Canada Cooperatives Act (S.C. 1998, c. 1)

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.