PART 8Capital Structure (continued)
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.
(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.
(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.
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.
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).
- 1998, c. 1, s. 137
- 2001, c. 14, s. 180
- 2011, c. 21, s. 83(F)
Marginal note:Stated capital account
(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
(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
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.
- 1998, c. 1, s. 138
- 2001, c. 14, s. 181
- 2011, c. 21, s. 84(E)
- Date modified: