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

Marginal note:Prohibition of short sale

• 172 (1) No insider shall knowingly sell, directly or indirectly, a security of a distributing cooperative or any of its affiliates if the insider selling the security does not own or has not fully paid for the security to be sold.

• Marginal note:Calls and puts

  (2) No insider shall knowingly, directly or indirectly, buy a put or sell a call in respect of a security of the cooperative or any of its affiliates.

• Marginal note:Exception

  (3) Despite subsection (1), an insider may sell a security that the insider does not own if the insider owns another security convertible into the security sold or an option or right to acquire the security sold and, no later than ten days after the sale, the insider

  • (a) exercises the conversion privilege, option or right and delivers the security so acquired to the purchaser; or

  • (b) transfers the convertible security, option or right to the purchaser.

Marginal note:Definition of insider

• 173 (1) In this section, insider, with respect to a cooperative, means

  • (a) the cooperative;

  • (b) an affiliate of the cooperative;

  • (c) a director or an officer of the cooperative or of any persons described in paragraphs (b), (e) or (g);

  • (d) a member who controls more than ten per cent of the voting rights that may be exercised to elect or appoint a director of the cooperative;

  • (e) a person who beneficially owns, directly or indirectly, shares of the cooperative or who exercises control or direction over shares of the cooperative, or a combination of any such ownership, control and direction, carrying more than the prescribed percentage of the voting rights attached to all of the outstanding shares of the cooperative other than shares held by the person as underwriter while those shares are in the course of a distribution to the public;

  • (f) a person, other than a person described in paragraph (g), employed or retained by the cooperative or by a person described in paragraph (g);

  • (g) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the cooperative;

  • (h) a person who received, while they were a person described in any of paragraphs (a) to (g) material confidential information concerning the cooperative;

  • (i) a person who receives material confidential information from a person described in this subsection or in subsection (2) or (2.1), including from a person described in this paragraph, and who knows or who ought reasonably to have known that the person giving the information is a person described in this subsection or in subsection (2) or (2.1), including a person described in this paragraph; and

  • (j) a prescribed person.

• Marginal note:Deemed insiders

  (2) For the purposes of this section, a person who proposes to make a take-over bid (as defined in the regulations) for securities of a cooperative, or to enter into a business combination with a cooperative, is an insider of the cooperative with respect to material confidential information obtained from the cooperative and is an insider of the cooperative for the purposes of subsection (6).

• Marginal note:Deemed insiders

  (2.1) An insider of a person referred to in subsection (2), and an affiliate or associate of such a person, is an insider of the cooperative referred to in that subsection. Paragraphs (1)(b) to (j) apply in determining whether a person is such an insider except that references to “cooperative” in those paragraphs are to be read as references to “person described in subsection (2)”.

• Marginal note:Expanded definition of “security”

  (3) For the purposes of this section, the following are deemed to be a security of the cooperative:

  • (a) a put, call or option or other right or obligation to purchase or sell a security of the cooperative; and

  • (b) a security of another entity whose market price varies materially with the market price of the securities of the cooperative.

• Marginal note:Insider trading — compensation to persons

  (4) An insider who purchases or sells a security of the cooperative with knowledge of confidential information that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the cooperative is liable to compensate the seller of the security or the purchaser of the security, as the case may be, for any damages suffered by the seller or purchaser as a result of the purchase or sale, unless the insider establishes that

  • (a) the insider reasonably believed that the information had been generally disclosed;

  • (b) the information was known, or ought reasonably to have been known, by the seller or purchaser; or

  • (c) the purchase or sale of the security took place in the prescribed circumstances.

• Marginal note:Insider trading — compensation to cooperative

  (5) The insider is accountable to the cooperative for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (4) unless the insider establishes the circumstances in paragraph 4(a).

• Marginal note:Tipping — compensation to persons

  (6) An insider who discloses to another person confidential information with respect to the cooperative that has not been generally disclosed and that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the cooperative is liable to compensate for damages any person who subsequently sells securities of the cooperative to, or purchases securities of the cooperative from, any person that received the information, unless the insider establishes

  • (a) that the insider reasonably believed that the information had been generally disclosed;

  • (b) that the information was known, or ought reasonably to have been known, to the person who alleges to have suffered the damages;

  • (c) that the disclosure of the information was necessary in the course of the business of the insider, except if the insider is a person described in subsection (2) or (2.1); or

  • (d) if the insider is a person described in subsection (2) or (2.1), that the disclosure of the information was necessary to effect the take-over bid or the business combination, as the case may be.

• Marginal note:Tipping — compensation to cooperative

  (7) The insider is accountable to the cooperative for any benefit or advantage received or receivable by the insider as a result of a disclosure of the information as described in subsection (6) unless the insider establishes the circumstances in paragraph (6)(a), (c) or (d).

• Marginal note:Measure of damages

  (8) The court may assess damages under subsection (4) or (6) in accordance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in a situation involving a security of a distributing cooperative, the court must consider the following:

  • (a) if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security over the twenty trading days immediately following general disclosure of the information; and

  • (b) if the plaintiff is a seller, the average market price of the security over the twenty trading days immediately following general disclosure of the information, less the price that the plaintiff received for the security.

• Marginal note:Liability

  (9) If more than one insider is liable under subsection (4) or (6) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.

• Marginal note:Limitation

  (10) An action to enforce a right created by subsections (4) to (7) may be commenced only within two years after discovery of the facts that gave rise to the cause of action.

PART 11Compulsory Acquisition

Marginal note:Definitions

174 The definitions in this section apply in this Part.

dissenting offeree

dissenting offeree means a holder of a share of a class for which a take-over bid is made who does not accept the take-over bid, and includes a subsequent holder of that share who acquires it from the first-mentioned holder. (pollicité dissident)

offer

offer includes an invitation to make an offer. (pollicitation)

offeree

offeree means a person to whom a take-over bid is made. (pollicité)

offeree cooperative

offeree cooperative means a distributing cooperative whose shares are the object of a take-over bid. (coopérative pollicitée)

offeror

offeror means a person, other than an agent or mandatary, who makes a take-over bid, and includes two or more persons who, directly or indirectly,

• (a) make take-over bids jointly or in concert; or

• (b) intend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made. (pollicitant)

share

share means an investment share, with or without voting rights, and includes

• (a) a security currently convertible into such a share; and

• (b) currently exercisable options and rights to acquire such a share or such a convertible security. (part)

take-over bid

take-over bid means an offer made by an offeror to shareholders of a distributing cooperative at approximately the same time to acquire all of the shares of a class of issued shares and includes an offer made by a distributing cooperative to repurchase all of the shares of a class of its shares. (offre d’achat)