Short Title

Marginal note:Short title

1 This Act may be cited as the Cooperative Credit Associations Act.

PART IInterpretation and Application

Definitions

Marginal note:Definitions

2 In this Act,

affairs

affaires internes

affairs, with respect to an association, means the relationships among the association and its affiliates and the members, shareholders, directors and officers of the association and its affiliates, but does not include the business of the association or any of its affiliates; (affaires internes)

affiliate

groupe

affiliate means an entity that is affiliated with another entity within the meaning of section 6; (groupe)

Agency

Agence

Agency means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act; (Agence)

annual statement

rapport annuel

annual statement means the annual financial statement of an association within the meaning of paragraph 292(1)(a); (rapport annuel)

association

association

association means a body corporate referred to in section 14; (association)

auditor

vérificateur

auditor includes a firm of accountants; (vérificateur)

bearer

porteur

bearer, in relation to a security, means the person in possession of a security payable to bearer or endorsed in blank; (porteur)

bearer form

titre au porteur

bearer form, in respect of a security, means a security in bearer form as determined in accordance with subsection 90(2); (titre au porteur)

beneficial ownership

véritable propriétaire et propriété effective

beneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries; (véritable propriétaire et propriété effective)

body corporate

personne morale

body corporate means an incorporated body wherever or however incorporated; (personne morale)

branch

bureau

branch, in respect of an association, means an agency, the head office and any other office of the association; (bureau)

Canadian financial institution

institution financière canadienne

Canadian financial institution means a financial institution that is incorporated or formed by or under an Act of Parliament or of the legislature of a province; (institution financière canadienne)

central cooperative credit society

coopérative de crédit centrale ou centrale

central cooperative credit society means a cooperative credit society incorporated by or under an Act of the legislature of a province, one of whose principal purposes is to provide liquidity support to local cooperative credit societies, and

• (a) whose membership consists wholly or primarily of local cooperative credit societies, or

• (b) whose directors are wholly or primarily persons elected or appointed by local cooperative credit societies,

but does not include a deposit protection agency; (coopérative de crédit centrale ou centrale)

central securities register or securities register

registre central des valeurs mobilières ou registre des valeurs mobilières

central securities register or securities register means the register referred to in section 245; (registre central des valeurs mobilières ou registre des valeurs mobilières)

Commissioner

commissaire

Commissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act; (commissaire)

common-law partner

conjoint de fait

common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)

complainant

plaignant

complainant, in relation to an association or any matter concerning an association, means

• (a) a member or former member of an association,

• (b) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of an association or any of its affiliates,

• (c) a director or an officer, or a former director or officer, of an association or any of its affiliates, or

• (d) any other person who, in the discretion of a court, is a proper person to make an application under section 318, 322 or 469; (plaignant)

consumer provision

disposition visant les consommateurs

consumer provision means a provision referred to in paragraph (b) of the definition “consumer provision” in section 2 of the Financial Consumer Agency of Canada Act; (disposition visant les consommateurs)

cooperative credit society

coopérative de crédit

cooperative credit society means a cooperative corporation one of whose principal purposes is to provide financial services to its members; (coopérative de crédit)

cooperative corporation

coopérative

cooperative corporation means a body corporate organized and operated on cooperative principles; (coopérative)

court

tribunal

court means

• (a) in the Province of Ontario, the Superior Court of Justice,

• (b) in the Province of Quebec, the Superior Court of the Province,

• (c) in the Provinces of Nova Scotia and British Columbia, the Supreme Court of the Province,

• (d) in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province,

• (e) in the Provinces of Prince Edward Island and Newfoundland, the trial division of the Supreme Court of the Province, and

• (f) in the Yukon Territory and the Northwest Territories, the Supreme Court of the territory, and in Nunavut, the Nunavut Court of Justice; (tribunal)

court of appeal

cour d’appel

court of appeal means the court to which an appeal lies from a decision or order of a court; (cour d’appel)

debt obligation

titre de créance

debt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured; (titre de créance)

delegate

délégué

delegate means a natural person appointed or elected to represent a member of an association at a meeting of members; (délégué)

deposit protection agency

agence d’assurance-dépôts

deposit protection agency means an entity established

• (a) to provide or administer a stabilization or mutual aid fund for local cooperative credit societies,

• (b) to assist in the payment of any losses incurred by the members of a local cooperative credit society in the liquidation of the society, or

• (c) to provide deposit insurance for members of local cooperative credit societies; (agence d’assurance-dépôts)

director, board of directors or directors

administrateur, conseil d’administration ou conseil

director means a natural person occupying the position of director, by whatever name called, of a body corporate, and board of directors or directors refers to the directors of a body corporate as a body; (administrateur, conseil d’administration ou conseil)

entity

entité

entity means a body corporate, trust, partnership, fund, an unincorporated organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof; (entité)

fiduciary

représentant

fiduciary means any person acting in a fiduciary capacity, and includes a personal representative of a deceased person; (représentant)

financial institution

institution financière

financial institution means

• (a) an association,

• (b) a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,

• (c) a body corporate to which the Trust and Loan Companies Act applies,

• (d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,

• (e) a trust, loan or insurance corporation incorporated by or under an Act of the legislature of a province,

• (f) a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,

• (g) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities, including portfolio management and investment counselling, and

• (h) a foreign institution; (institution financière)

foreign institution

institution étrangère

foreign institution means an entity that is

• (a) engaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, and

• (b) incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province; (institution étrangère)

former Act

loi antérieure

former Act means the Cooperative Credit Associations Act, chapter C-41 of the Revised Statutes of Canada, 1985; (loi antérieure)

former-Act association

association antérieure

former-Act association means the Canadian Co-operative Credit Society Limited, a corporation incorporated by chapter 58 of the Statutes of Canada, 1952-53; (association antérieure)

form of proxy

formulaire de procuration

form of proxy means a written or printed form that, when completed and executed by or on behalf of a shareholder, constitutes a proxy; (formulaire de procuration)

guarantee

garantie

guarantee includes a letter of credit; (garantie)

head office

siège

head office means the office required to be maintained by an association pursuant to section 234; (siège)

holder

détenteur

holder means

• (a) in respect of a security certificate, the person in possession of the certificate issued or endorsed to that person or to bearer or in blank,

• (b) in respect of the ownership of a membership share, the person referred to in section 7, and

• (c) in respect of the ownership of a share, the shareholder of the share within the meaning of section 8; (détenteur)

holding body corporate

société mère

holding body corporate means a holding body corporate within the meaning of section 4; (société mère)

incorporated

constitué en personne morale ou constitué

incorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, also refers to a body corporate that is continued by or under any such Act; (constitué en personne morale ou constitué)

incorporating instrument

acte constitutif

incorporating instrument means the special Act, letters patent, instrument of continuance or other constating instrument by which a body corporate was incorporated or continued and includes any amendment to or restatement of the constating instrument; (acte constitutif)

incorporator

fondateur

incorporator, in relation to an association, means a person who applied for letters patent to incorporate the association; (fondateur)

issuer

émetteur

issuer, in respect of a security, means the entity that issues or issued the security; (émetteur)

league

confédération

league means a cooperative corporation incorporated by or under an Act of the legislature of a province whose membership consists wholly or primarily of local cooperative credit societies and whose principal purpose is the provision of administrative, technical, research and consultative services, and goods related to those services, to any cooperative credit society or to persons intending to organize or operate such a society; (confédération)

letters patent

lettres patentes

letters patent, in respect of an instrument authorized to be issued under this Act, means letters patent in a form approved by the Superintendent; (lettres patentes)

local cooperative credit society

coopérative de crédit locale ou coopérative locale

local cooperative credit society means a cooperative credit society incorporated by or under an Act of the legislature of a province

• (a) whose members consist substantially of individuals, and

• (b) whose principal purpose is to receive deposits from, and make loans to, its members; (coopérative de crédit locale ou coopérative locale)

member

Version anglaise seulement

member, in respect of an association, means a person who is a member of the association; (Version anglaise seulement)

members register

registre des associés

members register means the register referred to in section 49; (registre des associés)

membership share

parts sociales

membership share means an interest in the equity of an association that confers the rights referred to in subsection 67(2); (parts sociales)

Minister

ministre

Minister means the Minister of Finance; (ministre)

officer

dirigeant

officer means

• (a) in relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, and

• (b) in relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members thereof or otherwise; (dirigeant)

order form

titre à ordre

order form, in respect of a security, means a security in order form as determined in accordance with subsection 90(3); (titre à ordre)

ordinary resolution

résolution ordinaire

ordinary resolution means a resolution passed by a majority of the votes cast by or on behalf of the members who voted in respect of the resolution; (résolution ordinaire)

patronage allocation

ristourne

patronage allocation means an amount that an association allocates among and credits or pays to its members or to its member and non-member patrons based on the business done by them with or through the association, and includes

• (a) a patronage refund, and

• (b) an allocation in proportion to borrowing; (ristourne)

person

personne

person means a natural person, an entity or a personal representative; (personne)

personal representative

représentant personnel

personal representative means a person who stands in place of and represents another person and, without limiting the generality of the foregoing, includes, as the circumstances require, a trustee, an executor, an administrator, a committee, a guardian, a tutor, a curator, an assignee, a receiver, an agent or an attorney of any person, but does not include a delegate; (représentant personnel)

prescribed

Version anglaise seulement

prescribed means prescribed by regulation; (Version anglaise seulement)

proxy

procuration

proxy means a completed and executed form of proxy by means of which a shareholder appoints a proxyholder to attend and act on the shareholder’s behalf at a meeting of shareholders; (procuration)

proxyholder

fondé de pouvoir

proxyholder means the person appointed by proxy to attend and act on behalf of a shareholder at a meeting of shareholders; (fondé de pouvoir)

real property

biens immeubles

real property includes a leasehold interest in real property; (biens immeubles)

recorded address

adresse enregistrée

recorded address means

• (a) in relation to a member of an association, the latest postal address of the member according to the members register of the association, and

• (b) in relation to a shareholder of an association, the latest postal address of the person according to the central securities register of the association; (adresse enregistrée)

registered form

titre nominatif

registered form, in respect of a security, means a security in registered form as determined in accordance with subsection 90(4); (titre nominatif)

regulatory capital

capital réglementaire

regulatory capital, in respect of an association, has the meaning given to that expression by the regulations; (capital réglementaire)

resident Canadian

résident canadien

resident Canadian means a natural person who is

• (a) a Canadian citizen ordinarily resident in Canada,

• (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or

• (c) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship; (résident canadien)

residential property

immeuble résidentiel

residential property means real property consisting of buildings that are used, or are to be used, to the extent of at least one half of the floor space thereof, as one or more private dwellings; (immeuble résidentiel)

retail association

association de détail

retail association, for the purpose of any particular provision of this Act, means an association as defined in the regulations; (association de détail)

securities underwriter

souscripteur à forfait

securities underwriter means a person who, as principal, agrees to purchase securities with a view to the distribution of the securities or who, as agent for a body corporate or other person, offers for sale or sells securities in connection with a distribution of the securities, and includes a person who participates, directly or indirectly, in a distribution of securities, other than a person whose interest in the distribution of securities is limited to receiving a distributor’s or seller’s commission payable by a securities underwriter; (souscripteur à forfait)

security

titre ou valeur mobilière

security means

• (a) in relation to a body corporate, a share of any class of shares of the body corporate or a debt obligation of the body corporate, and includes a warrant of the body corporate, but does not include a deposit with a financial institution or any instrument evidencing such a deposit or, for greater certainty, a membership share, and

• (b) in relation to any other entity, any ownership interest in or debt obligation of the entity; (titre ou valeur mobilière)

security interest

sûreté

security interest means an interest in or charge on property by way of mortgage, lien, pledge or otherwise taken by a creditor or guarantor to secure the payment or performance of an obligation; (sûreté)

send

envoyer

send includes deliver; (envoyer)

series

série

series, in respect of shares, means a division of a class of shares; (série)

share

Version anglaise seulement

share does not include a membership share; (Version anglaise seulement)

significant interest

intérêt substantiel

significant interest means a significant interest determined in accordance with section 9; (intérêt substantiel)

special resolution

résolution extraordinaire

special resolution means a resolution passed by a majority of not less than two thirds of the votes cast by or on behalf of the persons who voted in respect of that resolution; (résolution extraordinaire)

subordinated indebtedness

titre secondaire

subordinated indebtedness means an instrument evidencing an indebtedness of an association that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the association, be subordinate in right of payment to all deposit liabilities of the association and all other liabilities of the association except those that, by their terms, rank equally with or are subordinate to such indebtedness; (titre secondaire)

subsidiary

filiale

subsidiary means an entity that is a subsidiary of another entity within the meaning of section 5; (filiale)

substantial investment

intérêt de groupe financier

substantial investment means a substantial investment determined in accordance with section 12; (intérêt de groupe financier)

Superintendent

surintendant

Superintendent means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act; (surintendant)

trade

opération

trade, in respect of securities, means any sale or disposition of securities for valuable consideration; (opération)

transfer

transfert

transfer, in respect of securities, includes a transmission by operation of law; (transfert)

voting share

action avec droit de vote

voting share means a share of any class of shares of a body corporate carrying voting rights under all circumstances or by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled. (action avec droit de vote)

Interpretation

Marginal note:Control

• 3 (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 50 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;

  • (b) a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;

  • (c) the general partner of a limited partnership controls the limited partnership;

  • (d) a person controls a cooperative corporation if the person has the right to exercise more than 50 per cent of the votes that may be cast at an annual meeting or to appoint or elect the majority of the directors of the corporation; and

  • (e) a person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.

• Marginal note:Deemed control

  (2) A person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.

• Marginal note:Deemed control

  (3) A person is deemed to control, within the meaning of paragraph (1)(a), (b) or (d), an entity if the aggregate of

  • (a) any securities of the entity that are beneficially owned by that person, and

  • (b) any securities of the entity that are beneficially owned by any entity controlled by that person

  is such that, if that person and all of the entities referred to in paragraph (b) that beneficially own securities of the entity were one person, that person would control the entity.

• Marginal note:Guidelines

  (4) The Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(e), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(e) in that provision shall be interpreted in accordance with the guidelines.

Marginal note:Holding body corporate

4 A body corporate is the holding body corporate of any entity that is its subsidiary.

Marginal note:Subsidiary

5 An entity is a subsidiary of another entity if it is controlled by the other entity.

Marginal note:Affiliated entities

• 6 (1) One entity is affiliated with another entity if one of them is controlled by the other or both are controlled by the same person.

• (2) [Repealed, 2001, c. 9, s. 251]

Marginal note:Member

• 7 (1) For the purposes of this Act, a person is a holder of a membership share of an association when, according to the members register of the association, the person is the owner of the membership share or is entitled to be entered in the members register or like record of the association as the owner of the membership share.

• Marginal note:Holder of a membership share

  (2) A reference in this Act to the holding of a membership share by or in the name of a person is a reference to the fact that the person is registered or is entitled to be registered in the members register or like record of the association as the holder of that share.

Marginal note:Shareholder

• 8 (1) For the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of one or more shares of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of the share or shares.

• Marginal note:Holder of a share

  (2) A reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or like record of the body corporate as the holder of that share.

Marginal note:Significant interest

• 9 (1) A person has a significant interest in a class of shares of an association where the aggregate of

  • (a) any shares of that class beneficially owned by the person, and

  • (b) any shares of that class beneficially owned by entities controlled by the person

  exceeds 10 per cent of all of the outstanding shares of that class of shares of the association.

• Marginal note:Increasing significant interest

  (2) A person who has a significant interest in a class of shares of an association increases that significant interest in the class of shares where the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional shares of that class, or

  • (b) acquires control of any entity that beneficially owns shares of that class,

  in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.

Marginal note:Acting in concert — members’ rights to vote

• 10 (1) For the purposes of section 52, where two or more members have agreed, pursuant to any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of the exercise of any right to vote at a meeting of members, those members shall be deemed to be a single member.

• Marginal note:Exception

  (2) For the purposes of this section, members shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact that

  • (a) their membership voting rights are vested in the same delegate or delegates; or

  • (b) they exercise their membership voting rights in the same manner.

• Marginal note:Designation

  (3) Where in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsection (1) exists by or among two or more members, the Superintendent may designate those members as members who have agreed to act jointly or in concert.

Marginal note:Acting in concert — shares

• 11 (1) For the purposes of Part VIII, where two or more persons have agreed, pursuant to any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of

  • (a) shares of an association that they beneficially own,

  • (b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of an association, or

  • (c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of an association,

  those persons shall be deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the association or shares or ownership interests of the entity that are beneficially owned by them.

• Marginal note:Idem

  (2) Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of an association or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),

  • (a) whereby any of them or their nominees may veto any proposal put before the board of directors of the association, or

  • (b) pursuant to which no proposal put before the board of directors of the association may be approved except with the consent of any of them or their nominees,

  shall be deemed to be an agreement, commitment or understanding referred to in subsection (1).

• Marginal note:Exceptions

  (3) For the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact that

  • (a) one is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); or

  • (b) they vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.

• Marginal note:Designation

  (4) Where in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Superintendent may designate those persons as persons who have agreed to act jointly or in concert.

Marginal note:Substantial investment in body corporate

• 12 (1) A person has a substantial investment in a body corporate where

  • (a) the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate or, in the case of a cooperative corporation, the person, together with any entities controlled by the person, has the right to exercise more than 10 per cent of the votes that may be cast at an annual meeting; or

  • (b) the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the equity of the body corporate.

• Marginal note:Increasing substantial investment in body corporate

  (2) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(a) increases that substantial investment when the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person or, in the case of a cooperative corporation, obtains the right to exercise more than 10 per cent of the votes that may be cast at an annual meeting; or

  • (b) acquires, as the case may be,

    • (i) control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person, or

    • (ii) where the body corporate is a cooperative corporation, control of any entity that has the right to exercise one or more votes that may be cast at an annual meeting of the cooperative corporation.

• Marginal note:Idem

  (3) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(b) increases that substantial investment when the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or

  • (b) acquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.

• Marginal note:New substantial investment

  (4) For greater certainty,

  • (a) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(a) and the person, or any entity controlled by the person,

    • (i) purchases or otherwise acquires beneficial ownership of shares of the body corporate, or

    • (ii) acquires control of any entity that beneficially owns shares of the body corporate

    in such number as to cause the equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25 per cent of the equity of the body corporate, or

  • (b) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(b) and the person or any entity controlled by the person

    • (i) purchases or otherwise acquires beneficial ownership of voting shares of the body corporate or, where the body corporate is a cooperative corporation, purchases or otherwise acquires beneficial ownership of membership shares of the cooperative corporation, or

    • (ii) acquires control of any entity that beneficially owns voting shares of the body corporate or, where the body corporate is a cooperative corporation, acquires control of any entity that beneficially owns membership shares of the cooperative corporation,

    in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10 per cent of the voting rights attached to all the outstanding voting shares of the body corporate or, where the body corporate is a cooperative corporation, in such number that the person, together with any entities controlled by the person, has the right to exercise more than 10 per cent of the votes that may be cast at an annual meeting of the cooperative corporation,

  the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.

• Marginal note:Substantial investment in unincorporated entity

  (5) A person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of all of the ownership interests into which the entity is divided.

• Marginal note:Increasing substantial investment in unincorporated entities

  (6) A person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; or

  • (b) acquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.

Marginal note:Distribution to the public

• 13 (1) Subject to subsection (2), for the purposes of this Act, a security of a body corporate

  • (a) is part of a distribution to the public where, in respect of the security, there has been a filing of a prospectus, statement of material facts, registration statement, securities exchange take-over bid circular or similar document under the laws of Canada, a province or a jurisdiction outside Canada; or

  • (b) is deemed to be part of a distribution to the public where the security has been issued and a filing referred to in paragraph (a) would be required if the security were being issued currently.

• Marginal note:Exemption

  (2) On application therefor by an association, the Superintendent may determine that a security of the association is not or was not part of a distribution to the public if the Superintendent is satisfied that the determination would not prejudice any security holder of the association.

• Marginal note:Securities deemed part of distribution

  (3) For the purposes of this Act, securities of an association

  • (a) issued on the conversion of other securities, or

  • (b) issued in exchange for other securities

  are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

Marginal note:References in other Acts

13.1 A reference in any other Act of Parliament to “an association to which the Cooperative Credit Associations Act applies” is to be construed as not including a central cooperative credit society for which an order has been made under subsection 473(1).

Application

Marginal note:Application of Act

14 This Act applies to the former-Act association, and to every body corporate incorporated or formed by or under this Act, so long as it is not discontinued under this Act.

Marginal note:Conflicting provisions

15 Where there is a conflict or inconsistency between a provision of this Act and a provision of the incorporating instrument of the former-Act association, the provision of this Act prevails.

PART IIStatus and Powers

Marginal note:Corporate powers

• 16 (1) An association has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.

• Marginal note:Powers restricted

  (2) An association shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.

• Marginal note:Business in Canada

  (3) An association may carry on business throughout Canada.

• Marginal note:Powers outside Canada

  (4) Subject to this Act, an association has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.

Marginal note:No invalidity

17 No act of an association, including any transfer of property to or by an association, is invalid by reason only that the act or transfer is contrary to the association’s incorporating instrument or this Act.

Marginal note:By-law not necessary

18 It is not necessary for an association to pass a by-law in order to confer any particular power on the association or its directors.

Marginal note:No personal liability

19 The members and shareholders of an association are not, by reason only of holding membership shares or shares of the association, liable for any liability, act or default of the association except as otherwise provided by this Act.

Marginal note:No constructive notice

20 No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning an association by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the association.

Marginal note:Authority of directors and officers

21 An association or a guarantor of an obligation of an association may not assert against a person dealing with the association or with any person who has acquired rights from the association that

• (a) the association’s incorporating instrument or any by-laws of the association have not been complied with,

• (b) the persons named as directors of the association in the most recent return sent to the Superintendent under section 432 are not the directors of the association,

• (c) the place named in the incorporating instrument or the by-laws of the association is not the head office of the association,

• (d) a person held out by the association as a director, an officer or a representative of the association has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the association or usual for such director, officer or representative, or

• (e) a document issued by any director, officer or representative of the association with actual or usual authority to issue the document is not valid or not genuine,

except where the person has or ought to have by virtue of the person’s position with or relationship to the association knowledge to that effect.

Marginal note:Sunset provision

• 22 (1) Subject to subsection (2), associations shall not carry on business after the day that is five years after this section comes into force, except that if Parliament dissolves on that day or at any time within the three-month period before that day, associations may continue to carry on business until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

• Marginal note:Extension

  (2) The Governor in Council may, by order, extend by up to six months the time during which associations may continue to carry on business. No more than one order may be made under this subsection.

PART IIIIncorporation, Continuance and Discontinuance

Formalities of Incorporation

Marginal note:Incorporation of association

23 On the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating an association.

Marginal note:Who may apply for incorporation

24 An application for incorporation of an association may only be made by

• (a) an association; or

• (b) persons who are entitled to be members of an association under Part IV that include at least

  • (i) two central cooperative credit societies not all of which are incorporated under the laws of one province,

  • (ii) ten local cooperative credit societies not all of which are incorporated under the laws of one province, or

  • (iii) two or more leagues not all of which are incorporated under the laws of one province.

Marginal note:Application for incorporation

• 25 (1) An application for letters patent to incorporate an association setting out the names of the first directors of the association shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.

• Marginal note:Publishing notice of intent

  (2) Before filing an application referred to in subsection (1), one of the applicants shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the association is to be situated.

Marginal note:Objections to incorporation

• 26 (1) Any person who objects to the proposed incorporation of an association may, within thirty days after the date of the last publication under subsection 25(2) in respect of the proposed association, submit the objection in writing to the Superintendent.

• Marginal note:Minister to be informed

  (2) On receipt of an objection under subsection (1), the Superintendent shall inform the Minister of the objection.

• Marginal note:Inquiry into objection and report

  (3) On receipt of an objection under subsection (1), and if the application for the issuance of the letters patent to which the objection relates has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.

• Marginal note:Report to be made available

  (4) Within thirty days after receiving a report under subsection (3), the Minister shall make the report available to the public.

• Marginal note:Rules governing proceedings

  (5) Subject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.

Marginal note:Matters for consideration

27 Before issuing letters patent to incorporate an association, the Minister shall take into account all matters that the Minister considers relevant to the application, including

• (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the association;

• (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the association;

• (c) the business record and experience of the applicant or applicants;

• (d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

• (e) whether the association will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

• (f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the association on the conduct of those businesses and operations;

• (g) whether the association is to be operated in accordance with cooperative principles; and

• (h) the best interests of the financial system in Canada and, in particular, the cooperative financial system in Canada.

Marginal note:Contents of letters patent

• 28 (1) There shall be set out in the letters patent incorporating an association

  • (a) the name of the association;

  • (b) the place in Canada where the head office of the association is to be situated; and

  • (c) the date that the association came, or is to come, into existence.

• Marginal note:Provisions in letters patent

  (2) The Minister may set out in the letters patent incorporating an association any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed association.

• Marginal note:Terms and conditions

  (3) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating an association as the Minister considers necessary or appropriate.

Marginal note:Notice of issue of letters patent

29 The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating an association.

Marginal note:First directors

30 The first directors of an association are the directors named in the application for letters patent to incorporate the association.

Marginal note:Effect of letters patent

31 An association comes into existence on the date provided therefor in its letters patent.

Continuance

Marginal note:Federal corporations

• 31.1 (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament may apply to the Minister for letters patent continuing the body corporate as an association.

• Marginal note:Other corporations

  (2) A body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as an association.

• Marginal note:Continuance for the purpose of amalgamation

  (3) A body corporate incorporated or continued otherwise than under this Act may apply to the Minister for letters patent continuing the body corporate as an association if the body corporate proposes to be continued under this Act for the purpose of amalgamating with another body corporate in compliance with this Act.

Marginal note:Application for continuance

• 31.2 (1) When a body corporate applies for letters patent under section 31.1, sections 24 to 27 apply in respect of the application, with any modifications that the circumstances require.

• Marginal note:Special resolution approval

  (2) When a body corporate applies for letters patent under section 31.1, the application must be duly authorized by a special resolution.

• Marginal note:Copy of special resolution

  (3) A copy of the special resolution must be filed with the application.

Marginal note:Power to issue letters patent

• 31.3 (1) On the application of a body corporate under subsection 31.1(1) or (2), the Minister may, subject to this Part, issue letters patent continuing the body corporate as an association if the body corporate

  • (a) satisfies the requirements for incorporation as an association or will, immediately after the letters patent are issued, satisfy those requirements;

  • (b) is organized and operated and carries on its business on a cooperative basis or will, immediately after the letters patent are issued, be organized and operated and carry on its business on a cooperative basis; and

  • (c) has a capital and corporate structure that, if set out in the letters patent and by-laws, would meet the requirements of this Act.

• Marginal note:Power to issue letters patent

  (2) On the application of a body corporate under subsection 31.1(3), the Minister may, subject to this Part, issue letters patent continuing the body corporate as an association only if the Minister is of the opinion that the association that results from the amalgamation will

  • (a) satisfy the requirements for incorporation as an association;

  • (b) be organized and operated and carry on its business on a cooperative basis; and

  • (c) have a capital and corporate structure that meet the requirements of this Act.

• Marginal note:Issue of letters patent

  (3) If letters patent are issued to a body corporate under subsection (1) or (2), section 27 applies in respect of the issue of letters patent, with any modifications that the circumstances require.

Marginal note:Effect of letters patent

31.4 On the day set out in the letters patent continuing a body corporate as an association under section 31.3,

• (a) the body corporate becomes an association as if it had been incorporated under this Act; and

• (b) the letters patent are deemed to be the incorporating instrument of the continued company.

Marginal note:Copy of letters patent

• 31.5 (1) When a body corporate is continued as an association under section 31.3, the Superintendent shall without delay send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was incorporated.

• Marginal note:Notice of issuance of letters patent

  (2) The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as an association.

Marginal note:Effects of continuance

31.6 Where a body corporate is continued as an association,

• (a) the property of the body corporate continues to be the property of the association;

• (b) the association continues to be liable for the obligations of the body corporate;

• (c) an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;

• (d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the association;

• (e) a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the association;

• (f) a person who, on the day the body corporate becomes an association, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect of the security, but any such right or privilege may be exercised only in accordance with this Act; and

• (g) the by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the association.

Marginal note:Transitional

• 31.7 (1) Despite any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to an association in respect of which letters patent were issued under section 31.3 permission to

  • (a) engage in a business activity specified in the order that an association is not otherwise permitted by this Act to engage in and that the body corporate continued as the association was engaging in at the time the application for the letters patent was made;

  • (b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

  • (c) hold assets that an association is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the association at the time the application for the letters patent was made;

  • (d) acquire and hold assets that an association is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the association was obliged, at the time the application for the letters patent was made, to acquire those assets; and

  • (e) maintain outside Canada any records or registers required by this Act to be maintained in Canada and maintain and process outside Canada information and data relating to the preparation and maintenance of those records or registers.

• Marginal note:Duration

  (2) The permission shall be expressed to be granted for a period specified in the order not exceeding

  • (a) with respect to any activity described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, if the activity is conducted under an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

  • (b) with respect to any matter described in paragraph (1)(b), ten years; and

  • (c) with respect to any matter described in any of paragraphs (1)(c) to (e), two years.

• Marginal note:Renewal

  (3) Subject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission with respect to any matter described in paragraphs (1)(b) to (d) for any further period or periods that the Minister considers necessary.

• Marginal note:Limitation

  (4) The Minister shall not grant to an association a permission

  • (a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the association to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the association that the association will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

  • (b) with respect to matters referred to in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the date of the approval for the association to commence and carry on business.

Discontinuance

Marginal note:Transferring to other federal Acts

• 32 (1) An association may

  • (a) apply for letters patent continuing the association as a company under subsection 33(1) of the Trust and Loan Companies Act or amalgamating and continuing the association as a company under section 228 and subsection 234(1) of that Act;

  • (b) apply for letters patent continuing the association as a bank under subsection 35(1) of the Bank Act or amalgamating and continuing the association as a bank under section 223 and subsection 229(1) of that Act;

  • (c) apply for letters patent continuing the association as a bank holding company under subsection 684(1) of the Bank Act or amalgamating and continuing the association as a bank holding company under section 803 and subsection 809(1) of that Act;

  • (d) with the approval of the Minister, apply for a certificate of continuance under section 187 of the Canada Business Corporations Act; or

  • (e) with the approval of the Minister, apply for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, under section 285 of the Canada Cooperatives Act.

• Marginal note:Conditions for approval

  (2) No approval referred to in paragraph (1)(d) or (e) may be given to an association unless the Minister is satisfied that

  • (a) the application has been authorized by a special resolution of the members; and

  • (b) the association holds no deposits that are insured under the Canada Deposit Insurance Corporation Act.

Marginal note:Effect of letters patent or certificate

33 On the day specified in the letters patent or certificate of continuance referred to in any of paragraphs 32(1)(a) to (e), the Act referred to in the relevant paragraph applies and this Act ceases to apply to the body corporate continued under that Act.

Marginal note:Withdrawing application

34 If a special resolution authorizing the application for letters patent or a certificate of continuance referred to in any of paragraphs 32(1)(a) to (e) so states, the directors of an association may, without further approval of the members, withdraw the application before it is acted on.

Corporate Name

Marginal note:Prohibited names

• 35 (1) An association may not be incorporated under this Act with a name

  • (a) that is prohibited by an Act of Parliament;

  • (b) that is, in the opinion of the Superintendent, deceptively misdescriptive;

  • (c) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing

    • (i) trade-mark or trade name, or

    • (ii) corporate name of a body corporate,

    except where the trade-mark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trade-mark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;

  • (d) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; or

  • (e) that is reserved under section 39 for another association or a proposed association.

• Marginal note:Use of “cooperative”

  (2) Notwithstanding the Canada Cooperatives Act, an association may use the word “cooperative” or “coopérative”, or any abbreviation of that word, in its name.

Marginal note:Name

36 The name of an association shall include

• (a) the word “cooperative” or “coopérative”, along with another word or expression indicating the financial nature of the association,

• (b) the phrase “central credit union”, “credit union central” or “fédération de caisses populaires”, or

• (c) any word or phrase specified by the Minister

or any combination or derivative thereof.

Marginal note:Affiliated entity

37 Despite section 35, an association that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

Marginal note:English or French form of name

• 38 (1) The name of an association may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the association may use and be legally designated by any such form.

• Marginal note:Alternate name

  (2) An association may identify itself outside Canada by its name in any language and the association may use and be legally designated by any such form of its name outside Canada.

• Marginal note:Other name

  (3) Subject to subsection (4) and section 250, an association may carry on business under or identify itself by a name other than its corporate name.

• Marginal note:Directions

  (4) Where an association is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the association not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 35(1)(a) to (e).

Marginal note:Reserved name

39 The Superintendent may, on request, reserve for ninety days a name for a proposed association or for an association that intends to change its name.

Marginal note:Directing change of name

• 40 (1) If through inadvertence or otherwise an association

  • (a) comes into existence or is continued with a name, or

  • (b) on an application to change its name, is granted a name

  that is prohibited by section 35, the Superintendent may, by order, direct the association to change its name and the association shall comply with that direction.

• Marginal note:Revoking name

  (2) If an association has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the association and assign to it a name and, until changed in accordance with section 219 or 221, the name of the association is thereafter the name so assigned.

PART IVMembership

Admittance

Marginal note:Members

• 41 (1) Only a person that is an association, a central cooperative credit society, a local cooperative credit society, a cooperative corporation, a league, a deposit protection agency or an unincorporated organization consisting wholly of any of those entities may be admitted to membership in an association.

• Marginal note:Condition for membership

  (2) No person shall be admitted to membership in an association until the person’s application for membership has been approved by the directors and the person has complied fully with any by-law governing admission of members.

• (3) [Repealed, 2001, c. 9, s. 264]

• (4) [Repealed, 1994, c. 47, s. 50]

• Marginal note:Membership not transferable

  (5) No transfer of a membership is valid for any purpose.

Marginal note:Right to vote

• 42 (1) Subject to subsection (2) and the by-laws, each member of an association shall have one vote on all matters to be decided by the members.

• Marginal note:Delegates

  (2) The members of an association may, by by-law, provide that the voting rights of a member shall be vested in one or more delegates to be elected or appointed by the member in such manner as may be provided for in the by-laws, and the delegates so elected or appointed may exercise all or any of those rights.

• Marginal note:References

  (3) Where, in this Act, reference is made to a meeting of members of an association and the association has passed a by-law under subsection (2), a reference in this Act to a meeting of members shall be construed as a reference to a meeting of delegates.

Marginal note:Classes of members

43 The members of an association may, by by-law, establish one or more classes of members, and such a by-law may provide for such matters as are necessary, including

• (a) the qualifications for and the terms and conditions applying to membership in each such class;

• (b) the number of delegates to represent each class and the manner of electing or appointing such delegates; and

• (c) the election, appointment or removal of its directors by the members or delegates of particular classes.

Marginal note:Transfer of membership shares

44 No transfer of membership shares in an association is valid unless the transfer is approved by resolution of the directors.

Marginal note:By-laws binding

45 Subject to this Act, every by-law of an association binds the association and its members to the same extent as if

• (a) each member had duly approved the by-law; and

• (b) there were in the by-law a covenant under seal on the part of each member, and the successors and assigns of the member, to conform thereto.

Withdrawal and Expulsion

Marginal note:Notice of withdrawal

46 A member may withdraw from membership in an association by giving six months notice of its intention to the directors or such shorter notice as the directors may fix.

Marginal note:Expulsion

• 47 (1) A member may be expelled from membership in an association by special resolution passed by the directors at a meeting called for that purpose.

• Marginal note:Conditions for resolution

  (2) A special resolution passed under subsection (1) is not valid unless prior written notice is given to the member setting forth the grounds on which the association is seeking to expel it and an opportunity is given to the member to appear, by an agent or counsel, to make submissions at the meeting of the directors called to consider the resolution to expel it.

• Marginal note:Effective date

  (3) A special resolution passed under subsection (1) takes effect on the date on which the member is notified of the resolution or, if later, the date specified in the resolution.

Marginal note:Where withdrawal or expulsion

48 Where a member withdraws or is expelled pursuant to section 46 or 47, the association shall permit the withdrawal of the member’s deposits with the association and shall, in accordance with any by-law passed pursuant to subsection 67(4), redeem the membership shares held by the member, unless

• (a) there are reasonable grounds for believing that the association is, or the payment to redeem the membership shares would cause the association to be, in contravention of any regulation referred to in 409(1) and (2) or any direction referred to in 409(3); or

• (b) subject to paragraph 79(1)(b), the redemption of the membership shares has not been approved by the Superintendent.

Members Register

Marginal note:Members register

• 49 (1) An association shall maintain a members register in which it shall record

  • (a) the names, alphabetically arranged, and latest known addresses of the members and former members of the association;

  • (b) the number of membership shares held by each member; and

  • (c) the date and particulars of the issue and transfer of each membership share.

• Marginal note:Former-Act and amalgamated associations

  (2) For the purposes of subsection (1), “members register” includes similar registers required by law to be maintained by the former-Act association, or by a body corporate amalgamated and continued as an association under this Act, before the coming into force of this section or the amalgamation, as the case may be.

• Marginal note:Application of certain provisions

  (3) Subsection 236(4) and sections 240 to 242 and 246 to 249 apply, with such modifications as the circumstances require, in respect of a members register.

General Provisions

Marginal note:Minimum membership

• 50 (1) The membership in an association must include at least

  • (a) an association;

  • (b) two central cooperative credit societies not all of which are incorporated under the laws of one province;

  • (c) ten local cooperative credit societies not all of which are incorporated under the laws of one province; or

  • (d) two or more leagues not all of which are incorporated under the laws of one province.

• Marginal note:Where minimum not attained

  (2) If, at any time, the membership in an association is not in accordance with subsection (1), the association shall without delay take the steps that are necessary to

  • (a) apply for a certificate of continuation or letters patent referred to in subsection 32(1); or

  • (b) liquidate and dissolve the association under Part VII.

Marginal note:Lien

51 Unless the by-laws otherwise provide, where a member is indebted to an association, the association has a lien to the extent of the debt on the membership shares and deposits recorded in the name of, and any dividends payable to, the member.

Marginal note:No control

52 No person other than an association may control an association.

PART VOrganization and Commencement

Organization Meetings

Marginal note:First directors’ meeting

• 53 (1) After letters patent incorporating an association are issued, a meeting of the directors of the association shall be held at which the directors may, subject to this Part,

  • (a) adopt forms of certificates for membership shares and shares and of corporate records;

  • (b) authorize the issue of membership shares of the association;

  • (c) admit persons to membership in the association;

  • (d) appoint officers;

  • (e) make banking arrangements; and

  • (f) deal with any other matters necessary to organize the association.

• Marginal note:Calling directors’ meeting

  (2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 186(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the association.

Marginal note:Calling members’ meeting

• 54 (1) After the meeting referred to in subsection 53(1), the directors of the association shall forthwith call a meeting of the members of the association.

• Marginal note:Meeting of members

  (2) The members of an association shall, at the meeting called pursuant to subsection (1),

  • (a) make by-laws;

  • (b) elect or appoint directors to hold office for a term expiring not later than the close of the third annual meeting of the association following the election; and

  • (c) appoint an auditor to hold office until the close of the first annual meeting of the association.

Marginal note:Term of first directors

55 A director named in the application for letters patent to incorporate an association holds office until the close of the meeting called pursuant to subsection 54(1).

Commencement and Carrying on of Business

Marginal note:Order to commence and carry on business

• 56 (1) An association shall not carry on any business until the Superintendent has, by order, approved the commencement and carrying on of business by the association.

• Marginal note:Former-Act association

  (2) A certificate or any other authorization that was given to the former-Act association and that is in effect immediately before the coming into force of this Part is deemed to be an order of the Superintendent under subsection (1).

• Marginal note:Amalgamated association

  (3) Where letters patent amalgamating and continuing two or more bodies corporate as an association under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the association.

• Marginal note:Subsection 57(2) and section 60 do not apply

  (4) For greater certainty, subsection 57(2) and section 60 do not apply in respect of an association referred to in subsection (3).

Marginal note:Authority to make order

• 57 (1) On application by an association, the Superintendent may make an order approving the commencement and carrying on of business by the association.

• Marginal note:Statement of payments

  (2) An application by an association for an order under subsection (1) must contain a statement setting out the amounts paid or to be paid by the association in connection with its incorporation and organization.

Marginal note:No payments before order

58 Until an order approving the commencement and carrying on of business is made for an association, the association shall not make any payment on account of incorporation or organization expenses out of the paid-in capital of the association and interest thereon, except reasonable sums

• (a) for the remuneration of not more than two officers;

• (b) for the payment of costs related to the issue of membership shares and shares of the association; and

• (c) for the payment of clerical assistance, legal services, accounting services, office accommodation at one location, office expenses, advertising, stationery, postage and travel expenses.

Marginal note:Deposits and investments before order

59 Where an association comes into existence but no order approving the commencement and carrying on of business is made for the association, the association may only

• (a) deposit, in Canada, paid-in capital of the association in another deposit-taking Canadian financial institution; or

• (b) invest paid-in capital of the association in unencumbered securities of the Government of Canada or the government of any province.

Marginal note:Conditions for order

• 60 (1) The Superintendent shall not make an order approving the commencement and carrying on of business by an association until it has been shown to the satisfaction of the Superintendent that

  • (a) the meeting of members of the association referred to in subsection 54(1) has been duly held;

  • (b) the association has paid-in capital of at least five million dollars or such greater amount as the Minister may specify;

  • (c) the expenses of incorporation and organization to be borne by the association are reasonable; and

  • (d) all other relevant requirements of this Act have been complied with.

• Marginal note:Time limit

  (2) The Superintendent shall not make an order approving the commencement and carrying on of business by an association more than one year after the day on which the association comes into existence.

Marginal note:Conditions of order

61 An order approving the commencement and carrying on of business by an association may contain any conditions or limitations that the Superintendent considers appropriate.

Marginal note:Variations

• 62 (1) In respect of the order approving the commencement and carrying on of business by an association, the Superintendent may at any time, by further order,

  • (a) make the order subject to such conditions or limitations that are consistent with this Act and that relate to the business of the association as the Superintendent deems expedient and necessary, or

  • (b) amend or revoke any authorization contained in the order or any condition or limitation to which the order is subject,

  but before making any such further order the Superintendent shall provide the association with an opportunity to make representations regarding that further order.

• (2) to (6) [Repealed, 1996, c. 6, s. 53]

Marginal note:Public notice

• 63 (1) On the making of an order approving the commencement and carrying on of business by an association, the association shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where the head office of the association is located.

• Marginal note:Notice in Canada Gazette

  (2) The Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order approving the commencement and carrying on of business by an association.

Marginal note:Cessation of existence

64 Except for the sole purpose of winding up the association’s affairs, an association ceases to exist one year after the day on which its incorporating instrument became effective if it does not obtain an order approving the commencement and carrying on of business within that year.

Marginal note:Allowed disbursements

• 65 (1) Where an order approving the commencement and carrying on of business is not made for an association, no part of the moneys of the association shall be used for the payment of incorporation and organization expenses, other than remuneration and costs referred to in section 58, unless the payment has been approved by a special resolution.

• Marginal note:Application to court to settle disbursements

  (2) If the amount allowed by a special resolution for the payment of any incorporation and organization expenses referred to in subsection (1) is considered insufficient by the directors or if no special resolution for the payment of such expenses is passed, the directors may apply to any court having jurisdiction in the place where the head office of the association is situated to settle and determine the amounts to be paid out of any moneys of the association.

• Marginal note:Notice of application to court

  (3) The directors shall, at least twenty-one days prior to the date fixed for the hearing of the application referred to in subsection (2), send to the members or incorporators, as the case may be, a notice of the application, which notice shall contain a statement of the amounts that are proposed to be settled and determined by the court.

• Marginal note:Ratio payable

  (4) In order that the amounts paid and payable under this section may be equitably borne by the members or incorporators, as the case may be, the directors shall, after the amounts of the payments have been approved by special resolution or settled and determined by a court, fix the proportionate part thereof chargeable to each member or incorporator as the ratio of the amount paid in by the member or incorporator to the aggregate of all the amounts paid in by the members or incorporators.

• Marginal note:Return of excess

  (5) After the amounts referred to in this section have been paid, the directors shall pay, with any interest earned thereon, to the members or incorporators, the respective balances of the moneys paid in by them, less the amount chargeable to each member or incorporator under subsection (4).

PART VICapital Structure

Share Capital

Marginal note:Power to issue membership shares and shares

• 66 (1) Subject to this Act and the incorporating instrument and by-laws of the association,

  • (a) membership shares of an association may be issued at such times and to such members and for such consideration as the directors of the association may determine; and

  • (b) shares of an association may be issued at such times and to such persons and for such consideration as the directors of the association may determine.

• Marginal note:Form

  (2) Shares of an association shall be in registered form and membership shares and shares shall be without nominal or par value.

Marginal note:Holding membership shares

• 67 (1) Members shall hold the minimum number of membership shares prescribed by the by-laws.

• Marginal note:Rights

  (2) The membership shares of an association confer on the holders thereof equal rights, including equal rights to

  • (a) receive dividends declared on the shares; and

  • (b) receive the remaining property of the association on dissolution.

• Marginal note:Designation of shares

  (3) No association shall designate a class of its shares as “membership shares” or any variation thereof.

• Marginal note:Redemption

  (4) The by-laws of an association shall set the terms and conditions under which membership shares may be redeemed, including the manner and time of payment for the redeemed membership shares.

• Marginal note:Certificates not mandatory

  (5) The by-laws of an association may provide that no membership share certificates need be issued but if this is the case, the association shall issue to each member who so requests, a statement of the number of membership shares held by the member.

• Marginal note:Certificates

  (6) If an association issues membership share certificates, there shall be stated on the face of each certificate for a membership share issued by the association after the coming into force of this section

  • (a) the name of the association;

  • (b) a statement that the association is subject to the Cooperative Credit Associations Act;

  • (c) the name of the person to whom it is issued;

  • (d) a statement that the certificate represents membership shares in the association, and the number of such membership shares;

  • (e) a statement that the certificate is not transferable without the approval of the Board of Directors of the association; and

  • (f) that there may be a lien on the membership shares represented by the certificate in favour of the association for indebtedness to the association.

Marginal note:No automatic rights

• 68 (1) Subject to subsection (2), an association shall not issue any share that confers on the holder thereof the right

  • (a) to vote at meetings of the association otherwise than in accordance with this Act; or

  • (b) to receive any of the remaining property of the association on dissolution.

• Marginal note:Right to vote

  (2) An association may issue a share that confers on the holder thereof the right to vote at an election of directors by reason of an event that has occurred and is continuing or by a reason of a condition that has been fulfilled.

• Marginal note:Effect of contravening provision

  (3) Any provision in a by-law that purports to confer a right referred to in subsection (1) is of no force and effect.

Marginal note:Shares of former-Act association

• 69 (1) Membership shares and shares with nominal or par value of the former-Act association are deemed to be shares without nominal or par value.

• Marginal note:Deemed share conditions

  (2) Where any right of a holder of a membership share or share with nominal or par value of the former-Act association was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this Part, that right is thereafter deemed to be the same right stated or expressed without reference to the nominal or par value of the share.

Marginal note:Classes of shares

• 70 (1) The members of an association may, by by-law, provide for one or more classes of shares and, if they so provide, shall set out

  • (a) the rights, privileges, restrictions and conditions attaching to the shares of each class; and

  • (b) the maximum number, if any, of shares of any class that the association is authorized to issue.

• Marginal note:Approval required

  (2) A by-law referred to in subsection (1) must be approved by special resolution.

Marginal note:Shares in series

• 71 (1) The by-laws of an association made pursuant to section 70 may authorize the issue of any class of shares in one or more series and may authorize the directors of the association to fix the maximum number, if any, of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to the limitations set out in the by-laws.

• Marginal note:Series participation

  (2) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.

• Marginal note:Voting rights

  (3) Where voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.

• Marginal note:Restriction on series

  (4) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.

• Marginal note:Material to Superintendent

  (5) Before the issue of shares authorized under this section, the directors shall send to the Superintendent a copy of any by-law authorizing the directors to fix the rights, privileges, restrictions and conditions of those shares and shall provide the Superintendent with particulars of the proposed shares.

Marginal note:One share, one vote

72 Where voting rights are attached to a share of an association issued pursuant to a by-law passed under section 70, the by-law may confer only one vote in respect of that share.

Marginal note:Membership shares and shares non-assessable

73 Membership shares and shares issued by an association after the coming into force of this section are non-assessable and the members and shareholders are not liable to the association or to its creditors in respect thereof.

Marginal note:Consideration

• 74 (1) No membership share and no share of any class of shares of an association shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.

• Marginal note:Other currencies

  (2) When issuing membership shares or shares, an association may provide that any aspect of the membership shares or shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.

• Marginal note:When approval not necessary

  (3) The by-laws of an association may, with the approval of the Superintendent, provide for a formula or procedure for valuing a member of the association or any of its assets or liabilities when the member, or the asset or liability, is proposed to be acquired by the association in exchange for membership shares or shares of the association. The approval of the Superintendent under subsection (1) is not necessary when such shares are issued in accordance with such a by-law.

Marginal note:Stated capital account

• 75 (1) An association shall maintain a separate stated capital account for the membership shares and for each class and series of shares it issues.

• Marginal note:Addition to stated capital account

  (2) An association shall record in the appropriate stated capital account the full amount of any consideration it receives for any membership shares or shares it issues.

• Marginal note:Exception

  (2.1) Despite subsection (2), an association may, subject to subsection (2.2), record in the appropriate stated capital account part of the amount of any consideration it receives for shares it issues

  • (a) in exchange for

    • (i) property of a person who immediately before the exchange did not deal with the association at arm’s length within the meaning of that expression in the Income Tax Act or property of any other prescribed person, or

    • (ii) shares of, or another interest in, a body corporate that immediately before the exchange, or because of the exchange, did not deal with the association at arm’s length within the meaning of that expression in the Income Tax Act or shares of or another interest in any prescribed entity; or

  • (b) under an agreement referred to in subsection 227(1) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated association.

• Marginal note:Limit on addition to a stated capital account

  (2.2) On the issuance of a share, an association shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.

• Marginal note:Constraint on addition to a stated capital account

  (2.3) Where an association that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the association as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 84(4).

• Marginal note:Stated capital of former-Act association

  (3) On the coming into force of this Part, the former-Act association shall record in the stated capital account maintained for membership shares then outstanding an amount that is equal to the aggregate of

  • (a) the aggregate amount paid up on the membership shares immediately before the coming into force of this Part, and

  • (b) the amount of the contributed surplus of the association that is attributable to those membership shares.

• Marginal note:Contributed surplus entry

  (4) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (3)(b) shall be deducted from the contributed surplus account of the association.

• Marginal note:Share issued before coming into force

  (5) Any amount unpaid in respect of a membership share issued by the former-Act association before the coming into force of this Part and paid after the coming into force of this Part shall be recorded in the stated capital account maintained by the association for the membership shares.

Marginal note:Pre-emptive right: shareholders

• 76 (1) Where the by-laws of an association so provide, no shares of any class shall be issued unless the shares have first been offered to the persons holding shares of that class, and those persons have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.

• Marginal note:Exception

  (2) Notwithstanding the existence of a pre-emptive right, a shareholder of an association has no pre-emptive right in respect of shares that are to be issued

  • (a) for a consideration other than money;

  • (b) as a share dividend; or

  • (c) pursuant to the exercise of conversion privileges, options or rights previously granted by the association.

• Marginal note:Idem

  (3) Notwithstanding the existence of a pre-emptive right, a shareholder of an association has no pre-emptive right in respect of shares to be issued

  • (a) where the issue of shares to the shareholder is prohibited by this Act; or

  • (b) where, to the knowledge of the directors of the association, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the members at the last annual meeting.

Marginal note:Conversion privileges

• 77 (1) An association may issue conversion privileges, options or rights to acquire securities of the association, and shall set out the conditions thereof

  • (a) in the documents that evidence the conversion privileges, options or rights; or

  • (b) in the securities to which the conversion privileges, options or rights are attached.

• Marginal note:Transferable rights

  (2) Conversion privileges, options and rights to acquire securities of an association may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.

• Marginal note:Reserved shares

  (3) Where an association has granted privileges to convert any securities issued by the association into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the association shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

Marginal note:Holding of own shares

78 Except as provided in sections 79 to 81, or unless permitted by the regulations, an association shall not

• (a) hold membership shares or shares of the association; or

• (b) permit any of its subsidiaries to hold membership shares greater than the minimum number of membership shares of the association prescribed by a by-law made under subsection 67(1) or any shares of the association.

Marginal note:Purchase and redemption of membership shares and shares

• 79 (1) Subject to subsection (2) and to its by-laws, an association may,

  • (a) with the consent of the Superintendent, purchase, for the purpose of cancellation, any membership shares or shares issued by it, or redeem any redeemable shares issued by it at a price not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or, in the case of shares, according to the conditions attaching to the shares; and

  • (b) purchase in any calendar year, for the purpose of cancellation, not more than one per cent of the membership shares outstanding at the beginning of the year, at a price not exceeding the redemption price of the membership shares calculated according to a formula stated in its by-laws.

• Marginal note:Restrictions on purchase and redemption

  (2) An association shall not make any payment to purchase or redeem any membership shares or shares issued by it if there are reasonable grounds for believing that the association is, or the payment would cause the association to be, in contravention of any regulation referred to in subsection 409(1) or (2) or any direction made pursuant to subsection 409(3).

• Marginal note:Donations

  (3) An association may accept any membership share or share of the association surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 82.

Marginal note:Holding as personal representative

• 80 (1) An association may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, membership shares and shares of the association, but only where the association or the subsidiary does not have a beneficial interest in the shares.

• Marginal note:Security interest

  (2) Subject to section 51, an association may, and may permit its subsidiaries to, hold membership shares and shares of the association by way of a security interest where the security interest is nominal or immaterial when measured by criteria established by the association that have been approved in writing by the Superintendent.

• Marginal note:Saving

  (3) Nothing in subsection (2) precludes the former-Act association or any of its subsidiaries from holding any security interest held immediately prior to the coming into force of this Part.

Marginal note:Cancellation of membership shares and shares

• 81 (1) Subject to subsection (2), where an association purchases membership shares, or shares of the association or fractions thereof, or redeems or otherwise acquires membership shares or shares of the association, the association shall cancel those membership shares or shares.

• Marginal note:Sale of shares

  (2) Where an association or any of its subsidiaries, through the realization of security, acquires any membership shares or shares of the association, the association may, or may cause its subsidiary to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the membership shares or shares.

Marginal note:Reduction of capital

• 82 (1) The stated capital of an association may be reduced by special resolution.

• Marginal note:Limitation

  (2) An association shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the association is, or the reduction would cause the association to be, in contravention of any regulation referred to in subsection 409(1) or (2) or any direction made pursuant to subsection 409(3).

• Marginal note:Contents of special resolution

  (3) A special resolution to reduce the stated capital of an association shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

• Marginal note:Approval by Superintendent

  (4) A special resolution to reduce the stated capital of an association has no effect until it is approved in writing by the Superintendent.

• Marginal note:Conditions for approval

  (5) No approval to reduce the stated capital of an association may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.

• Marginal note:Statements to be submitted

  (6) In addition to evidence of the passing of a special resolution to reduce the stated capital of an association and of the publication thereof, statements showing

  • (a) the number of the association’s membership shares and shares issued and outstanding,

  • (b) the results of the voting by members of the association or by class of shares,

  • (c) the association’s assets and liabilities, and

  • (d) the reason why the association seeks the reduction of capital

  shall be submitted to the Superintendent at the time of the application for approval of the special resolution.

Marginal note:Recovery by action

• 83 (1) Where any money or property was paid or distributed to a member, shareholder or other person as a consequence of a reduction of capital made contrary to section 82, a creditor of the association may apply to a court for an order compelling the member, shareholder or other person to pay the money or deliver the property to the association.

• Marginal note:Shares held by personal representative

  (2) No person holding membership shares or shares in the capacity of a personal representative and registered on the records of the association as a member or shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.

• Marginal note:Limitation

  (3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.

• Marginal note:Remedy preserved

  (4) This section does not affect any liability that arises under section 211.

Marginal note:Adjustment of stated capital account

• 84 (1) On a purchase, redemption or other acquisition by an association of membership shares, or shares, or fractions thereof issued by it, other than membership shares or shares acquired pursuant to section 80 or acquired through the realization of security and sold pursuant to subsection 81(2), the association shall deduct from the stated capital account maintained for the membership shares, or for the class or series of shares, so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the membership shares or the shares of that class or series by the number of membership shares or shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of membership shares or shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.

• Marginal note:Idem

  (2) An association shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 82.

• Marginal note:Shares converted to another class

  (3) On a conversion of outstanding shares of an association into shares of another class or series, or on a change of outstanding shares of the association into shares of another class or series, the association shall

  • (a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and

  • (b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.

• Marginal note:Stated capital of convertible shares

  (4) For the purposes of subsection (3) and subject to the association’s by-laws, where an association issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.

• Marginal note:Conversion or change of shares

  (5) Shares issued by an association and converted into shares of another class or series, or changed under subsection 221(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.

Marginal note:Addition to stated capital account

85 On a conversion of any debt obligation of an association into membership shares, or into shares of a class or series of shares, the association shall

• (a) deduct from the liabilities of the association the nominal value of the debt obligation being converted; and

• (b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the membership shares or for the class or series of shares into which the debt obligation has been converted.

Marginal note:Declaration of dividend

• 86 (1) The directors of an association may declare and an association may pay a dividend by issuing fully paid membership shares or options or rights to acquire membership shares to members or fully paid shares or options or rights to acquire fully paid shares to members or shareholders and, subject to subsections (4) and (5), the directors of an association may declare and an association may pay a dividend in money or property, and if a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

• Marginal note:Notice to Superintendent

  (2) The directors of an association shall notify the Superintendent of the declaration of a dividend at least ten days prior to the day fixed for its payment.

• Marginal note:Dividend

  (3) If membership shares or shares of an association are issued in payment of a dividend, the association shall record in the stated capital account maintained or to be maintained for the membership shares or shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.

• Marginal note:When dividend not to be declared

  (4) The directors of an association shall not declare and an association shall not pay a dividend if there are reasonable grounds for believing that the association is, or the payment would cause the association to be, in contravention of any regulation referred to in subsection 409(1) or (2) or any direction made pursuant to subsection 409(3).

• Marginal note:When dividend not to be declared

  (5) The directors of an association shall not declare and an association shall not pay a dividend in any financial year without the approval of the Superintendent if, on the day the dividend is declared, the total of all dividends declared by the association in that year would exceed the aggregate of the association’s net income up to that day in that year and its retained net income for the preceding two financial years.

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

• 87 (1) An association shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.

• Marginal note:References to subordinated indebtedness

  (2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by an association refer to the subordinated indebtedness otherwise than as subordinated indebtedness.

• Marginal note:Deemed not to be a deposit

  (3) Subordinated indebtedness issued by an association is deemed not to be a deposit.

• Marginal note:Other currencies

  (4) When issuing subordinated indebtedness, an association may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.

Security Certificates and Transfers

Marginal note:Definitions

88 In this section and sections 89 to 142,

adverse claim

adverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security; (opposition)

bona fide purchaser

bona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)

clearing agency

clearing agency means a person designated as a recognized clearing agency by the Superintendent; (agence de compensation et de dépôt)

delivery

delivery means voluntary transfer of possession; (livraison ou remise)

fungible

fungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)

genuine

genuine means free of forgery or counterfeit; (authentique)

good faith

good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)

over-issue

over-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue; (émission excédentaire)

purchaser

purchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)

securities broker

securities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer; (courtier)

security

security or security certificate means an instrument issued by an association that is

• (a) in bearer, order or registered form,

• (b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,

• (c) one of a class or series or by its terms divisible into a class or series of instruments, and

• (d) evidence of a share, participation or other interest in or obligation of an association,

but does not include an instrument evidencing a deposit or a membership share; (valeur mobilière, titre ou certificat de valeur mobilière)

trust indenture

trust indenture has the meaning given that expression by section 278; (acte de fiducie)

unauthorized

unauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery; (non autorisé)

uncertificated security

uncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered or recorded in records maintained for that purpose by or on behalf of an association; (valeur mobilière sans certificat)

valid

valid means issued in accordance with the applicable law or validated under section 104. (valide)

Marginal note:Provisions governing transfers of securities

89 The transfer of a security is governed by sections 90 to 142.

Marginal note:Security a negotiable instrument

• 90 (1) A security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.

• Marginal note:Bearer form

  (2) A security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.

• Marginal note:Order form

  (3) A security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.

• Marginal note:Registered form

  (4) A security is in registered form if

  • (a) it specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; or

  • (b) it bears a statement that it is in registered form.

Marginal note:Status of guarantor

91 A guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.

Marginal note:Rights of holder

• 92 (1) Subject to Part VIII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from an association in respect of the securities of that association held by the security holder.

• Marginal note:Fee for security certificate

  (2) An association may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.

• Marginal note:Joint holders

  (3) An association is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.

Marginal note:Signatures on security certificate

• 93 (1) A security certificate shall be signed manually

  • (a) by at least one director or officer of the association,

  • (b) by or on behalf of a registrar, transfer agent or branch transfer agent of the association, or

  • (c) by a trustee who certifies it in accordance with a trust indenture,

  and any additional signatures required on a security certificate may be printed or otherwise mechanically produced thereon.

• Marginal note:No manual signature required

  (2) Notwithstanding subsection (1), a manual signature is not required on a security certificate representing a fractional share, on an option or a right to acquire a security or on a scrip certificate.

• Marginal note:Continuation of signature

  (3) Where a security certificate contains a printed or mechanically reproduced signature of a person, the association may issue the security certificate, notwithstanding that the person has ceased to be a director or an officer of the association, and the security certificate is as valid as if the person were a director or an officer at the date of its issue.

Marginal note:Contents of share certificate

94 There shall be stated on the face of each share certificate issued by an association after the coming into force of this section

• (a) the name of the association;

• (b) a statement that the association is subject to the Canadian Cooperative Credit Associations Act;

• (c) the name of the person to whom the share certificate is issued; and

• (d) the number and class of shares and the designation of any series that the certificate represents.

Marginal note:Restrictions and constraints

• 95 (1) If a security certificate issued by an association is or becomes subject to

  • (a) a restriction on its transfer other than a constraint under Part VIII, or

  • (b) a lien in favour of the association,

  the restriction or lien is ineffective against a transferee of the security who has no actual knowledge of it, unless the restriction or lien or a reference to it is noted conspicuously on the security certificate.

• Marginal note:Limit on restriction

  (2) Where any of the issued shares of an association are or were part of a distribution to the public and remain outstanding and are held by more than one person, the association shall not have a restriction on the issue, transfer or ownership of its shares of any class or series except by way of a constraint under Part VIII.

Marginal note:Particulars of class

• 96 (1) There shall be stated legibly on a share certificate issued after the coming into force of this section by an association that is authorized to issue shares of more than one class or series

  • (a) the rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; or

  • (b) that the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the association will furnish a shareholder, on demand and without charge, with a full copy of

    • (i) the text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, and

    • (ii) the text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.

• Marginal note:Duty

  (2) Where a share certificate issued by an association contains the statement mentioned in paragraph (1)(b), the association shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).

Marginal note:Fractional share

97 An association may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.

Marginal note:Scrip certificates

98 The directors of an association may attach conditions to any scrip certificate issued by the association, including conditions that

• (a) the scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; and

• (b) any shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the association to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.

Marginal note:Holders of fractional shares

• 99 (1) A holder of a fractional share issued by an association is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.

• Marginal note:Holders of scrip certificates

  (2) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.

Marginal note:Dealings with registered holder

• 100 (1) An association or a trustee within the meaning of section 278 may, subject to sections 146 to 149 and 154, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.

• Marginal note:Constructive registered holder

  (2) Notwithstanding subsection (1), an association may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the association with evidence as described in subsection 134(4) that the person is

  • (a) the heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;

  • (b) the personal representative of a registered security holder who is an infant, an incompetent person or a missing person; or

  • (c) a liquidator of, or a trustee in bankruptcy for, a registered security holder.

• Marginal note:Permissible registered holder

  (3) If a person on whom the ownership of a security of an association devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the association that is not registered in the person’s name, the association shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.

• Marginal note:Immunity of association

  (4) An association is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.

Marginal note:Infant owner

101 If an infant exercises any rights of ownership in the securities of an association, no subsequent repudiation or avoidance is effective against the association.

Marginal note:Joint shareholders

102 An association may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the association receives proof satisfactory to it of the death of any of the joint holders.

Marginal note:Transmission of securities

• 103 (1) Subject to the provisions of Part VIII and any applicable law relating to the collection of taxes, a person referred to in paragraph 100(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 100(2)(a) delivers to the association or its transfer agent

  • (a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by

    • (i) the court that granted the probate or letters of administration,

    • (ii) a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, or

    • (iii) a lawyer or notary acting on behalf of the person referred to in paragraph 100(2)(a), or

  • (b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,

  together with

  • (c) an affidavit or declaration of transmission made by the person referred to in paragraph 100(2)(a) that states the particulars of the transmission, and

  • (d) the security certificate that was owned by the deceased holder

    • (i) in the case of a transfer to the person referred to in paragraph 100(2)(a), with or without the endorsement of that person, and

    • (ii) in the case of a transfer to any other person, endorsed in accordance with section 118,

  and accompanied by any assurance the association may require under section 134.

• Marginal note:Excepted transmissions

  (2) Notwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VIII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the association or its transfer agent the following documents, namely,

  • (a) the security certificate that was owned by the deceased holder; and

  • (b) reasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.

• Marginal note:Right of association to treat as owner

  (3) Subject to Part VIII, delivery of the documents referred to in this section empowers an association or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 100(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.

Marginal note:Over-issue

• 104 (1) The provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, but

  • (a) if a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; or

  • (b) if a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.

• Marginal note:Retroactive validation

  (2) Where an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.

• Marginal note:Payment not a purchase or redemption

  (3) A purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 79 or 84 applies.

Marginal note:Burden of proof

105 In any action on a security,

• (a) unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;

• (b) a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

• (c) if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; and

• (d) if the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.

Marginal note:Securities fungible

106 Unless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.

Marginal note:Notice of defect

• 107 (1) Even against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.

• Marginal note:Purchaser for value

  (2) A security is valid in the hands of a purchaser for value without notice of any defect going to its validity.

• Marginal note:Lack of genuineness

  (3) Except as provided in section 108, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.

• Marginal note:Ineffective defences

  (4) All defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.

• Marginal note:Staleness as defect notice

  (5) After an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuer

  • (a) if the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or

  • (b) if the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.

Marginal note:Unauthorized signature

108 An unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done by

• (a) an authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; or

• (b) an employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.

Marginal note:Completion or alteration

• 109 (1) Where a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,

  • (a) any person may complete it by filling in the blanks in accordance with the person’s authority; and

  • (b) notwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

• Marginal note:Enforceability

  (2) A completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.

Marginal note:Warranties of agents

• 110 (1) A person signing a security, as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice that

  • (a) the security is genuine;

  • (b) the person’s acts in connection with the issue of 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:Limitation of liability

  (2) Unless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.

Marginal note:Title of purchaser

• 111 (1) Subject to Part VIII, on delivery of a security the purchaser acquires the rights in the security that the purchaser’s transferor had or had authority to convey, except that the position of a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim is not improved by taking from a later bona fide purchaser.

• Marginal note:Title of bona fide purchaser

  (2) A bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.

• Marginal note:Limited interest purchaser

  (3) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

Marginal note:Deemed notice of adverse claim

112 A purchaser of a security, or any securities broker for a seller or purchaser, is deemed to have notice of an adverse claim if

• (a) the security, whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or

• (b) the security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.

Marginal note:Notice of fiduciary duty

113 Notwithstanding that a purchaser, or any securities broker for a seller or purchaser, has notice that a security is held for a third person by, or is registered in the name of or endorsed by, a fiduciary, neither the purchaser nor the securities broker has any duty to inquire into the rightfulness of the transfer or any notice of an adverse claim, except that if the purchaser or securities broker for the seller or purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty, the purchaser or securities broker is deemed to have notice of an adverse claim.

Marginal note:Staleness as notice

114 An event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchase

• (a) made more than one year after any date set for such a presentation or surrender; or

• (b) made more than six months after any date set for payment of money against such a presentation or surrender if funds are available for payment on that date.

Marginal note:Warranties to issuer

• 115 (1) A person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

• Marginal note:Warranties to purchaser

  (2) A person by transferring a security to a purchaser for value warrants 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:Warranties of intermediary

  (3) Where a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against that delivery, the intermediary by that delivery warrants only the intermediary’s own good faith and authority even if the intermediary has purchased or made advances against the draft or other claim to be collected against the delivery.

• Marginal note:Warranties of pledgee

  (4) A pledgee or other holder for purposes of security who redelivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).

• Marginal note:Warranties of securities broker

  (5) A securities broker gives to the broker’s customer, to the issuer and to a purchaser, as the case may be, the warranties provided in subsections (1) to (4) and has the rights and privileges of a purchaser under those subsections, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the broker’s customer and warranties given in favour of the broker’s customer.

Marginal note:Right to compel endorsement

116 Where a security in registered form is delivered to a purchaser without a necessary endorsement, the purchaser may become a bona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.

Definition of appropriate person

• 117 (1) In this section, section 118, subsections 125(1), 128(4) and 133(1) and section 137, appropriate person means

  • (a) the person specified by the security or by 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 in the described capacity, either that person or that person’s 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 are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed;

  • (d) if a person described in paragraph (a) is a natural person and is without capacity to act by reason of death, incompetence, minority or other reason, 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 having power to sign under any applicable law or a power of attorney; or

  • (g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent, the person’s authorized agent.

• Determining an appropriate person

  (2) Whether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by such a person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.

Marginal note:Endorsement

• 118 (1) An endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more on the back of the security.

• Marginal note:Special or blank

  (2) An endorsement may be special or in blank.

• 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.

Marginal note:Immunity of endorser

119 Unless otherwise agreed, the endorser by the endorsement assumes no obligation that the security will be honoured by the issuer.

Marginal note:Partial endorsement

120 An endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

Marginal note:Effect of failure by fiduciary to comply

121 Failure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

Marginal note:Effect of endorsement without delivery

122 An endorsement of a security, whether special or in blank, does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.

Marginal note:Endorsement in bearer form

123 An endorsement of a security in bearer form may give notice of an adverse claim under section 112 but does not otherwise affect any of the holder’s rights.

Marginal note:Effect of unauthorized endorsement

• 124 (1) The owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim, who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the owner

  • (a) has ratified an unauthorized endorsement of the security; or

  • (b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

• Marginal note:Liability of issuer

  (2) An issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.

Marginal note:Warranties of guarantor of signature

• 125 (1) A person who guarantees the signature of an endorser of a security warrants that, at the time of signing,

  • (a) the signature was genuine;

  • (b) the signer was an appropriate person to endorse; and

  • (c) the signer had legal capacity to sign.

• Marginal note:Limitation of liability

  (2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.

• Marginal note:Warranties of guarantor of endorsement

  (3) A person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

• Marginal note:Extent of warrantor’s liability

  (4) The warranties referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to such a person for any loss resulting from breach of warranty.

Marginal note:Constructive delivery of a security

126 Delivery to a purchaser occurs when

• (a) the purchaser or a person designated by the purchaser acquires possession of a security;

• (b) the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;

• (c) the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; or

• (d) in respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.

Marginal note:Constructive ownership of security

• 127 (1) A purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases referred to in paragraphs 126(b) and (c).

• Marginal note:Ownership of part of fungible bulk

  (2) If a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest in the fungible bulk.

• Marginal note:Notice to securities broker of adverse claim

  (3) Notice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.

Marginal note:Delivery of security

• 128 (1) Unless otherwise agreed, if a sale of a security is made on a stock exchange or otherwise through securities brokers,

  • (a) the selling customer fulfils the customer’s duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or causes an acknowledgement to be made to the selling securities broker that it is held for the selling securities broker; and

  • (b) the selling securities broker, including a correspondent broker, acting for a selling customer fulfils the securities broker’s duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

• Marginal note:Duty to deliver

  (2) Except as otherwise provided in this section and unless otherwise agreed, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.

• Marginal note:Delivery to securities broker

  (3) A sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

• Marginal note:Transfer through clearing agency

  (4) If a security shown in the records of a clearing agency is evidenced by

  • (a) a security certificate in the custody of the clearing agency or a custodian, or a nominee of either, subject to the instructions of the clearing agency, and is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing agency or a custodian, or of a nominee of either, or

  • (b) an uncertificated security registered or recorded in records maintained by or on behalf of the association in the name of the clearing agency or a custodian, or of a nominee of either, subject to the instructions of the clearing agency,

  then, in addition to other methods, a transfer or pledge of the security or any interest therein may be effected by the making of an appropriate entry in the records of the clearing agency.

• Marginal note:Interest in fungible bulk

  (5) Under subsections (4) to (10), entries may be in respect of like securities or interests therein as part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number or the like and, in appropriate cases, may be on a net basis taking into account other transfers or pledges of the same security.

• Marginal note:Constructive endorsement and delivery

  (6) A transfer or pledge under subsections (4) to (10) has the effect of a delivery of a security in bearer form or duly endorsed in blank representing the amount of the obligation or the number of shares or rights transferred or pledged.

• Marginal note:Idem

  (7) If a pledge or the creation of a security interest is intended, the making of entries has the effect of a taking of delivery by the pledgee or a secured party and the pledgee or secured party shall be deemed to have taken possession for all purposes.

• Marginal note:Holder

  (8) A person depositing a security certificate or an uncertificated security with a clearing agency, or a transferee or pledgee of a security under subsections (4) to (10), is a holder of the security and shall be deemed to have possession of the security so deposited, transferred or pledged, as the case may be, for all purposes.

• Marginal note:Not registration

  (9) A transfer or pledge under subsections (4) to (10) does not constitute a registration of transfer under sections 133 to 140.

• Marginal note:Error in records

  (10) That entries made in the records of the clearing agency as provided in subsection (4) are not appropriate does not affect the validity or effect of the entries nor the liabilities or obligations of the clearing agency to any person adversely affected thereby.

Marginal note:Right to reclaim possession

• 129 (1) A person against whom the transfer of a security is wrongful for any reason, including the person’s incapacity, may, against anyone except a bona fide purchaser,

  • (a) reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights; or

  • (b) claim damages.

• Marginal note:Recovery where unauthorized endorsement

  (2) If the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a bona fide purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 124.

• Marginal note:Remedies

  (3) The right to reclaim possession of a security may be specially enforced, its transfer may be restrained and the security may be impounded pending litigation.

Marginal note:Right to requisites for registration

• 130 (1) Unless otherwise agreed, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for a transferor to prove authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

• Marginal note:Rescission of transfer

  (2) If a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.

Marginal note:Seizure of security

131 No seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.

Marginal note:No conversion if good faith delivery

132 An agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of an association, has received securities and sold, pledged or delivered them according to the instructions of the agent’s or bailee’s principal is not liable for conversion or for participation in breach of fiduciary duty even though the principal has no right to dispose of the securities.

Marginal note:Duty to register transfer

• 133 (1) Subject to Part VIII, where a security in registered form is presented for transfer, the issuer shall register the transfer if

  • (a) the security is endorsed by an appropriate person;

  • (b) reasonable assurance is given that the endorsement is genuine and effective;

  • (c) the issuer has no duty to inquire into adverse claims or has discharged any such duty;

  • (d) all applicable laws relating to the collection of taxes have been complied with;

  • (e) the transfer is rightful or is to a bona fide purchaser; and

  • (f) the fee, if any, referred to in subsection 92(2) has been paid.

• Marginal note:Liability for delay

  (2) Where an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from the failure or refusal to register the transfer.

Marginal note:Assurance of endorsements

• 134 (1) An issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiring

  • (a) if the endorsement is by an agent, reasonable assurance of authority to sign;

  • (b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;

  • (c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

  • (d) in any other case, assurance that corresponds as closely as practicable to the foregoing.

• Definition of guarantee of the signature

  (2) For the purposes of subsection (1), guarantee of the signature means a guarantee signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.

• Marginal note:Standards

  (3) An issuer may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).

• Definition of evidence of appointment or incumbency

  (4) For the purposes of paragraph (1)(b), evidence of appointment or incumbency means

  • (a) in the case of a fiduciary appointed by a court and referred to in subsection 103(1), a copy of the certified court order referred to in subsection 103(1) and dated not earlier than sixty days before the day a security is presented for transfer; or

  • (b) in the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.

• Marginal note:Standards

  (5) An issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).

• Marginal note:No notice to issuer

  (6) An issuer is deemed not to have notice of the contents of any document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.

Marginal note:Notice from additional documentation

135 If an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 134(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.

Marginal note:Limited duty of inquiry

• 136 (1) An issuer to whom a security is presented for registration has a duty to inquire into adverse claims if

  • (a) the issuer receives written notice of an adverse claim at a time and in a manner that provides the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; or

  • (b) the issuer is deemed to have notice of an adverse claim from a document that it obtained under section 135.

• Marginal note:Discharge of duty

  (2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, within thirty days after the date of mailing of the notice, either

  • (a) the issuer is served with a restraining order or other order of a court, or

  • (b) the issuer is provided with an indemnity bond sufficient in the issuer’s judgment to protect the issuer and any registrar, transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.

Marginal note:Inquiry into adverse claims

137 Unless an issuer is deemed to have notice of an adverse claim from a document that it obtained under section 135 or has received notice of an adverse claim under subsection 136(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,

• (a) an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;

• (b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

• (c) an issuer is deemed not to have notice of the contents of any court record or any registered document even if the record or document is in the issuer’s possession and even if the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.

Marginal note:Duration of notice of adverse claim

138 A written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.

Marginal note:Limitation on issuer’s liability

• 139 (1) Except as otherwise provided in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security if

  • (a) the necessary endorsements were on or with the security; and

  • (b) the issuer had no duty to inquire into adverse claims or had discharged any such duty.

• Marginal note:Duty of issuer on default

  (2) If an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unless

  • (a) the issuer is not liable by virtue of subsection (1);

  • (b) the owner is precluded by subsection 140(1) from asserting any claim; or

  • (c) the delivery would result in over-issue in respect of which section 104 applies.

Marginal note:Lost or stolen security

• 140 (1) Where a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of the owner’s adverse claim within a reasonable time after the owner knows of the loss, destruction or taking, then, if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.

• Marginal note:Duty to issue new security

  (2) Where the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the owner

  • (a) so requests before the issuer has notice that the security has been acquired by a bona fide purchaser;

  • (b) provides the issuer with a sufficient indemnity bond; and

  • (c) satisfies any other reasonable requirements imposed by the issuer.

• Marginal note:Duty to register transfer

  (3) If, after the issue of a new security under subsection (2), a bona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in over-issue in respect of which section 104 applies.

• Marginal note:Right of issuer to recover

  (4) In addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a bona fide purchaser.

Marginal note:Authenticating agent’s duty

141 An authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

• (a) a duty to the issuer to exercise good faith and reasonable diligence; and

• (b) the same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.

Marginal note:Notice to agent

142 Notice to an authenticating trustee, registrar, transfer agent or other agent of an issuer is notice to the issuer in respect of the functions performed by the agent.

PART VIICorporate Governance

Members and Shareholders

Marginal note:Place of meetings

143 Meetings of members or shareholders of the association shall be held at the place within Canada provided for in the by-laws of the association or, in the absence of any such provision, at the place within Canada that the directors determine.

Marginal note:Calling meetings

144 The directors of an association

• (a) shall, after the meeting called pursuant to subsection 54(1), call the first annual meeting of the association, which meeting must be held not later than six months after the end of the first financial year of the association, and subsequently call an annual meeting, which meeting must be held not later than six months after the end of each financial year; and

• (b) may at any time call a special meeting of members or shareholders of the association.

Marginal note:Fixing record date

• 145 (1) For the purpose of determining shareholders

  • (a) entitled to receive payment of a dividend, or

  • (b) for any other purpose except the right to receive notice of, or to vote at, a meeting,

  the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede by more than fifty days the particular action to be taken.

• Marginal note:Record date for meetings

  (2) For the purpose of determining shareholders entitled to receive notice of a meeting, the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede by more than fifty days or by less than twenty-one days the date on which the meeting is to be held.

• Marginal note:No record date fixed

  (3) If no record date is fixed pursuant to subsection (1) or (2),

  • (a) the record date for the determination of shareholders for any purpose, other than to establish a shareholder’s right to receive notice of a meeting or to vote, is the day on which the directors pass the resolution relating to the particular purpose; and

  • (b) the record date for the determination of shareholders entitled to receive notice of, or to vote at, a meeting is

    • (i) the day immediately preceding the day on which the notice is given, or

    • (ii) if no notice is given, the day on which the meeting is held.

• Marginal note:When record date fixed

  (4) When a record date is fixed for an association, unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the central securities register at the close of business on the date the directors fix the record date, notice thereof shall, not less than seven days before the record date, be given

  • (a) by advertisement in a newspaper in general circulation in the place where the head office of the association is situated and in each place in Canada where the association has a transfer agent or where a transfer of the association’s shares may be recorded; and

  • (b) by written notice to each stock exchange, if any, in Canada on which the shares of the association are listed for trading.

Marginal note:Notice of meeting

• 146 (1) Notice of the time and place of a meeting of members or shareholders of an association shall be sent not less than twenty-one days or more than fifty days before the meeting

  • (a) to each member of the association;

  • (b) to each shareholder of the association entitled to vote at the meeting;

  • (c) to each director of the association; and

  • (d) to the auditor of the association.

• Marginal note:Publication in newspaper

  (2) In addition to the notice required under subsection (1), where any class of shares of an association is publicly traded on a recognized stock exchange in Canada, notice of the time and place of a meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the head office of the association is situated and in each place in Canada where the association has a transfer agent or where a transfer of the association’s shares may be recorded.

Marginal note:When notice not required

• 147 (1) A notice of a meeting of shareholders is not required to be sent to shareholders who were not registered on the records of the association or its transfer agent on the record date fixed or determined under subsection 145(2) or (3).

• Marginal note:Effect of default

  (2) Failure to receive a notice of a meeting does not deprive a member or shareholder of the right to vote at the meeting.

Marginal note:Notice of adjourned meeting

• 148 (1) If a meeting is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.

• Marginal note:Notice of meeting continued after adjournment

  (2) If a meeting is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 166.04(1) does not apply.

Marginal note:Special business

• 149 (1) All matters dealt with at a special meeting of members or shareholders and all matters dealt with at an annual meeting, except consideration of the financial statements, auditor’s report, election of directors, remuneration of directors and re-appointment of the incumbent auditor, are deemed to be special business.

• Marginal note:Notice of special business

  (2) Notice of a meeting of members or shareholders at which special business is to be transacted must

  • (a) state the nature of the special business in sufficient detail to permit a member or shareholder to form a reasoned judgment thereon; and

  • (b) contain the text of any special resolution to be submitted to the meeting.

Marginal note:Nominations for directors

• 150 (1) Where shareholders of an association are entitled to elect one or more directors of an association, a notice of a meeting of shareholders must include any nomination made by a shareholder for the election of a director.

• Marginal note:Exception

  (2) An association is not required to comply with subsection (1) if the nomination is not submitted to the association at least ninety days before the anniversary date of the previous annual meeting.

Marginal note:Waiver of notice

• 151 (1) A member, a shareholder and any other person entitled to attend a meeting may in any manner waive notice of the meeting.

• Marginal note:Idem

  (2) Attendance at a meeting of members or shareholders is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

Marginal note:Proposals

• 152 (1) At an annual meeting of an association, any member may

  • (a) submit to the association notice of any matter that the member proposes to raise at the meeting; and

  • (b) discuss at the meeting any matter in respect of which the member would have been entitled to submit a proposal.

• Marginal note:Notice of proposal

  (2) Any proposal of a member submitted for consideration at a meeting must be attached to the notice of the meeting, and, if so requested by the member, a statement by the member of not more than two hundred words in support of the proposal and the name and address of the member must also be so attached.

• Marginal note:Conditions precedent for proposals

  (3) An association is not required to comply with subsection (2) if

  • (a) the proposal is not submitted to the association at least ninety days before the anniversary date of the previous annual meeting;

  • (b) it clearly appears that the proposal is submitted primarily for the purpose of enforcing a personal claim or redressing a personal grievance against the association or its directors, officers, members or security holders, or primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes;

  • (c) the association, at the member’s request, attached to the notice of a meeting a proposal relating to a meeting held within two years preceding the receipt of the request, and the member failed to present the proposal at the meeting;

  • (d) substantially the same proposal was submitted to members in a notice of a meeting relating to a meeting held within two years preceding the receipt of the member’s request and the proposal was defeated; or

  • (e) the rights conferred by subsections (1) and (2) are being abused to secure publicity.

• Marginal note:Immunity for proposal and statement

  (4) No association or person acting on behalf of an association incurs any liability by reason only of circulating a proposal or statement in compliance with section 152.

Marginal note:Refusal of proposal

• 153 (1) If an association refuses to include a proposal in a notice of a meeting referred to in paragraph 146(1)(a), the association shall, within ten days after receiving the proposal, notify the member submitting the proposal of its intention to omit the proposal from the notice and send to the member a statement of the reasons for the refusal.

• Marginal note:Appeal to court

  (2) On the application of a member claiming to be aggrieved by an association’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order it thinks fit.

• Marginal note:Idem

  (3) An association or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the association to omit the proposal from a notice of a meeting, and the court, if it is satisfied that subsection 152(3) applies, may make such order as it thinks fit.

• Marginal note:Notice to Superintendent

  (4) An applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.

Marginal note:Member list

• 154 (1) An association shall prepare a list, which may be in electronic form, of its members entitled to receive notice of a meeting under paragraph 146(1)(a), arranged in alphabetical order, which list must be prepared at the close of business on the day immediately preceding the day on which notice is given.

• Marginal note:Shareholder list

  (2) An association shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 146(1)(b), arranged in alphabetical order and showing the number of shares held by each shareholder, which list must be prepared

  • (a) if a record date is fixed under subsection 145(2), not later than ten days after that date; or

  • (b) if no record date is fixed,

    • (i) at the close of business on the day immediately preceding the day on which the notice is given, or

    • (ii) where no notice is given, on the day on which the meeting is held.

• Marginal note:Effect of shareholder list

  (3) Where an association fixes a record date under subsection 145(2), a person named in the list prepared under paragraph (2)(a) is, subject to this Act, entitled to vote the shares shown opposite that person’s name at the meeting to which the list relates, except to the extent that

  • (a) the person has transferred the ownership of any of those shares after the record date, and

  • (b) the transferee of those shares

    • (i) produces properly endorsed share certificates, or

    • (ii) otherwise establishes that the transferee owns the shares,

    and demands, not later than ten days before the meeting or such shorter period before the meeting as the by-laws of the association provide, that the transferee’s name be included in the list before the meeting,

  in which case the transferee may vote those transferred shares at the meeting.

• Marginal note:Idem

  (4) Where an association does not fix a record date under subsection 145(2), a person named in the list prepared under paragraph (2)(b) is, subject to this Act, entitled to vote the shares shown opposite that person’s name at the meeting to which the list relates, except to the extent that

  • (a) the person has transferred the ownership of any of those shares after the date on which a list was prepared under subparagraph (2)(b)(i), and

  • (b) the transferee of those shares

    • (i) produces properly endorsed share certificates, or

    • (ii) otherwise establishes that the transferee owns the shares,

    and demands, not later than ten days before the meeting or such shorter period before the meeting as the by-laws of the association provide, that the transferee’s name be included in the list before the meeting,

  in which case the transferee may vote those transferred shares at the meeting.

• Marginal note:Examination of list

  (5) A member or shareholder of an association may examine a list referred to in subsection (1) or (2),

  • (a) during usual business hours at the head office of the association or at the place where its members register is maintained; and

  • (b) at the meeting for which the list was prepared.

Marginal note:Quorum — members

• 155 (1) Unless the by-laws otherwise provide, a quorum is present at a meeting of members if members holding a majority of the voting rights that may be exercised at the meeting are represented by a personal representative or delegate.

• Marginal note:Quorum — shareholders

  (2) Unless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.

• Marginal note:Quorum

  (3) If a quorum is present at the opening of a meeting of members or shareholders, the members or shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.

• Marginal note:Idem

  (4) If a quorum is not present at the opening of a meeting of members or shareholders, the members or shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business.

Marginal note:One shareholder meeting

156 If an association has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.

Marginal note:One share — one vote

157 Where a share of an association entitles the holder thereof to vote at a meeting, that share entitles the shareholder to one vote at the meeting.

Marginal note:Representative shareholder

• 158 (1) Subject to subsection 42(2), if an entity is a member or shareholder of an association, the association shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of members or shareholders.

• Marginal note:Idem

  (2) A natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were a natural person, as well as a member or a shareholder.

Marginal note:Joint shareholders

159 Unless the by-laws otherwise provide, if two or more persons hold shares jointly, one of those holders present at a meeting may in the absence of the others vote the shares, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares jointly held by them.

Marginal note:Voting by hands or ballot

• 160 (1) Unless the by-laws otherwise provide, voting at a meeting of members or shareholders shall take place by show of hands except when a ballot is demanded by a person entitled to vote at the meeting.

• Marginal note:Ballot

  (2) A person entitled to vote may demand a ballot either before or after any vote by show of hands.

Marginal note:Resolution in lieu of meeting

• 161 (1) Except where a written statement is submitted by a director under section 181 or by an auditor under subsection 305(1),

  • (a) a resolution in writing signed by all the persons entitled to vote on that resolution at a meeting of members or shareholders is as valid as if it had been passed at such a meeting; and

  • (b) a resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of members or shareholders, and signed by all the persons entitled to vote at that meeting, satisfies all the requirements of this Act relating to meetings.

• Marginal note:Filing resolution

  (2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings.

Marginal note:Requisitioned meeting

• 162 (1) Two or more members of an association who together hold not less than 5 per cent of the voting rights that members of the association have by virtue of membership in the association, may requisition the directors to call a meeting of the members of the association for the purposes stated in the requisition.

• Marginal note:Idem

  (2) Two or more shareholders who together hold not less than 5 per cent of the issued and outstanding shares of an association that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders of the association for the purposes stated in the requisition.

• Marginal note:Form

  (3) A requisition referred to in subsection (1) or (2)

  • (a) must state the business to be transacted at the meeting and must be sent to each director and to the head office of the association; and

  • (b) may consist of several documents of like form, each signed by one or more members or shareholders.

• Marginal note:Directors calling meeting

  (4) On receipt of a requisition referred to in subsection (1) or (2), the directors shall call a meeting to transact the business stated in the requisition, unless

  • (a) a record date has been fixed under subsection 145(2) and notice thereof has been given under subsection 145(4);

  • (b) the directors have called a meeting and have given notice thereof under section 146; or

  • (c) the business of the meeting as stated in the requisition includes matters described in paragraphs 152(3)(b) to (e).

• Marginal note:Members or shareholders calling meeting

  (5) If the directors do not call a meeting within twenty-one days after receiving the requisition referred to in subsection (1) or (2), any member or shareholder who signed the requisition may call the meeting.

• Marginal note:Procedure

  (6) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Act.

• Marginal note:Reimbursement

  (7) Unless the members or shareholders otherwise resolve at a meeting called under subsection (5), the association shall reimburse the members or shareholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

Marginal note:Meeting called by court

• 163 (1) Where it is impracticable

  • (a) to call a meeting of members or shareholders in the manner in which meetings are to be called, or

  • (b) to conduct the meeting in the manner required by the by-laws and this Act,

  or where a court thinks fit to do so for any other reason, the court, on the application of a director or a person entitled to vote at the meeting, may order a meeting to be called, held and conducted in such manner as the court directs.

• Marginal note:Varying quorum

  (2) Without restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted pursuant to this section.

• Marginal note:Valid meeting

  (3) A meeting called, held and conducted pursuant to this section is for all purposes a meeting duly called, held and conducted.

Marginal note:Court review of election

• 164 (1) An association or a member, shareholder or director of an association may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the association.

• Marginal note:Powers of court

  (2) On an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

  • (b) an order declaring the result of the disputed election or appointment;

  • (c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the association until a new election is held or the new appointment is made;

  • (d) an order determining the voting rights of members and persons claiming to be members; and

  • (e) an order determining the voting rights of shareholders and of persons claiming to own shares.

Marginal note:Notice to Superintendent

• 165 (1) A person who makes an application under subsection 163(1) or 164(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.

• Marginal note:Superintendent representation

  (2) The Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).

Marginal note:Pooling agreement

166 A written agreement between two or more shareholders may provide that in exercising voting rights the shares held by them will be voted as provided in the agreement.

Proxies

Marginal note:Definitions

166.01 The definitions in this section apply in this section and in sections 166.02 to 166.08.

registrant

courtier agréé

registrant means a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction. (courtier agréé)

solicit or solicitation

sollicitation

solicit or solicitation includes

• (a) a request for a proxy, whether or not accompanied by or included in a form of proxy,

• (b) a request to execute or not to execute a form of proxy or to revoke a proxy,

• (c) the sending of a form of proxy or other communication to a shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and

• (d) the sending of a form of proxy to a shareholder under section 166.04,

but does not include

• (e) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,

• (f) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

• (g) the sending by a registrant of the documents referred to in section 166.07, or

• (h) a solicitation by a person in respect of shares of which that person is the beneficial owner. (sollicitation)

solicitation by or on behalf of the management of an association

sollicitation effectuée par la direction d’une association ou pour son compte

solicitation by or on behalf of the management of an association means a solicitation by any person pursuant to a resolution or instruction of, or with the acquiescence of, the directors or a committee of the directors of the association. (sollicitation effectuée par la direction d’une association ou pour son compte)

Marginal note:Appointing proxyholder

• 166.02 (1) A shareholder who is entitled to vote at a meeting of shareholders may, by executing a form of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.

• Marginal note:Execution of proxy

  (2) A form of proxy shall be executed by a shareholder or by a shareholder’s attorney authorized in writing to do so.

• Marginal note:Limit on authority

  (3) No appointment of a proxyholder provides authority for the proxyholder to act in respect of the appointment of an auditor or the election of a director unless a nominee proposed in good faith for the appointment or election is named in the form of proxy, a management proxy circular, a dissident’s proxy circular or a proposal under subsection 152(1).

• Marginal note:Required information

  (4) A form of proxy must indicate, in bold-face type, that the shareholder by whom or on whose behalf it is executed may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the shareholder’s behalf at a meeting to which the proxy relates, and must contain instructions as to the manner in which the shareholder may do so.

• Marginal note:Validity of proxy

  (5) A proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.

• Marginal note:Revocation of proxy

  (6) A shareholder may revoke a proxy

  • (a) by depositing an instrument in writing executed by the shareholder or by the shareholder’s attorney authorized in writing to do so

    • (i) at the head office of the association at any time up to and including the last business day before the day of a meeting, or a continuation of the meeting after an adjournment, at which the proxy is to be used, or

    • (ii) with the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; or

  • (b) in any other manner permitted by law.

Marginal note:Deposit of proxies

166.03 The directors may specify, in a notice calling a meeting of shareholders or a continuation of a meeting of shareholders after an adjournment, a time before which executed forms of proxy to be used at the meeting or the continued meeting must be deposited with the association or its transfer agent. The time specified may not be more than forty-eight hours, excluding Saturdays and holidays, before the meeting or the continued meeting.

Marginal note:Mandatory solicitation

• 166.04 (1) Subject to subsection 148(2) and subsection (2), the management of an association shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder entitled to receive notice of the meeting.

• Marginal note:Exception

  (2) If an association has fewer than fifteen shareholders, the management of the association is not required to send a form of proxy to the shareholders under subsection (1). For the purpose of this subsection, two or more joint shareholders are counted as one shareholder.

Marginal note:Soliciting proxies

• 166.05 (1) A person shall not solicit proxies unless

  • (a) in the case of solicitation by or on behalf of the management of an association, a management proxy circular in prescribed form, either as an appendix to, or as a separate document accompanying, the notice of the meeting is sent to the auditor of the association and to each shareholder whose proxy is solicited; and

  • (b) in the case of any other solicitation, a dissident’s proxy circular in prescribed form stating the purposes of the solicitation is sent to the auditor of the association, to each shareholder whose proxy is solicited and to the association.

• Marginal note:Copy to Superintendent

  (2) A person who sends a management proxy circular or dissident’s proxy circular shall at the same time file with the Superintendent

  • (a) in the case of a management proxy circular, a copy of it together with a copy of the notice of meeting, form of proxy and any other documents for use in connection with the meeting; and

  • (b) in the case of a dissident’s proxy circular, a copy of it together with a copy of the form of proxy and any other documents for use in connection with the meeting.

• Marginal note:Exemption by Superintendent

  (3) On the application of an interested person, the Superintendent may, on any terms that the Superintendent thinks fit, exempt the person from any of the requirements of subsection (1) and section 166.04, and the exemption may be given retroactive effect.

• Marginal note:Reporting exemptions

  (4) The Superintendent shall set out in a periodical available to the public the particulars of each exemption granted under subsection (3) together with the reasons for the exemption.

Marginal note:Attendance at meeting

• 166.06 (1) A person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend every meeting in respect of which the proxy is valid, and the proxyholder or alternate proxyholder shall comply with the directions of the shareholder who executed the form of proxy.

• Marginal note:Rights of proxyholder

  (2) A proxyholder or an alternate proxyholder has the same rights as the appointing shareholder to speak at a meeting of shareholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder, to vote at the meeting in respect of any matter by way of a show of hands.

• Marginal note:Vote by show of hands

  (3) Where the chairperson of a meeting of shareholders declares to the meeting that, if a ballot were conducted, the total number of votes represented at the meeting by proxy required to be voted against what, to the knowledge of the chairperson, would be the decision of the meeting in relation to any matter or group of matters is less than five per cent of all the votes that might be cast at the meeting on the ballot, unless a shareholder or proxyholder demands a ballot,

  • (a) the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; and

  • (b) a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.

Marginal note:Duty of registrant

• 166.07 (1) Shares of an association that are registered in the name of a registrant or registrant’s nominee and that are not beneficially owned by the registrant shall not be voted unless the registrant sends to the beneficial owner

  • (a) a copy of the notice of the meeting, annual statement, management proxy circular, dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; and

  • (b) a written request for voting instructions, except where the registrant has already received written voting instructions from the beneficial owner.

• Marginal note:When documents to be sent

  (2) The documents to be sent to the beneficial owner under subsection (1) shall be sent by the registrant without delay after the registrant receives the documents referred to in paragraph (1)(a).

• Marginal note:Where registrant not to vote shares

  (3) A registrant shall not vote or appoint a proxyholder to vote shares of an association registered in the registrant’s name or in the name of the registrant’s nominee that the registrant does not beneficially own unless the registrant receives voting instructions from the beneficial owner.

• Marginal note:Copies

  (4) A person by or on behalf of whom a solicitation is made shall, at the request of a registrant, without delay provide the registrant, at that person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).

• Marginal note:Instructions to registrant

  (5) A registrant shall vote or appoint a proxyholder to vote any shares referred to in subsection (1) in accordance with any written voting instructions received from the beneficial owner.

• Marginal note:Beneficial owner as proxyholder

  (6) If requested by a beneficial owner, a registrant shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.

• Marginal note:Default of registrant — effect

  (7) The failure of a registrant to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or any action taken at the meeting.

• Marginal note:Right of registrant limited

  (8) Nothing in this Part gives a registrant the right to vote shares that the registrant is otherwise prohibited from voting.

Marginal note:Restraining order

• 166.08 (1) If a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit including,

  • (a) an order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;

  • (b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and

  • (c) an order adjourning the meeting.

• Marginal note:Notice of application

  (2) Where a person other than the Superintendent is an applicant under subsection (1), the applicant shall give notice of the application to the Superintendent and the Superintendent is entitled to appear and to be heard in person or by counsel.

Directors and Officers

Duties

Marginal note:Duty to manage

• 167 (1) Subject to this Act, the directors of an association shall manage or supervise the management of the business and affairs of the association.

• Marginal note:Specific duties

  (2) Without limiting the generality of subsection (1), the directors of an association shall

  • (a) establish an audit committee to perform the duties referred to in subsections 199(3) and (4);

  • (b) establish a conduct review committee to perform the duties referred to in subsection 200(3);

  • (c) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;

  • (d) designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);

  • (e) establish investment and lending policies, standards and procedures in accordance with section 387;

  • (f) in the case of a retail association, establish procedures to provide disclosure of information to customers of the association that is required to be disclosed by this Act and for dealing with complaints as required by section 385.22; and

  • (g) designate a committee of the board of directors to monitor the procedures referred to in paragraph (f) and satisfy itself that they are being adhered to by the retail association.

Marginal note:Duty of care

• 168 (1) Every director and officer of an association in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shall

  • (a) act honestly and in good faith with a view to the best interests of the association; and

  • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• Marginal note:Duty to comply

  (2) Every director, officer and employee of an association shall comply with this Act, the regulations, the association’s incorporating instrument and the by-laws of the association.

• Marginal note:No exculpation

  (3) No provision in any contract, in any resolution or in the by-laws of an association relieves any director, officer or employee of the association from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.

Qualification and Number — Directors

Marginal note:Minimum number of directors

• 169 (1) An association shall have at least seven directors.

• Marginal note:Residency requirement

  (2) At least two thirds of the directors of an association must be, at the time of each director’s election or appointment, resident Canadians.

Marginal note:Disqualified persons

170 The following persons are disqualified from being directors of an association:

• (a) a person who is less than eighteen years of age;

• (b) a person who is of unsound mind and has been so found by a court in Canada or elsewhere;

• (c) a person who has the status of a bankrupt;

• (d) a person who is not a natural person;

• (e) and (f) [Repealed, 1994, c. 47, s. 51]

• (g) a minister of Her Majesty in right of Canada or in right of a province; and

• (h) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof.

Marginal note:Limit on directors

171 No more than 15 per cent of the directors of an association may, at each director’s election or appointment, be employees of the association or a subsidiary of the association.

Election and Tenure — Directors

Marginal note:Number of directors

• 172 (1) Subject to subsection 169(1), the members of an association shall, by by-law, determine the number of directors or the minimum and maximum number of directors.

• Marginal note:Content of by-law

  (2) A by-law made pursuant to subsection (1) shall set out the manner in which directors are nominated, appointed or elected, but no by-law that decreases the number of directors shortens the term of an incumbent director.

• Marginal note:Election at annual meeting

  (3) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be appointed or elected at any annual meeting be such number as is fixed by the directors prior to the annual meeting.

Marginal note:Voting by shareholders

173 Where shareholders of an association are entitled to elect one or more directors of an association, no more than one third of the directors may be elected by the shareholders.

Marginal note:Term of directors

• 174 (1) An association may, by by-law, provide that the directors be appointed or elected for terms of one, two or three years.

• Marginal note:Term of one, two or three years

  (2) A director appointed or elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting following the appointment or election of the director.

• Marginal note:No stated term

  (3) A director who is not appointed or elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting following the appointment or election of the director.

• Marginal note:Tenure of office

  (4) It is not necessary that all directors appointed or elected at a meeting hold office for the same term.

• Marginal note:Idem

  (5) If a by-law of an association provides that the directors be appointed or elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.

• Marginal note:Composition requirements

  (6) Where a director of an association is appointed or elected for a term of more than one year, the association shall comply with subsection 169(2) and section 171 at each annual meeting during the director’s term of office as if that director were appointed or elected on that date.

Marginal note:Determining election of directors

• 175 (1) The persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of an association shall be directors thereof.

• Marginal note:Idem

  (2) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors to be elected, determine which of the persons so receiving an equal number of votes are to be elected.

Marginal note:Re-appointment or re-election of directors

176 A director who has completed a term of office is, if otherwise qualified, eligible for re-appointment or re-election.

Director Vacancies

Marginal note:Void election or appointment

• 177 (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 169(2) or section 171, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.

• Marginal note:Failure to appoint or elect minimum

  (2) Where, at the close of a meeting of members or shareholders of an association, the members or shareholders have failed to appoint or elect the number or minimum number of directors required by this Act or the by-laws of the association, the purported appointment or election of directors at the meeting

  • (a) is valid if the directors purported to be appointed or elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or

  • (b) is void if the directors purported to be appointed or elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.

Marginal note:Directors where appointment or elections incomplete or void

• 178 (1) Notwithstanding subsections 174(2) and (3) and paragraph 179(1)(a), if section 177 applies at the close of any meeting of members or shareholders of an association, the board of directors shall, until such time as their successors are appointed or elected, consist solely of

  • (a) where paragraph 177(2)(a) applies, the directors referred to in that paragraph; or

  • (b) where subsection 177(1) or paragraph 177(2)(b) applies, those persons who were the incumbent directors immediately before the meeting.

• Marginal note:Where there is no approved rectification plan

  (1.1) Notwithstanding subsections 174(2) and (3) and paragraph 179(1)(a), where a plan to rectify the non-compliance referred to in subsection 177(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.

• Marginal note:Directors to call meeting

  (2) Where subsection (1) or (1.1) applies, the board of directors referred to in that subsection shall without delay call a special meeting of members or shareholders to fill the vacancies, where paragraph 177(2)(a) applies, or elect a new board of directors, where subsection 177(1) or paragraph 177(2)(b) applies.

• Marginal note:Calling meeting

  (3) Where the directors fail to call a special meeting required by subsection (2), the meeting may be called by any person entitled to vote at that meeting.

Marginal note:Ceasing to hold office

• 179 (1) A director ceases to hold office

  • (a) at the close of the annual meeting at which the director’s term of office expires;

  • (b) when the director dies or resigns;

  • (c) when the director becomes disqualified under section 170 or ineligible to hold office pursuant to subsection 207(2);

  • (d) when the director is removed under section 180; or

  • (e) when the director is removed from office under section 441.2.

• Marginal note:Date of resignation

  (2) The resignation of a director of an association becomes effective at the time a written resignation is sent to the association by the director or at the time specified in the resignation, whichever is later.

Marginal note:Removal of director

• 180 (1) Subject to subsections (2) and (3), the members of an association may, by special resolution at a special meeting of members, remove any or all directors from office.

• Marginal note:Exception

  (2) Where members of an association have the exclusive right to appoint or elect one or more directors, a director so appointed or elected may be removed only by those members.

• Marginal note:Idem

  (3) Where the holders of any class or series of shares of an association have the exclusive right to elect one or more directors, a director so elected may be removed only by a special resolution at a meeting of the shareholders of that class or series.

• Marginal note:Vacancy by removal

  (4) A vacancy created by the removal of a director may be filled at the meeting of the members or shareholders at which the director is removed.

Marginal note:Statement of director

• 181 (1) A director who

  • (a) resigns,

  • (b) receives a notice or otherwise learns of a meeting called for the purpose of removing the director from office, or

  • (c) receives a notice or otherwise learns of a meeting of directors, members or shareholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,

  is entitled to submit to the association a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

• Marginal note:Statement re disagreement

  (2) Where a director resigns as a result of a disagreement with the other directors or the officers of an association, the director shall submit to the association and the Superintendent a written statement setting out the nature of the disagreement.

Marginal note:Circulation of statement

• 182 (1) Forthwith on receipt of a director’s statement referred to in subsection 181(1) relating to a matter referred to in paragraph 181(1)(b) or (c), or a director’s statement referred to in subsection 181(2), an association shall send a copy thereof to the Superintendent, to each member and, if the director was elected by the holders of shares of a class, to those shareholders.

• Marginal note:Exception

  (2) An association is not required to comply with subsection (1) in respect of shareholders if the statement is included in or attached to a management proxy circular required by paragraph 166.05(1)(a).

• Marginal note:Immunity for statement

  (3) No association or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).

Marginal note:Filling vacancy

• 183 (1) Subject to the by-laws of an association, a vacancy among the directors of the association is to be filled by an appointment or election by members only or by an appointment or election by persons having an exclusive right to appoint or elect one or more directors if the vacancy occurs among the directors appointed or elected by those persons.

• Marginal note:Where composition fails

  (2) Notwithstanding section 188, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of sections 169 and 171, the directors who, pursuant to the by-laws, are empowered to fill that vacancy shall do so forthwith.

• Marginal note:Class vacancy

  (3) Notwithstanding section 188, the by-laws of an association may provide that, where a class of persons has an exclusive right to appoint or elect one or more directors and a vacancy occurs among those directors,

  • (a) the remaining directors appointed or elected by those persons may fill the vacancy except a vacancy resulting from an increase in the number or minimum number of directors who are to be appointed or elected by that class or from a failure to appoint or elect the number or minimum number of directors who are to be appointed or elected by that class;

  • (b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of sections 169 and 171, the other directors may fill that vacancy; and

  • (c) if there are no such remaining directors and paragraph (b) does not apply, any person of that class of persons may call a meeting of the class for the purpose of filling the vacancy.

Marginal note:Unexpired term

184 Unless the by-laws otherwise provide, a director appointed or elected to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.

Meetings of the Board

Marginal note:Meetings required

• 185 (1) The directors shall meet at least four times during each financial year.

• Marginal note:Place for meetings

  (2) The directors may meet at any place unless the by-laws provide otherwise.

• Marginal note:Notice for meetings

  (3) The notice for the meetings must be given as required by the by-laws.

Marginal note:Notice of meeting

• 186 (1) A notice of a meeting of directors shall specify each matter referred to in section 202 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.

• Marginal note:Waiver of notice

  (2) A director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

• Marginal note:Adjourned meeting

  (3) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting was announced at the original meeting.

Marginal note:Quorum

• 187 (1) Subject to section 188, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

• Marginal note:Idem

  (2) The number of directors constituting a quorum at any meeting of directors or a committee of directors shall be

  • (a) a majority of the minimum number of directors required by this Act for the board of directors or a committee of directors; or

  • (b) such greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the association.

• Marginal note:Director continues to be present

  (3) Any director present at a meeting of directors who is not present at any particular time during the meeting for the purposes of subsection 207(1) shall be considered as being present for the purposes of this section.

Marginal note:Resident Canadian majority

• 188 (1) The directors of an association shall not transact business at a meeting of directors or of a committee of directors unless a majority of the directors present are resident Canadians.

• Marginal note:Exception

  (2) Notwithstanding subsection (1), the directors of an association may transact business at a meeting of directors or of a committee of directors without the required proportion of directors who are resident Canadians if

  • (a) a director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; and

  • (b) there would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.

Marginal note:Electronic meeting

• 189 (1) Subject to the by-laws of an association, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.

• Marginal note:Deemed present

  (2) A director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Act to be present at that meeting.

Marginal note:Resolution outside board meeting

• 189.1 (1) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.

• Marginal note:Filing directors’ resolution

  (2) A copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.

• Marginal note:Resolution outside committee meeting

  (3) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 199(3) or a resolution of the conduct review committee in carrying out its duties under subsection 200(3), is as valid as if it had been passed at a meeting of that committee.

• Marginal note:Filing committee resolution

  (4) A copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.

Marginal note:Dissent of director

• 190 (1) A director of an association who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unless

  • (a) the director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;

  • (b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

  • (c) the director sends the director’s dissent by registered mail or delivers it to the head office of the association immediately after the meeting is adjourned.

• Marginal note:Loss of right to dissent

  (2) A director of an association who votes for or consents to a resolution is not entitled to dissent under subsection (1).

• Marginal note:Dissent of absent director

  (3) A director of an association who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the director

  • (a) causes the director’s dissent to be placed with the minutes of the meeting; or

  • (b) sends the director’s dissent by registered mail or delivers it to the head office of the association.

Marginal note:Meeting required by Superintendent

• 191 (1) Where in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require an association to hold a meeting of directors of the association to consider the matters set out in the notice.

• Marginal note:Attendance of Superintendent

  (2) The Superintendent may attend and be heard at a meeting referred to in subsection (1).

By-laws

Marginal note:By-laws — members

• 192 (1) The members of an association may by special resolution make, amend or repeal any by-law that regulates the business or affairs of the association.

• Marginal note:By-laws — directors

  (2) Unless this Act otherwise provides, the directors of an association may by special resolution make a by-law or amend a by-law of the association but only if the by-law or amendment is not contrary to any by-law made by the members.

• Marginal note:Approval

  (3) The directors shall submit a by-law, or an amendment to a by-law, that is made under subsection (2) to the members at the next meeting of members, and the members may, by special resolution, confirm or amend the by-law or amendment.

• Marginal note:Where by-law not confirmed

  (4) Where a by-law made by the directors pursuant to subsection (2) is not confirmed, with or without amendments, pursuant to subsection (3), the by-law is repealed.

Marginal note:Proposal of by-law

193 A member may, in accordance with section 152, make a proposal to make, amend or repeal a by-law.

Marginal note:Effective date of by-law

• 194 (1) Unless this Act otherwise provides, a by-law, or an amendment to or a repeal of a by-law, made by the members, is effective from the later of the date of the resolution made under subsection 192(1) and the date specified in the by-law.

• Marginal note:Idem

  (2) Unless this Act otherwise provides, a by-law, or an amendment to a by-law, made by the directors is effective from the later of the date that the by-law is made or amended by the directors and the date specified in the by-law, until it is confirmed, confirmed as amended under subsection 192(3) or repealed under subsection 192(4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.

• Marginal note:Where by-law not approved

  (3) Where a by-law, or an amendment to a by-law, made by the directors pursuant to 192(2) is not submitted by the directors at a meeting as required under subsection 192(3), the by-law or amendment ceases to be effective from the date of that meeting.

• Marginal note:New resolution by directors

  (4) Where a by-law, or an amendment to a by-law, made by the directors pursuant to subsection 192(2) is repealed pursuant to subsection 192(4), or ceases to be effective pursuant to subsection (3), no subsequent resolution of directors to make or amend a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the members.

Marginal note:By-laws of former-Act association

195 Subject to section 196, where a by-law of the former-Act association is in effect on the coming into force of this section, the by-law continues in effect until amended or repealed, unless it is contrary to a provision of this Act.

Marginal note:By-laws re remuneration

• 196 (1) A by-law of an association respecting the remuneration of the directors of the association, as directors, that is in effect on the coming into force of this Part ceases to have effect on the day on which the first annual meeting of the association is held following the coming into force of this Part.

• Marginal note:Existing resolutions

  (2) Where the remuneration of directors of the former-Act association was, immediately prior to the coming into force of this Part, fixed by a resolution of the directors, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the members following the coming into force of this Part.

• Marginal note:Application of subsections 192(3) and (4) and section 194

  (3) Subsections 192(3) and (4) and section 194 apply in respect of a by-law referred to in this section as if it were a by-law made under section 192.

Marginal note:Deemed by-laws

• 197 (1) Any matter provided for in the incorporating instrument of the former-Act association on the coming into force of this Part that, under this Act, would be provided for in the by-laws of an association is deemed to be provided for in the by-laws of the association.

• Marginal note:By-law prevails

  (2) Where a by-law of the association made in accordance with sections 192 and 194 amends or repeals any matter referred to in subsection (1), the by-law prevails.

Committees of the Board

Marginal note:Committees

198 The directors of an association may appoint from their number, in addition to the committees referred to in subsection 167(2), such other committees as they deem necessary and, subject to section 202, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.

Marginal note:Audit committee

• 199 (1) The audit committee of an association shall consist of at least three directors.

• Marginal note:Membership

  (2) None of the members of the audit committee may be

  • (a) employees of the association or of a subsidiary of the association; or

  • (b) officers of the association or of a subsidiary of the association who are involved in the day-to-day operation of the association or subsidiary.

• Marginal note:Duties of audit committee

  (3) The audit committee of an association shall

  • (a) review the annual statement of the association before the annual statement is approved by the directors;

  • (b) review such returns of the association as the Superintendent may specify;

  • (c) require the management of the association to implement and maintain appropriate internal control procedures;

  • (c.1) review, evaluate and approve those procedures;

  • (d) review such investments and transactions that could adversely affect the well-being of the association as the auditor or any officer of the association may bring to the attention of the committee;

  • (e) meet with the auditor to discuss the annual statement and the returns and transactions referred to in this subsection; and

  • (f) meet with the chief internal auditor of the association, or the officer or employee of the association acting in a similar capacity, and with management of the association, to discuss the effectiveness of the internal control procedures established for the association.

• Marginal note:Report

  (4) In the case of the annual statement and returns of an association that under this Act must be approved by the directors of the association, the audit committee of the association shall report thereon to the directors before the approval is given.

• Marginal note:Required meeting of directors

  (5) The audit committee of an association may call a meeting of the directors of the association to consider any matter of concern to the committee.

Marginal note:Conduct review committee

• 200 (1) The conduct review committee of an association shall consist of at least three directors.

• Marginal note:Membership

  (2) None of the members of the conduct review committee may be

  • (a) employees of the association or of a subsidiary of the association; or

  • (b) officers of the association or of a subsidiary of the association who are involved in the day-to-day operation of the association or subsidiary.

• Marginal note:Duties of conduct review committee

  (3) The conduct review committee of an association shall

  • (a) require the management of the association to establish procedures for complying with Part XII;

  • (b) review those procedures and their effectiveness in ensuring that the association is complying with Part XII; and

  • (c) review the practices of the association to ensure that any transactions with related parties of the association that may have a material effect on the stability or solvency of the association are identified.

• Marginal note:Association report to Superintendent

  (4) An association shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).

• Marginal note:Committee report to directors

  (5) After each meeting of the conduct review committee of an association, the committee shall report to the directors of the association on matters reviewed by the committee.

• Marginal note:Directors report to Superintendent

  (6) Within ninety days after the end of each financial year, the directors of an association shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).

Directors and Officers — Authority

Marginal note:Appointment of officers

• 201 (1) The directors of an association may, subject to the by-laws, designate the offices of the association, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 202, to manage the business and affairs of the association.

• Marginal note:Directors as officers

  (2) Subject to section 171, a director of an association may be appointed to any office of the association.

• Marginal note:Two or more offices

  (3) Two or more offices of an association may be held by the same person.

Marginal note:Limits on power to delegate

202 The directors of an association may not delegate any of the following powers, namely, the power to

• (a) submit to the members or shareholders a question or matter requiring their approval;

• (b) admit members;

• (c) fill a vacancy among the directors or a committee of directors or in the office of auditor;

• (d) issue or cause to be issued securities except in the manner and on terms authorized by the directors;

• (e) declare a dividend on membership shares or shares, a payment of a bonus on any deposit or a patronage allocation;

• (f) authorize the redemption or other acquisition by the association pursuant to section 79 of membership shares or shares issued by the association;

• (g) authorize the payment of a commission on a share issue;

• (h) approve a management proxy circular;

• (i) except as provided in this Act, approve the annual statement of the association and any other financial statements issued by the association;

• (j) expel members; or

• (k) adopt or amend by-laws.

Marginal note:Remuneration of directors, officers and employees

• 203 (1) Subject to this section and the by-laws, the directors of an association may fix the remuneration of the directors, officers and employees of the association.

• Marginal note:By-law required

  (2) No remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution of the members.

Marginal note:Validity of acts

• 204 (1) An act of a director or an officer of an association is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.

• Marginal note:Idem

  (2) An act of the board of directors of an association is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.

Marginal note:Right to attend meetings

205 A director of an association is entitled to attend and to be heard at every meeting of members or shareholders of the association.

Conflicts of Interest

Marginal note:Disclosure of interest

• 206 (1) A director or an officer of an association who

  • (a) is a party to a material contract or proposed material contract with the association,

  • (b) is a director or an officer of any entity, other than a member, that is a party to a material contract or proposed material contract with the association, or

  • (c) has a material interest in any person who is a party to a material contract or proposed material contract with the association

  shall disclose in writing to the association or request to have entered in the minutes of the meetings of directors the nature and extent of that interest.

• Marginal note:Time of disclosure for director

  (2) The disclosure required by subsection (1) shall be made, in the case of a director,

  • (a) at the meeting of directors at which a proposed contract is first considered;

  • (b) if the director was not then interested in a proposed contract, at the first meeting after the director becomes so interested;

  • (c) if the director becomes interested after a contract is made, at the first meeting after the director becomes so interested; or

  • (d) if a person who is interested in a contract later becomes a director, at the first meeting after that person becomes a director.

• Marginal note:Time of disclosure for officer

  (3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,

  • (a) forthwith after the officer becomes aware that a proposed contract is to be considered or a contract has been considered at a meeting of directors;

  • (b) if the officer becomes interested after a contract is made, forthwith after the officer becomes so interested; or

  • (c) if a person who is interested in a contract later becomes an officer, forthwith after the person becomes an officer.

• Marginal note:Time of disclosure for director or officer

  (4) If a material contract or proposed material contract is one that, in the ordinary course of business of the association, would not require approval by the directors or members, a director or an officer referred to in subsection (1) shall disclose in writing to the association or request to have entered in the minutes of meetings of directors the nature and extent of the director’s or officer’s interest forthwith after the director or officer becomes aware of the contract or proposed contract.

Marginal note:Where director must abstain

• 207 (1) Where subsection 206(1) applies to a director in respect of a contract, the director shall not be present at any meeting of directors while the contract is being considered at the meeting or vote on any resolution to approve the contract unless the contract is

  • (a) an arrangement by way of security for money lent to or obligations undertaken by the director for the benefit of the association or a subsidiary of the association;

  • (b) a contract relating primarily to the director’s remuneration as a director or an officer, employee or agent of the association or a subsidiary of the association or an entity controlled by the association or an entity in which the association has a substantial investment;

  • (c) a contract for indemnity under section 216 or for insurance under section 217; or

  • (d) a contract with a subsidiary of the association.

• Marginal note:Ineligibility

  (2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.

• Marginal note:Validity of acts

  (3) An act of the board of directors of an association or of a committee of the board of directors is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.

Marginal note:Continuing disclosure

208 For the purposes of subsection 206(1), a general notice to the directors by a director or an officer declaring that the director or officer is a director or officer of an entity, or has a material interest in a person, and is to be regarded as interested in any contract made with that entity or person, is a sufficient declaration of interest in relation to any contract so made.

Marginal note:Avoidance standards

209 Where a material contract is entered into between an association and one or more of its directors or officers, or between an association and another entity of which a director or an officer of the association is a director or an officer or between an association and a person in which the director or officer has a material interest and disclosure is required by subsection 206(1), the contract is neither void nor voidable

• (a) by reason only of that relationship, or

• (b) by reason only that a director with an interest in the contract is present at or is counted to determine the presence of a quorum at the meeting of directors or the committee of directors that authorized the contract,

if the director or officer disclosed the interest in accordance with subsection 206(2), (3) or (4) or section 208 and the contract was approved by the directors or the members and it was reasonable and fair to the association at the time it was approved.

Marginal note:Application to court

210 Where a director or an officer of an association fails to disclose an interest in a material contract in accordance with sections 206 and 208, a court may, on the application of the association or a member of the association, set aside the contract on such terms as the court thinks fit.

Liability, Exculpation and Indemnification

Marginal note:Directors’ liability

• 211 (1) The directors of an association who vote for or consent to a resolution of the directors authorizing the issue of a membership share or share contrary to subsection 74(1) or the issue of subordinated indebtedness contrary to section 87 for a consideration other than money are jointly and severally liable to the association to make good any amount by which the consideration received is less than the fair equivalent of the money that the association would have received if the membership share, share or subordinated indebtedness had been issued for money on the date of the resolution.

• Marginal note:Further liabilities

  (2) The directors of an association who vote for or consent to a resolution of the directors authorizing

  • (a) a redemption or purchase of membership shares or shares contrary to section 79,

  • (b) a reduction of capital contrary to section 82,

  • (c) a payment of a dividend contrary to section 86,

  • (d) a payment of an indemnity contrary to section 216, or

  • (e) any transaction contrary to Part XII

  are jointly and severally liable to restore to the association any amounts so distributed or paid and not otherwise recovered by the association and any amounts in relation to any loss suffered by the association.

Marginal note:Contribution

• 212 (1) A director who has satisfied a judgment in relation to the director’s liability under section 211 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.

• Marginal note:Recovery

  (2) A director who is liable under section 211 is entitled to apply to a court for an order compelling a member, shareholder or other person to pay or deliver to the director

  • (a) any money or property that was paid or distributed to the member, shareholder or other person contrary to section 79, 82, 86 or 216; or

  • (b) an amount equal to the value of the loss suffered by the association as a result of any transaction contrary to Part XII.

• Marginal note:Court order

  (3) Where an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,

  • (a) order a member, shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the member, shareholder or other person contrary to section 79, 82, 86 or 216 or any amount referred to in paragraph (2)(b);

  • (b) order an association to return or issue membership shares or shares to a member or shareholder from whom the association has purchased, redeemed or otherwise acquired membership shares or shares; or

  • (c) make any further order it thinks fit.

Marginal note:Limitation

213 An action to enforce a liability imposed by section 211 may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Liability for wages

• 214 (1) Subject to subsections (2) and (3), the directors of an association are jointly and severally liable to each employee of the association for all debts not exceeding six months wages payable to the employee for services performed for the association while they are directors.

• Marginal note:Conditions precedent

  (2) A director is not liable under subsection (1) unless

  • (a) the association has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;

  • (b) the association has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or

  • (c) a winding-up order has been issued in respect of the association under the Winding-up and Restructuring Act and a claim for the debt has been allowed or proven within six months after the issue of the winding-up order.

• Marginal note:Limitations

  (3) A director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.

• Marginal note:Amount due after execution

  (4) Where execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.

• Marginal note:Subrogation of director

  (5) Where a director of an association pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or winding-up proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.

• Marginal note:Contribution entitlement

  (6) A director of an association who has satisfied a claim under this section is entitled to a contribution from the other directors of the association who are liable for the claim.

Marginal note:Reliance on statement

215 A director, an officer or an employee of an association is not liable under subsection 168(1) or (2) or section 211 or 214 or subsection 430(1) if the director, officer or employee relies in good faith on

• (a) financial statements of the association represented to the director, officer or employee by an officer of the association or in a written report of the auditor of the association fairly to reflect the financial condition of the association; or

• (b) a report of an accountant, lawyer, notary or other professional person whose profession lends credibility to a statement made by the professional person.

Marginal note:Indemnification of directors and officers

• 216 (1) Except in respect of an action by or on behalf of the association to procure a judgment in its favour, an association may indemnify

  • (a) a director or an officer of the association,

  • (b) a former director or officer of the association, or

  • (c) any person who acts or acted at the association’s request as a director or an officer of an entity of which the association is or was a member, shareholder or creditor

  against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred by the person in respect of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a person referred to in any of paragraphs (a) to (c), if

  • (d) the director, officer or person acted honestly and in good faith with a view to the best interests of the association, and

  • (e) in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, the director, officer or person had reasonable grounds for believing that the impugned conduct was lawful.

• Marginal note:Indemnification in derivative action

  (2) An association may, with the approval of a court, indemnify a person referred to in subsection (1), in respect of an action by or on behalf of the association or entity to procure a judgment in its favour to which the person is made a party by reason of being or having been a director or an officer of the association or entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the person in connection with that action if the person fulfils the conditions set out in paragraphs (1)(d) and (e).

• Marginal note:Right to indemnity

  (3) Notwithstanding anything in this section, a person referred to in subsection (1) is entitled to indemnity from the association in respect of all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the person in connection with the defence of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a director or an officer of the association or an entity, if the person seeking indemnity

  • (a) was substantially successful on the merits in the defence of the action or proceedings; and

  • (b) fulfils the conditions set out in paragraphs (1)(d) and (e).

• Marginal note:Heirs

  (4) An association may, to the extent referred to in subsections (1) to (3) in respect of the person, indemnify the heirs or personal representatives of any person the association may indemnify pursuant to subsections (1) to (3).

Marginal note:Directors’ and officers’ insurance

217 An association may purchase and maintain insurance for the benefit of any person referred to in section 216 against any liability incurred by the person

• (a) in the capacity of a director or an officer of the association, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the association; or

• (b) in the capacity of a director or an officer of another entity where the person acts or acted in that capacity at the association’s request, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.

Marginal note:Application to court for indemnification

• 218 (1) An association or a person referred to in section 216 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.

• Marginal note:Notice to Superintendent

  (2) An applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.

• Marginal note:Other notice

  (3) On an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.

Fundamental Changes

Amendments

Marginal note:Incorporating instrument

219 On the application of an association duly authorized by special resolution of the members, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the association’s incorporating instrument.

Marginal note:Letters patent to amend

• 220 (1) On receipt of an application referred to in section 219, the Minister may issue letters patent to effect the proposal.

• Marginal note:Effect of letters patent

  (2) Letters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.

Marginal note:By-laws

• 221 (1) The members of an association may, by special resolution, make, amend or repeal any by-laws, in the manner set out in subsection (2) and sections 222 to 225, to

  • (a) change the maximum number, if any, of shares of any class that the association is authorized to issue;

  • (b) create new classes of shares;

  • (c) change the designation of any or all of the association’s shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of any or all of the association’s shares, whether issued or unissued;

  • (d) change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;

  • (e) divide a class of shares, whether issued or unissued, into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;

  • (f) authorize the directors to divide any class of unissued shares into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;

  • (g) authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;

  • (h) revoke, diminish or enlarge any authority conferred under paragraphs (f) and (g);

  • (i) increase or decrease the number of directors or the minimum or maximum number of directors, subject to subsection 169(1);

  • (i.1) change the name of the association; or

  • (j) change the place in Canada where the head office of the association is to be situated.

• Marginal note:Effective date of by-law

  (2) A by-law, or an amendment to or a repeal of a by-law, made under paragraph (1)(i.1) is not effective until it is approved by the Superintendent.

Marginal note:Class vote

• 222 (1) The holders of shares of a class or, subject to subsection (2), of a series are, unless the by-laws otherwise provide in the case of an amendment to the by-laws referred to in paragraph (a), (b) or (e), entitled to vote separately as a class or series on a proposal to amend the by-laws to

  • (a) increase or decrease any maximum number of authorized shares of that class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of that class;

  • (b) effect an exchange, reclassification or cancellation of all or part of the shares of a class;

  • (c) add, change or remove the rights, privileges, restrictions or conditions attached to the shares of a class and, without limiting the generality of the foregoing,

    • (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 the association, or sinking fund provisions;

  • (d) increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class;

  • (e) create a new class of shares equal or superior to the shares of that class;

  • (f) make any class of shares having rights or privileges inferior to the shares of that class equal or superior to the shares of that class; or

  • (g) effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of that class.

• Marginal note:Right limited

  (2) The holders of a series of shares of a class are entitled to vote separately as a series under subsection (1) if that series is affected by an addition or amendment to the by-laws in a manner different from other shares of the same class.

• Marginal note:Right to vote

  (3) Subsections (1) and (2) apply whether or not the shares of a class otherwise carry the right to vote.

Marginal note:Separate resolutions

223 A proposed addition or amendment to the by-laws referred to in subsection 222(1) is adopted when the holders of the shares of each class or series entitled to vote separately thereon as a class or series have approved the addition or amendment by a special resolution.

Marginal note:Proposal to amend

• 224 (1) Subject to subsection (2), a member may, in accordance with sections 152 and 153, make a proposal to make an application referred to in section 219 or to make, amend or repeal the by-laws referred to in subsection 221(1) of the association.

• Marginal note:Notice of amendment

  (2) Notice of a meeting at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of an association is to be considered must set out the proposal.

Marginal note:Rights preserved

225 No amendment to the incorporating instrument or by-laws of an association affects an existing cause of action or claim or liability to prosecution in favour of or against the association or its directors or officers, or any civil, criminal or administrative action or proceeding to which the association or any of its directors or officers are a party.

Amalgamation

Marginal note:Application to amalgamate

226 On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including associations, the Minister may issue letters patent amalgamating and continuing the applicants as one association if the proposed capital and corporate structure of the amalgamated association meets the requirements for an association to be incorporated under this Act.

Marginal note:Amalgamation agreement

• 227 (1) Each applicant proposing to amalgamate shall enter into an amalgamation agreement.

• Marginal note:Contents of agreement

  (2) Every amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,

  • (a) the name of the amalgamated association and the place in Canada where its head office is to be situated;

  • (b) the name and place of ordinary residence of each proposed director of the amalgamated association;

  • (c) the manner in which the membership shares of each association are to be converted into membership shares in the amalgamated association;

  • (d) the manner in which the shares of each applicant are to be converted into shares or other securities of the amalgamated association;

  • (e) if any membership shares of an applicant are not to be converted into membership shares of the amalgamated association the amount of money or securities that the members are to receive in addition to or in lieu of membership shares of the amalgamated association;

  • (f) if any shares of an applicant are not to be converted into shares or other securities of the amalgamated association, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities of the amalgamated association;

  • (g) the manner of payment of money in lieu of the issue of fractional shares of the amalgamated association or of any other body corporate that are to be issued in the amalgamation;

  • (h) the proposed by-laws of the amalgamated association;

  • (i) details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated association; and

  • (j) the proposed effective date of the amalgamation.

• Marginal note:Cross ownership of shares

  (3) If membership shares or shares of one of the applicants are held by or on behalf of another of the applicants, other than membership shares or shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those membership shares or shares when the amalgamation becomes effective without any repayment of capital in respect thereof, and no provision shall be made in the agreement for the conversion of those membership shares or shares into membership shares or shares of the amalgamated association.

Marginal note:Approval of agreement by Minister

228 An amalgamation agreement shall be submitted to the Minister for approval and any approval of such an agreement pursuant to subsection 229(4) by the members and the holders of any class or series of shares of an applicant is invalid unless, prior to the date of the approval, the Minister has approved the agreement in writing.

Marginal note:Approval

• 229 (1) The directors of each applicant shall submit an amalgamation agreement for approval to a meeting of the members or shareholders of the applicant association or subsidiary of which they are directors and, subject to subsection (3), to the holders of each class or series of such shares.

• Marginal note:Right to vote

  (2) Each share of an applicant carries the right to vote in respect of an amalgamation whether or not the share otherwise carries the right to vote.

• Marginal note:Class vote

  (3) The holders of shares of a class or series of shares of an applicant are entitled to vote separately as a class or series in respect of an amalgamation if the amalgamation agreement contains a provision that, if contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.

• Marginal note:Special resolution

  (4) Subject to subsection (3), an amalgamation agreement is approved when the members or shareholders of each applicant association or subsidiary have approved the amalgamation by special resolution.

• Marginal note:Termination

  (5) An amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant notwithstanding that the agreement has been approved by the members or shareholders of all or any of the applicant associations or subsidiaries.

Marginal note:Vertical short-form amalgamation

• 230 (1) An association may, without complying with sections 227 to 229, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the association and

  • (a) the amalgamation is approved by a resolution of the directors of the association and of each amalgamating subsidiary; and

  • (b) the resolutions provide that

    • (i) the shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,

    • (ii) the letters patent of amalgamation and the by-laws of the amalgamated association will be the same as the incorporating instrument and the by-laws of the amalgamating association that is the holding body corporate, and

    • (iii) no securities will be issued by the amalgamated association in connection with the amalgamation.

• Marginal note:Horizontal short-form amalgamation

  (2) Two or more bodies corporate incorporated by or under an Act of Parliament may amalgamate and continue as an association without complying with sections 227 to 229 if

  • (a) at least one of the applicants is an association;

  • (b) the applicants are all wholly-owned subsidiaries of the same holding body corporate;

  • (c) the amalgamation is approved by a resolution of the directors of each of the applicants; and

  • (d) the resolutions provide that

    • (i) the shares of all applicants, except those of one of the applicants that is an association, will be cancelled without any repayment of capital in respect of those shares,

    • (ii) the letters patent of amalgamation and the by-laws of the amalgamated association will be the same as the incorporating instrument and the by-laws of the amalgamating association whose shares are not cancelled, and

    • (iii) the stated capital of the amalgamating association and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating association whose shares are not cancelled.

Marginal note:Joint application to Minister

• 231 (1) Subject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 229(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 229(4) or the approval of the directors in accordance with section 230, jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one association.

• Marginal note:Conditions precedent to application

  (2) No application for the issue of letters patent under subsection (1) may be made unless

  • (a) notice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; and

  • (b) the application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.

• Marginal note:Application of sections 24 to 26

  (3) If two or more bodies corporate, none of which is an association, apply for letters patent under subsection (1), sections 24 to 26 apply in respect of the application with any modifications that the circumstances require.

• Marginal note:Matters for consideration

  (4) Before issuing letters patent of amalgamation continuing the applicants as one association, the Minister shall take into account all matters that the Minister considers relevant to the application, including

  • (a) the sources of continuing financial support for the amalgamated association;

  • (b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated association;

  • (c) the business record and experience of the applicants;

  • (d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

  • (e) whether the amalgamated association will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

  • (f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

  • (g) whether the association is to be operated in accordance with cooperative principles; and

  • (h) the best interests of the financial system in Canada and, in particular, the cooperative financial system in Canada.

Marginal note:Issue of letters patent

• 232 (1) Where an application has been made to the Minister in accordance with section 231, the Minister may issue letters patent of amalgamation continuing the applicants as one association.

• Marginal note:Letters patent

  (2) Where letters patent are issued pursuant to this section, section 28 applies with such modifications as the circumstances require in respect of the issue of the letters patent.

• Marginal note:Publication of notice

  (3) The Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).

Marginal note:Court enforcement

• 232.1 (1) If an association or any director, officer, employee or agent of an association is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the association or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

• Marginal note:Appeal

  (2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

Marginal note:Effect of letters patent

• 233 (1) On the day provided for in the letters patent issued under section 232,

  • (a) the amalgamation of the applicants and their continuance as one association becomes effective;

  • (b) the property of each applicant continues to be the property of the amalgamated association;

  • (c) the amalgamated association continues to be liable for the obligations of each applicant;

  • (d) any existing cause of action, claim or liability to prosecution is unaffected;

  • (e) any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated association;

  • (f) any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated association;

  • (g) if any director or officer of an applicant continues as a director or officer of the amalgamated association, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated association; and

  • (h) the letters patent of amalgamation are the incorporating instrument of the amalgamated association.

• Marginal note:Minutes

  (2) Any deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated association.

• Marginal note:Transitional

  (3) Notwithstanding anything in this Act or the regulations, the Governor in Council may, by order, on the recommendation of the Minister, grant to an association in respect of which the letters patent were issued pursuant to subsection 232(1) permission to

  • (a) engage in a business activity specified in the order that an association is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;

  • (b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

  • (c) [Repealed, 1994, c. 47, s. 52]

  • (d) hold assets that an association is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;

  • (e) acquire and hold assets that an association is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets; and

  • (f) maintain outside Canada any records or registers required by this Act to be maintained in Canada and maintain and process, outside Canada, information and data relating to the preparation and maintenance of such records or registers.

• Marginal note:Duration of exceptions

  (4) The permission granted under any of paragraphs (3)(a) to (f) shall be expressed to be granted for a period specified in the order not exceeding

  • (a) with respect to any matter described in paragraph (3)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

  • (b) with respect to any matter described in paragraph (3)(b), ten years; and

  • (c) with respect to any matter described in any of paragraphs (3)(d) to (f), two years.

• Marginal note:Renewal

  (5) Subject to subsection (6), the Governor in Council may, by order, renew a permission granted by order under subsection (3) with respect to any matter described in any of paragraphs (3)(b) to (e) for such further period or periods as the Governor in Council deems necessary.

• Marginal note:Limitation

  (6) The Governor in Council shall not grant to an association any permission

  • (a) with respect to matters described in paragraph (3)(b) that purports to be effective more than ten years after the date of the approval for the association to commence and carry on business unless the Governor in Council is satisfied on the basis of evidence on oath provided by an officer of the association that the association will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

  • (b) with respect to matters described in paragraphs (3)(d) and (e) that purports to be effective more than ten years after the date of issue of the letters patent.

Transfer of Business

Marginal note:Sale by association

• 233.1 (1) An association may sell all or substantially all of its assets to a financial institution incorporated by or under an Act of Parliament, a central cooperative credit society for which an order has been made under subsection 473(1), a bank holding company or an authorized foreign bank in respect of its business in Canada if the purchasing financial institution, central cooperative credit society, bank holding company or authorized foreign bank assumes all or substantially all of the liabilities of the association.

• Marginal note:Sale agreement

  (2) An agreement of purchase and sale (in subsection (3), section 233.2, subsections 233.3(1) and (4) and section 233.5 referred to as a “sale agreement”) must set out the terms of, and means of effecting, the sale of assets referred to in subsection (1).

• Marginal note:Consideration

  (3) Despite anything in this Act, the consideration for a sale referred to in subsection (1) may be cash or fully paid securities of the purchasing financial institution, central cooperative credit society for which an order has been made under subsection 473(1), bank holding company or authorized foreign bank or in part cash and in part fully paid securities of the purchasing financial institution, central cooperative credit society, bank holding company or authorized foreign bank or any other consideration that is provided for in the sale agreement.

• Meaning of authorized foreign bank and bank holding company

  (4) In this section, authorized foreign bank and bank holding company have the meaning assigned to those expressions by section 2 of the Bank Act.

Marginal note:Agreement to Minister

233.2 A sale agreement must be submitted to the Minister before the sending of the sale agreement to members and shareholders of the selling association under subsection 233.3(1).

Marginal note:Approval

• 233.3 (1) The directors of a selling association shall submit a sale agreement for approval to a meeting of the members, and to a meeting of shareholders, of the association and, subject to subsection (3), to the holders of each class or series of shares of the association.

• Marginal note:Right to vote

  (2) Each share of a selling association carries the right to vote in respect of a sale referred to in subsection 233.1(1) whether or not the share otherwise carries the right to vote.

• Marginal note:Class vote

  (3) The holders of shares of a class or series of shares of a selling association are entitled to vote separately as a class or series in respect of a sale referred to in subsection 233.1(1) only if the shares of the class or series are affected by the sale in a manner different from the shares of another class or series.

• Marginal note:Special resolution

  (4) A sale agreement is approved when the members and shareholders, and the holders of each class or series of shares entitled to vote separately as a class or series under subsection (3), of the selling association have approved the sale by special resolution.

Marginal note:Abandoning sale

233.4 If a special resolution approving a sale under subsection 233.3(4) so states, the directors of a selling association may, subject to the rights of third parties, abandon the sale without further approval of the members and shareholders.

Marginal note:Application to Minister

• 233.5 (1) Subject to subsection (2), unless a sale agreement is abandoned in accordance with section 233.4, the selling association shall, within three months after the approval of the sale agreement in accordance with subsection 233.3(4), apply to the Minister for approval of the sale agreement.

• Marginal note:Conditions precedent to application

  (2) No application for approval under subsection (1) may be made unless

  • (a) a notice of intention to make the application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the selling association is situated; and

  • (b) the application is supported by satisfactory evidence that the selling association has complied with the requirements of sections 233.1 to 233.4 and this section.

• Marginal note:Approval by Minister

  (3) A sale agreement has no force or effect until it has been approved by the Minister.

• Marginal note:Approval by Minister

  (4) If an application has been made to the Minister in accordance with subsections (1) and (2), the Minister may approve the sale agreement to which the application relates.

Corporate Records

Head Office and Corporate Records

Marginal note:Head office

• 234 (1) An association shall at all times have a head office in the place within Canada specified in its incorporating instrument or by-laws.

• Marginal note:Change of head office

  (2) The directors of an association may change the address of the head office within the place specified in the incorporating instrument or by-laws.

• Marginal note:Notice of change of address

  (3) An association shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.

Marginal note:Records

• 235 (1) An association shall prepare and maintain records containing

  • (a) its incorporating instrument and the by-laws of the association and all amendments thereto;

  • (b) minutes of meetings and resolutions of members and shareholders;

  • (c) the information referred to in paragraphs 432(1)(a) and (c) to (g) contained in all returns provided to the Superintendent pursuant to section 432;

  • (d) particulars of any authorizations, conditions and limitations established by the Superintendent pursuant to section 61 or subsection 62(1) or that are from time to time applicable to the association; and

  • (e) written approvals of the Minister and the Superintendent relating to special resolutions of members and shareholders and changes in the by-laws of the association.

• Marginal note:Additional records

  (2) In addition to the records described in subsection (1), an association shall prepare and maintain adequate

  • (a) corporate accounting records;

  • (b) records containing minutes of meetings and resolutions of the directors and any committee thereof; and

  • (c) records showing, for each member and customer of the association, on a daily basis, particulars of the transactions between the association and that member and customer and the balance owing to or by the association in respect of that member or customer.

• Marginal note:Amalgamated and former-Act associations

  (3) For the purposes of paragraph (1)(b) and subsection (2),

  • (a) in the case of a body corporate amalgamated and continued as an association under this Act, “records” includes similar records required by law to be maintained by the body corporate before it was so amalgamated; and

  • (b) in the case of the former-Act association, “records” includes similar records required by law to be maintained by the association before the coming into force of this section.

Marginal note:Place of records

• 236 (1) The records described in section 235 shall be kept at the head office of the association or at such other place in Canada as the directors think fit.

• Marginal note:Notice of place of records

  (2) Where any of the records described in section 235 are not kept at the head office of an association, the association shall notify the Superintendent of the place where the records are kept.

• Marginal note:Inspection

  (3) The records described in section 235, other than those described in paragraph 235(2)(c), shall at all reasonable times be open to inspection by the directors.

• Marginal note:Access to association records

  (4) Members, shareholders and creditors of an association and their personal representatives may examine the records referred to in subsection 235(1) during the usual business hours of the association, and may take extracts therefrom, free of charge, or have copies made thereof on payment of a reasonable fee and, where the association is a distributing association within the meaning of subsection 260(1), any other person may, on payment of a reasonable fee, examine such records and take extracts therefrom or copies thereof.

• Marginal note:Electronic access

  (4.1) An association may make the information contained in records referred to in subsection 235(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

• Marginal note:Copies of by-laws

  (5) Every member and every shareholder of an association is entitled, on request made not more frequently than once in each calendar year, to receive, free of charge, one copy of the by-laws of the association.

Marginal note:Lists

• 237 (1) A person who is entitled to a basic list of members or shareholders of an association (in this section referred to as the “applicant”) may request the association to furnish the applicant with a basic list within ten days after receipt by the association of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the association shall comply with the request.

• Marginal note:Affidavit and contents

  (2) A request under subsection (1) must be accompanied by an affidavit containing

  • (a) the name and address of the applicant,

  • (b) the name and address for service of the entity, if the applicant is an entity, and

  • (c) an undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 239,

  and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.

• Marginal note:Entitlement

  (3) Every member, shareholder or creditor of an association or the personal representative of a member, shareholder or creditor of an association is entitled to a basic list of members or shareholders of the association, but, if the association is a distributing association within the meaning of subsection 260(1), any person is entitled to a basic list of members or shareholders of the association on request therefor.

• Marginal note:Basic list

  (4) A basic list of members or shareholders of an association consists of a list of members or shareholders that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets out

  • (a) the names of the members or shareholders of the association;

  • (b) the voting rights of each member or the number of shares owned by each shareholder; and

  • (c) the address of each member or shareholder as shown in the records of the association.

• Marginal note:Supplemental lists

  (5) A person requiring an association to supply a basic list of members or shareholders may, if the person states in the accompanying affidavit that supplemental lists are required, request the association or its agent, on payment of a reasonable fee, to provide supplemental lists of members or shareholders setting out any changes from the basic list in the names and addresses of the members or shareholders and the voting rights of each member or the number of shares owned by each shareholder for each business day following the date to which the basic list is made up.

• Marginal note:When supplemental lists to be furnished

  (6) An association or its agent shall provide a supplemental list of members or shareholders required under subsection (5)

  • (a) within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; and

  • (b) within ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.

Marginal note:Option holders

238 A person requiring an association to supply a basic list or a supplemental list of members or shareholders may also require the association to include in that list the name and address of any known holder of an option or right to acquire membership shares or shares of the association.

Marginal note:Use of list

239 A list of members or shareholders obtained under section 237 shall not be used by any person except in connection with

• (a) an effort to influence the voting of members or shareholders of the association;

• (b) an offer to acquire shares of the association; or

• (c) any other matter relating to the affairs of the association.

Marginal note:Form of records

• 240 (1) A register or other record required or authorized by this Act to be prepared and maintained by an association

  • (a) may be in a bound or loose-leaf form or in a photographic film form; or

  • (b) may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

• Marginal note:Conversion of records

  (2) Registers and records maintained in one form may be converted to any other form.

• Marginal note:Destruction of converted records

  (3) Notwithstanding section 243, an association may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.

Marginal note:Protection of records

241 An association and its agents shall take reasonable precautions to

• (a) prevent loss or destruction of,

• (b) prevent falsification of entries in,

• (c) facilitate detection and correction of inaccuracies in, and

• (d) ensure that unauthorized persons do not have access to or use of information in

the registers and records required or authorized by this Act to be prepared and maintained.

Marginal note:Location and processing of information

• 242 (1) Subject to subsection (3), an association shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in section 235 unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the association from the application of this section.

• Marginal note:Copies

  (2) Subject to subsections (3) and (4), an association may maintain copies of the records referred to in subsection (1) outside Canada and may further process outside Canada any information or data relating to those copies.

• Marginal note:Information for Superintendent

  (3) Where an association, in accordance with subsection (2), maintains outside Canada copies of any records referred to in subsection (1) or further processes information or data relating to those copies outside Canada, the association shall so inform the Superintendent and provide the Superintendent with a list of those copies maintained outside Canada and a description of the further processing of information or data relating to those copies outside Canada and such other information as the Superintendent may require from time to time.

• Marginal note:Processing information in Canada

  (4) If the Superintendent is at any time of the opinion that the maintenance outside Canada of any copies referred to in subsection (3), or the further processing of information or data relating to any such copies outside Canada, is incompatible with the fulfilment of the Superintendent’s responsibilities under this Act or the Superintendent is advised by the Minister that, in the opinion of the Minister, such maintenance or further processing is not in the national interest, the Superintendent shall direct the association to maintain those copies, or to further process information or data relating to those copies, in Canada.

• Marginal note:Association to comply

  (5) An association shall forthwith comply with any direction issued under subsection (4).

• Marginal note:Guidelines

  (6) The Superintendent shall issue guidelines respecting the circumstances under which an exemption referred to in subsection (1) may be available.

Marginal note:Retention of records

243 An association shall retain

• (a) the members register;

• (b) the records of the association referred to in subsection 235(1);

• (c) any record of the association referred to in paragraph 235(2)(a) or (b); and

• (d) the central securities register.

Marginal note:Regulations

244 The Governor in Council may make regulations respecting the records, papers and documents to be retained by an association and the length of time those records, papers and documents are to be retained.

Securities Registers

Marginal note:Central securities register

• 245 (1) An association shall maintain a central securities register in which it shall record the securities, within the meaning of section 88, issued by it in registered form, showing in respect of each class or series of securities

  • (a) the names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;

  • (b) the number of securities held by each security holder; and

  • (c) the date and particulars of the issue and transfer of each security.

• Marginal note:Former-Act and amalgamated associations

  (2) For the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by the former-Act association, or by a body corporate amalgamated and continued as an association under this Act, before the coming into force of this section or the amalgamation, as the case may be.

• Marginal note:Application of certain provisions

  (3) Subsections 236(4) and (4.1) and sections 237 and 239 to 242 apply, with any modifications that the circumstances require, in respect of a central securities register.

Marginal note:Agents

246 An association may appoint an agent to maintain its central securities register.

Marginal note:Location of central securities register

247 The central securities register of an association shall be maintained by the association at its head office or at any other place in Canada designated by the directors of the association.

Marginal note:Effect of registration

248 Registration of the issue or transfer of a security in the central securities register is complete and valid registration for all purposes.

Marginal note:Destruction of certificates

249 An association, its agent or a trustee within the meaning of section 278 is not required to produce

• (a) a cancelled security certificate in registered form or an instrument referred to in subsection 77(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;

• (b) a cancelled security certificate in bearer form or an instrument referred to in subsection 77(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or

• (c) an instrument referred to in subsection 77(1) or a like instrument, irrespective of its form, after the date of its expiration.

Corporate Name and Seal

Marginal note:Publication of name

250 An association shall set out its name in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the association.

Marginal note:Corporate seal

251 An instrument or agreement executed on behalf of an association by a director, an officer or an agent of the association is not invalid merely because a corporate seal is not affixed thereto.

252 to 259 [Repealed, 1997, c. 15, s. 130]

Insiders

Interpretation

Marginal note:Definitions

• 260 (1) In this section and sections 261 to 267,

  business combination

  regroupement d’entreprises

  business combination means an acquisition of all or substantially all the assets of one body corporate by another body corporate or an amalgamation of two or more bodies corporate; (regroupement d’entreprises)

  call

  option d’achat

  call means an option, transferable by delivery, to demand delivery of a specified number or amount of shares at a fixed price within a specified time but does not include an option or right to acquire shares of the body corporate that granted the option or right to acquire; (option d’achat)

  distributing association

  association ayant fait appel au public

  distributing association means an association, any of the issued securities of which are or were part of a distribution to the public and remain outstanding and are held by more than one person; (association ayant fait appel au public)

  insider

  initié

  insider means, except in section 266 and subsection 267(1),

  • (a) a director or an officer of a distributing association,

  • (b) a member who holds more than one per cent of the membership shares of a distributing association,

  • (c) a central cooperative credit society that is a member of a distributing association and any other member designated by the Superintendant,

  • (d) a distributing association that purchases or otherwise acquires, except by means of a donation or redemption, shares issued by it, or

  • (e) a person who beneficially owns more than 10 per cent of the shares of a distributing association or who exercises control or direction over more than 10 per cent of the votes attached to shares of a distributing association, excluding shares owned by a securities underwriter under an underwriting agreement while those shares are in the course of a distribution to the public; (initié)

  officer

  dirigeant d’une association

  officer, in relation to an association, means

  • (a) an officer as defined in paragraph (a) of the definition “officer” in section 2, or

  • (b) any natural person who performs functions for the association similar to those performed by a person referred to in paragraph (a) of the definition “officer” in section 2; (dirigeant d’une association)

  put

  option de vente

  put means an option, transferable by delivery, to deliver a specified number or amount of shares at a fixed price within a specified time; (option de vente)

  share

  action

  share means a voting share and includes

  • (a) a security currently convertible into a voting share, and

  • (b) a currently exercisable option or a right to acquire a voting share or a security referred to in paragraph (a),

  but does not include a membership share. (action)

• Marginal note:Control

  (2) For the purposes of this section and sections 261 to 267, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(e).

• Marginal note:Deemed insiders and beneficial owners

  (3) For the purposes of this section and sections 261 to 267,

  • (a) a director or an officer of a body corporate that is an insider of a distributing association is deemed to be an insider of the distributing association;

  • (b) a director or an officer of a body corporate that is a subsidiary of a distributing association is deemed to be an insider of the distributing association;

  • (c) a person is deemed to beneficially own shares beneficially owned by a body corporate controlled directly or indirectly by that person;

  • (d) a body corporate is deemed to beneficially own shares beneficially owned by its affiliates; and

  • (e) the acquisition or disposition by an insider of an option or right to acquire a share is deemed to be a change in the beneficial ownership of the share to which the option or right to acquire relates.

• Marginal note:Becoming an insider

  (4) For the purposes of this section and sections 261 to 267,

  • (a) if a body corporate becomes an insider of a distributing association or enters into a business combination with a distributing association, or

  • (b) if a distributing association becomes an insider of a body corporate,

  every director or officer of the body corporate and every shareholder of the body corporate who is a person referred to in paragraph (e) of the definition “insider” in subsection (1) is deemed to have been an insider of the distributing association for the previous six months or for such shorter period as the director, officer or shareholder was a director, officer or shareholder of the body corporate.

Insider Reporting

Marginal note:First insider report

• 261 (1) An insider shall send to the Superintendent an insider report in prescribed form not later than ten days after the later of

  • (a) the end of the month in which the person became an insider, and

  • (b) the end of the month in which regulations prescribing the form of an insider report come into force.

• (2) [Repealed, 1997, c. 15, s. 131]

• Marginal note:Constructive insider

  (3) A person who is deemed to have been an insider under subsection 260(4) shall, not later than ten days after

  • (a) the end of the month in which the person is deemed to have become an insider, or

  • (b) the end of the month in which regulations prescribing the form of an insider report come into force,

  whichever is later, send to the Superintendent, in prescribed form and for the period in respect of which the person is deemed to have been an insider, the insider report that the person would have been required to send under this section had the person been otherwise an insider for that period.

Marginal note:Subsequent insider report

262 An insider whose interest in securities of a distributing association changes from that shown or required to be shown in the last insider report sent or required to be sent by the insider shall, within ten days after the end of the month in which the change takes place, send to the Superintendent an insider report in prescribed form.

Marginal note:Exemption by regulation

262.1 Under prescribed circumstances, an insider is exempt from any of the requirements of section 261 or 262.

Marginal note:One insider report

• 263 (1) An insider report of a person that includes securities deemed to be beneficially owned by that person is deemed to be an insider report of a body corporate referred to in paragraph 260(3)(c) and the body corporate is not required to send a separate insider report.

• Marginal note:Deemed report

  (2) An insider report of a body corporate that includes securities deemed to be beneficially owned by the body corporate is deemed to be an insider report of an affiliate referred to in paragraph 260(3)(d) and the affiliate is not required to send a separate insider report.

• Marginal note:Contents

  (3) An insider report of a person that includes securities deemed to be beneficially owned by that person pursuant to paragraph 260(3)(c) or (d) shall disclose separately

  • (a) the number of securities owned by a body corporate; and

  • (b) the name of the body corporate.

Marginal note:Exemption by Superintendent

• 264 (1) On an application by or on behalf of an insider, the Superintendent may, in writing, on such terms as the Superintendent thinks fit, exempt the insider from any of the requirements of sections 261 to 263, and the exemption may be given retroactive effect.

• Marginal note:Publication

  (2) The Superintendent shall summarize or cause to be summarized in a periodical available to the public the information contained in insider reports sent to the Superintendent under sections 261 to 263 and the particulars of exemptions granted under subsection (1) together with the reasons therefor.

Insider Trading

Marginal note:Short selling prohibited

• 265 (1) An insider shall not knowingly sell, directly or indirectly, a share of the distributing association or any of its affiliates if the insider does not own or has not fully paid for the share to be sold.

• Marginal note:Exception for convertible shares

  (2) Notwithstanding subsection (1), an insider may sell a share that the insider does not own if the insider owns another share convertible into the share sold or an option or right to acquire the share sold and, within ten days after the sale, the insider

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

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

• Marginal note:Prohibited calls and puts

  (3) An insider shall not, directly or indirectly, buy or sell a call or put in respect of a share of the association or any of its affiliates.

Civil Remedies

Marginal note:Extended meaning of “insider”

• 266 (1) In subsections (2) and 267(1), “insider” means, with respect to an association,

  • (a) the association;

  • (b) an affiliate of the association;

  • (c) a director or officer of the association;

  • (d) a member who holds more than one per cent of the membership shares of the association;

  • (e) a central cooperative credit society that is a member of the association and any other member of the association designated by the Superintendent;

  • (f) a person who beneficially owns more than 10 per cent of the shares of the association or who exercises control or direction over more than 10 per cent of the votes attached to the shares of the association;

  • (g) a person employed or retained by the association; and

  • (h) a person who receives specific confidential information from a person described in this section, including a person described in this paragraph, and who has knowledge that the person giving the information is a person described in this section, including a person described in this paragraph.

• Marginal note:Deemed insider

  (2) For the purposes of subsection 267(1),

  • (a) if a body corporate becomes an insider of an association or enters into a business combination with an association, or

  • (b) if an association becomes an insider of a body corporate,

  every director or officer of the body corporate is deemed to have been an insider of the association for the previous six months or for such shorter period as the director or officer was a director or officer of the body corporate.