a court may make any order it thinks fit, including an order

  • (a) restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

  • (b) declaring the result of a disputed election or appointment;

  • (c) requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the cooperative until a new election is held or a new appointment is made; or

  • (d) determining the voting rights of persons claiming to be entitled to vote.

By-laws

Marginal note:Making or amendment of by-law by members

• 73 (1) The members may, by special resolution, make, amend or repeal any by-law that regulates the business and affairs of the cooperative.

• Marginal note:Making or amendment of by-law by directors

  (2) Unless the by-laws of a cooperative provide otherwise, the directors may, by special resolution, make a by-law or amend a by-law of the cooperative, but only if the by-law or amendment is not contrary to a by-law made by the members.

• Marginal note:Approval

  (3) The directors must present a by-law or an amendment to a by-law that is made under subsection (2) to the members at the next meeting of members and the members may, by special resolution, confirm or amend it.

• Marginal note:By-law not confirmed

  (4) If a by-law or an amendment to a by-law made by the directors is not confirmed, with or without amendments, under subsection (3), the by-law or amendment is repealed as of the date of the meeting of members at which it was not confirmed.

Marginal note:Proposal of by-law

74 A member may, in accordance with section 58, make a proposal to make, amend or repeal a by-law.

Marginal note:Effective date of by-law

• 75 (1) A by-law or an amendment to or repeal of a by-law made by the members is effective from the later of the date of the resolution made under subsection 73(1) and the date specified in the by-law, amendment or repeal.

• Marginal note:Effective date of by-law

  (2) A by-law or an amendment to a by-law made by the directors is effective from the later of the date the by-law is made or amended by the directors and the date specified in the by-law, until it is confirmed, with or without amendment, under subsection 73(3) or repealed under subsection 73(4) and, if the by-law is confirmed, or confirmed as amended, it is in effect in the form in which it was so confirmed.

• Marginal note:If by-law not approved

  (3) If a by-law or an amendment to a by-law made by the directors under subsection 73(2) is not submitted by the directors to the next meeting of the members as required under subsection 73(3), the by-law or amendment ceases to be effective from the date of that meeting.

• Marginal note:New resolution of directors

  (4) If a by-law or an amendment to a by-law made by the directors under subsection 73(2) is repealed under subsection 73(4) or ceases to be effective under subsection (3), no subsequent resolution of the directors to make or amend a by-law that has substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the members.

PART 7Directors and Officers

General Provisions

Marginal note:Number of directors

• 76 (1) A cooperative must have at least three directors or any greater minimum number that is set out in the articles.

• Marginal note:Effect of decrease

  (2) If the articles are amended to decrease the number of directors, the term of any incumbent director is not affected.

• Marginal note:Effect of increase

  (3) At a meeting to amend the articles to increase the number of directors, the persons who are entitled to do so may elect or appoint the additional number of directors.

Marginal note:Directors as members

77 Not less than two thirds of the directors, or any greater proportion that is provided for by the articles, must be members of the cooperative, or representatives of members that are entities or members of members that are cooperative entities.

Marginal note:Qualifications

• 78 (1) A person is not qualified to be a director if the person

  • (a) is not an individual;

  • (b) is less than eighteen years of age;

  • (c) is incapable; or

  • (d) has the status of bankrupt.

• Marginal note:Additional qualifications

  (2) A cooperative may provide in its by-laws for qualifications or disqualifications of directors in addition to those in subsection (1).

• Marginal note:Status of directors

  (3) Unless Part 21 applies to a cooperative, a majority of the directors must be individuals who are not full-time officers or employees of the cooperative.

• Marginal note:Resident in Canada

  (4) At least twenty-five per cent of the directors must be resident in Canada. However, if the cooperative has only three directors, at least one director must be resident in Canada.

• Marginal note:Member election

  (5) Subject to subsections 124(3) and (4), all directors are to be elected by the members.

Marginal note:Functions of directors

79 Subject to this Act and to the articles and any unanimous agreement, the directors manage or supervise the management of the business and affairs of the cooperative.

Marginal note:Duties

• 80 (1) Every director and officer must, in exercising the powers and performing the duties of office,

  • (a) act honestly and in good faith with a view to the best interests of the cooperative; and

  • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• Marginal note:Duty of compliance

  (2) Every director and officer must comply with this Act, the articles, the by-laws and any unanimous agreement.

• Marginal note:No exculpation

  (3) Subject to subsection 115(5), no provision in a contract, the articles, the by-laws, a unanimous agreement or a resolution relieves a director or officer from complying with this Act and the regulations or from liability for non-compliance.

Marginal note:Notice of directors

• 81 (1) At the time of sending articles of incorporation, the incorporators must send the Director a notice of directors, in the form that the Director fixes.

• Marginal note:First directors

  (2) When a cooperative comes into existence, the individuals identified in the notice have all the powers and duties of directors until the first meeting of members.

• Marginal note:First meeting

  (3) At the first meeting of members after a cooperative comes into existence, the directors are to be elected or appointed in accordance with this Act, the articles, the by-laws and any unanimous agreement.

Marginal note:Organizational meeting

• 82 (1) After a cooperative comes into existence, a meeting of directors must be held at which the directors may

  • (a) adopt forms of security certificates and of cooperative records;

  • (b) admit persons to membership in the cooperative and issue or authorize the issuance of membership shares and member loan certificates;

  • (c) appoint officers;

  • (d) appoint an auditor to hold office until the first meeting of members;

  • (e) make arrangements with an appropriate financial institution; and

  • (f) transact any other business necessary to organize the cooperative.

• Marginal note:Notice

  (2) An incorporator or a director may call a meeting of directors referred to in subsection (1) by giving not less than five days notice of the meeting to each director, stating the time and place of the meeting.

Marginal note:Rules for election of directors

• 83 (1) Unless the articles, the by-laws or a unanimous agreement provides otherwise, the election of the directors must be in accordance with this section, subsection 78(5) and sections 84 to 87 and 124.

• Marginal note:Annual election

  (2) Elections of directors are to be held annually at a meeting of the persons who are entitled to elect or appoint them.

• Marginal note:Term of office

  (3) Directors hold office until the close of the meeting at which their successors are elected.

• Marginal note:Staggered terms

  (4) It is not necessary that all directors elected at a meeting of the cooperative hold office for the same term.

• Marginal note:Re-election

  (5) Directors may be re-elected.

• Marginal note:Election or appointment as director

  (6) An individual who is elected or appointed to hold office as a director is not a director and is deemed not to have been elected or appointed to hold office as a director unless

  • (a) he or she was present at the meeting when the election or appointment took place and he or she did not refuse to hold office as a director; or

  • (b) he or she was not present at the meeting when the election or appointment took place and

    • (i) he or she consented to hold office as a director in writing before the election or appointment or within ten days after it, or

    • (ii) he or she has acted as a director pursuant to the election or appointment.

• (7) [Repealed, 2001, c. 14, s. 160]

• Marginal note:Secret ballot

  (8) Directors are to be elected by secret ballot if the number of nominees exceeds the number of directors to be elected.

• Marginal note:Casting ballot

  (9) A ballot that is cast for the election of more than the number of directors to be elected is null or void.

• Marginal note:Determining election of directors

  (10) The individual who receives the greatest number of votes at an election of directors is elected a director and the other individuals who receive, in descending order, the next greatest numbers of votes are also elected directors, until the number of directors to be elected has been elected. If two individuals receive an equal number of votes for the last vacancy on the board, the directors already elected to the board must determine which of the two individuals is to be elected.

• Marginal note:Majority voting

  (10.1) If, at a meeting of persons who are entitled to elect or appoint directors of a distributing cooperative — other than in the case of a prescribed class of distributing cooperatives — at which an election of directors is required, there is only one candidate nominated for each position available on the board, each candidate is elected only if the number of votes cast in their favour represents a majority of the votes cast for and against them by those persons who are present in person or represented by proxy, unless the articles require a greater number of votes.

• Marginal note:Incumbent director not elected

  (10.2) Despite subsection (3) and paragraph 84(1)(b), if an incumbent director who was a candidate in an election held in accordance with subsection (10.1) was not elected during the election, the director may continue in office until the earlier of

  • (a) the 90th day after the day of the election; and

  • (b) the day on which their successor is appointed or elected.

• Marginal note:Separate election

  (11) If shareholders have a right to elect one or more directors, they vote separately from the members.

• Marginal note:Separate vote for each candidate

  (12) If the election of directors is for a prescribed cooperative, a separate vote by persons who are entitled to elect or appoint directors must be taken with respect to each candidate nominated for director.

• Marginal note:Exception

  (13) If an individual who was a candidate in an election held in accordance with subsection (10.1) was not elected during that election, the individual is not to be appointed, except in prescribed circumstances, as a director under subsection 85(1) before the next meeting at which an election of directors is required by persons who are entitled to elect or appoint directors.

Marginal note:Maximum term

• 84 (1) Subject to section 86, a director is entitled to hold office for a term expiring not later than

  • (a) in the case of a cooperative that is not a distributing cooperative, the close of the third annual meeting of members following the director’s election; and

  • (b) in the case of a distributing cooperative, the close of the next annual meeting of members following the director’s election.

• Marginal note:Exceptions — certain distributing cooperatives

  (2) Despite paragraph (1)(b), in the case of any prescribed class of distributing cooperatives or in any prescribed circumstances respecting distributing cooperatives or classes of distributing cooperatives, the directors are not entitled to hold office for a term that is longer than three years.

Marginal note:Vacancy on board

• 85 (1) Subject to subsection (3), if there is a vacancy on the board of directors, except a vacancy because of an increase in the number or the minimum or maximum number of directors provided for in the articles or because of a failure to elect or appoint the number or minimum number of directors provided for in the articles, and there is still a quorum on the board, the remaining directors may

  • (a) continue to fulfil their functions without filling the vacancy; or

  • (b) subject to subsection (8), appoint a director to fill the vacancy.

• Marginal note:Failure to appoint or elect minimum

  (2) If, at the close of a meeting of a cooperative, the persons at the meeting have failed to appoint or elect the number or minimum number of directors required by this Act or the articles, the purported appointment or election of directors at the meeting

  • (a) is valid if the directors purported to be appointed or elected and the incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or

  • (b) is null or void if the directors purported to be appointed or elected and the incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.

• Marginal note:Special meeting

  (3) The articles may provide that if there is a vacancy on the board of directors, the remaining directors must call a special meeting of the persons who are entitled to vote for the purpose of electing or appointing directors to fill the vacancy.

• Marginal note:Absence of quorum

  (4) If there is not a quorum of directors, the directors must, without delay, call a special meeting of the persons who are entitled to vote to fill the vacancy, and if they fail to do so, any person who is entitled to vote at a meeting of the cooperative may call the meeting.

• Marginal note:Vacant board

  (5) If the board of directors is vacant, any person who is entitled to vote at a meeting of the cooperative may call a special meeting to elect directors to fill the vacancies.

• Marginal note:Deemed directors

  (6) If all of the directors have resigned or been removed without replacement, a person who manages or supervises the management of the business and affairs of the cooperative is deemed to be a director for the purposes of this Act.

• Marginal note:Exceptions

  (7) Subsection (6) does not apply to

  • (a) an officer who manages the business or affairs of the cooperative under the direction or control of a member, shareholder or other person;

  • (b) a lawyer, notary, accountant or other professional who participates in the management of the cooperative solely for the purpose of providing professional services; or

  • (c) a trustee in bankruptcy, receiver, receiver-manager, sequestrator or secured creditor who participates in the management of the cooperative or exercises control over its property solely for the purpose of the realization of security or the administration of a bankrupt’s estate, in the case of a trustee in bankruptcy.

• Marginal note:Class director

  (8) Subject to subsection (3), if there is a vacancy in the position of a director who is to be elected by a class vote of either the members or the shareholders,

  • (a) any remaining directors elected or appointed by that class may act under subsection (1); or

  • (b) if there are no such remaining directors, any member of the class may act under subsection (5).

• Marginal note:Unexpired term

  (9) Unless the by-laws provide otherwise, a director who is elected or appointed to fill a vacancy holds office for the unexpired term of their predecessor in office.

Marginal note:Continuation in office

86 If the election of directors does not occur at the time fixed by this Act, the by-laws or a unanimous agreement, the directors then in office continue in office until their successors are elected.

Marginal note:Ceasing to hold office

• 87 (1) A director ceases to hold office when he or she dies, resigns, is removed from office or is no longer qualified to be a director.

• Marginal note:Resignation date

  (2) A resignation of a director becomes effective on the later of

  • (a) the day a written letter of resignation is sent to the cooperative, and

  • (b) the day specified in the letter of resignation.

Marginal note:Removal of directors

• 88 (1) A director may be removed from office by ordinary resolution at a special meeting of the persons who are entitled to vote in the election or appointment of that director.

• Marginal note:Vacancy

  (2) The vacancy created by the removal of a director may be filled at the meeting at which the director was removed.

Marginal note:Resignation statement

• 89 (1) A director who resigns is entitled to submit to the cooperative a written statement giving the reasons for the resignation.

• Marginal note:Opposition statement

  (2) A director who learns of

  • (a) a meeting of the cooperative called for the purpose of removing the director, or

  • (b) a meeting of the cooperative, or of the directors, at which another person is to be appointed or elected to succeed or replace the director,

  is entitled to attend and address the meeting, or to submit a written statement to the cooperative, giving the reasons why the director opposes any proposed action or resolution at the meeting.

• Marginal note:Circulation of statement

  (3) When the cooperative receives a statement under subsection (1) or (2), it must ensure that a copy of it is sent without delay to the Director and to every person who is entitled to receive notice of the meeting.

• Marginal note:Immunity for statement

  (4) No cooperative or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (3).

Marginal note:Right to attend meetings

90 A director is entitled to receive notice of, to attend and to be heard at every meeting of the cooperative.

Marginal note:Notice of change of director or director’s address

• 91 (1) A cooperative must, within fifteen days after

  • (a) a change is made among its directors, or

  • (b) it receives a notice of change of address of a director referred to in subsection (2),

  send to the Director a notice, in the form that the Director fixes, setting out the change.

• Marginal note:Director’s change of address

  (2) A director must, within fifteen days after changing his or her address, send the cooperative a notice of that change.

• Marginal note:Application to court

  (3) Any interested person, or the Director, may apply to a court for an order to require a cooperative to comply with subsection (1), and the court may so order and make any further order it thinks fit.

Marginal note:Place of meetings

• 92 (1) The directors may meet at any place unless the articles or by-laws provide otherwise.

• Marginal note:Notice of meeting

  (2) Unless the by-laws provide otherwise, notice of the time and place of a meeting of directors must be given to every director by sending the notice not less than ten days before the date of the meeting to the latest address of the director as shown on the records of the cooperative.

Marginal note:Content of notice

93 Notice of a meeting of directors must specify the time and place of the meeting but need not specify the matter to be dealt with at the meeting, unless the matter is one listed in subsection 109(3).

Marginal note:Waiver of notice

94 A director may, in any manner, waive notice of a meeting of directors and attendance at a meeting constitutes waiver of notice unless the director is attending for the purpose of objecting to the meeting on the ground that it was not lawfully called.

Marginal note:Adjourned meeting

95 There is no need to give notice for the continuation of a meeting of directors that is adjourned or for a meeting of directors that immediately follows an annual meeting.

Marginal note:Quorum

96 Unless the articles, the by-laws or a unanimous agreement provides for a greater proportion, a majority of the number or minimum number of directors, subject to section 97, constitutes a quorum at any meeting of directors or of a committee of directors, and, despite any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

Marginal note:Quorum

• 97 (1) To constitute a quorum,

  • (a) at least twenty-five per cent of the directors at the meeting must be resident in Canada or, if the cooperative has only three directors, at least one of the directors at the meeting must be resident in Canada; and

  • (b) a majority of the directors at the meeting must be members of the cooperative, or representatives of members that are entities or members of members that are cooperative entities.

• Marginal note:Exception

  (2) Despite subsection (1), a meeting of directors may be held without the number of directors resident in Canada required under that subsection if

  • (a) a director who is resident in Canada and who is not present approves, in writing or by telephonic, electronic or other communication facilities, the business transacted at the meeting; and

  • (b) the required number would have been present had that director been present at the meeting.

Marginal note:Participation

• 98 (1) Subject to the by-laws, a director may, in accordance with the regulations, if any, participate in a meeting of directors or of a committee of directors by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.

• Marginal note:Presence

  (2) A director participating in a meeting by a means referred to in subsection (1) is deemed to be present at the meeting.

Marginal note:Validity of acts

99 No act of a director or officer is invalid by reason only of an irregularity in the person’s election or appointment or because the director or officer is not qualified to be one.

Marginal note:Resolution in lieu of meeting

• 100 (1) A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors or of a committee of directors, is as valid as if it had been passed at a meeting of directors or of a committee of directors.

• Marginal note:Copy of resolutions

  (2) A copy of every resolution referred to in subsection (1) must be kept with the minutes of the meetings of the directors or committee of directors.

• Marginal note:Evidence

  (3) Unless a ballot is demanded, an entry in the minutes of a meeting to the effect that the chairperson of the meeting declared a resolution to be carried or defeated is, in the absence of evidence to the contrary, proof of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

Liability

Marginal note:Directors’ liability

• 101 (1) Directors who vote for or consent to a resolution authorizing the issue of a membership share or an investment share in exchange for a thing or service other than money are jointly and severally, or solidarily, liable to the cooperative to make good any amount by which the thing or service received is less than the fair equivalent of the money that the cooperative would have received if the membership share or investment share had been issued for money on the date of the resolution.

• Marginal note:Exemption

  (2) A director is not liable under subsection (1) if the director proves that he or she did not know and could not reasonably have known that the membership share or investment share was issued for a thing or service less than the fair equivalent of the money that the cooperative would have received if the membership share or investment share had been issued for money on the date of the resolution.

• Marginal note:Further liability

  (3) Directors who vote for or consent to resolutions authorizing any of the following matters are jointly and severally, or solidarily, liable to restore to the cooperative any amounts so distributed or paid and not otherwise recovered by the cooperative:

  • (a) a redemption or other acquisition of shares or the repayment of member loans contrary to this Act;

  • (b) a commission contrary to this Act;

  • (c) a payment of a dividend, a patronage return or interest contrary to this Act;

  • (d) [Repealed, 2001, c. 14, s. 166]

  • (e) a payment of an indemnity contrary to this Act; or

  • (f) any other payment contrary to this Act.

• Marginal note:Contribution

  (4) A director who satisfies a judgment for a debt owed under this section is entitled to contribution from the other directors who were liable for the debt.

• Marginal note:Recovery

  (5) A director who is liable under subsection (3) may apply to a court for an order to recover any money or property referred to in paragraphs (3)(a) to (f).

• Marginal note:Order of court

  (6) A court may, on application under subsection (5), if it is satisfied that it is equitable to do so,

  • (a) order any person to pay or deliver to the director any money or property referred to in paragraphs (3)(a) to (f) that was paid or distributed to that person;

  • (b) order a cooperative to return or issue membership shares or investment shares to a person from whom the cooperative redeemed or otherwise acquired membership shares or investment shares;

  • (c) order any person to repay to the cooperative the amount of a member loan that was repaid; or

  • (d) make any further order that it sees fit.

• Marginal note:Limitation period

  (7) An action to enforce a liability imposed by this section may not be commenced more than two years after the date of the resolution authorizing the action complained of.

Marginal note:Liability for wages

• 102 (1) Subject to this section and any other applicable law, each director is jointly and severally, or solidarily, liable to the employees of the cooperative for all debts payable to them for services performed while the director held office.

• (2) [Repealed, 2001, c. 14, s. 167]

• Marginal note:Amount of liability

  (3) The amount of the liability under this section may not exceed six months wages in the case of each employee.

• Marginal note:Conditions precedent

  (4) A director is not liable under this section unless

  • (a) the cooperative was sued for the debt within six months after it became due and execution was returned unsatisfied in whole or in part;

  • (b) the cooperative has commenced liquidation or dissolution proceedings or was dissolved and a claim for the debt was proved no later than six months after the earlier of the date of commencement of the proceedings and the date of the dissolution; or

  • (c) the cooperative made an assignment or was made subject to a bankruptcy order under the Bankruptcy and Insolvency Act and a claim for the debt was proved no later than six months after the date of the assignment or bankruptcy order.

• Marginal note:Limitation period

  (5) A director is not liable under this section unless he or she is sued while holding office or no later than two years after ceasing to be a director.

• Marginal note:Amount due after execution

  (6) If execution referred to in paragraph (4)(a) has issued, the amount recoverable from the director is the amount remaining unsatisfied after execution.

• Marginal note:Subrogation of director

  (7) A director who pays a debt owed under this section that is proven in liquidation and dissolution or bankruptcy proceedings is subrogated to any priority that the employee would have been entitled to and, if a judgment has been obtained, the director is

  • (a) in Quebec, subrogated to the employee’s rights as declared in the judgment; and

  • (b) elsewhere in Canada, entitled to an assignment of the judgment.

• Marginal note:Contribution

  (8) A director who pays a debt owed under this section is entitled to contribution from the other directors who were liable for the debt.

Conflict of Interests

Marginal note:Disclosure of interest

• 103 (1) A director or officer must, in accordance with this section, disclose to the cooperative the nature and extent of any interest that the director or officer has in a material contract or transaction, or a proposed material contract or transaction, with the cooperative, and any material change to any such interest, if the director or officer

  • (a) is a party to the contract or transaction;

  • (b) is a director or officer — or an individual acting in a similar capacity — of a party to the contract or transaction; or

  • (c) has a material interest in a party to the contract or transaction.

• Marginal note:Exemption

  (2) This section does not require the disclosure of an interest in a contract or transaction that is available to and customarily entered into between the cooperative and its members, if the contract or transaction is on the same terms as are generally available to members.

• Marginal note:Manner of disclosure

  (3) The director or officer must make the disclosure in writing to the cooperative or request to have it entered in the minutes of the meetings of directors.

• Marginal note:Time of disclosure for a director

  (4) A director must make the disclosure

  • (a) at the meeting of directors at which the proposed contract or transaction is first considered;

  • (b) if the director was not interested in the proposed contract or transaction at the time of the meeting referred to in paragraph (a), at the first meeting after the director acquires an interest in it;

  • (c) if there is a material change in the director’s interest in the contract, transaction, proposed contract or proposed transaction, at the first meeting after the change;

  • (d) if the director becomes interested in a contract or transaction after it is made, at the first meeting after the director acquires an interest in it;

  • (e) if the director had an interest in the contract or transaction before becoming a director, at the first meeting after becoming a director; or

  • (f) if the contract or transaction is one that would, in the ordinary course of business, not require the approval of the directors, as soon as the director becomes aware of the contract or transaction.

• Marginal note:Time of disclosure for an officer

  (5) An officer who is not a director must make the disclosure

  • (a) immediately after becoming aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors;

  • (b) if the officer acquires an interest in a contract or transaction after it is made, immediately after the officer acquires an interest in it;

  • (c) if there is a material change in the officer’s interest in the contract, transaction, proposed contract or proposed transaction, immediately after the change;

  • (d) if the officer had an interest in the contract or transaction before becoming an officer, immediately after becoming an officer; or

  • (e) if the contract or transaction is one that would, in the ordinary course of business, not require the approval of the directors, as soon as the officer becomes aware of the contract or transaction.

• Marginal note:Access

  (6) The members and shareholders may examine the portions of minutes of meetings of directors, of other documents that contain disclosures under this section and of the general notice referred to in section 105 during the usual business hours of the cooperative.

• (7) [Repealed, 2001, c. 14, s. 168]

Marginal note:Voting

• 104 (1) A director who is interested in a contract or transaction referred to in subsection 103(1) may not vote on any resolution to approve the contract or transaction.

• Marginal note:Exception

  (2) Subsection (1) does not apply to

  • (a) a contract or transaction that relates primarily to the director’s remuneration as a director, officer, employee or agent or mandatary of the cooperative or of one of its subsidiaries; or

  • (b) a contract for indemnity or insurance under section 113.

Marginal note:Continuing disclosure

105 For the purposes of section 103, a general notice to the directors declaring that the director or officer is a director or officer of an entity or acting in a similar capacity, or has a material interest in an entity, or that there has been a change in the nature of their interest in the entity, and that the director or officer is therefore to be regarded as interested in a contract or transaction made with that entity, as declared in the notice, is a sufficient declaration of interest in a contract or transaction so made.

Marginal note:Effect of disclosure

106 A contract or transaction for which disclosure is required under section 103 is not invalid, and the director or officer is not accountable to the cooperative, its members or its shareholders for any profit realized from the contract or transaction, because of the director’s or officer’s interest in the contract or transaction or because the director was present or was counted to determine whether a quorum existed at the meeting of directors or committee of directors that considered the contract or transaction, if

• (a) disclosure of the interest was made in accordance with sections 103 to 105;

• (b) the directors approved the contract or transaction; and

• (c) the contract or transaction was reasonable and fair to the cooperative when it was approved.

Marginal note:Confirmation

106.1 Even if the conditions of section 106 are not met, a director or officer, acting honestly and in good faith, is not accountable to the cooperative, its members or its shareholders for any profit realized from a contract or transaction for which disclosure is required under section 103 and the contract or transaction is not invalid by reason only of the interest of the director or officer in the contract or transaction if

• (a) the contract or transaction is approved or confirmed by special resolution at a meeting of the members;

• (b) disclosure of the interest was made to the members in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and

• (c) the contract or transaction was reasonable and fair to the cooperative when it was approved or confirmed.

Marginal note:Court order

107 If a director or officer of a cooperative fails to disclose an interest in a material contract or transaction in accordance with section 103, or otherwise fails to comply with sections 103 to 106.1, a court may, on the application of the cooperative or a member or shareholder, set aside the contract or transaction on any terms that it thinks fit or order that the director or officer account to the cooperative, its members or its shareholders for any profit realized from the contract or transaction.

Officers

Marginal note:Officers

108 Subject to the articles, the by-laws and any unanimous agreement, the directors may

• (a) designate the offices of the cooperative;

• (b) specify the powers and duties of each office;

• (c) appoint any individual of full capacity, including a director, to be an officer;

• (d) appoint one individual to hold more than one office; and

• (e) delegate to the officers the power to manage the business and affairs of the cooperative, except a power referred to in subsection 109(3).

Marginal note:Appointment of managing director or committee

• 109 (1) The directors may appoint from among themselves a managing director or any committee they consider necessary.

• Marginal note:Residency

  (2) The managing director must be resident in Canada.

• Marginal note:Delegation

  (3) The directors may delegate to a managing director or a committee composed of at least three directors any powers of the directors, except the power to

  • (a) fill a vacancy among the directors or in the office of the auditor, or appoint additional directors;

  • (b) declare dividends on shares, interest on member loans or patronage returns;

  • (c) approve a financial statement of the cooperative;

  • (d) submit to the persons who are entitled to vote on them questions or matters required to be approved at a meeting of the cooperative;

  • (e) make decisions that by this Act, the articles or a unanimous agreement are required to be made by a vote of greater than a majority of the directors;

  • (f) redeem or otherwise acquire shares issued by the cooperative;

  • (g) pay a commission referred to in section 128, except as authorized by the directors;

  • (h) approve a management proxy circular referred to in Part 9;

  • (i) issue securities, except in the manner and on the terms authorized by the directors; or

  • (j) issue investment shares of a series under section 126 except as authorized by the directors.

• Marginal note:Powers

  (4) A committee referred to in subsection (1) may exercise the powers that have been delegated to it subject to any restrictions imposed by the directors.

• Marginal note:Membership on committee

  (5) A director who is appointed to a committee may remain on the committee until the appointment is revoked or the person ceases to be a director.

• Marginal note:Duties

  (6) A committee appointed under this section must

  • (a) fix its quorum at not less than a majority of its members;

  • (b) keep minutes of its proceedings; and

  • (c) report, at each meeting of the directors, on the proceedings of the committee since the last meeting of the directors.

Marginal note:Deemed assent

• 110 (1) A director who is present at a meeting of directors is deemed to have consented to any resolution made or action taken at the meeting unless

  • (a) the director requests that a dissent be entered in the minutes of the meeting or the dissent is so entered;

  • (b) the director sends a written dissent to the secretary of the meeting before it is adjourned; or

  • (c) the director sends a written dissent by confirmed delivery service or delivers it personally, to the registered office of the cooperative immediately after the meeting is adjourned.

• Marginal note:Loss of right to dissent

  (2) A director who votes for or expressly consents to a resolution or action taken at a meeting is not entitled to later dissent.

• Marginal note:Deemed assent of absent director

  (3) A director who is not present at a meeting of directors is deemed to have consented to any resolution made or action taken at the meeting unless the director, within seven days after becoming aware of the resolution or action,

  • (a) causes a dissent to be entered in the minutes of the meeting; or

  • (b) sends a written dissent by confirmed delivery service or delivers it personally, to the registered office of the cooperative.

Marginal note:Due diligence

111 A director is not liable under this Part if the director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on

• (a) financial statements of the cooperative represented to the director by an officer of the cooperative or in a written report of the auditor of the cooperative fairly to reflect the financial condition of the cooperative; or

• (b) a report of a person whose profession lends credibility to a statement made by the professional person.

Marginal note:Remuneration

112 Unless the articles, the by-laws or a unanimous agreement provides otherwise, the directors may fix the remuneration of the directors, officers and employees of the cooperative.

Marginal note:Indemnification

• 113 (1) A cooperative may indemnify an individual who is or was a director or officer of the cooperative, or who acts or acted at the cooperative’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a claim, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved by reason of their association with the cooperative or entity.

• Marginal note:Advance of costs

  (2) A cooperative may advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1). The individual must repay the moneys if the individual did not fulfil the conditions of subsection (3), unless the members and shareholders decide, by separate resolutions, that the individual need not repay the moneys.

• Marginal note:Limitation

  (3) A cooperative may not indemnify an individual under subsection (1) unless the individual

  • (a) acted honestly and in good faith with a view to the best interests of the cooperative, or, as the case may be, to the best interests of the entity for which the individual acted as director or officer or in a similar capacity at the cooperative’s request; and

  • (b) in the case of a criminal or administrative proceeding, had reasonable grounds for believing that the individual’s conduct was lawful.

• Marginal note:Derivative action

  (4) A cooperative may not indemnify an individual under subsection (1) or advance costs under subsection (2) in respect of an action by or on behalf of the cooperative or entity unless a court so orders.

• Marginal note:Right to indemnity

  (5) An individual referred to in subsection (1) is entitled to indemnity from the cooperative for the costs, charges and expenses referred to in that subsection if the individual

  • (a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and

  • (b) fulfils the conditions in subsection (3).

• Marginal note:Insurance

  (6) A cooperative may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual by reason of being or having been a director or officer of the cooperative, having been a director or officer of another entity or having acted in a similar capacity, if the individual acts or acted in that capacity at the cooperative’s request.

Marginal note:Application to court

• 114 (1) A court may, on application of a cooperative or an individual referred to in subsection 113(3), approve an indemnity under section 113 and make any further order that it sees fit.

• Marginal note:Notice

  (2) On an application under subsection (1), the court may order notice to be given to any interested person and the person is entitled to appear and be heard in person or by counsel.

Marginal note:Restricting powers of directors

• 115 (1) A provision in the articles of the cooperative or in a unanimous agreement that restricts, in whole or in part, the powers of the directors to manage, or supervise the management of, the business and affairs of the cooperative or vests, in whole or in part, but only in members and subject to subsection 76(1), those powers, is valid.

• Marginal note:Deemed unanimous agreement

  (2) For the purpose of subsection (1), a unanimous agreement to which another person is also a party is deemed to be a unanimous agreement.

• Marginal note:Investment shareholders

  (3) A purchaser or transferee of an investment share that is subject to a unanimous agreement is deemed to be party to the unanimous agreement.

• Marginal note:When no notice given

  (4) If notice is not given to the purchaser or transferee of the existence of a unanimous agreement, in the manner referred to in subsection 183(2) or otherwise, the purchaser or transferee may, no later than thirty days after they become aware of its existence, rescind the transaction by which they acquired the investment shares.

• Marginal note:Rights of members

  (5) To the extent that a provision in the articles of the cooperative, or in a unanimous agreement, restricts the powers of the directors to manage, or supervise the management of, the business and affairs of the cooperative, members who are given that power to manage or supervise the management of the business and affairs of the cooperative have all the rights, powers, duties and liabilities of directors, whether they arise under this Act or otherwise, including any defences available to the directors, and the directors are relieved of their rights, powers, duties and liabilities, including their liabilities under section 102, to the same extent.

• Marginal note:Discretion of shareholders

  (6) Nothing in this section prevents members from fettering their discretion when exercising the powers of directors under a unanimous agreement.

• (7) and (8) [Repealed, 2001, c. 14, s. 174]

PART 8Capital Structure

Membership Capital

Marginal note:Loan capital

116 The capital of a cooperative without membership shares may be in the form of member loans and those loans may be in the amounts, payable at the times, and with or without interest, that the articles of the cooperative provide.

Marginal note:Membership shares

117 A cooperative with membership shares must have one class of membership shares, designated as such in the articles.

Marginal note:Issuance to members

• 118 (1) Membership shares may be issued only to members, each of whom must hold the minimum number of membership shares prescribed by the by-laws.

• Marginal note:Equal rights

  (2) Subject to Parts 20 and 21, the membership shares of a cooperative confer on their holders equal rights, including equal rights to

  • (a) receive dividends declared on membership shares; and

  • (b) subject to the articles, receive the remaining property of the cooperative on dissolution.

• Marginal note:Membership shares

  (3) The articles may not include any preference, right, condition, restriction, limitation or prohibition on membership shares, except as provided for by this Act.

• Marginal note:Transfer requires approval

  (4) A transfer of membership shares is valid only if it complies with section 46 and any restrictions set out in the by-laws.

• Marginal note:No right to vote

  (5) The right to vote attaches to membership in accordance with section 37 and not to a membership share.

• Marginal note:Redeemable

  (6) Subject to sections 146 and 149, membership shares may be redeemed by the cooperative.

Certificates

Marginal note:Issue of certificates

• 119 (1) The by-laws of a cooperative may provide that no membership share certificates or certificates in respect of member loans need be issued. If the by-laws provide that no such certificates need be issued, the cooperative must, on the request of a member, issue a statement of the number of membership shares held by, or the amount of any member loan of, the member.

• Marginal note:Certificates

  (2) The face of each certificate that the cooperative issues in respect of membership shares or member loans after the coming into force of this section must contain

  • (a) the name of the cooperative;

  • (b) a statement that the cooperative is subject to this Act;

  • (c) the name of the person to whom it is issued;

  • (d) a statement that the certificate represents membership shares in, or member loans to, the cooperative, and the number of the membership shares or the amount of the member loan;

  • (e) a statement that the certificate is not transferable without the approval of the directors; and

  • (f) a statement that there is a charge, lien or hypothec on the membership shares or member loans represented by the certificate in favour of the cooperative for any indebtedness of the member to the cooperative.

• Marginal note:Certificate of membership

  (3) Each member is entitled to a certificate of membership.

Marginal note:Authorized capital

• 120 (1) The membership shares of a cooperative may be issued with or without a par value.

• Marginal note:Par-value membership shares

  (2) If the membership shares of a cooperative are with a par value, the articles must specify that fact and specify their par value and any limit on their number.

• Marginal note:No-par-value membership shares

  (3) If the membership shares of a cooperative are without a par value, the articles must specify that fact and specify any limit on their number.

Marginal note:Fixed or determined value

121 If any no-par-value membership shares of a cooperative are to be issued and are to be redeemed at a fixed or determined value, the articles must set out those facts and state the fixed price or formula to be used to determine the value.

Marginal note:Distribution on dissolution

122 Subject to Parts 20 and 21, the articles of a cooperative may provide that, on dissolution of the cooperative and after the payment of all debts and liabilities — including any declared and unpaid dividends, the amount to be paid to the holders of any investment shares and the amount to be paid on the redemption of membership shares — the value of the remaining property of the cooperative is to be distributed or disposed of to any person, including distribution

• (a) among the members at the time of dissolution, in any manner, including equally among the members irrespective of the number of membership shares or amount of member loans, if any, held or made by a member;

• (b) among the members at the time of dissolution on the basis of patronage returns accrued to those members during a stated period before the dissolution; or

• (c) to charitable organizations or cooperative entities.

Marginal note:Charge, lien or hypothec on membership shares for amounts

• 123 (1) A cooperative has a charge, lien or hypothec on a membership share or any amount standing to the credit of a member or the personal representative of a member for a debt of that member to the cooperative.

• Marginal note:Enforcement of charge

  (2) A cooperative may

  • (a) enforce a charge, lien or hypothec referred to in subsection (1) in the manner set out in its by-laws; or

  • (b) apply any moneys standing to the credit of a member toward payment of a debt due by the member to the cooperative.

Investment Shares

Marginal note:Investment shares

• 124 (1) The articles of a cooperative may provide that the cooperative may issue investment shares, and if they do, the articles must set out the following:

  • (a) whether the investment shares may be issued to non-members;

  • (b) whether the number of investment shares is to be unlimited and, if not, the maximum number of investment shares that may be issued;

  • (c) the number of classes of investment shares; and

  • (d) the preferences, rights, conditions, restrictions, limitations and prohibitions attaching to the investment shares and, if there is to be more than one class, the designation of each class and the special preferences, rights, conditions, restrictions, limitations and prohibitions attaching to each class.

• Marginal note:No voting rights

  (2) Subject to the articles and to this Act, no right to vote at a meeting of the cooperative attaches to an investment share.

• Marginal note:Exception

  (3) The articles may provide that

  • (a) an investment share confers on its holder the right to vote at an election of directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; or

  • (b) the shareholders, any class of shareholders or the holders of a series of investment shares, may elect a fixed number or a percentage of the directors.

• Marginal note:Limit on shareholders’ directors

  (4) Despite subsections (2) and (3), neither the articles nor a unanimous agreement may provide that the shareholders have the right to elect more than twenty per cent of the directors.

• Marginal note:One share, one vote

  (5) If shareholders are entitled to vote in accordance with subsection (3) or otherwise in accordance with this Act, each investment share entitles the holder to one vote.

• Marginal note:Members may exercise shareholder rights if shareholders

  (6) Despite section 37, a member who holds an investment share may exercise any voting right that holders of investment shares have.

Marginal note:No-par-value shares

• 125 (1) Investment shares of a cooperative must be in registered form and without a par value.

• Marginal note:When cooperative continued

  (2) Investment shares of a cooperative that is continued under this Act are deemed to be investment shares without a par value.

Marginal note:Shares in series

• 126 (1) The articles may authorize, subject to any limitations set out in them and subject to subsection (2), the issue of any class of investment shares in one or more series and may do either or both of the following:

  • (a) fix the number of investment shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the investment shares of, each series; or

  • (b) authorize the directors to fix the number of investment shares in, and to determine the designation, rights, privileges, restrictions and conditions attaching to the investment shares of, each series.

• Marginal note:Member authorization

  (2) No investment share may be issued until the members have authorized the principle of the issuance of investment shares.

• Marginal note:Series participation

  (3) If any cumulative dividends or amounts payable on return of capital in respect of a series of investment shares are not paid in full, the investment shares of all series of the same class must participate rateably in respect of accumulated dividends and return of capital.

• Marginal note:Restrictions on series

  (4) No rights, privileges, restrictions or conditions attached to a series of investment shares authorized under this section confer a priority in respect of dividends or return of capital on a series over any other series of investment shares of the same class that are then outstanding.

• Marginal note:Amendment of articles

  (5) If the directors exercise their authority under paragraph (1)(b), they must, before the issue of shares of the series, send to the Director articles of amendment in the form that the Director fixes to designate a series of investment shares.

• Marginal note:Certificate of amendment

  (6) On receipt of articles of amendment designating a series of shares under subsection (5), the Director must issue a certificate of amendment.

• Marginal note:Effect of certificate

  (7) The articles of the cooperative are amended accordingly on the date shown in the certificate of amendment.

Marginal note:Pre-emptive right

• 127 (1) If the articles so provide, no investment shares of any class may be issued unless the investment shares are first offered to the shareholders of that class. The shareholders of that class have a pre-emptive right to acquire the offered investment shares in proportion to their holdings of the investment shares of that class, at the price at which and on the terms on which those investment shares are to be offered to others.

• Marginal note:Limitation

  (2) Even if the articles provide the pre-emptive right referred to in subsection (1), shareholders have no pre-emptive right to acquire investment shares that are to be issued

  • (a) in exchange for a thing or service other than money;

  • (b) as an investment share dividend or in payment of a patronage return; or

  • (c) pursuant to the exercise of conversion privileges, options or rights previously granted by the cooperative.

Marginal note:Commissions

128 The directors may authorize the cooperative to pay a reasonable commission to any person in consideration of the person

• (a) purchasing or agreeing to purchase investment shares from the cooperative or from some other person; or

• (b) procuring or agreeing to procure purchasers for any such investment shares.

Marginal note:Charge, lien or hypothec on investment shares

• 129 (1) Subject to subsection 183(2), the articles may provide that the cooperative has a charge, lien or hypothec on an investment share registered in the name of a shareholder or the personal representative of a shareholder for a debt of the shareholder to the cooperative, including an amount unpaid as of the date a body corporate was continued under this Act, in respect of an investment share issued by it.

• Marginal note:Enforcement

  (2) A cooperative may enforce a charge, lien or hypothec referred to in subsection (1) in accordance with its by-laws.

Constraints

Marginal note:Constraints on shares

• 130 (1) Subject to subsection 290(3), a distributing cooperative that has issued investment shares that remain outstanding and are held by more than one person may, by special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to constrain

  • (a) the issue or transfer of investment shares of any class or series to persons who are not resident in Canada;

  • (b) the issue or transfer of investment shares of any class or series to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province

    • (i) to obtain a licence to carry on a business,

    • (ii) to become a publisher of a Canadian newspaper or periodical, or

    • (iii) to acquire investment shares of a financial intermediary as defined in the regulations;

  • (c) the issue, transfer or ownership of investment shares of any class or series to assist the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control;

  • (d) the issue, transfer or ownership of any investment share to assist the cooperative to comply with any prescribed law; or

  • (e) the issue, transfer or ownership of any investment share to enable the cooperative to be a registered labour sponsored venture capital corporation under Part X.3 of the Income Tax Act.

• Marginal note:Exception in respect of paragraph (1)(c)

  (2) Paragraph (1)(c) does not permit a constraint on the issue, transfer or ownership of investment shares of any class or series of which any investment shares are outstanding unless the investment shares of that class or series are already subject to a constraint permitted under that paragraph.

• Marginal note:Limitation of prohibition of investment shares

  (3) If the ownership by a person of investment shares would adversely affect the ability of a cooperative or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in paragraph (1)(c), the cooperative may, under that paragraph, limit the number of investment shares of the cooperative that may be owned, or prohibit the ownership of investment shares, by that person.

• Marginal note:Change or removal of constraint

  (4) A cooperative referred to in subsection (1) may, by a special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to change or remove any constraint on the issue, transfer or ownership of its investment shares.

• Marginal note:Termination

  (5) The directors may, if authorized by a special resolution effecting an amendment under subsection (1) or (4), revoke the resolution before it is acted on without further approval.

• Marginal note:Regulations

  (6) The Governor in Council may make regulations with respect to a cooperative that constrains the issue, transfer or ownership of its investment shares, prescribing

  • (a) the disclosure required of the constraints in documents issued or published by the cooperative;

  • (b) the duties and powers of the directors to refuse to issue or register transfers of investment shares in accordance with the articles;

  • (c) the limitations on voting rights of any investment shares held contrary to the articles;

  • (d) the powers of the directors to require disclosure of beneficial ownership of investment shares of the cooperative and the right of the cooperative and its directors, employees and agents or mandataries to rely on that disclosure and the effects of that reliance; and

  • (e) the rights of any person owning investment shares of the cooperative at the time of an amendment to its articles constraining investment share issues or transfers.

• Marginal note:Validity of acts

  (7) An issue or a transfer of an investment share or an act of a cooperative is valid despite any failure to comply with this section or the regulations.

Marginal note:Sale of constrained shares

• 131 (1) A cooperative that has constraints on the issue, transfer or ownership of any class of investment shares may, in accordance with any regulations, sell any of the investment shares that are owned, or that the directors determine may be owned, contrary to those constraints, as if it owned the investment shares, for the purposes of

  • (a) attaining or maintaining the level of Canadian ownership or control specified in its articles or required by law to carry on a business or qualify for a benefit; or

  • (b) complying with any prescribed law.

• Marginal note:Selection of shares

  (2) The directors must select the investment shares to be sold under subsection (1) in good faith and in a manner that does not unfairly prejudice or disregard the interests of the holders of the investment shares in the constrained class as a whole.

• Marginal note:Right to proceeds

  (3) A person who owned an investment share that was sold under this section is divested of all interests or rights in the investment share and is entitled to receive only the net proceeds of the sale and any net income on the proceeds.

• Marginal note:Immunity

  (4) Sections 192, 193 and 194 apply to the person referred to in subsection (3) as if the proceeds were a security and the person were a registered owner of the security.

Marginal note:Trust moneys

• 132 (1) The proceeds of a sale under section 131 are trust moneys in the hands of the cooperative for the benefit of the person who is entitled to receive them.

• Marginal note:Handling of trust moneys

  (2) Trust moneys under this section

  • (a) may be commingled with other such trust moneys; and

  • (b) must be invested as may be prescribed.

• Marginal note:Costs of administration

  (3) Reasonable costs of administration of trust moneys referred to in subsection (1) may be deducted from the trust moneys and any income earned on them.

• Marginal note:Appointment of trust company

  (4) Subject to this section, a cooperative may transfer any trust moneys referred to in subsection (1), and the administration of them, to a trust company in Canada registered as one under the laws of Canada or a province, and the cooperative is discharged of all further liability in respect of the trust moneys.

• Marginal note:Discharge of cooperative and trust company

  (5) A receipt signed by a person entitled under subsection 131(3) to receive the proceeds of a sale that constitute trust moneys under subsection (1) constitutes a complete discharge of the cooperative and of any trust company to which trust moneys are transferred under subsection (4), in respect of the trust moneys and income earned on them paid to the person.

• Marginal note:Vesting in Crown

  (6) Trust moneys described in subsection (1), together with any income earned on them, less any taxes and costs of administration, that has not been claimed by a person entitled under subsection 131(3) to receive the proceeds of a sale that constitute the trust moneys for a period of ten years after the date of the sale vests in Her Majesty in right of Canada.

• Marginal note:Escheats Act applies

  (7) Sections 3 to 5 of the Escheats Act apply in respect of a trust fund that vests in Her Majesty in right of Canada under subsection (6).

Marginal note:Election of directors

• 133 (1) If the holders of a class or series of investment shares of a cooperative have, under section 124, a right to elect or appoint one or more directors, or have a right to elect or appoint one or more directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled, the directors must call the following meetings for the purpose of electing or appointing the director or directors:

  • (a) a special meeting of the holders of the class or series of investment shares, to be called within six months or at any earlier date that may be specified in the articles, after the date on which investment shares of the class or series are first issued or after the event has occurred or the condition has been fulfilled; and

  • (b) an annual meeting of those holders for every subsequent year.

• Marginal note:Cumulative voting

  (2) If the articles so provide, directors who are to be elected by holders of investment shares may be elected by cumulative voting.

• Marginal note:When cumulative voting

  (3) If the articles provide for cumulative voting,

  • (a) the articles must require a fixed number of directors to be elected by the holders of investment shares, and not a minimum and maximum number of directors;

  • (b) each shareholder who is entitled to vote at an election of directors by holders of investment shares has the right to cast a number of votes equal to the number of votes attached to the investment shares held by that shareholder multiplied by the number of directors to be elected, and the shareholder may cast all the votes in favour of one candidate or distribute them among the candidates in any manner;

  • (c) a separate vote of shareholders must be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single resolution;

  • (d) if a shareholder has voted for more than one candidate without specifying the distribution of votes among the candidates, the shareholder is deemed to have distributed their votes equally among the candidates for whom the shareholder voted;

  • (e) if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes are eliminated until the number of candidates remaining equals the number of positions to be filled;

  • (f) each director ceases to hold office at the close of the first annual meeting after their election of the holders of investment shares entitled to elect that director;

  • (g) a director may only be removed from office if the number of votes cast in favour of the director’s removal is greater than the product of the number of directors and the number of votes cast against the motion; and

  • (h) the number of directors required by the articles may only be decreased if the votes cast in favour of the motion to decrease the number of directors is greater than the product of the number of directors and the number of votes cast against the motion.

Marginal note:Amendment of articles

• 134 (1) The holders of investment shares of a class or, subject to subsection (4), of a series are, unless the articles provide otherwise in the case of an amendment referred to in paragraphs (a), (b) and (e), entitled to vote separately as a class or series on a proposal to amend the articles to

  • (a) increase or decrease any maximum number of authorized investment shares of the class, or increase any maximum number of authorized investment shares of a class having rights or privileges equal or superior to the investment shares of the class;

  • (b) effect an exchange, reclassification or cancellation of all or part of the investment shares of the class;

  • (c) add, change or remove the rights, privileges, restrictions or conditions attached to the investment shares of the class, including

    • (i) remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,

    • (ii) add, remove or change prejudicially redemption rights,

    • (iii) reduce or remove a dividend preference or a liquidation preference, or

    • (iv) add, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of a cooperative, or sinking fund provisions;

  • (d) increase the rights or privileges of any class of shares having rights or privileges equal or superior to the investment shares of the class;

  • (e) create a new class of investment shares equal or superior to the investment shares of the class;

  • (f) make any class of investment shares having rights or privileges inferior to the investment shares of the class equal or superior to the investment shares of the class;

  • (g) effect an exchange or create a right of exchange of all or part of the investment shares of another class into the investment shares of the class; or

  • (h) constrain the issue, transfer or ownership of the investment shares of the class or change or remove a constraint.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of a proposal to amend the articles to add a right or privilege for a holder to convert investment shares of a class or series into investment shares of another class or series that is subject to a constraint permitted under paragraph 130(1)(c) but otherwise equal to the class or series first mentioned.

• Marginal note:Deeming provision

  (3) For the purpose of paragraph (1)(e), a new class of investment shares, the issue, transfer or ownership of which is to be constrained by an amendment to the articles under paragraph 130(1)(c), that is otherwise equal to an existing class of shares is deemed not to be equal or superior to the existing class of shares.

• Marginal note:Limitation

  (4) The holders of a series of investment shares of a class are entitled to vote separately as a series under subsection (1) only if the series is affected by an amendment in a manner different from other investment shares of the same class.

• Marginal note:Right to vote

  (5) Subsection (1) applies whether or not investment shares of a class or series otherwise carry the right to vote.

• Marginal note:Separate resolutions

  (6) A proposed amendment to the articles referred to in subsection (1) is adopted when it is approved by a special resolution of the members and by a separate special resolution of the shareholders of each class.

Corporate Finance

Marginal note:Power to issue investment shares

135 Subject to this Act, the articles, the by-laws and any unanimous agreement, membership shares may only be issued to members, and investment shares may be issued to any person, at any time and for money or in exchange for any thing or service that the directors may determine.

Marginal note:Payment for investment shares

• 136 (1) A cooperative may not issue an investment share until it is fully paid in money, or past service or any other thing that is not less in value than the fair equivalent of the money that the cooperative would have received if the investment share had been issued for money, but neither a promissory note nor a promise to pay made by a person to whom the investment shares are issued or a person not dealing at arm’s length with that person is acceptable in payment of an investment share.

• Marginal note:Payment for membership shares

  (2) Membership shares may be paid for in money, or past service or any other thing that is not less in value than the fair equivalent of the money that the cooperative would have received if the membership share had been issued for money.

Marginal note:Borrowing

137 Unless the articles, the by-laws or a unanimous agreement provide otherwise, the directors may, subject to subsection 126(2), without the authorization of the members or shareholders,

• (a) borrow money;

• (b) give debt obligations;

• (c) give guarantees;

• (d) create security interests in its property; and

• (e) despite paragraph 108(e) and subsection 109(3), delegate any power referred to in any of paragraphs (a) to (d).

Marginal note:Stated capital account

• 138 (1) A cooperative that is authorized to issue shares must maintain a stated capital account for each class and series of shares that it issues.

• Marginal note:Amounts

  (2) A cooperative must add to the appropriate stated capital account the full amount of any money, or the value or any thing or service, that it receives for shares it issues.

• Marginal note:Exception for non-arm’s length transactions

  (3) Despite subsection (2), a cooperative may, subject to subsection (4), add to the stated capital accounts maintained for the shares of classes or series the whole or any part of the amount of the money, or the value of the things and services, it receives in an exchange if the cooperative issues shares

  • (a) in exchange for

    • (i) property of a person who immediately before the exchange did not deal with the cooperative at arm’s length within the meaning of that expression in the Income Tax Act,

    • (ii) shares of, or another interest or right in, an entity that immediately before the exchange, or that because of the exchange, did not deal with the cooperative at arm’s length within the meaning of that expression in the Income Tax Act, or

    • (iii) property of a person who, immediately before the exchange, dealt with the cooperative at arm’s length within the meaning of that expression in the Income Tax Act, if the person, the cooperative and all the holders of shares in the class or series of shares so issued consent to the exchange; or

  • (b) under an amalgamation or arrangement, or to members or shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated cooperative.

• Marginal note:Limit on addition to a stated capital account

  (4) On the issue of a share, a cooperative may not add to a stated capital account in respect of the share it issues an amount greater than the amount of the money, or the value of the thing or service, it received for the share.

• Marginal note:Constraint on addition to a stated capital account

  (5) The proposed addition of an amount to a stated capital account maintained by a cooperative in respect of a class or series of shares must be approved in advance by a special resolution of the members and, if the cooperative has issued investment shares, by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of investment shares that is affected by the special resolution, if

  • (a) the amount to be added was not received by the cooperative as consideration for the issue of the shares; and

  • (b) the cooperative has issued shares of more than one class or series that are outstanding.

• Marginal note:Membership share inclusion

  (6) For greater certainty, if a cooperative issues membership shares with a par value, the cooperative is deemed, for the purposes of subsection 147(2), sections 151 and 154 and paragraph 299(2)(d), to have a stated capital account for its membership shares that includes each amount that has been received by the cooperative for the membership shares.

Marginal note:Other additions to stated capital account

• 139 (1) When a body corporate is continued under this Act, it may add to a stated capital account any money, or the value of any thing or service, received by it for a share it issued.

• Marginal note:Transitional

  (2) When a body corporate is continued under this Act, subsection 138(2) does not apply to the money, or the value of things or services, received by it before it was so continued unless the share in respect of which the money, thing or service received is issued after the body corporate is continued.

• Marginal note:Transitional

  (3) When a body corporate is continued under this Act, any amount unpaid in respect of a share issued by the body corporate before it was so continued and paid after it was so continued is added to the stated capital account maintained for the shares of that class or series.

• Marginal note:Continued cooperative

  (4) For the purposes of subsection 147(2), sections 151 and 154 and paragraph 299(2)(d), when a cooperative is continued under this Act, its stated capital account is deemed to include the amount that would have been included if the cooperative had been incorporated under this Act.

• Marginal note:Membership shares with a par value

  (5) When a cooperative is continued under this Act, subsection 138(6) applies if the cooperative has membership shares with a par value.

• Marginal note:Restriction

  (6) A cooperative must not reduce its stated capital or any stated capital account except in the manner provided in this Act.

Marginal note:Surplus accounts

140 Subject to subsection 138(5), a cooperative continued under this Act may at any time add to a stated capital account any amount it has credited to a retained earnings or other surplus account.

Marginal note:Shares not assessable

141 The shares of a cooperative are non-assessable and the members and shareholders are not liable to the cooperative or to its creditors in respect of them.

Marginal note:Options and rights

• 142 (1) A cooperative may issue certificates, warrants or other evidence of conversion privileges, options or rights to acquire shares or securities of the cooperative.

• Marginal note:Conversion for members only

  (2) A conversion privilege, option or right to acquire membership shares may be granted only to members, and is non-transferable.

• Marginal note:Conditions

  (3) The conditions of the conversion privileges, options or rights must be set out in

  • (a) the certificate, warrant or other evidence; or

  • (b) the certificates evidencing the securities to which the conversion privileges, options or rights are attached.

• Marginal note:Transferability

  (4) Subject to subsection (2), conversion privileges, options or rights to acquire securities of a cooperative may be made transferable or non-transferable, and options and rights to acquire securities of a cooperative may be made separable or inseparable from any securities to which they are attached.

Marginal note:Restriction regarding bearer investment shares

• 142.1 (1) Despite section 142, a cooperative must not issue, in bearer form, a certificate, warrant or other evidence of a conversion privilege, option or right to acquire an investment share of the cooperative.

• Marginal note:Replacement

  (2) A cooperative must, on the request of a holder of a certificate, warrant or other evidence of a conversion privilege, option or right to acquire an investment share of the cooperative that is in bearer form and that was issued before the coming into force of this section, issue in exchange to that holder, in registered form, a certificate, warrant or other evidence, as the case may be.

Marginal note:Reserves

143 If the articles limit the number of authorized shares, the cooperative must reserve sufficient authorized shares to meet the exercise of any conversion privileges, or any options or rights issued or granted by the cooperative to acquire shares.

Marginal note:Holding own shares

• 144 (1) Subject to sections 145 to 149, a cooperative may not

  • (a) hold any shares in itself or in its holding body corporate; or

  • (b) permit any of its subsidiaries to hold shares in the cooperative, other than the minimum number of membership shares required by the by-laws of the cooperative to qualify for membership in it.

• Marginal note:Disposal of shares

  (2) A cooperative must cause any subsidiary that holds shares in the cooperative contrary to subsection (1) to dispose of those shares no later than five years after the date on which

  • (a) it became a subsidiary; or

  • (b) the cooperative was continued under this Act.

Marginal note:Exception for holding own shares

• 145 (1) A cooperative may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares in itself or in its holding body corporate only if the cooperative, holding body corporate or subsidiary does not have a beneficial interest in the shares.

• Marginal note:Holding shares by way of security

  (2) A cooperative may hold shares in itself or its holding body corporate by way of security for the purposes of a transaction entered into by it in the ordinary course of a business that includes the lending of money.

Marginal note:Redemption of membership shares

146 Subject to section 149, a cooperative may at any time redeem any of its membership shares, if issued on a par-value basis at par value and if issued on a no-par-value basis in accordance with the price or formula that is set out in its articles, or, if no such price or formula is set out in the articles, at a fair value.

Marginal note:Acquisition of investment shares

• 147 (1) Subject to its articles and to subsection (2), a cooperative may at any time acquire any investment share issued by it.

• Marginal note:Limitation

  (2) A cooperative may not make a payment to acquire investment shares if there are reasonable grounds to believe that

  • (a) the cooperative is, or would after the payment be, unable to pay its liabilities as they become due; or

  • (b) the realizable value of the cooperative’s assets after the payment would be less than the total of the stated capital of all its issued shares and its liabilities.

• Marginal note:Redemption of investment shares

  (3) Subject to section 149, a cooperative may at any time redeem any of its investment shares that are redeemable, in accordance with any price or formula that may be set out in its articles or, if the articles do not so provide, at fair market value.

Marginal note:Alternative share acquisition

148 Despite section 146 and subsection 147(2), but subject to section 149 and to its articles, a cooperative may acquire shares issued by it

• (a) to satisfy the claim of members or shareholders who dissent under section 302;

• (b) to comply with an order under section 340;

• (c) to settle or compromise a debt or claim asserted by the cooperative;

• (d) to eliminate fractional shares; or

• (e) to fulfil the terms of a non-assignable option or obligation to purchase shares owned by a director, officer or employee.

Marginal note:Limitation on acquisition or redemption

149 A cooperative may not make a payment to acquire or redeem a share under section 146 or 148 if there are reasonable grounds to believe that

• (a) the cooperative is, or would after the payment be, unable to pay its liabilities as they become due; or

• (b) the realizable value of the cooperative’s assets after the payment would be less than the total of

  • (i) its liabilities, and

  • (ii) the amount that would be required to pay the holders of shares that have a right to be paid, on a redemption or liquidation, rateably with or in priority to the holders of the shares to be purchased or redeemed.

Marginal note:Cancellation or resurrection of shares

150 Shares of a cooperative that are redeemed or otherwise acquired by it are cancelled or, if the articles limit the number of authorized shares, restored to the status of unissued shares.

Marginal note:Reduction of capital

• 151 (1) Subject to subsection (2), a cooperative may reduce its stated capital for any purpose, by special resolution of its members and, if an investment share is proposed to be affected by the reduction, by the holders of the investment shares.

• Marginal note:Limitation on reductions

  (2) A cooperative may not reduce its stated capital if there are reasonable grounds to believe that

  • (a) the cooperative is, or would after the payment be, unable to pay its liabilities as they become due; or

  • (b) the realizable value of the cooperative’s assets after the reduction would be less than the total of its liabilities.

• Marginal note:Exception

  (3) Subsection (2) does not apply to a reduction of stated capital that is not represented by realizable assets.

• Marginal note:If several stated capital accounts

  (4) If a cooperative maintains more than one stated capital account, the special resolution to reduce stated capital required by subsection (1) must specify the stated capital account or accounts from which the reduction will be deducted.

• Marginal note:Court order

  (5) A creditor of a cooperative may apply to a court for an order compelling a person

  • (a) to pay to the cooperative an amount equal to any liability of the person that was extinguished or reduced contrary to this section; or

  • (b) to pay or deliver to the cooperative any money or property that was paid or distributed to the person as a consequence of a reduction of stated capital made contrary to this section.

• Marginal note:Limitation period

  (6) No action may be commenced to enforce a liability imposed by this section more than two years after the date of the act complained of.

Marginal note:Adjustment of stated capital account

• 152 (1) On a redemption or acquisition of any of its shares, a cooperative must adjust the stated capital account in relation to that share by the ratio of the stated capital for that class to that share.

• Marginal note:If special resolution

  (2) A cooperative must adjust its stated capital account in accordance with any special resolution made under subsection 151(1).

• Marginal note:Class or series

  (3) On a conversion of investment shares of a cooperative into investment shares of another class or series or a change under section 289, a reorganization under section 303 or the redemption or exchange of investment shares under an order made under section 340, the cooperative must

  • (a) deduct from the stated capital account maintained for the class or series of shares converted or changed, or subject to the reorganization, redemption or exchange, an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, or subject to the reorganization, redemption or exchange, divided by the number of issued shares of that class or series immediately before the conversion, change, reorganization, redemption or exchange; and

  • (b) add the result obtained under paragraph (a) and any additional amount received pursuant to the conversion, change, reorganization, redemption or exchange to the stated capital account maintained or to be maintained for the class or series of shares.

• Marginal note:Stated capital of interconvertible shares

  (4) For the purposes of subsection (3) and subject to its articles, if a cooperative issues two classes of investment shares and there is attached to each such class a right to convert an investment share of the one class into an investment share of the other class, if an investment share of one class is converted into a share of the other class, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of issued investment shares of both classes immediately before the conversion.

• Marginal note:Exception

  (5) For the purposes of this section, a cooperative holding shares in itself as permitted by section 145 is deemed not to have redeemed or acquired them.

• Marginal note:Conversion or change of investment shares

  (6) Investment shares issued by a cooperative and converted into shares of another class or series or changed under section 289, or subject to a reorganization under section 303 or the redemption or exchange of investment shares under an order made under section 340, become shares of the other class or series of shares.

• Marginal note:Effect of change of investment shares on number of unissued shares

  (7) If the articles limit the number of authorized shares of a class of investment shares of a cooperative and issued shares of that class or of a series of shares of that class have become, under subsection (6), issued investment shares of another class or series, the number of unissued shares of the first-mentioned class is, unless the articles provide otherwise, increased by the number of investment shares that, under subsection (6), became investment shares of another class or series.

Marginal note:Form of dividend

• 153 (1) A cooperative may pay a dividend by issuing fully paid shares of the cooperative and, subject to section 154, a cooperative may pay a dividend in money or property, except that membership shares may only be issued to members.

• Marginal note:Stated capital account

  (2) If shares of a cooperative are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money must be added to the stated capital account.

Marginal note:Limitation on paying dividends

154 A cooperative may not declare or pay a dividend if there are reasonable grounds to believe that

• (a) the cooperative is, or would after the payment be, unable to pay its liabilities as they become due; or

• (b) the realizable value of the cooperative’s assets after payment of the dividend would be less than the total of its liabilities and the stated capital of all its issued shares.

Marginal note:Patronage returns

• 155 (1) A cooperative may allocate among and credit or pay to the members, as a patronage return, all or a part of the surplus arising from the operations of the cooperative in a financial year in proportion to the business done by the members with or through the cooperative in that financial year, calculated in the manner described in subsection (2) at a rate set by the directors.

• Marginal note:Calculation of patronage

  (2) For the purpose of subsection (1), the directors may calculate the amount of the business done by each member with or through a cooperative in a financial year by taking into account

  • (a) the quantity, quality, kind and value of things bought, sold, handled, marketed or dealt in by the cooperative;

  • (b) the services rendered

    • (i) by the cooperative on behalf of or to the member, and

    • (ii) by the member on behalf of or to the cooperative; and

  • (c) differences that are, in the opinion of the directors, appropriate for different classes, grades or qualities of things and services.

• Marginal note:Non-member patronage allocation

  (3) The by-laws may provide that a cooperative may allocate among and credit or pay to persons who use the services of the cooperative but who are not members a share of any surplus at a rate that is equal to or less than the rate at which the surplus is distributed to members.

• Marginal note:Calculation of non-member patronage

  (4) If a cooperative allocates among and credits or pays to persons referred to in subsection (3) a share of any surplus, the directors must calculate the business done by the non-member patrons in the manner described in subsection (2).

Marginal note:Investment of patronage return

• 156 (1) A cooperative may, by by-law, provide that the whole, or any part that the directors may determine, of the patronage return of each member in respect of each financial year be applied to the purchase for the member of membership or investment shares in the cooperative.

• Marginal note:Contents of by-law

  (2) The by-law must provide for the giving of notice to each member of the number of shares purchased or to be purchased for the member, the manner of issuance or transfer of shares, the payment for the shares out of the patronage returns of members and, if applicable, the issuance and forwarding of certificates to members representing shares so issued or transferred.

• Marginal note:Price of shares

  (3) No member is required under this section to purchase membership shares, in the case of membership shares with a par value, at a price in excess of their par value, and in the case of membership shares with no par value or investment shares,

  • (a) if the articles provide for a fixed price or a price determined in accordance with a formula, in excess of that price; and

  • (b) in any other case, in excess of the fair value of the membership shares or the fair market value of the investment shares.

• Marginal note:Stated capital account

  (4) If shares of a cooperative are issued in payment of a patronage return, the amount of the patronage return, stated as an amount of money, must be added to the stated capital account.

Marginal note:Loans from patronage returns

157 A cooperative may, by by-law, require its members to lend to it the whole, or any part that the directors may determine, of the patronage returns to which they may become entitled in each financial year, on the terms and at the rate of interest that the directors determine, so long as the rate of interest does not exceed the rate that is provided in the by-laws.

Marginal note:Insolvent cooperative

158 If a cooperative is unable to pay its liabilities as they become due, no member need, under section 157, lend a patronage return to the cooperative, and no member need purchase shares under section 156.

Marketing

Marginal note:Marketing plans

• 159 (1) Subject to subsection (3), this section applies to a cooperative and its members if the members are required by a marketing plan established under an Act of Parliament or of the legislature of a province to sell or deliver things or render services to or through a producer board or a marketing commission or agency.

• Marginal note:Patronage returns

  (2) For the purposes of allocating, crediting and paying patronage returns among or to members and of making payments to members as part of the price or proceeds of their things or services, the members referred to in subsection (1) are deemed to have sold and delivered the things or to have rendered the services, or, if the by-laws so specify, any portion or category of the things or services, to the cooperative.

• Marginal note:Conditions

  (3) The by-laws of a cooperative may provide that this section does not apply to a member until any conditions with respect to the delivery of things or rendering of services set out in the by-laws are fulfilled.

160 [Repealed, 2001, c. 14, s. 184]

Marginal note:Enforcement of contract to buy shares

• 161 (1) A cooperative must fulfil its obligations under a contract to buy shares of the cooperative, except if the cooperative can prove that enforcement of the contract would put it in breach of subsection 147(2) or section 149.

• Marginal note:Right of claimant

  (2) Until the cooperative has fulfilled all its obligations under a contract referred to in subsection (1), the other party retains the status of claimant entitled to be paid as soon as the cooperative is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors and to the rights of any class of shareholders whose rights were in priority to the rights given to the class of investment shares being purchased, but in priority to the rights of members and other shareholders.

Marginal note:Debt obligations

• 162 (1) Debt obligations issued by a cooperative are not redeemed by reason only that the indebtedness evidenced by the debt obligation is repaid.

• Marginal note:Cancellation, etc.

  (2) Debt obligations issued by a cooperative and purchased, redeemed or otherwise acquired may be cancelled or may secure any obligation of the cooperative then existing or later incurred.

PART 9Proxies

Marginal note:Interpretation

• 163 (1) The definitions in this subsection apply in this Part.

  form of proxy

  form of proxy means a written or printed form that, on completion and execution or, in Quebec, on signing by or on behalf of a shareholder, becomes a proxy. (formulaire de procuration)

  intermediary

  intermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includes

  • (a) a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;

  • (b) a securities depositary;

  • (c) a financial institution;

  • (d) in respect of a clearing agency, a securities dealer, trust company, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominees hold securities of an issuer;

  • (e) a trustee or administrator of a self-administered retirement savings plan, retirement income fund, education savings plan or other similar self-administered savings or investment plan registered under the Income Tax Act;

  • (f) a nominee of a person referred to in any of paragraphs (a) to (e); and

  • (g) a person who carries out functions similar to those carried out by individuals or entities referred to in any of paragraphs (a) to (e) and that holds a security registered in its name, or in the name of its nominee, on behalf of another person who is not the registered holder of the security. (intermédiaire)

  solicit

  solicit or solicitation

  • (a) includes

    • (i) a request for a proxy whether or not accompanied by or included in a form of proxy,

    • (ii) a request to execute or not to execute or, in Quebec, to sign or not to sign a form of proxy or to revoke a proxy,

    • (iii) the sending of a form of proxy or other communication to a shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and

    • (iv) the sending of a form of proxy to a shareholder under section 165; but

  • (b) does not include

    • (i) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,

    • (ii) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

    • (iii) the sending by an intermediary of the documents referred to in section 169,

    • (iv) a solicitation by a person in respect of investment shares of which they are the beneficial owner,

    • (v) a public announcement, as prescribed, by a shareholder of how the shareholder intends to vote and the reasons for that decision,

    • (vi) a communication for the purposes of obtaining the number of investment shares required for a proposal under subsection 58(2.1), or

    • (vii) a communication, other than a solicitation by or on behalf of the management of the cooperative, that is made to shareholders, in any circumstances that may be prescribed. (sollicitation)

  solicitation by or on behalf of the management of a cooperative

  solicitation by or on behalf of the management of a cooperative means a solicitation by a person pursuant to a resolution or instructions of, or with the acquiescence of, the directors or a committee of directors. (sollicitation effectuée par la direction ou pour son compte)

• Marginal note:Membership and membership shares excluded

  (2) This Part does not apply to a member or membership shares, but a member who is a shareholder may exercise the rights given to a shareholder by this Part for all investment shares held.

Marginal note:Appointing proxyholder

• 164 (1) A shareholder who is entitled to vote at a meeting of shareholders may appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.

• Marginal note:Execution or signature of proxy

  (2) For a proxy to be valid, it must be executed or, in Quebec, signed by the shareholder or by their personal representative authorized in writing.

• Marginal note:Validity of proxy

  (3) A proxy is valid only at the meeting in respect of which it is given or at any adjournment of that meeting.

• Marginal note:Revocation of proxy

  (4) A shareholder may revoke a proxy

  • (a) by depositing a document in writing executed or, in Quebec, signed by the shareholder or by their personal representative authorized in writing

    • (i) at the registered office of the cooperative at any time up to and including the last business day before the day of the meeting or adjournment at which the proxy is to be used, or

    • (ii) with the chairperson of the meeting on the day of the meeting or adjournment; or

  • (b) in any other manner permitted by law.

• Marginal note:Deposit of proxies

  (5) The directors may specify in a notice calling a meeting of shareholders a time not more than 48 hours, excluding Saturdays and holidays, before the meeting or adjournment before which time proxies to be used at the meeting must be deposited with the cooperative or its agent or mandatary.

Marginal note:Mandatory solicitation

• 165 (1) Subject to subsection (2), the management of a cooperative shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder who is entitled to receive notice of the meeting.

• Marginal note:Exception

  (2) The management of a cooperative is not required to send a form of proxy under subsection (1) if

  • (a) it is not a distributing cooperative; and

  • (b) it has fifty or fewer shareholders entitled to vote at a meeting, two or more joint holders being counted as one shareholder.

Marginal note:Soliciting proxies

• 166 (1) No person may solicit a proxy unless the applicable circular described in subsection (2) is sent to the auditor of the cooperative, to each shareholder whose proxy is solicited, to each director and, if paragraph (2)(b) applies, to the cooperative.

• Marginal note:Circulars

  (2) The circular that is to be sent under subsection (1) is

  • (a) in the case of solicitation by or on behalf of the management of a cooperative, a management proxy circular in the prescribed form, either as an appendix to or as a separate document accompanying the notice of the meeting; and

  • (b) in the case of any other solicitation, a dissident’s proxy circular in the prescribed form stating the purposes of the solicitation.

• Marginal note:Copy to Director

  (3) When a management proxy circular or dissident’s proxy circular is sent, a copy of it must be sent to the Director together with a statement in the prescribed form and a copy of any notice of meeting, form of proxy and any other documents for use in connection with the meeting.

• Marginal note:Solicitation to fifteen or fewer shareholders

  (4) Despite subsection (1), a person may solicit proxies, other than by or on behalf of the management of the cooperative, without sending a dissident’s proxy circular, if the total number of shareholders whose proxies are solicited is fifteen or fewer, two or more joint holders being counted as one shareholder.

• Marginal note:Solicitation by public broadcast

  (4.1) Despite subsection (1), a person may solicit proxies, other than by or on behalf of the management of the cooperative, without sending a dissident’s proxy circular, if the solicitation is, in the prescribed circumstances, conveyed by public broadcast, speech or publication.

• Marginal note:When all shareholders are members

  (5) A management proxy circular need not be sent

  • (a) if all the shareholders of a cooperative are members; and

  • (b) if management has sent to the shareholders substantially the same information as that required to be sent in the circular, not less than twenty-one days or more than sixty days before the meeting at which the vote to which the circular relates is to be held.

Marginal note:Exemption

• 167 (1) On the application of any interested person, the Director may exempt, on any terms that the Director thinks fit, the person from any of the requirements of section 165 or subsection 166(1) or 169(1). The exemption may have retroactive effect.

• (2) [Repealed, 2018, c. 8, s. 62]

Marginal note:Attendance at meeting

• 168 (1) An individual who solicits a proxy and is appointed proxyholder shall attend the meeting in respect of which the proxy is given in person, or cause an alternate proxyholder to attend it, and shall comply with the directions of the shareholder who appointed the proxyholder.

• Marginal note:Rights of a proxyholder

  (2) A proxyholder or an alternate proxyholder has the same rights as the shareholder who appointed the proxyholder to speak at a meeting of shareholders in respect of any matter, to vote by way of ballot at the meeting and, except if the proxyholder or alternate proxyholder has conflicting instructions from more than one shareholder, to vote at the meeting in respect of any matter by a show of hands.

• Marginal note:Show of hands

  (3) Despite subsections (1) and (2), if the chairperson of a meeting of shareholders declares to the meeting that, if a ballot is conducted, the total number of votes attached to shares represented at the meeting by proxy required to be voted against what to the knowledge of the chairperson will be the decision of the meeting in relation to any matter or group of matters is less than five per cent of all the votes that might be cast by shareholders present in person or represented by proxy at the meeting on the ballot, unless a shareholder or proxyholder demands a ballot,

  • (a) the chairperson may conduct the vote in respect of that matter or group of matters by a show of hands; and

  • (b) a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by a show of hands.

Marginal note:Duty of intermediary

• 169 (1) Shares of a cooperative that are registered in the name of an intermediary or a nominee of an intermediary and not beneficially owned by the intermediary must not be voted unless the intermediary, without delay after receipt of the notice of the meeting, management proxy circular, dissident’s proxy circular and any other documents other than the form of proxy sent to shareholders by or on behalf of any person for use in connection with the meeting, sends a copy of the document to the beneficial owner and, except when the intermediary has received written voting instructions from the beneficial owner, a written request for those instructions.

• Marginal note:Restriction on voting

  (2) An intermediary, or a proxyholder appointed by an intermediary, may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or in the name of a nominee of the intermediary unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.

• Marginal note:Copies

  (3) A person by or on behalf of whom a solicitation is made must provide, at the request of an intermediary, without delay, to the intermediary at the person’s expense the necessary number of copies of the documents referred to in subsection (1), other than copies of the document requesting voting instructions.

• Marginal note:Instructions to intermediary

  (4) An intermediary shall vote or appoint a proxyholder to vote any shares referred to in subsection (1) in accordance with any written voting instructions received from the beneficial owner.

• Marginal note:Beneficial owner as proxyholder

  (5) If a beneficial owner so requests and provides an intermediary with appropriate documentation, the intermediary must appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.

• Marginal note:Validity

  (6) The failure of an intermediary to comply with this section does not render null or void any meeting of shareholders or any action taken at the meeting.

• Marginal note:Limitation

  (7) Nothing in this section gives an intermediary the right to vote shares that the intermediary is otherwise prohibited from voting.

Marginal note:Restraining order

• 170 (1) If a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact required in it or necessary to make a statement contained in it not misleading in the light of the circumstances in which it was made, the Director or any other interested person may apply to a court and the court may make any order it thinks fit, including

  • (a) an order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting to which the form of proxy, management proxy circular or dissident’s proxy circular relates;

  • (b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and

  • (c) an order adjourning the meeting.

• Marginal note:Notice to Director

  (2) An applicant under this section must give the Director notice of the application and the Director is entitled to appear and to be heard in person or by counsel.

PART 10Insider Trading

Marginal note:Interpretation

• 171 (1) The definitions in this subsection apply in this Part.

  business combination

  business combination means an acquisition of all or substantially all the property of one entity by another, or an amalgamation of two or more entities, or any similar reorganization between or among two or more entities. (regroupement d’entreprises)

  insider

  insider means, except in section 173,

  • (a) a director or officer of a distributing cooperative;

  • (b) a director or officer of a subsidiary of a distributing cooperative;

  • (c) a director or officer of an entity that enters into a business combination with a distributing cooperative; and

  • (d) a person employed or retained by a distributing cooperative. (initié)

  officer

  officer means the chairperson of the board of directors, president, vice-president, secretary, treasurer, comptroller, general counsel, general manager, managing director, or any other individual who performs functions for an entity similar to those normally performed by an individual occupying any of those offices. (dirigeant)

  share

  share means an investment share that carries voting rights under the articles or in the circumstances in which voting rights are exercisable with respect to it under this Act, and includes

  • (a) a security currently convertible into such an investment share; and

  • (b) currently exercisable options and rights to acquire such an investment share or such a convertible security. (part)

• Marginal note:Further interpretation

  (2) For the purposes of this Part,

  • (a) a director or an officer of an entity that beneficially owns, directly or indirectly, shares of a distributing cooperative, or that exercises control or direction over shares of the distributing cooperative, or that has a combination of any such ownership, control and direction, carrying more than the prescribed percentage of voting rights attached to all of the outstanding shares of the distributing cooperative not including shares held by the entity as underwriter while those shares are in the course of a distribution to the public is deemed to be an insider of the distributing cooperative;

  • (b) a director or an officer of an entity, or an individual acting in a similar capacity, that is a subsidiary is deemed to be an insider of its holding distributing cooperative;

  • (c) a person is deemed to beneficially own shares beneficially owned by an entity controlled by them directly or indirectly;

  • (d) an entity is deemed to beneficially own shares beneficially owned by its affiliates; and

  • (e) the acquisition or disposition by an insider of an option or right to acquire a share is deemed to be a change in the beneficial ownership of the share to which the option or right to acquire relates.

• Marginal note:Membership shares

  (3) For the purposes of this Part, the sale of membership shares to members or the making of a member loan to a cooperative is not a distribution to the public.

• (4) [Repealed, 2001, c. 14, s. 191]

Marginal note:Prohibition of short sale

• 172 (1) No insider shall knowingly sell, directly or indirectly, a security of a distributing cooperative or any of its affiliates if the insider selling the security does not own or has not fully paid for the security to be sold.

• Marginal note:Calls and puts

  (2) No insider shall knowingly, directly or indirectly, buy a put or sell a call in respect of a security of the cooperative or any of its affiliates.

• Marginal note:Exception

  (3) Despite subsection (1), an insider may sell a security that the insider does not own if the insider owns another security convertible into the security sold or an option or right to acquire the security sold and, no later than ten days after the sale, the insider

  • (a) exercises the conversion privilege, option or right and delivers the security so acquired to the purchaser; or

  • (b) transfers the convertible security, option or right to the purchaser.

Marginal note:Definition of insider

• 173 (1) In this section, insider, with respect to a cooperative, means

  • (a) the cooperative;

  • (b) an affiliate of the cooperative;

  • (c) a director or an officer of the cooperative or of any persons described in paragraphs (b), (e) or (g);

  • (d) a member who controls more than ten per cent of the voting rights that may be exercised to elect or appoint a director of the cooperative;

  • (e) a person who beneficially owns, directly or indirectly, shares of the cooperative or who exercises control or direction over shares of the cooperative, or a combination of any such ownership, control and direction, carrying more than the prescribed percentage of the voting rights attached to all of the outstanding shares of the cooperative other than shares held by the person as underwriter while those shares are in the course of a distribution to the public;

  • (f) a person, other than a person described in paragraph (g), employed or retained by the cooperative or by a person described in paragraph (g);

  • (g) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the cooperative;

  • (h) a person who received, while they were a person described in any of paragraphs (a) to (g) material confidential information concerning the cooperative;

  • (i) a person who receives material confidential information from a person described in this subsection or in subsection (2) or (2.1), including from a person described in this paragraph, and who knows or who ought reasonably to have known that the person giving the information is a person described in this subsection or in subsection (2) or (2.1), including a person described in this paragraph; and

  • (j) a prescribed person.

• Marginal note:Deemed insiders

  (2) For the purposes of this section, a person who proposes to make a take-over bid (as defined in the regulations) for securities of a cooperative, or to enter into a business combination with a cooperative, is an insider of the cooperative with respect to material confidential information obtained from the cooperative and is an insider of the cooperative for the purposes of subsection (6).

• Marginal note:Deemed insiders

  (2.1) An insider of a person referred to in subsection (2), and an affiliate or associate of such a person, is an insider of the cooperative referred to in that subsection. Paragraphs (1)(b) to (j) apply in determining whether a person is such an insider except that references to “cooperative” in those paragraphs are to be read as references to “person described in subsection (2)”.

• Marginal note:Expanded definition of “security”

  (3) For the purposes of this section, the following are deemed to be a security of the cooperative:

  • (a) a put, call or option or other right or obligation to purchase or sell a security of the cooperative; and

  • (b) a security of another entity whose market price varies materially with the market price of the securities of the cooperative.

• Marginal note:Insider trading — compensation to persons

  (4) An insider who purchases or sells a security of the cooperative with knowledge of confidential information that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the cooperative is liable to compensate the seller of the security or the purchaser of the security, as the case may be, for any damages suffered by the seller or purchaser as a result of the purchase or sale, unless the insider establishes that

  • (a) the insider reasonably believed that the information had been generally disclosed;

  • (b) the information was known, or ought reasonably to have been known, by the seller or purchaser; or

  • (c) the purchase or sale of the security took place in the prescribed circumstances.

• Marginal note:Insider trading — compensation to cooperative

  (5) The insider is accountable to the cooperative for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (4) unless the insider establishes the circumstances in paragraph 4(a).

• Marginal note:Tipping — compensation to persons

  (6) An insider who discloses to another person confidential information with respect to the cooperative that has not been generally disclosed and that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the cooperative is liable to compensate for damages any person who subsequently sells securities of the cooperative to, or purchases securities of the cooperative from, any person that received the information, unless the insider establishes

  • (a) that the insider reasonably believed that the information had been generally disclosed;

  • (b) that the information was known, or ought reasonably to have been known, to the person who alleges to have suffered the damages;

  • (c) that the disclosure of the information was necessary in the course of the business of the insider, except if the insider is a person described in subsection (2) or (2.1); or

  • (d) if the insider is a person described in subsection (2) or (2.1), that the disclosure of the information was necessary to effect the take-over bid or the business combination, as the case may be.

• Marginal note:Tipping — compensation to cooperative

  (7) The insider is accountable to the cooperative for any benefit or advantage received or receivable by the insider as a result of a disclosure of the information as described in subsection (6) unless the insider establishes the circumstances in paragraph (6)(a), (c) or (d).

• Marginal note:Measure of damages

  (8) The court may assess damages under subsection (4) or (6) in accordance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in a situation involving a security of a distributing cooperative, the court must consider the following:

  • (a) if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security over the twenty trading days immediately following general disclosure of the information; and

  • (b) if the plaintiff is a seller, the average market price of the security over the twenty trading days immediately following general disclosure of the information, less the price that the plaintiff received for the security.

• Marginal note:Liability

  (9) If more than one insider is liable under subsection (4) or (6) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.

• Marginal note:Limitation

  (10) An action to enforce a right created by subsections (4) to (7) may be commenced only within two years after discovery of the facts that gave rise to the cause of action.

PART 11Compulsory Acquisition

Marginal note:Definitions

174 The definitions in this section apply in this Part.

dissenting offeree

dissenting offeree means a holder of a share of a class for which a take-over bid is made who does not accept the take-over bid, and includes a subsequent holder of that share who acquires it from the first-mentioned holder. (pollicité dissident)

offer

offer includes an invitation to make an offer. (pollicitation)

offeree

offeree means a person to whom a take-over bid is made. (pollicité)

offeree cooperative

offeree cooperative means a distributing cooperative whose shares are the object of a take-over bid. (coopérative pollicitée)

offeror

offeror means a person, other than an agent or mandatary, who makes a take-over bid, and includes two or more persons who, directly or indirectly,

• (a) make take-over bids jointly or in concert; or

• (b) intend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made. (pollicitant)

share

share means an investment share, with or without voting rights, and includes

• (a) a security currently convertible into such a share; and

• (b) currently exercisable options and rights to acquire such a share or such a convertible security. (part)

take-over bid

take-over bid means an offer made by an offeror to shareholders of a distributing cooperative at approximately the same time to acquire all of the shares of a class of issued shares and includes an offer made by a distributing cooperative to repurchase all of the shares of a class of its shares. (offre d’achat)

Marginal note:Right to acquire

• 175 (1) If within one hundred and twenty days after the date of a take-over bid the bid is accepted by the holders of not less than ninety per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with this section, to acquire the shares held by the dissenting offerees.

• Marginal note:Notice

  (2) An offeror may acquire shares held by a dissenting offeree by sending, by confirmed delivery service within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, a notice to each dissenting offeree stating that

  • (a) the offerees holding not less than ninety per cent of the shares to which the bid relates accepted the take-over bid;

  • (b) the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;

  • (c) a dissenting offeree is required to elect

    • (i) to transfer their shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take-over bid, or

    • (ii) to demand payment of the fair value of their shares in accordance with subsections (10) to (19) by notifying the offeror within twenty days after the offeree receives the notice;

  • (d) a dissenting offeree who does not notify the offeror in accordance with subparagraph (c)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid; and

  • (e) a dissenting offeree must send the shares to which the take-over bid relates to the offeree cooperative within twenty days after the offeree receives the offeror’s notice.

• Marginal note:Notice of adverse claim

  (3) Concurrently with sending the notice under subsection (2), the offeror must send to the offeree cooperative a notice of adverse claim in accordance with section 240 with respect to each share held by a dissenting offeree.

• Marginal note:Share certificate

  (4) A dissenting offeree to whom a notice is sent under subsection (2) must, within twenty days after receiving the notice,

  • (a) send the share certificates of the class of shares to which the take-over bid relates to the offeree cooperative; and

  • (b) elect

    • (i) to transfer the shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take-over bid, or

    • (ii) to demand payment of the fair value of the shares in accordance with subsections (10) to (19) by notifying the offeror.

• Marginal note:Deemed election

  (5) A dissenting offeree who does not notify the offeror in accordance with subparagraph (4)(b)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.

• Marginal note:Payment

  (6) Within twenty days after the offeror sends a notice under subsection (2), the offeror must pay or transfer to the offeree cooperative the amount that the offeror would have had to pay to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (4)(b)(i).

• Marginal note:Amounts

  (7) The offeree cooperative is deemed to hold in trust for the dissenting shareholders the amounts it receives under subsection (6), and the offeree cooperative must deposit the amounts in a separate account in a body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board or by any other similar entity created by the law of another province, and must place any thing received in lieu of money in the custody of such a body corporate.

• Marginal note:When cooperative is offeror

  (8) A cooperative that is an offeror making a take-over bid to repurchase all of the shares of a class of its shares is deemed to hold in trust for the dissenting shareholders the amounts that it would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (4)(b)(i), and the cooperative must deposit the amounts in a separate account in a body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board or by any other similar entity created by the law of another province, and must place any thing received in lieu of money in the custody of such a body corporate.

• Marginal note:Duty of offeree cooperative

  (9) Within thirty days after the offeror sends a notice under subsection (2), the offeree cooperative must

  • (a) if the payments required by subsection (6) are made and the money or things are deposited as required by subsection (7), issue to the offeror a share certificate in respect of the shares that were held by dissenting offerees;

  • (b) give to each dissenting offeree who elects to accept the take-over bid terms under subparagraph (4)(b)(i) and who sends share certificates as required by paragraph (4)(a) the money or thing to which the offeree is entitled, disregarding fractional shares, which may be paid for in money; and

  • (c) if the payments required by subsection (6) are made and the money or things are deposited as required by subsection (7) or (8), send to each dissenting shareholder who has not sent share certificates as required by paragraph (4)(a) a notice stating that

    • (i) the dissenting shareholder’s shares have been cancelled,

    • (ii) the offeree cooperative or some designated person holds in trust for the dissenting shareholder the money or other things to which that shareholder is entitled as payment for or in exchange for the shares, and

    • (iii) the offeree cooperative will, subject to subsections (10) to (19), send that money or thing to that shareholder without delay after receiving the shares.

• Marginal note:Application to court

  (10) If a dissenting offeree has elected to demand payment of the fair value of the shares under subparagraph (4)(b)(ii), the offeror may, within twenty days after it has paid the money or transferred the things under subsection (6), apply to a court to fix the fair value of the shares of that dissenting offeree.

• Marginal note:Application to court

  (11) If an offeror fails to apply to a court under subsection (10), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.

• Marginal note:Status of dissenter if no court application

  (12) If no application is made to a court under subsection (11) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.

• Marginal note:Venue

  (13) An application under subsection (10) or (11) must be made to a court having jurisdiction in the place where the cooperative has its registered office or in the province where the dissenting offeree resides if the cooperative carries on business in that province.

• Marginal note:No security for costs

  (14) A dissenting offeree is not required to give security for costs in an application made under subsection (10) or (11).

• Marginal note:Parties

  (15) On an application under subsection (10) or (11),

  • (a) all dissenting offerees referred to in paragraph (4)(b) whose shares have not been acquired by the offeror must be joined as parties and are bound by the decision of the court; and

  • (b) the offeror must notify each affected dissenting offeree of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel.

• Marginal note:Powers of court

  (16) On an application to a court under subsection (10) or (11), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court must then fix a fair value for the shares of all dissenting offerees.

• Marginal note:Appraisers

  (17) A court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the shares of a dissenting offeree.

• Marginal note:Final order

  (18) The final order of the court must be made against the offeror in favour of each dissenting offeree and for the amount for shares as fixed by the court.

• Marginal note:Additional powers

  (19) In connection with proceedings under this section, a court may make any order it thinks fit, including an order to

  • (a) fix the amount of money or things that are required to be held in trust under subsections (7) and (8);

  • (b) order that the money or thing be held in trust by a person other than the offeree cooperative;

  • (c) allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the offeree sends or delivers the share certificates under subsection (4) until the date of payment; and

  • (d) order that any money payable to a shareholder who cannot be found be paid to the Receiver General, in which case subsection 327(3) applies.

Marginal note:Distributing cooperative

• 176 (1) If a shareholder holding shares of a distributing cooperative does not receive a notice under this Part, the shareholder may

  • (a) within ninety days after the date of the end of the take-over bid, or

  • (b) if the shareholder did not receive an offer pursuant to the take-over bid, within ninety days after the later of

    • (i) the date of the end of the take-over bid, and

    • (ii) the date on which the shareholder learned of the take-over bid,

  require the offeror to acquire those shares.

• Marginal note:Obligation to acquire

  (2) If a shareholder requires the offeror to acquire shares under subsection (1), the offeror must acquire the shares on the same terms under which the offeror acquired or will acquire the shares of the offerees who accepted the take-over bid.

PART 12Security Certificates, Registers and Transfers

Interpretation

Marginal note:Definitions

• 177 (1) The definitions in this subsection apply in this Part.

  adverse claim

  adverse claim, in respect of a security, includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest or right in the security. (opposition)

  bearer

  bearer means the person who is in possession of a security that is payable to bearer or endorsed in blank. (porteur)

  broker

  broker means a person who is engaged in whole or in part in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to a customer. (courtier)

  delivery

  delivery means voluntary transfer of possession. (livraison ou remise)

  fiduciary

  fiduciary means any person who acts in a fiduciary capacity or as the administrator of the property of others and includes a personal representative of a deceased person. (représentant)

  fungible

  fungible, in relation to securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. (fongibles)

  genuine

  genuine means free of forgery or counterfeiting. (authentique)

  good faith

  good faith, with respect to a transaction, means honesty in fact in the conduct of the transaction. (bonne foi)

  good faith purchaser

  good faith purchaser, with respect to a security in bearer form or order form or a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank, means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of the security. (acquéreur de bonne foi)

  holder

  holder means a person who is in possession of a security that is issued or endorsed to the person or to bearer or in blank. (détenteur)

  issuer

  issuer includes a cooperative that

  • (a) is required by this Act to maintain a securities register;

  • (b) in Quebec, issues securities that confer directly or indirectly rights in its property; or

  • (c) elsewhere in Canada, directly or indirectly creates fractional interests in its rights or property and issues securities as evidence of the fractional interests. (émetteur)

  overissue

  overissue means the issue of securities in excess of any maximum number of securities that the issuer is authorized by its articles or a trust indenture to issue. (émission excédentaire)

  purchaser

  purchaser means a person who takes an interest or right in a security by sale, mortgage, hypothec, pledge, issue, reissue, gift or any other voluntary transaction. (acquéreur)

  security

  security or security certificate means a document issued by a cooperative that is

  • (a) in bearer, order or registered form,

  • (b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,

  • (c) one of a class or series or by its terms divisible into a class or series of documents, and

  • (d) evidence of an investment share, participation or other interest or right in or obligation of a cooperative,

  but does not include

  • (e) a membership share or a document evidencing a membership share, or

  • (f) a member loan or a document evidencing a member loan. (valeur mobilière ou certificat de valeurs mobilières)

  transfer

  transfer includes transmission by operation of law. (transfert)

  trust indenture

  trust indenture means a trust indenture as defined in section 266. (acte de fiducie)

  valid

  valid means issued in accordance with the applicable law and the articles of the issuer, or validated under section 196. (valide)

• Marginal note:Negotiable instruments

  (2) Except when a transfer is restricted and noted on a security in accordance with subsection 183(2), a security is a negotiable instrument.

• Marginal note:Registerable form

  (3) A security is in registered form if it

  • (a) specifies a person who is entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; or

  • (b) bears a statement that it is in registered form.

• Marginal note:Order form

  (4) A debt obligation is in order form if, by its terms, it is payable to the order of a person specified with reasonable certainty in it or to a person to whom it is assigned.

• Marginal note:Bearer form

  (5) A security is in bearer form if it is payable to bearer according to its terms and not by reason of an endorsement.

• Marginal note:Guarantor for issuer

  (6) A guarantor for an issuer is deemed to be an issuer to the extent of the guarantee, whether or not the obligation is noted on the security.

Application

Marginal note:Application

178 This Part governs the transfer or transmission of a security.

Security Certificates

Marginal note:Security certificate

179 Every security holder is entitled, at their option, to obtain from the cooperative

• (a) a security certificate that complies with this Act; or

• (b) a non-transferable written acknowledgement of their right to obtain a security certificate.

Marginal note:Fee

180 A cooperative may charge a reasonable fee for a security certificate issued in respect of a transfer.

Marginal note:Joint owners

181 If securities are held jointly by more than one person,

• (a) a cooperative is not required to issue more than one security certificate in respect of those securities; and

• (b) delivery of a security certificate to one of the joint owners is sufficient delivery to them all.

Marginal note:Signatures

• 182 (1) A security certificate must be signed by at least one of the following persons, or a facsimile of the signature must be reproduced on the certificate:

  • (a) a director, or an individual on their behalf, or an officer;

  • (b) a transfer agent or branch transfer agent of the cooperative, or an individual on their behalf; or

  • (c) a trustee who certifies it in accordance with a trust indenture.

• Marginal note:Former director

  (2) A cooperative may issue security certificates that contain the signature of a person who is no longer a director or officer and the validity of the certificate is not adversely affected.

Marginal note:Contents of certificate

• 183 (1) The following information must be stated on the face of each security certificate issued by a cooperative:

  • (a) the name of the cooperative;

  • (b) the words “Incorporated under the Canada Cooperatives Act”, “constituée sous l’autorité de la Loi canadienne sur les coopératives”, “Subject to the Canada Cooperatives Act” or “assujetti à la Loi canadienne sur les coopératives”;

  • (c) the name of the person to whom it was issued; and

  • (d) the number and class of shares and the designation of any series that the certificate represents.

• Marginal note:Notation of restrictions

  (2) No restriction, charge, lien, hypothec, agreement or endorsement described in subsection (3) is effective against a transferee of a security, issued by a cooperative or by a body corporate before it is continued under this Act, who has no actual knowledge of the restriction, charge, lien, hypothec, agreement or endorsement unless it or a reference to it is noted conspicuously on the security certificate.

• Marginal note:Restrictions, etc.

  (3) The restrictions, charges, liens, hypothecs, agreements and endorsements referred to in subsection (2) are

  • (a) a restriction on transfer other than a constraint under section 130;

  • (b) a charge, lien or hypothec in favour of the cooperative;

  • (c) a unanimous agreement; and

  • (d) an endorsement under subsection 302(10).

• Marginal note:Restrictions

  (4) If the issued investment shares of a distributing cooperative remain outstanding and are held by more than one person, the cooperative must not restrict the transfer or ownership of its investment shares of any class or series except by way of a constraint under section 130.

• Marginal note:Conspicuous notation

  (5) A reference to a constraint on the issue, transfer or ownership of any class or series of investment shares must be noted conspicuously on every security certificate evidencing such a share that is issued after the share becomes subject to the constraint under this Act, if the constraint is one

  • (a) for the purpose of attaining or maintaining a level of Canadian ownership or control specified in its articles or required by law to carry on business or qualify for benefit; or

  • (b) to comply with any prescribed law.

• Marginal note:Effect of failure to note constraint

  (6) A failure to note a constraint under subsection (5) does not invalidate the investment share or the security certificate and does not render the constraint ineffective.

Marginal note:Contents of certificate

• 184 (1) Every share certificate for an investment share of a cooperative that is authorized to issue shares of more than one class or series must clearly state

  • (a) the rights, privileges, restrictions and conditions attached to the shares of each class and series that exist when the share certificate is issued; or

  • (b) that the class or series of shares that it represents has rights, privileges, restrictions or conditions attached to it and that the cooperative will provide a shareholder, on demand and without charge, with a full copy of the text of

    • (i) any rights, privileges, restrictions and conditions attached to each class authorized to be issued, and to each series, that have been fixed by the directors, and

    • (ii) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series.

• Marginal note:Copy of information

  (2) If a share certificate for an investment share contains the statement referred to in paragraph (1)(b), the cooperative must provide the shareholder, on demand and without charge, with a copy of

  • (a) the rights, privileges, restrictions and conditions attached to each class or series of investment shares authorized to be issued; and

  • (b) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series of investment shares in the same class.

Marginal note:Fractional shares

• 185 (1) A cooperative may issue for each fractional investment share, a certificate in registered form or scrip certificates in registered form that entitle the holder to receive a certificate for a full investment share in exchange for scrip certificates equalling a full investment share.

• Marginal note:Replacement

  (1.1) A cooperative must, on the request of a holder of a certificate for a fractional investment share or scrip certificate that is in bearer form and that was issued before the coming into force of this subsection, issue in exchange to that holder, in registered form, a certificate for a fractional investment share or a scrip certificate, as the case may be.

• Marginal note:Conditions

  (2) The directors may attach conditions to scrip certificates issued by the cooperative, including conditions that

  • (a) the scrip certificates become void or, in Quebec, null if not exchanged for an investment share representing a full investment share before a specified date; and

  • (b) any investment shares for which the scrip certificates are exchangeable may, despite any pre-emptive right, be issued by the cooperative to any person and the proceeds distributed rateably to the holders of the scrip certificates.

• Marginal note:Voting rights

  (3) A holder of a fractional investment share is not entitled to exercise voting rights or to receive a dividend in respect of the investment share unless

  • (a) the fractional share results from a consolidation of investment shares; or

  • (b) the articles of the cooperative provide otherwise.

• Marginal note:Exercise of voting rights

  (4) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.

Registers

Marginal note:Securities register

• 186 (1) A cooperative that issues securities must maintain a securities register in which it records the securities issued by it in registered form, showing with respect to each class or series

  • (a) the names, in alphabetical order, and the latest known address of each person who holds or previously held the security;

  • (b) the number of securities held by each security holder; and

  • (c) the date and particulars of the issue and transfer of each security.

• Marginal note:Location of register

  (2) The securities register must be maintained at the cooperative’s registered office or at any other place in Canada designated by the directors.

• Marginal note:Branch registers

  (3) A cooperative may maintain additional branch securities registers in other places designated by the directors.

• Marginal note:Contents of branch register

  (4) A branch securities register only contains particulars of securities issued or transferred at the branch. The same information is also recorded in the central registry.

• Marginal note:Destruction of certificates

  (5) A cooperative, its agent or mandatary or a trustee as defined in section 266 is not required to produce

  • (a) a cancelled security certificate in registered form, an instrument referred to in any of subsections 142(1) to (3) that is cancelled or a like cancelled instrument in registered form six years after the date of its cancellation;

  • (b) a cancelled security certificate in bearer form or an instrument referred to in any of subsections 142(1) to (3) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or

  • (c) an instrument referred to in any of subsections 142(1) to (3) or a like instrument, irrespective of its form, after the date of its expiration.

Marginal note:Agent or mandatary

187 A cooperative may appoint an agent or mandatary to maintain securities registers on its behalf.

Marginal note:Registration

188 The registration of the issue or transfer of an investment share in a securities register maintained by the cooperative is complete and valid registration for all purposes.

Marginal note:Trustee

189 Subject to sections 51, 53 and 61, a cooperative or a trustee as defined in section 266 may treat the person whose name appears on the securities register as the owner of a security as its owner for all purposes.

Marginal note:Proof of ownership

190 If a cooperative restricts the right to transfer its investment shares, the cooperative may, despite section 189, treat a person as the registered holder of a security if the person provides the cooperative with evidence that reasonably meets the requirements of the cooperative that the person is

• (a) the heir of a deceased security holder, or the fiduciary of the estate or succession of a deceased security holder, or of a registered security holder who is a minor, an incapable person or a missing person; or

• (b) a liquidator of, or a trustee in bankruptcy for, a registered security holder.

Marginal note:Proof of ownership

191 A cooperative must treat a person, other than one described in section 190, as being entitled to exercise the rights and privileges attached to a security if the person provides proof that the person has acquired ownership of the security by operation of law or has legal authority to exercise the rights and privileges.

Marginal note:Joint owners

192 If satisfactory proof of the death of a joint holder of a security is provided to a cooperative, it may treat any surviving joint holders as the owner of the security.

Marginal note:Duties of cooperative

193 A cooperative is not required to inquire into the existence of, or see to the performance of, any duty owed to a third person by a registered holder or a person who may be treated as a registered holder of a security.

Marginal note:Minors

194 If an individual who is less than 18 years of age exercises a right of ownership in a security of a cooperative, no subsequent repudiation or avoidance or, in Quebec, annulment or reduction of obligations is effective against the cooperative.

Marginal note:Deceased owner

• 195 (1) Subject to any applicable law relating to the collection of taxes, a person who is an heir or a fiduciary of an estate or succession of a deceased security holder is entitled to become the registered holder or to designate a registered holder if the person deposits the following information with the cooperative or its transfer agent, together with any reasonable assurances that the cooperative may require:

  • (a) the security certificate or, in default of one, a document proving that the deceased was the security holder;

  • (b) a document proving the death of the security holder; and

  • (c) a document proving that the heir or fiduciary has the right under the law of the place in which the deceased was domiciled immediately before their death to deal with the security.

• Marginal note:Endorsement

  (2) A security certificate referred to in paragraph (1)(a) must be endorsed

  • (a) in the case of a transfer to an heir or fiduciary, by that person; and

  • (b) in any other case, in a manner acceptable to the cooperative.

• Marginal note:Right of cooperative

  (3) Deposit of the documents required by subsection (1) empowers a cooperative or its transfer agent to record in a securities register the transmission of a security from the deceased holder to the heir or fiduciary or to any person that the heir or fiduciary may designate and to treat the person who becomes a registered holder as the owner of the securities.

Marginal note:Overissue

• 196 (1) Subject to this section, the provisions of this Part that validate a security or compel its issue or reissue do not apply if the validation, issue or reissue of a security would result in overissue.

• Marginal note:Identical security

  (2) The person who is entitled to a validation or issue may, if there has been an overissue and if a valid security that is similar in all respects to the security involved in the overissue is reasonably available for purchase, compel the issuer to purchase and deliver that security against the surrender of the security that the person holds.

• Marginal note:If identical security not available

  (3) If a valid security that is similar in all respects to the security involved in the overissue is not reasonably available for purchase, the person who is entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.

• Marginal note:Increase in capital

  (4) The overissued securities are valid from the date they were issued only if the issuer increases the number of its authorized securities to a number equal to or greater than the number of securities previously authorized plus the number of the securities overissued.

Marginal note:Exemptions

197 Sections 147 to 149 and 152 do not apply to a payment or purchase by an issuer under section 196.

Proceedings

Marginal note:Rules of action

198 The following rules apply in an action on a security:

• (a) each signature on the security certificate or in a necessary endorsement is admitted unless specifically denied in the pleadings;

• (b) a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

• (c) if a signature is admitted or established, production of a certificate entitles the holder to recover on it unless the other party establishes a defence or defect going to the validity of the security; and

• (d) if the other party establishes the defence or defect, the plaintiff has the burden of establishing that the defect is ineffective against the plaintiff or some other person under whom the claim is made.

Delivery

Marginal note:Delivery of securities

• 199 (1) A person who is required to deliver securities may deliver any security of the specified issue

  • (a) in bearer form;

  • (b) in registered form in the name of the transferee; or

  • (c) endorsed to the person or in blank.

• Marginal note:Limitation

  (2) Subsection (1) is subject to any agreement to the contrary, to the provisions of this Act, of any other applicable Act of Parliament, of any applicable Act of the legislature of a province or of any applicable regulation made under any such Act or to any applicable stock exchange rule.

General

Marginal note:Incorporation by reference

• 200 (1) The terms of a security include those stated on the security and those incorporated by reference to another instrument or act, Act of Parliament or the legislature of a province, regulation, rule or order to the extent that the incorporated terms do not conflict with those stated on the security.

• Marginal note:Purchaser without notice

  (2) Subsection (1) applies to a good faith purchaser but the incorporation by reference is itself not notice of a defect to the purchaser even if the security expressly states that a person accepting it admits that notice.

Marginal note:Validity of security

201 A security is valid in the hands of a good faith purchaser.

Marginal note:Defence

202 Subject to section 205, the fact that a security is not genuine is a complete defence even against a good faith purchaser.

Marginal note:Defences

203 All other defences of an issuer, including non-delivery and conditional delivery of a security, are ineffective against a good faith purchaser.

Marginal note:Deemed notice

• 204 (1) A purchaser is deemed to have notice of any defect in the issue of a security or any defence of the issuer if the security becomes stale within the meaning of subsection (2).

• Marginal note:Stale security

  (2) A security becomes stale if

  • (a) the purchaser takes the security more than two years after

    • (i) the date on which performance of the principal obligation evidenced by the security was due, or

    • (ii) the set date on or after which the security is to be presented or surrendered for redemption or exchange; or

  • (b) the payment of money or the delivery of securities is required in order to present or surrender the security, the money or securities are available on the day for the payment or delivery and the purchaser takes the security more than one year after that day.

Marginal note:Unauthorized signature

• 205 (1) Subject to subsection (2), an unauthorized signature on a security is ineffective.

• Marginal note:Limited effectiveness

  (2) An unauthorized signature on a security is effective in favour of a good faith purchaser if the signature was made by

  • (a) an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the security, or similar securities, or to prepare them for signing; or

  • (b) an employee of the issuer or a person referred to in paragraph (a) who handles the security in the ordinary course of their duties.

Marginal note:Completion of form

206 If a security contains the signatures necessary for its issue or transfer but is incomplete in another respect, any person may complete it in accordance with their authority.

Marginal note:Enforceability

207 A security that was completed incorrectly is enforceable by a good faith purchaser.

Marginal note:Fraud

208 A completed security that was improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.

Marginal note:Guarantees

• 209 (1) A person signing a security as an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the security guarantees to a good faith purchaser that

  • (a) the security is genuine;

  • (b) the person’s acts in connection with the security are within the person’s authority; and

  • (c) the person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.

• Marginal note:Liability

  (2) Unless agreed otherwise, a person referred to in subsection (1) does not assume any further liability for the validity of the security.

Marginal note:Acquisition of rights

• 210 (1) On delivery of a security, the purchaser of the security acquires the rights in it that the transferor had or had authority to convey.

• Marginal note:Claim free

  (2) A good faith purchaser of a security acquires it free from any adverse claim.

• Marginal note:No better position

  (3) A purchaser who was a party to a fraud or illegality affecting a security or who, as a prior holder, had notice of an adverse claim does not have a better position by taking from a later good faith purchaser.

Marginal note:Limitation of the purchase

211 A purchaser acquires rights only to the extent of the interest or right purchased.

Marginal note:Deemed notice

• 212 (1) A purchaser of a security, or a broker for a seller or purchaser, is deemed to have notice of an adverse claim if

  • (a) the security has been endorsed “for collection” or “for surrender” or for some other purpose other than transfer; or

  • (b) the security is in bearer form and has a statement on it that it belongs to a person other than the transferor.

• Marginal note:Name

  (2) The mere writing of a name on a security is not a statement for the purposes of paragraph (1)(b).

Marginal note:No duty to inquire

• 213 (1) A purchaser of a security, or a broker for a seller or purchaser, has no duty to inquire into the rightfulness of the transfer and, subject to section 214, has no notice of an adverse claim.

• Marginal note:Third party holding

  (2) Subsection (1) applies even if the purchaser or broker has notice that the security is held by a third person or is registered in the name of or endorsed by a fiduciary.

Marginal note:Deemed notice

214 A purchaser or broker who knows that the transaction is for the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty is deemed to have notice of an adverse claim.

Marginal note:Staleness

• 215 (1) The following events do not constitute notice of an adverse claim except if the security becomes stale within the meaning of subsection (2):

  • (a) an event that creates a right to performance of the principal obligation evidenced by the security; or

  • (b) an event that sets the date on or after which the security is to be presented or surrendered for redemption or exchange.

• Marginal note:Staleness of security

  (2) A security becomes stale if

  • (a) the purchaser takes the security more than one year after

    • (i) the date on which performance of the principal obligation evidenced by the security was due, or

    • (ii) the date on or after which the security was to be presented or surrendered for redemption or exchange; or

  • (b) the payment of money or the delivery of securities is required in order to present or surrender the security, the money or securities are available on the day for the payment or delivery and the purchaser takes the security more than six months after that day.

Marginal note:Guarantee

• 216 (1) A person who presents a security for registration of transfer or for payment or exchange guarantees to the issuer that the person is entitled to do so.

• Marginal note:Limitation on guarantee

  (2) A good faith purchaser who receives a new, re-issued or re-registered security and who registers a transfer guarantees only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

Marginal note:Content of guarantee

217 A person who transfers a security to a purchaser for value guarantees by the transfer only that

• (a) the transfer is effective and rightful;

• (b) the security is genuine and has not been materially altered; and

• (c) the person knows of nothing that might impair the validity of the security.

Marginal note:Guarantee of intermediary

218 An intermediary delivering a security to a purchaser who knows that the intermediary is an intermediary guarantees only good faith.

Marginal note:Guarantee of broker

219 A broker gives to a customer, to the issuer and to a purchaser the guarantees provided in sections 216 to 218 and has the rights and privileges of a purchaser under those sections, and those guarantees of and in favour of the broker acting as an agent or mandatary are in addition to guarantees given by the customer and guarantees given in favour of the customer.

Marginal note:Right to compel endorsement

220 If a registered security is delivered to a purchaser without a necessary endorsement, the purchaser has the right to demand the endorsement. The purchaser becomes a good faith purchaser after the endorsement.

Marginal note:Definition of appropriate

• 221 (1) In this section, section 222, subsections 229(1) and 237(1) and section 241, appropriate, with respect to a person, means that the person is

  • (a) the person who is specified by the security or by a special endorsement to be entitled to the security;

  • (b) if a person described in paragraph (a) is described as a fiduciary but is no longer serving as one, either that person or their successor;

  • (c) if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons is no longer a fiduciary, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified;

  • (d) if a person described in paragraph (a) is an individual and is without capacity to act by reason of death, minority or incapability, the person’s fiduciary;

  • (e) if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;

  • (f) a person who has the legal power to sign; or

  • (g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent or mandatary, the person’s authorized agent or mandatary.

• Marginal note:Time for determination

  (2) The authority of a person signing is determined as of the time of signing.

Marginal note:Endorsement

• 222 (1) An endorsement of a security in registered form for the purposes of assignment or transfer is made when an appropriate person signs either the security or a separate document, or when the signature of an appropriate person is written without more on the back of the security.

• Marginal note:Blank or special

  (2) An endorsement may be

  • (a) in blank; or

  • (b) special.

• Marginal note:Blank endorsement

  (3) An endorsement in blank includes an endorsement to bearer.

• Marginal note:Special endorsement

  (4) A special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.

• Marginal note:Right of holder

  (5) A holder may convert an endorsement in blank into a special endorsement.

Marginal note:Immunity of endorser

223 Unless agreed otherwise, the endorser does not, by the endorsement, assume any obligation that the security will be honoured by the issuer.

Marginal note:Partial endorsement

224 An endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

Marginal note:Effect of failure by fiduciary to comply

225 Failure of a fiduciary to comply with the instrument or act that is the source of the fiduciary’s power or with the law of the jurisdiction governing the fiduciary relationship does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

Marginal note:Effect of endorsement without delivery

226 An endorsement of a security does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and the document.

Marginal note:Endorsement in bearer form

227 An endorsement of a security in bearer form may give notice of an adverse claim under section 212 but does not otherwise affect any of the holder’s rights.

Marginal note:Effect of unauthorized endorsement

• 228 (1) The owner of a security may assert the ineffectiveness of an endorsement against the issuer or a purchaser, other than a good faith purchaser who has in good faith received a new, re-issued or re-registered security on registration of transfer, unless the owner

  • (a) has ratified an unauthorized endorsement of the security; or

  • (b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

• Marginal note:Liability of issuer

  (2) An issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.

Marginal note:Warranties of guarantor of signature

• 229 (1) A person who guarantees the signature of an endorser of a security warrants that, at the time of signing, the signer was an appropriate person to endorse and the signature was genuine.

• Marginal note:Limitation of liability

  (2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.

• Marginal note:Warranties of guarantor of endorsement

  (3) A person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

• Marginal note:Extent of liability

  (4) The guarantees referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to the person for any loss resulting from breach of warranty.

Marginal note:Presumption of delivery

230 Delivery of a security to a purchaser occurs when

• (a) the purchaser or a person designated by the purchaser acquires possession of it;

• (b) the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;

• (c) the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; or

• (d) in respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.

Marginal note:Presumption of ownership

• 231 (1) A purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases described in paragraphs 230(b) and (c).

• Marginal note:Ownership of part of fungible bulk

  (2) If a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest or right in the fungible bulk.

• Marginal note:Notice to securities broker of adverse claim

  (3) Notice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.

Marginal note:Delivery of security

• 232 (1) Unless agreed otherwise, if a sale of a security is made on a stock exchange or otherwise through securities brokers,

  • (a) the selling customer fulfils their duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or when they cause an acknowledgement to be made to the selling securities broker; and

  • (b) the selling securities broker, including a correspondence broker, acting for a selling customer fulfils their duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by affecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

• Marginal note:Duty to deliver

  (2) Except as provided otherwise in this section and unless agreed otherwise, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.

• Marginal note:Delivery to securities broker

  (3) A sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

Marginal note:Right to reclaim possession

• 233 (1) A person against whom the transfer of a security is wrongful may, against anyone except a good faith purchaser,

  • (a) reclaim possession of the security or obtain possession of a new security evidencing all or part of the same rights; or

  • (b) claim damages.

• Marginal note:Recovery when unauthorized endorsement

  (2) If the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a good faith purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 228.

Marginal note:Right to requisites for registration

• 234 (1) Unless agreed otherwise, a transferor must, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for the transferor to provide authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

• Marginal note:Rescission of transfer

  (2) If a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.

Marginal note:Seizure of security

235 No seizure of a security or other interest or right evidenced by the security is effective until the person making the seizure obtains possession of the security.

Marginal note:No liability for acts in good faith

236 An agent or mandatary, or a bailee or depositary, who in good faith has received securities and sold, pledged or delivered them according to the instructions of the principal or mandator is not in breach of a fiduciary duty or otherwise liable even though they have no right to dispose of the securities.

Marginal note:Duty to register transfer

• 237 (1) If a security in registered form is presented for transfer, the issuer must register the transfer if

  • (a) the security is endorsed by an appropriate person;

  • (b) reasonable assurance is given that the endorsement is genuine and effective;

  • (c) the issuer has no duty to inquire into adverse claims or has discharged that duty;

  • (d) all applicable laws relating to the collection of taxes have been complied with;

  • (e) the transfer is rightful or is to a good faith purchaser; and

  • (f) any transfer fee referred to in section 180 has been paid.

• Marginal note:Liability for delay

  (2) An issuer who has a duty to register a transfer of a security is liable to the person presenting it for registration for any loss resulting from an unreasonable delay in registration or from the failure or refusal to register the transfer.

Marginal note:Assurance of endorsement

• 238 (1) An issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiring

  • (a) if the endorsement is by an agent or mandatary, reasonable assurance of authority to sign;

  • (b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;

  • (c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

  • (d) in any other case, assurance that corresponds as closely as is feasible to the cases set out in paragraphs (a) to (c).

• Marginal note:Sufficiency of guarantee

  (2) For the purpose of subsection (1), a guarantee of the signature of a person is sufficient if it is signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.

• Marginal note:Standards

  (3) An issuer may adopt reasonable standards to determine responsible persons for the purpose of subsection (2).

• Marginal note:Sufficiency of evidence of appointment or incumbency

  (4) For the purpose of paragraph (1)(b), the following constitute sufficient evidence of appointment or incumbency of a fiduciary:

  • (a) in the case of a fiduciary of a deceased security holder’s estate or succession, a certified copy of the document referred to in paragraph 195(1)(c) and dated not earlier than sixty days before the day a security is presented for transfer; or

  • (b) in the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.

• Marginal note:Standards

  (5) An issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).

• Marginal note:No notice to issuer

  (6) An issuer is deemed not to have notice of the content of a document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.

Marginal note:Notice from additional documentation

239 If an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 238(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained in the document that affect the transfer.

Marginal note:Limited duty of inquiry

• 240 (1) An issuer to whom a security is presented for registration has a duty to inquire into adverse claims if the issuer

  • (a) receives written notice of an adverse claim at a time and in a manner that provide the issuer with a reasonable opportunity to act on it before the issue of a new, re-issued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; or

  • (b) is deemed to have notice of an adverse claim from a document that it obtained under section 239.

• Marginal note:Discharge of duty

  (2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, no later than thirty days after the date of sending the notice, the issuer

  • (a) is served with a restraining order or other order of a court; or

  • (b) is provided with an indemnity bond sufficient in the issuer’s judgement to protect the issuer and any transfer agent or other agent or mandatary of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.

Marginal note:Inquiry into adverse claim

241 (1) Unless an issuer is deemed to have notice of an adverse claim from a document that is obtained under section 239 or has received notice of an adverse claim under subsection 240(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,

• (a) an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and the issuer may then assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;

• (b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

• (c) an issuer is deemed not to have notice of the contents of a court record or a registered document even if the record or document is in the issuer’s possession and the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.

Marginal note:Duration of notice of adverse claim

242 A written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.

Marginal note:Limitation on issuer’s liability

• 243 (1) Except as provided otherwise in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security if

  • (a) the necessary endorsements were on or with the security; and

  • (b) the issuer had no duty to inquire into adverse claims or had discharged that duty.

• Marginal note:Duty of issuer on default

  (2) If an issuer has registered a transfer of a security to a person not entitled to it, the issuer must on demand deliver a like security to the owner unless

  • (a) the issuer is not liable by virtue of subsection (1);

  • (b) the owner is precluded by subsection 244(1) from asserting a claim; or

  • (c) the delivery would result in an overissue to which section 196 applies.

Marginal note:Lost or stolen security

• 244 (1) The owner of a security who fails to notify the issuer of an adverse claim, in writing, within a reasonable time after the owner knows of a loss, apparent destruction or wrongful taking of the security is precluded from asserting against the issuer a claim to a new security if the issuer has registered a transfer of the security.

• Marginal note:Duty to issue new security

  (2) If the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the owner

  • (a) so requests before the issuer has notice that the security has been acquired by a good faith purchaser;

  • (b) provides the issuer with a sufficient indemnity bond; and

  • (c) satisfies any other reasonable requirements imposed by the issuer.

• Marginal note:Duty to register transfer

  (3) If, after the issue of a new security under subsection (2), a good faith purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in an overissue to which section 196 applies.

• Marginal note:Right of issuer to recover

  (4) In addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a good faith purchaser.

Marginal note:Duty

245 An authenticating trustee, transfer agent or other agent or mandatary of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

• (a) a duty to the issuer to exercise good faith and reasonable diligence; and

• (b) the same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.

Marginal note:Notice to agent or mandatary

246 Notice to an authenticating trustee, transfer agent or other agent or mandatary of an issuer is notice to the issuer in respect of the functions performed by the agent or mandatary.

PART 13Financial Disclosure

Marginal note:Annual financial statements to members

• 247 (1) The directors must place before the members at every annual meeting of members

  • (a) prescribed comparative financial statements that conform to any prescribed requirements and relate separately to

    • (i) the period that began on the date the cooperative came into existence and ended not more than six months before the annual meeting or, if the cooperative has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting, and

    • (ii) the immediately preceding financial year;

  • (b) the report of the auditor, if any; and

  • (c) any further information respecting the financial position of the cooperative and the results of its operations required by the articles, the by-laws or a unanimous agreement.

• Marginal note:Annual financial statements to shareholders

  (2) If shareholders have a right to have an annual meeting under subsection 133(1), the directors must place the documents described in subsection (1) before the shareholders at every annual meeting of shareholders.

• Marginal note:Exception

  (3) Despite paragraph (1)(a) and subsection (2), the financial statements referred to in subparagraph (1)(a)(ii) may be omitted if the reason for the omission is set out in the financial statements, or in a note to those statements, to be placed before the members at an annual meeting of members and, in a case to which subsection (2) applies, the shareholders at an annual meeting of shareholders.

Marginal note:Application for exemption

248 On the application of a cooperative, the Director may exempt the cooperative, on any terms that the Director thinks fit, from any requirement set out in section 247 or any of sections 249 to 252, if the Director reasonably believes that the detriment that may be caused to the cooperative by the requirement outweighs its benefit to the members and shareholders or, in the case of a distributing cooperative, to the public.

Marginal note:Consolidated statements

• 249 (1) A cooperative must keep at its registered office a copy of the financial statements of each of its subsidiaries and of each entity the accounts of which are consolidated in its financial statements.

• Marginal note:Examination

  (2) The members and shareholders of a cooperative and their personal representatives may on request examine the statements referred to in subsection (1) during the usual business hours of the cooperative and may take extracts from them free of charge.

• Marginal note:Barring examination

  (3) A cooperative may, not later than fifteen days after a request to examine under subsection (2), apply to a court for an order barring the right of any person to so examine, and the court may, if it is satisfied that the examination would be detrimental to the cooperative or a subsidiary, bar the right and make any further order it thinks fit.

• Marginal note:Notice

  (4) A cooperative must give the person requesting to examine under subsection (2) notice of an application under subsection (3), and the person may appear and be heard in person or by counsel.

Marginal note:Approval of financial statements

• 250 (1) The directors must approve the financial statements referred to in section 247 and the approval is evidenced by the manual signature of one or more directors, or a facsimile of the signatures reproduced on the statements.

• Marginal note:Condition precedent

  (2) A cooperative may not issue, publish or circulate copies of the financial statements referred to in section 247 unless they are

  • (a) approved and signed in accordance with subsection (1); and

  • (b) accompanied by the report of the auditor of the cooperative, if any.

Marginal note:Copies to shareholders

251 A cooperative shall send a copy of the documents referred to in section 247 to each member and shareholder, except to a member or shareholder who has informed the cooperative in writing that they do not want a copy of the documents,

• (a) not less than twenty-one days before each annual meeting of members;

• (b) not less than twenty-one days before each annual meeting of shareholders, if subsection 247(2) applies; or

• (c) not later than a resolution in lieu of an annual meeting is signed under section 66.

Marginal note:Copies to Director

• 252 (1) A distributing cooperative, any of the issued securities of which remain outstanding and are held by more than one person, must send a copy of the documents referred to in section 247 to the Director

  • (a) not less than twenty-one days before each annual meeting of members or, without delay after a resolution referred to in paragraph 251(c) is signed; and

  • (b) in any event within fifteen months after the last preceding annual meeting of shareholders was held or the resolution referred to in paragraph 251(c) was signed, but no later than six months after the end of the cooperative’s preceding financial year.

• Marginal note:Subsidiary cooperative

  (2) A subsidiary cooperative is not required to comply with this section if its financial statements are consolidated or combined with those of its holding cooperative entity and the statements of its holding cooperative entity are sent to the Director in compliance with this section.

Marginal note:Qualifications of auditor

• 253 (1) Subject to subsection (5), a person is disqualified from being an auditor of a cooperative if the person is not independent of the cooperative, of any of its affiliates or of the directors or officers of the cooperative or its affiliates.

• Marginal note:Independence

  (2) For the purposes of this section,

  • (a) independence is a question of fact; and

  • (b) a person is deemed not to be independent if the person, or another person with whom the person is in business,

    • (i) is a director, officer or employee of the cooperative or any of its affiliates, is in business with the cooperative or any of its affiliates, or is in business with a director, officer or employee of the cooperative or any of its affiliates,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the securities of the cooperative or any of its affiliates, or

    • (iii) has been a receiver, receiver-manager, sequestrator, liquidator or trustee in bankruptcy of the cooperative or any of its affiliates within two years of the proposed appointment of the person as auditor of the cooperative.

• Marginal note:Duty to resign

  (3) An auditor who becomes disqualified under this section must, subject to subsection (5), resign without delay after becoming aware of the disqualification.

• Marginal note:Disqualification order

  (4) Any interested person may apply to a court for an order declaring an auditor to be disqualified under this section and the office of auditor to be vacant.

• Marginal note:Exemption order

  (5) Any interested person may apply to a court for an order exempting an auditor from disqualification under this section and the court may, if it is satisfied that an exemption would not unfairly prejudice the members or shareholders, make an exemption order on any terms that it thinks fit. The order may have retrospective effect.

Marginal note:Appointment of auditor

• 254 (1) Subject to section 255, the members must, by ordinary resolution, at the first annual meeting of members and at each subsequent annual meeting, appoint an auditor to hold office until the close of the next annual meeting.

• Marginal note:Eligibility

  (2) An auditor appointed under section 82 is eligible for appointment under subsection (1).

• Marginal note:Incumbent auditor

  (3) Despite subsection (1), if an auditor is not appointed at a meeting of members, the incumbent auditor continues in office until a successor is appointed.

• Marginal note:Remuneration

  (4) The remuneration of an auditor may be fixed by ordinary resolution of the members or, if not so fixed, may be fixed by the directors.

Marginal note:Dispensing with auditor

• 255 (1) A cooperative that is not a distributing cooperative may resolve not to appoint an auditor by

  • (a) special resolution of the members; and

  • (b) special resolution of all shareholders, including those who do not otherwise have the right to vote.

• Marginal note:Limitation

  (2) A resolution under subsection (1) is valid only until the next annual meeting of members.

Marginal note:Ceasing to hold office

• 256 (1) An auditor of a cooperative ceases to hold office when the auditor dies, resigns or is removed under section 257.

• Marginal note:Effective date of resignation

  (2) A resignation of an auditor becomes effective on the date on which a written resignation is sent to the cooperative, or on the date specified in the resignation, whichever is later.

Marginal note:Removal of auditor

• 257 (1) The members may by ordinary resolution at a special meeting remove the auditor from office, unless the auditor was appointed by a court under section 259.

• Marginal note:Vacancy

  (2) A vacancy created by the removal of an auditor may be filled at the meeting at which the auditor is removed or, if not so filled, may be filled under section 258.

Marginal note:Filling vacancy

• 258 (1) Subject to subsection (3), the directors must fill a vacancy in the office of auditor without delay after it occurs.

• Marginal note:Calling meeting

  (2) If there is not a quorum of directors, the directors then in office must, not later than twenty-one days after a vacancy in the office of auditor occurs, call a special meeting of members to fill the vacancy and, if they fail to call a meeting or if there are no directors, the meeting may be called by any member.

• Marginal note:Members filling vacancy

  (3) The by-laws of a cooperative may provide that a vacancy in the office of auditor may only be filled by vote of the members.

• Marginal note:Unexpired term

  (4) An auditor appointed to fill a vacancy holds office for the unexpired term of their predecessor.

Marginal note:Court appointed auditor

• 259 (1) If a cooperative does not have an auditor, the court may, on the application of a member or shareholder, appoint and fix the remuneration of an auditor who holds office until an auditor is appointed by the members.

• Marginal note:Exception

  (2) Subsection (1) does not apply if a resolution made under section 255 not to appoint an auditor is in effect.

Marginal note:Right to attend meeting

• 260 (1) The auditor of a cooperative is entitled to receive notice of every meeting of the cooperative and, at the expense of the cooperative, to attend and be heard at the meetings on matters relating to the auditor’s duties.

• Marginal note:Duty to attend

  (2) If a director or member of a cooperative, whether or not the member is entitled to vote at the meeting, or a shareholder that is entitled to vote at that meeting of shareholders, gives written notice not less than ten days before a meeting of the cooperative to the auditor or a former auditor of the cooperative, the auditor or former auditor shall attend the meeting at the expense of the cooperative and answer questions relating to the auditor’s duties.

• Marginal note:Notice to cooperative

  (3) A director, member or shareholder who sends a notice referred to in subsection (2) must send a copy of the notice to the cooperative at the same time.

• Marginal note:Statement of auditor

  (4) An auditor is entitled to submit to the cooperative a written statement giving the reasons for the auditor’s resignation or the reasons why the auditor opposes a proposed action or resolution set out in any of paragraphs (a) to (d), in any of the following situations:

  • (a) the auditor resigns;

  • (b) the auditor receives a notice or otherwise learns of a meeting of members called for the purpose of removing the auditor from office;

  • (c) the auditor receives a notice or otherwise learns of a meeting of directors or members at which another person is to be appointed to fill the office of auditor, whether because of the resignation or removal of the incumbent auditor or because the term of office of the incumbent auditor has expired or is about to expire; or

  • (d) the auditor receives a notice or otherwise learns of a meeting at which a resolution referred to in section 255 is to be proposed.

• Marginal note:Other statements

  (5) In the case of a proposed replacement of an auditor, whether through removal or at the end of the auditor’s term, the following rules apply with respect to other statements:

  • (a) the cooperative must make a statement on the reasons for the proposed replacement; and

  • (b) the proposed replacement auditor may make a statement in which he or she comments on the reasons referred to in paragraph (a).

• Marginal note:Circulating statement

  (6) The cooperative must send a copy of the statements referred to in subsections (4) and (5) without delay to every person who is entitled to receive notice of a meeting referred to subsection (1) and to the Director.

• Marginal note:Replacing auditor

  (7) No person may accept appointment or consent to be appointed as auditor of a cooperative if the person is replacing an auditor who has resigned or been removed or whose term of office has expired or is about to expire until the person has requested and received from that auditor a written statement of the circumstances and the reasons why, in that auditor’s opinion, the auditor is to be replaced.

• Marginal note:Exception

  (8) Despite subsection (7), a person otherwise qualified may accept appointment or consent to be appointed as auditor of a cooperative if, no later than fifteen days after making the request referred to in that subsection, the person does not receive a reply.

• Marginal note:Effect of non-compliance

  (9) Unless subsection (8) applies, an appointment as auditor of a cooperative of a person who has not complied with subsection (7) is null or void.

Marginal note:Examination

• 261 (1) An auditor of a cooperative must make any examination that is in the auditor’s opinion necessary to enable the auditor to report in the manner that may be prescribed on the financial statements required by this Act to be placed before the members or shareholders, except any financial statements or parts of statements that relate to the period referred to in subparagraph 247(1)(a)(ii).

• Marginal note:Reliance on other auditor

  (2) Despite section 262, an auditor of a cooperative may reasonably rely on the report of an auditor of an entity the accounts of which are included in whole or in part in the financial statements of the cooperative.

• Marginal note:Application

  (3) Subsection (2) applies whether or not the financial statements of the cooperative reported on by the auditor are in consolidated form.

Marginal note:Right to information

• 262 (1) On the demand of an auditor of a cooperative, the present or former directors, officers, employees or agents or mandataries of the cooperative must provide any information and explanations, and access to any documents of the cooperative or any of its subsidiaries that are, in the opinion of the auditor, necessary to enable the auditor to make the examination and report required under section 261 and that they are reasonably able to provide.

• Marginal note:Other information

  (2) On the demand of the auditor of a cooperative, the directors must obtain from the present or former directors, officers, employees and agents or mandataries of any subsidiary of the cooperative the information and explanations that the present or former directors, officers, employees and agents or mandataries are reasonably able to provide and that are, in the auditor’s opinion, necessary to enable the auditor to make the examination and report required under section 261 and provide them to the auditor.

• Marginal note:No civil liability

  (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) is not liable in any civil action arising from having made the communication.

Marginal note:Audit committee

• 263 (1) Subject to subsection (2), a distributing cooperative must, and any other cooperative may, have an audit committee composed of not fewer than three directors, a majority of whom are not full-time officers or employees of the cooperative or any of its affiliates.

• Marginal note:Exemption

  (2) The Director may, on application of a cooperative, authorize the cooperative to dispense with an audit committee and the Director may, if satisfied that the members and shareholders will not be prejudiced, permit the cooperative to dispense with an audit committee on any reasonable conditions that the Director thinks fit.

• Marginal note:Duty of committee

  (3) An audit committee must review the financial statements of the cooperative before they are approved under section 250.

• Marginal note:Auditor’s attendance

  (4) The auditor of a cooperative is entitled to receive notice of every meeting of the audit committee and, at the expense of the cooperative, to attend and be heard at the meeting. If requested to do so by a member of the audit committee, the auditor must attend every meeting of the committee held during the auditor’s term of office.

• Marginal note:Calling meeting

  (5) The auditor of a cooperative or a member of the audit committee may call a meeting of the committee.

Marginal note:Notice of error

• 264 (1) A director or officer of a cooperative shall, without delay, notify the auditor and the audit committee, if any, of any error or misstatement of which the director or officer becomes aware in a financial statement that the auditor or a former auditor has reported on.

• Marginal note:Errors in financial statements

  (2) If the auditor or former auditor of a cooperative is notified or becomes aware of an error or misstatement in a financial statement on which the auditor or former auditor has reported, and if in their opinion the error or misstatement is material, the auditor or former auditor must inform each director accordingly.

• Marginal note:Duty of directors

  (3) When under subsection (2) the auditor or former auditor informs the directors of an error or misstatement in a financial statement, the directors shall

  • (a) prepare and issue revised financial statements; or

  • (b) otherwise inform the members and shareholders and, if the cooperative is one that is required to comply with section 252, inform the Director of the error or misstatement in the same manner as it informs the members.

Marginal note:Qualified privilege

265 Any oral or written statement or report made under this Act by the auditor or former auditor of a cooperative has qualified privilege.

PART 14Trust Indentures

Interpretation

Marginal note:Definitions

266 The definitions in this section apply in this Part.

event of default

event of default means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other money payable under the trust indenture become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period for giving the notice has elapsed. (cas de défaut)

guarantor

guarantor means a person that has guaranteed an obligation of an issuer under a trust indenture. (caution)

issuer

issuer means a cooperative that has issued, is about to issue or is in the process of issuing debt obligations. (émetteur)

trustee

trustee means a person appointed as trustee, including the administrator of the property of others, under the terms of a trust indenture to which a cooperative is a party, and includes a successor trustee. (fiduciaire)

trust indenture

trust indenture means a deed, indenture or other instrument or act, including a supplement or amendment, made by a cooperative under which the cooperative issues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations issued under it. (acte de fiducie)

Application

Marginal note:Application

• 267 (1) This Part applies to a trust indenture if the debt obligations issued or to be issued under it are part of a distribution to the public.

• Marginal note:Exemptions

  (2) The Director may, in writing, exempt a trust indenture from the application of this Part if, in the Director’s opinion, the trust indenture and the debt obligations under it are subject to a law of another jurisdiction that is substantially equivalent to the provisions of this Act relating to trust indentures.