PART 13Financial Disclosure (continued)
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.
(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.
(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
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 means a person that has guaranteed an obligation of an issuer under a trust indenture. (caution)
issuer means a cooperative that has issued, is about to issue or is in the process of issuing debt obligations. (émetteur)
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)
- 1998, c. 1, s. 266
- 2011, c. 21, s. 100
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.
(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.
- 1998, c. 1, s. 267
- 2001, c. 14, s. 204(F)
Marginal note:Conflict of interests
268 (1) No person may be appointed as trustee if there is a material conflict of interests between the person’s role as trustee and any other role of the person.
Marginal note:Eliminating conflict of interests
(2) A trustee must, no later than ninety days after the trustee becomes aware that a material conflict of interests exists,
(a) eliminate the conflict of interests; or
(b) resign from office.
Marginal note:Validity despite conflict
269 A trust indenture, any debt obligations issued under it and the security interest effected by them are valid even if there is a material conflict of interests of the trustee.
Marginal note:Removal of trustee
270 If a trustee is appointed in contravention of subsection 268(1) or if a trustee contravenes subsection 268(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on any terms that it thinks fit.
Marginal note:Trustee application
271 A trustee, or at least one of the trustees if more than one is appointed, must be a trust company incorporated under the laws of Canada or a province and authorized to carry on business as a trustee.
Marginal note:List of security holders
272 (1) A holder of debt obligations issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, no later than fifteen days after the delivery to the trustee of the statutory declaration, a list setting out the following information, as shown on the records maintained by the trustee on the day the statutory declaration is delivered to the trustee:
(a) the names and addresses of the registered holders of the outstanding debt obligations;
(b) the principal amount of outstanding debt obligations of each such holder; and
(c) the total principal amount of debt obligations outstanding.
Marginal note:Duty of issuer
(2) On the demand of a trustee, the issuer must provide the trustee with the information required to enable the trustee to comply with subsection (1).
Marginal note:When applicant is entity
(3) If the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection may be made by a director or an officer of the entity or a person acting in a similar capacity.
Marginal note:Contents of statutory declaration
(4) The statutory declaration must state
(a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, its address for service; and
(b) that the list will not be used except as permitted by subsection (5).
Marginal note:Use of list
(5) No person shall use a list obtained under this section except in connection with
(a) an effort to influence the voting of the holders of debt obligations;
(b) an offer to acquire debt obligations; or
(c) any other matter relating to the debt obligations or the affairs of the issuer or guarantor of them.
Marginal note:Compliance with trust indentures
273 (1) An issuer or a guarantor of a debt obligation issued or to be issued under a trust indenture must provide the trustee with evidence of compliance with the conditions in the trust indenture before undertaking
(a) the issue, certification and delivery of debt obligations under the trust indenture;
(b) the release, or release and substitution, of property subject to a security interest constituted by the trust indenture; or
(c) the satisfaction and discharge of the trust indenture.
Marginal note:Compliance by issuer or guarantor
(2) On the demand of a trustee, the issuer or guarantor must provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.
Marginal note:Evidence of compliance
(3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):
(a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;
(b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and
(c) an opinion or report of the auditors of the issuer or guarantor, or any other accountant that the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors or accountants.
Marginal note:Further evidence of compliance
(4) The evidence of compliance described in subsection (3) must include a statement by the person giving the evidence
(a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);
(b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and
(c) declaring that the person has made any examination or investigation that the person believes necessary to enable the statements to be made or the opinions contained or expressed in the statement to be given.
Marginal note:Trustee may require evidence
274 (1) On request of a trustee, the issuer or guarantor must provide the trustee with evidence in any form that the trustee requires of compliance with any condition relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.
Marginal note:Certificate of compliance
(2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor must provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars of the failure.
Marginal note:Notice of default
275 A trustee must, no later than thirty days after the trustee becomes aware of the occurrence of an event of default, give to the holders of debt obligations issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs the issuer and guarantor in writing.
276 (1) In exercising powers and discharging duties, the trustee must
(a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and
(b) exercise the care, diligence and skill of a reasonably prudent trustee.
Marginal note:Reliance on statements
(2) Despite subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.
Marginal note:No exculpation
277 No term of a trust indenture or of an agreement between a trustee and the holders of debt obligations issued under the indenture or agreement or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by this Part.
PART 15Receivers, Receiver-managers and Sequestrators
Marginal note:Functions of receiver or sequestrator
278 A receiver or sequestrator of any property of a cooperative may, subject to the rights of secured creditors, receive the income from the property and pay the liabilities connected with the property and realize the security interest of those on behalf of whom the receiver or sequestrator is appointed, but, except to the extent permitted by a court, the receiver or sequestrator may not carry on the business of the cooperative.
- 1998, c. 1, s. 278
- 2011, c. 21, s. 102
- Date modified: