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

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]