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

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.