text:
Consolidated Acts: C.C.S.M. | Municipal | Private
The Cooperatives Act
This version is current as of January 14, 2022.
It has been in effect since May 20, 2021.
Show previous versions Hide previous versions
12 May 2021 to 19 May 2021 — Bilingual version (PDF)
8 Apr 2020 to 11 May 2021 — Bilingual version (PDF)
3 Jun 2019 to 7 Apr 2020 — Bilingual version (PDF)
2 Jun 2017 to 2 Jun 2019 — Bilingual version (PDF)
1 Sep 2014 to 1 Jun 2017 — Bilingual version (PDF)
14 Jun 2012 to 31 Aug 2014 — Bilingual version (PDF)
16 Jun 2011 to 13 Jun 2012
1 Nov 2009 to 16 Jun 2010
11 Jun 2009 to 31 Oct 2009
Note: Earlier consolidated versions are not available online.
Information table
C.C.S.M. c. C223
Order affecting the operation of this Act:
Order re Temporary Suspension of Corporate Meeting Provisions (2), renewal (2) made by Order in Council 325/2021 under The Emergency Measures Act, with effect from October 1, 2021 to March 31, 2022
File 1: s. 1 to 217 (Parts 1 to 8)
File 2: s. 218 to 404 (Parts 9 to 21)
Table of Contents Bilingual (PDF)	 Regulations
(Assented to June 29, 1998)
INTERPRETATION AND APPLICATION
In this Act,
"affairs" means the relationship between
(a) a cooperative and its affiliates,
(b) a cooperative and its members, shareholders, directors and officers, and
(c) an affiliate of a cooperative and the members, shareholders, directors and officers of the cooperative,
but does not include a relationship that arises out of the ordinary course of a business carried on by the cooperative or an affiliate of the cooperative; (« affaires »)
"arrangement" means a reconstruction under which a cooperative transfers or sells, or proposes to transfer or sell, to another body corporate all or a substantial part of its undertaking for consideration consisting in whole or in part of securities of, or memberships in, that other body corporate, and under which the cooperative proposes to distribute a part or all of that consideration among its members or to cease carrying on its undertaking or that part of its undertaking so transferred or sold, or proposed to be transferred or sold; (« arrangement »)
"articles" means the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of arrangement, articles of continuance, articles of reorganization, articles of dissolution and articles of revival of a body corporate and any amendments thereto, and includes any Act, statute or ordinance by or under which a body corporate has been incorporated, and any letters patent, supplementary letters patent, certificate of incorporation, memorandum of association, and any other document evidencing corporate existence; (« statuts »)
"bearer", in respect of a security, means the person who is in possession of a security that is payable to bearer or endorsed in blank; (« porteur »)
"beneficial ownership" includes ownership through a trustee, legal representative, agent or other intermediary; (« propriété véritable »)
"body corporate" means any body that is incorporated wherever or however incorporated; (« personne morale »)
"broker" means a person who is engaged in whole or in part in the business of acting for others in the buying and selling shares in the capital stock of bodies corporate, interests in partnerships and syndicates, government and corporate bonds or similar issues, or options, warrants and similar rights in respect of such shares, bonds or interests, but not including such a person while the person is acting in the buying or selling of such shares, interests, bonds, issues, options, warrants or rights for the person's own account; (« courtier »)
"business" of a body corporate includes any undertaking carried on by the body corporate in the ordinary course of its activities; (« activité commerciale »)
"common-law partner" of a person means a person who, not being married to the other person, is cohabiting with him or her in a conjugal relationship of some permanence; (« conjoint de fait »)
"cooperative" means any body corporate to which this Act applies; (« coopérative »)
"cooperative entity" means a body corporate that, by the law under which it is organized and operated, is required to be organized and operated, and is organized and operated, on cooperative principles; (« entité coopérative »)
"corporation" means a body corporate incorporated by or under an Act of the Legislature; (« corporation »)
"court" means the Court of Queen's Bench; (« tribunal »)
"Crown" means Her Majesty in right of Manitoba; (« Couronne »)
"debt obligation" means a bond, debenture, note or other evidence of indebtedness or guarantee, whether secured or unsecured; (« titre de créance »)
"delegate" means an individual elected to represent a division of the members of a cooperative at meetings of the cooperative; (« délégué »)
"director" means an individual occupying the position of director, by whatever name called, of a cooperative, and "directors" and "board of directors" refers to the directors as a body; (« administrateur »)
"distributing cooperative" means a cooperative any of whose issued securities, other than membership shares, member loans and patronage loans, are or were part of a distribution to the public and remain outstanding and are held by more than one person; (« coopérative ayant fait appel au public »)
"entity" means a body corporate, a trust, a partnership, a fund or an unincorporated organization; (« entité »)
"federation" means a cooperative whose membership is composed substantially of other cooperative entities or leagues of cooperative entities; (« fédération »)
"for profit housing stakeholder group" means a stakeholder group the common interest of whose members in a multi-stakeholder cooperative is to occupy residential housing provided by the cooperative on a for profit basis; (« groupement de partenaires occupant une habitation à but lucratif »)
"former Act cooperative" means a body corporate that was in existence immediately before this Act comes into force and that is
(a) a cooperative that was incorporated under The Cooperative Associations Act, being chapter 8 of the Statutes of Manitoba, 1925, now repealed,
(b) a corporation that was incorporated under The Companies Act, being chapter C160 of the Revised Statutes of Manitoba, 1970, now repealed, or under any previous Act of the Legislature for which that Act was substituted, as a corporation to be operated on a cooperative basis, or
(c) a cooperative that was incorporated under The Cooperatives Act being chapter C223 of the Re-enacted Statutes of Manitoba, 1987, or under any previous Act of the Legislature for which that Act was substituted; (« coopérative régie par l'ancienne loi »)
"holder" means
(a) in respect of a certificate evidencing a security of a cooperative, the person in possession of the certificate issued or endorsed to the person or to bearer or in blank,
(b) in respect of a membership share of a cooperative, the member of the cooperative who, according to the cooperative's register of members or like record, is the owner of the share or the person who is entitled to be entered in that register or record as the owner of the share, and
(c) in respect of an investment share of a cooperative, the shareholder of the cooperative who according to the cooperative's register of shareholders or like record, is the owner of the share, or the person who is entitled to be entered in that register or record as the owner of the share; (« détenteur »)
"housing cooperative" means a cooperative that is authorized by its articles to carry on a business of providing residential housing to its members; (« coopérative d'habitation »)
"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, includes a body corporate that is continued by or under any such Act; (« constituée »)
"incorporator" of a cooperative means a person who signs the articles of incorporation of the cooperative; (« fondateur »)
"individual" means a natural person; (« particulier »)
"investment share" of a cooperative means a share in the capital of the cooperative that is not a membership share; (« part de placement »)
"issuer", in respect of a security, means the entity that issues the security; (« émetteur »)
"meeting of a cooperative" means
(a) a meeting of members of a cooperative, or
(b) a meeting of the holders of investment shares of a cooperative, or of a class or series of investment shares; (« assemblée d'une coopérative »)
"member" means a person having rights through a membership interest in a cooperative in accordance with the provisions of this Act and the articles or by-laws of the cooperative; (« membre »)
"member loan" means a loan required by a cooperative from its members as a condition of membership or to continue membership in the cooperative; (« prêt de membre »)
"membership share" means a share of a cooperative that is issuable only to a member or a person whose application for membership has been approved, and that belongs to a class of shares that is designated in the articles as membership shares or patronage shares; (« part de membre »)
"minister" means the member of the Executive Council charged by the Lieutenant Governor in Council with the administration of this Act; (« ministre »)
"multi-stakeholder cooperative" means a cooperative the articles of which conform to the requirements of section 295.2; (« coopérative composée de partenaires multiples »)
"not for profit housing stakeholder group" means a stakeholder group the common interest of whose members in a multi-stakeholder cooperative is to occupy residential housing provided by the cooperative on a not for profit basis; (« groupement de partenaires occupant une habitation sans but lucratif »)
"ordinary resolution", in relation
(a) to a cooperative that is not a multi-stakeholder cooperative, means a resolution passed at a meeting of the cooperative or of its directors
(i) by a majority of the votes cast by or on behalf of the persons who are entitled to vote on the resolution, or
(ii) if a greater number or percentage of votes than a majority is specified by the articles or a unanimous agreement of the cooperative for passing the resolution, by at least that number or percentage of the votes cast by or on behalf of the persons who are entitled to vote on the resolution, and
(b) to a multi-stakeholder cooperative, means a resolution passed
(i) at a meeting of the cooperative
(A) by a majority of the votes cast by or on behalf of the persons who are entitled to vote on the resolution, or
(B) if a greater number or percentage of votes than a majority is specified by the articles or a unanimous agreement of the cooperative for passing the resolution, by at least that number or percentage of the votes cast by or on behalf of the persons who are entitled to vote on the resolution,
and confirmed, if such confirmation is required by the articles or unanimous agreement, by a majority of the votes cast by the members of each stakeholder group at the meeting or at separate meetings of each stakeholder group duly called for that purpose, or
(ii) at a meeting of its directors
(A) by a majority of the votes cast by or on behalf of the directors who are entitled to vote on the resolution, or
(B) if a greater number or percentage of votes than a majority is specified by the articles or a unanimous agreement of the cooperative for passing the resolution, by at least that number or percentage of the votes cast by or on behalf of the directors who are entitled to vote on the resolution; (« résolution ordinaire »)
"patronage loan" means a loan by a member to a cooperative of all or part of a patronage return; (« prêt de ristourne »)
"patronage return" means an amount that under this Act is allocated among and credited or paid by a cooperative to its members, or to its members and non-member patrons, based upon the business done by each of them with or through the cooperative; (« ristourne »)
"person" means an individual or an entity, and includes a legal representative; (« personne »)
"prescribed" means prescribed by the regulations;
"proxy" means a completed and executed document by means of which a member or shareholder appoints a proxyholder to attend and act on the member's or shareholder's behalf at a meeting of the members or shareholders; (« procuration »)
"redeemable", in relation to a share issued by a cooperative, means that the share is one that
(a) the cooperative may, subject to its articles and this Act, acquire or redeem on its own demand,
(b) the cooperative is required by its articles, subject to this Act, to acquire or redeem at a specified time, or
(c) the holder may, subject to the articles and this Act, require the cooperative to acquire or redeem at a specified time or upon demand; (« rachetable »)
"Registrar" means the individual designated under section 7 as the Registrar; (« registraire »)
"security" of a cooperative means an investment share of the cooperative, a debt obligation of the cooperative and a certificate evidencing such a share or debt obligation; (« valeur mobilière »)
"security interest" in a cooperative means an interest in, or charge on, property of the cooperative to secure payment of a debt, or the performance of an obligation, of the cooperative; (« sûreté »)
"send" includes deliver; (« envoyer »)
"series", in relation to shares of a cooperative, means a division of a class of shares of the cooperative; (« série »)
"share" of a cooperative means a membership share of the cooperative or an investment share of the cooperative; (« part »)
"shareholder" of a cooperative means a person who, according to the cooperative's register of its shareholders, or other like record, is the owner of an investment share of the cooperative, or who is entitled to be entered in the cooperative's register of shareholders, or other like record, as the owner of an investment share of the cooperative; (« détenteur de parts de placement »)
"special resolution", in relation
(i) by at least 2/3 of the votes cast by or on behalf of the persons who are entitled to vote on the resolution, or
(ii) if a greater number or percentage of votes than 2/3 is specified by the articles or a unanimous agreement of the cooperative for passing the resolution, by at least that number or percentage of the votes cast by or on behalf of the persons who are entitled to vote on the resolution, and
(A) by at least 2/3 of the votes cast by or on behalf of the persons who are entitled to vote on the resolution, or
(B) if a greater number or percentage of votes than 2/3 is specified by the articles or a unanimous agreement of the cooperative for passing the resolution, by at least that number or percentage of the votes cast by or on behalf of the persons who are entitled to vote on the resolution,
and confirmed by at least 2/3 of or, if paragraph (B) applies, at least that greater number or percentage of the votes cast by the members of each stakeholder group at the meeting or at separate meetings of each stakeholder group duly called for that purpose, or
(A) by at least 2/3 of the votes cast by or on behalf of the directors who are entitled to vote on the resolution, or
(B) if a greater number or percentage of votes than 2/3 is specified by the articles or a unanimous agreement of the cooperative for passing the resolution, by at least that number or percentage of the votes cast by or on behalf of the directors who are entitled to vote on the resolution; (« résolution spéciale »)
"stakeholder group" means a collection of members of a multi-stakeholder cooperative who constitute a group because they
(a) have a common interest in the cooperative, or
(b) reside within a defined geographical area; (« groupement de partenaires »)
"Superintendent" means the individual designated under section 7.1 as the Superintendent; (« surintendant »)
"surplus", of a cooperative for any financial year of the cooperative, means the amount that remains after deducting from its operating revenue, charges to members and patrons, and other revenue in that financial year,
(a) its operating expenses and losses in that financial year, including proper allowances for depreciation, for expenses incurred but not paid and for other proper charges against its operations, and
(b) any refunds and interim and final payments to members and patrons made in that financial year or required to be made under contracts or under its articles or by-laws in that financial year or in respect of that financial year and not made in a previous financial year; (« surplus »)
"trust indenture" means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a cooperative after its incorporation or continuance under this Act, under which the cooperative issues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations issued thereunder; (« acte de fiducie »)
"unanimous agreement" of a cooperative means an agreement in writing into which all members and all shareholders, if any, of the cooperative have entered; (« convention unanime »)
"worker" means an individual who works in the operation of a worker cooperative, whether for remuneration or as a volunteer; (« travailleur »)
"worker cooperative" means a cooperative whose articles require that not more than 20% of its members may be persons who are not workers of the cooperative; (« coopérative de travailleurs »)
"worker stakeholder group" means a stakeholder group the common interest of whose members in a multi-stakeholder cooperative is to work in the operation of a worker cooperative, whether for remuneration or as a volunteer. (« groupement de partenaires formé de travailleurs »)
Registered common-law relationship
For the purposes of this Act, while they are cohabiting, persons who have registered their common-law relationship under section 13.1 of The Vital Statistics Act are deemed to be cohabiting in a conjugal relationship of some permanence.
S.M. 2000, c. 14, s. 2; S.M. 2002, c. 24, s. 14; S.M. 2002, c. 48, s. 28; S.M. 2009, c. 19, s. 2; S.M. 2011, c. 7, s. 2; S.M. 2019, c. 25, s. 11.
For the purposes of this Act,
(a) a body corporate is controlled by a person if securities of the body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate; and
(b) a cooperative entity is controlled by a person if the person has the right to exercise more than 50% of the votes that may be cast at an annual meeting or to appoint or elect a majority of the directors.
Holding body corporate
A particular body corporate is the holding body corporate of another body corporate if that other body corporate is the subsidiary of the particular body corporate.
A particular body corporate is a subsidiary of another body corporate if
(a) the particular body corporate is controlled by
(i) the other body corporate,
(ii) the other body corporate and one or more bodies corporate each of which is controlled by the other body corporate, or
(iii) two or more bodies corporate each of which is controlled by that other body corporate; or
(b) the particular body corporate is a subsidiary of a body corporate that is a subsidiary of the other body corporate.
For the purposes of this Act, a body corporate is an affiliate of another body corporate
(a) if one of them is a subsidiary of the other;
(b) if each of them is a subsidiary of the same body corporate;
(c) if each of them is controlled by the same person; and
(d) if each of them is an affiliate of the same body corporate because of clause (a), (b) or (c) or this clause.
For the purposes of this Act, a person is an associate of
(a) a body corporate of which the person beneficially owns or controls, directly or indirectly, shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or because of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase such shares or such convertible securities;
(b) a cooperative entity of which the person beneficially owns more than 10% of the voting rights that can be cast at a meeting of the cooperative entity;
(c) a partnership, other than a limited partnership, of which the person is a partner;
(d) a limited partnership of which the person is the operating partner or of which the person beneficially owns more than 10% of the partnership interests;
(e) an unincorporated entity, other than a partnership, of which the person beneficially owns more than 10% of the ownership interests or of which the person is the chief operating officer or chief administrative officer;
(f) a partner of a partnership of which the person is also a partner;
(g) a trust or an estate or succession in which the person has a substantial beneficial interest or serves as a trustee, administrator, executor or liquidator of the trust or of the estate or succession or in a similar capacity;
(h) a spouse or common-law partner of the person if the spouse or common-law partner and the person are not living separate and apart because of a breakdown in their relationship;
(i) a child, grandchild, parent, grandparent, brother or sister of the person;
(j) a child, grandchild, parent or grandparent of the spouse or common-law partner of the person if the person and the spouse or common-law partner are not living separate and apart because of a breakdown in their relationship; and
(k) a relative of the person or of the spouse or common-law partner of the person if the relative and the person have the same residence.
S.M. 2002, c. 24, s. 14.
Deemed distribution to the public
For the purposes of this Act, securities of a body corporate
(a) issued upon a 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.
Distribution to the public
For the purposes of this Act but subject to subsection (3), a security of a body corporate
(a) is part of a distribution to the public if, in respect of the security, there has been a filing of an offering statement, a prospectus, a statement of material facts, a registration statement, a securities exchange take-over bid circular or a similar document under the laws of Manitoba, or any jurisdiction outside Manitoba;
(b) is deemed to be part of a distribution to the public if the security has been issued and a filing referred to in clause (a) would be required if the security were being issued currently; or
(c) is deemed to be part of a distribution to the public if it is listed on a stock exchange.
Upon the application of a cooperative, the Superintendent may determine that a security of the cooperative is not part of a distribution to the public if the Superintendent is satisfied that to so determine would not prejudice any security holder, and where the Superintendent makes that determination in respect of the security, the security is deemed, for the purposes of this Act not to be part of a distribution to the public.
Cooperative basis
For the purposes of this Act, a cooperative is organized and operated, and carries on business, on a cooperative basis if,
(a) subject to subsection (2) and subsection 295.4(3), membership in the cooperative is open, in a non-discriminatory manner, to persons who can use the services of the cooperative and who are willing and able to accept the responsibilities of membership;
(b) subject to subsection (3), each of its members or each delegate representing a division of its members has only one vote;
(c) interest on its member loans is limited to a maximum rate fixed in its articles, which maximum rate shall not exceed the prescribed maximum rate of interest on member loans;
(d) interest on its patronage loans is limited to a maximum rate fixed in its articles, which maximum rate shall not exceed the prescribed maximum rate of interest on patronage loans;
(e) dividends on its membership shares are limited to the maximum percentage, fixed in its articles, of the par value of its membership shares, which maximum percentage shall not exceed the prescribed maximum percentage for dividends on membership shares of cooperatives;
(f) to the extent feasible, its members provide the capital required by the cooperative;
(g) surplus funds arising from the cooperative's operations are used
(i) to develop its business,
(ii) to provide or improve common services to its members,
(iii) to provide for reserves or the payment of interest on its member loans or dividends on its membership shares and investment shares,
(iv) for community welfare or the propagation of cooperative enterprises, or
(v) as a distribution among its members as a patronage return based on the business the members have done with the cooperative; and
(h) it educates its members, officers, employees and the public on the principles and techniques of cooperative enterprise.
Restrictions on membership
The articles of a cooperative may restrict the classes of persons to which membership in the cooperative is available if the restrictions
(a) reasonably relate to any business restriction set out in its articles and to the reasonable commercial ability of the cooperative to provide services to prospective members; and
(b) are consistent with applicable laws in respect of human rights.
Exception re voting
The articles of a federation may provide that its members or delegates representing divisions of its members have unequal number of votes determined in accordance with rules set out in the articles.
S.M. 2011, c. 7, s. 3.
Application of Act
This Act, except where it is otherwise expressly provided, applies to
(a) every cooperative incorporated under this Act;
(b) every former Act cooperative that has not been continued under an Act of Parliament or of the legislature of a province, dissolved or wound-up; and
(c) every body corporate that is continued under this Act.
No application to credit unions
This Act does not apply to a body corporate that is a credit union within the meaning of The Credit Unions and Caisses Populaires Act.
Powers of existing cooperatives
Where, immediately before the coming into force of this Act, the articles of a former Act cooperative excluded any of the powers authorized by any former Act by or under which the cooperative was incorporated, the articles are deemed to restrict the cooperative from exercising any similar power authorized by this Act until the exclusion is removed by subsequent articles of the cooperative.
Designation of Registrar
The minister may designate an individual employed by the government under The Civil Service Act as the Registrar to carry out the duties and exercise the powers of the Registrar under this Act and may designate one or more Deputy Registrars.
Designation of employee of another department
Under subsection (1), the minister may designate an employee of a government department that is not under that minister's administration as the Registrar or a Deputy Registrar if the minister responsible for the other department agrees.
Responsibilities of the Registrar
7(2.1)
The Registrar is responsible for
(a) receiving articles and other documents filed or sent to the Registrar by cooperatives under this Act and the regulations;
(b) maintaining a registry consisting of the documents and information filed or sent to the Registrar by cooperatives under this Act and the regulations; and
(c) performing any other duties and exercising any other powers of the Registrar under this Act and the regulations.
Delegation by Registrar
Where this Act authorizes the Registrar to do any act or thing, the Registrar may in writing delegate that authority to a Deputy Registrar designated under subsection (1).
Designation of Superintendent
The minister may designate an individual employed by the government under The Civil Service Act as the Superintendent to carry out the duties and exercise the powers of the Superintendent under this Act and may designate one or more Deputy Superintendents.
Under subsection (1), the minister may designate an employee of a government department that is not under that minister's administration as the Superintendent or a Deputy Superintendent if the minister responsible for the other department agrees.
Responsibilities of the Superintendent
The Superintendent is responsible for
(a) supervising the issuance of securities by a cooperative and the trade by a cooperative in its securities;
(b) the formation of appeal tribunals to hear appeals of membership terminations in housing cooperatives under Part 12; and
(c) performing any other duties and exercising any other powers of the Superintendent under this Act and the regulations.
Delegation by Superintendent
The Superintendent may, in writing, authorize a Deputy Superintendent to perform any of the Superintendent's duties or exercise any of the Superintendent's powers under this Act and the regulations.
Disclosure between Registrar and Superintendent
The Registrar and the Superintendent may disclose to each other any information or documents, including personal information as defined in subsection 1(1) of The Freedom of Information and Protection of Privacy Act, collected by either of them in the administration of this Act and the regulations.
Application by individuals
Any three or more individuals, none of whom
(a) is less than 18 years of age; or
(b) has the status of a bankrupt;
may apply for incorporation of a cooperative by sending to the Registrar, in duplicate, articles of incorporation.
Application by corporations
Any two or more bodies corporate may apply for incorporation of a cooperative by sending to the Registrar, in duplicate, articles of incorporation.
Application by cooperatives
Any one or more cooperative entities may apply for incorporation of a cooperative by sending to the Registrar, in duplicate, articles of incorporation.
Articles of incorporation of a cooperative shall be in a form approved by the Registrar and shall set out
(a) the name of the cooperative;
(b) the place in Manitoba where the registered office of the cooperative is to be situated;
(c) whether the cooperative is to be incorporated with or without membership share capital, and if without, a statement that the interest of each member of the cooperative is the same as that of every other member;
(d) if the cooperative is to have membership share capital, the particulars of the membership share capital as required by section 39;
(e) whether or not there is to be investment share capital in the cooperative and, if so, the particulars of the investment share capital as required by subsection 42(1);
(f) if the issue, transfer or ownership of shares of the cooperative is to be restricted, a statement to that effect, and a statement as to the nature of the restrictions;
(g) the number, or the minimum and maximum number, of directors of the cooperative, and the names and residence address, giving the street and number if any, of each individual who is to be a first director of the cooperative;
(h) a statement of the type of cooperative that the cooperative will be;
(i) any restrictions on the business or businesses that the cooperative may carry on;
(j) any restrictions on or qualifications for membership in the cooperative;
(k) a statement that the cooperative will be organized and operated and will carry on business on a cooperative basis;
(l) [repealed] S.M. 2009, c. 19, s. 3;
(m) the maximum rate of interest that may be paid on its member loans or patronage loans, which must not exceed the maximum rate permitted by the regulations; and
(n) provisions for the distribution of the property of the cooperative on its dissolution.
Additional provisions
The articles of a cooperative may
(a) restrict, in whole or in part, the powers of its directors to manage the business of the cooperative; or
(b) set out any provisions that could be set out in the by-laws of the cooperative, and if the articles do, any reference in this Act to such provisions in the by-laws of a cooperative is also a reference to those provisions in the articles of the cooperative.
Special majorities
Subject to subsection (4), the articles of a cooperative, or a unanimous agreement of the cooperative, may require a greater number of votes of directors, members or shareholders of the cooperative than is required by this Act to effect an action.
Voting number
Neither the articles of a cooperative nor a unanimous agreement of the cooperative may require, in order to remove a director of the cooperative or a delegate representing a division of its members, that more than a majority of the votes cast by or on behalf of the persons who are entitled to vote be cast in favour of the removal.
S.M. 2009, c. 19, s. 3.
The articles of incorporation of a cooperative must be signed by its incorporators.
Consent of first directors
The articles of incorporation of a cooperative shall have attached to them, in a form approved by the Registrar, the consent of each of its first directors who is not an incorporator of the cooperative.
As soon as possible after a site is acquired for the first registered office of a cooperative, whether before or after the cooperative is incorporated, the incorporators, or the cooperative if it has been incorporated, shall send to the Registrar a notice indicating the address of the site giving the street and number, if any, at which the site is located.
Copy of by-laws to Registrar
A cooperative shall send a copy of its by-laws adopted at the first meeting of its members to the Registrar within 30 days after they are adopted and shall send a copy of any by-laws passed subsequently and any amendments to its by-laws, and notice of any repeal of a by-law of the cooperative, to the Registrar within 30 days of the passing of the by-law or amendment or the repeal of the by-law, as the case may be.
Registrar's order re by-laws
The Registrar may order a cooperative to enact a by-law consistent with, or to amend or repeal a by-law that is inconsistent with, any provision of this Act, the regulations or the cooperative's articles or any other provisions of its by-laws, and the cooperative shall enact, amend or repeal the by-law as ordered.
By-laws: mandatory provisions
The by-laws of a cooperative shall provide for
(a) the qualifications, and the procedures for acceptance, of members of the cooperative;
(b) the rights of persons, if any, who hold memberships in the cooperative jointly;
(c) the membership obligations of members of the cooperative, including any obligation to use the services of the cooperative and any fees to be paid by the members;
(d) whether the interest of a member of the cooperative may, subject to section 102, be transferred or assigned, and any conditions or restrictions that apply to such a transfer or assignment;
(e) subject to sections 244, 245 and 246 and Parts 12 and 13, the conditions on which membership in the cooperative is terminated, whether by withdrawal or by involuntary termination;
(f) the mode of holding meetings of its members, the quorum for the meetings, the rights of voting of its members, the procedures for making, repealing, and amending its by-laws or regulations, the right of its members to vote by ballot or mail or both, and the manner, form and effect of votes at the meetings;
(g) the election, qualifications, term of office, removal and replacing of its directors, committee members and officers, and their powers, duties and remuneration, and the procedure and quorum at meetings of its board of directors;
(h) the terms of any contract between the cooperative and its members that all its members may be required to sign, and of any renewals of such contracts;
(i) the appointment of auditors of the cooperative;
(j) the refunds and the interim and final payments to be made to its members; and
(k) the distribution of the surplus earnings arising from the operations of the cooperative.
By-laws: other provisions
The by-laws of a cooperative may provide for
(a) the division of the territory in which members of the cooperative are located into districts and the alteration thereof, the election of delegates to represent the members located in each district and the defining of the powers, duties, election and voting rights of district delegates;
(b) the separation of members of the cooperative into divisions and if so,
(i) the qualifications for membership in each division,
(ii) the conditions precedent to membership in each division,
(iii) the method, time and manner of withdrawing from a division or transferring membership from one division to another and any applicable conditions on a transfer, and
(iv) the conditions on which membership in a division ends;
(c) the representation of divisions of members of the cooperative by delegates and, if so,
(i) the designation of the divisions of members, to be represented by delegates,
(ii) the procedures for altering divisions of members, if applicable, and
(iii) the powers, duties, selection, voting rights and procedures for appointment or election, and for removal, of delegates;
(d) the referral of disputes between the cooperative and a member of the cooperative to a process of dispute resolution;
(e) the holding of a referendum on any matter of general concern to its members; and
(f) any other matter that the members of the cooperative consider necessary or desirable.
Every cooperative shall be organized and operated, and shall carry on business, on a cooperative basis.
Issuance of certificate of incorporation
The Registrar shall issue a certificate of incorporation for a cooperative if the Registrar is satisfied that
(a) the articles are in accordance with section 9 and, if applicable, section 276, subsection 290(1) or section 295.2;
(b) the cooperative will be organized and operated, and will carry on business, on a cooperative basis; and
(c) the cooperative will comply with Part 12, 13 or 13.1, if applicable.
The Registrar may request additional information that the Registrar considers necessary to be satisfied that the requirements set out in subsection (1) have been met, but for the purposes of clauses (1)(b) and (c), the Registrar may rely on the articles.
If membership too low
If the membership of a cooperative is reduced to a number less than the number of members required for incorporation and, after 30 days notice remains at less than that number, the Registrar may require the cooperative
(a) to apply for a certificate of continuance under The Corporations Act if it was incorporated with membership capital; or
(b) to be liquidated or dissolved under Part 17.
Effect of certificate
A cooperative comes into existence on the day indicated in its certificate of incorporation.
Name of cooperative
The corporate name of every cooperative must
(a) include the word "Cooperative", "Co-operative", "Coopérative" or "Pool", or the abbreviation "Co-op"; and
(b) end with the word "Limited", "limitée", "incorporated" or "incorporée", or the abbreviation "Ltd.", "ltée" or "Inc.".
Use of full word or abbreviation
A cooperative may use and may be legally designated by either the full or abbreviated form of a word required by subsection (1), regardless of which form is used in its articles.
Name of certain cooperatives must reflect type
A cooperative, other than a multi-stakeholder cooperative, must have as part of its name one or more words that suggest what type of cooperative it is.
Existing names
A former Act cooperative is not required to change its name to conform with subsection (2), but if such a cooperative makes any change to its name after the coming into force of this Act, the new name shall conform with subsection (2).
Alternative name
Subject to section 20, a cooperative may set out its name in its articles in an English form or a French form or a combined English and French form, and may be legally designated by that form.
Name in any language form
Subject to section 20, a cooperative may set out its name in its articles in any language form and it may be legally designated by that form, but, if that language form is in characters other than the Roman alphabet, the articles shall set out an alternative name for the cooperative that is the English or French equivalent, in the Roman alphabet, of its name in that language form.
A cooperative may have as part of its name a symbol prescribed for use as part of names of cooperatives.
Publication of name
A cooperative shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the cooperative.
Subject to section 20 and the provisions of The Business Names Registration Act, a cooperative may carry on business under or identify itself by a name other than its corporate name.
S.M. 2009, c. 19, s. 4; S.M. 2011, c. 7, s. 5.
Prohibited use of cooperative designations
Subject to subsection (3), no person other than a cooperative entity shall use any of the words "cooperative", "co-operative", "coopérative" and "pool" or any derivative thereof, or the abbreviation "co-op" or any other abbreviation of those words, as part of its name.
Prohibition against holding out
Subject to subsection (3), no person other than a cooperative entity shall hold itself out as, or use as part of its name or otherwise any word or abbreviation suggesting, indicating or implying that it is, carrying on business on a cooperative basis.
Subsections (1) and (2) do not apply to a body corporate incorporated by or under the authority of an Act of the Parliament of Canada or of the legislature of a province or of an ordinance of a territory that expressly authorizes the use of any of the words "cooperative", "co-operative", "coopérative" and "pool", or the abbreviation "co-op", or to any corporation heretofore incorporated in respect of which the Registrar consents in writing to the continued use of any of those words or that abbreviation.
Reservation of name
The Registrar may, on the request in writing of any person and upon payment of the prescribed fee, reserve a corporate name for use by, and the benefit of, the person or the person's nominee for a period of 90 days, if, at the time of the request, a cooperative is not prohibited by section 20 from having that name.
Assignment of number
If requested to do so by the incorporators of a cooperative, the Registrar shall assign to the cooperative, as its name, a number determined by the Registrar plus one or more words that suggest what type of cooperative the cooperative is.
"Business" or "association" defined
In this section, "business" or "association" means an individual or an entity carrying on business.
Prohibited names
A cooperative shall not have a name
(a) that is known to the Registrar to be the same as the name of an existing body corporate or of a dissolved body corporate;
(b) that, subject to subsection (4), is known to the Registrar to be the same as the name of a business or association;
(c) that suggests or implies a connection with the Crown, or any member of the Royal Family, or the Government of Canada or the government of any province or territory of Canada or any department, branch, bureau, service, agency, or activity of any of those governments, without the consent in writing of the appropriate authority;
(d) that includes the word "Loan" or "Trust"; or
(e) that the Registrar for any good and valid reason disapproves.
Names similar to other bodies corporate
A cooperative shall not have a name that is the same as similar to the name of any other body corporate if the use of that name by the cooperative would be likely to confuse or mislead, unless the body corporate consents in writing to its name being given in whole or in part to the cooperative and, if required by the Registrar, the body corporate undertakes to dissolve or to change its name within six months after the incorporation of the cooperative.
Names similar to other businesses or associations
A cooperative shall not have a name that is the same as or similar to the name of a business or association, if the use of that name by the cooperative would be likely to confuse or mislead, unless the business or association consents in writing to its name being given in whole or in part to the cooperative and, if required by the Registrar, the business or association undertakes to cease carrying on its business or activities or to change its name within six months after the incorporation of the cooperative.
Reserved name
A cooperative shall not have a name that is reserved for another body corporate under this Act or The Corporations Act, unless the consent in writing is obtained from the person for whose use and benefit the name is reserved.
Undertaking not carried out
Where a cooperative is granted a name subject to an undertaking given under subsection (3) or (4) and the undertaking is not carried out within the specified time, the Registrar may direct the cooperative to which the name is granted to change its name to a name that complies with this Act; and if the cooperative fails to comply with the directive within 60 days of the service thereof, the Registrar may revoke the name of the cooperative and assign to it a number plus one or more words that suggest what type of cooperative it is, and until changed in accordance with section 297 the name of the corporation is thereafter the number and words so assigned.
Directing change of name
Where, through inadvertence or otherwise, a cooperative
(a) comes into existence or is continued with; or
(b) upon an application to change its name, is granted;
a name that contravenes this section, the Registrar may direct the cooperative to change its name in accordance with section 297.
Directing change of where number assigned
Where a cooperative has an assigned number as its name, the Registrar may direct the cooperative to change its name, in accordance with section 7, to a name that complies with this Act.
Revoking name
Where a cooperative is directed under subsection (7) to change its name and fails within 60 days from the service of the directive to change its name to a name that complies with this Act, the Registrar may revoke the name of the cooperative and assign to it a number plus one or more words that suggest what type of cooperative it is, and until changed in accordance with section 297 the name of the cooperative is thereafter the number and words so assigned.
Certificate of amendment
Where a cooperative has had its name revoked and a number assigned to it under subsection 20(6) or (9), the Registrar shall issue a certificate of amendment in respect of the cooperative showing the new name of the cooperative and shall forthwith give notice of the change of name in the gazette.
The articles of the cooperative are amended accordingly on the date shown in the certificate of amendment in respect of the cooperative.
Personal liability under pre-incorporation contracts
Except as provided in this section, a person who enters into a written contract in the name of or on behalf of a cooperative before it comes into existence is personally bound by the contract and is entitled to the benefits of the contract.
Adoption of pre-incorporation contracts
A cooperative may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound by the contract, adopt a written contract made before it came into existence in its name or on its behalf, and upon the adoption
(a) the cooperative is bound by the contract and is entitled to the benefits thereof as if the cooperative had been in existence on the day when the contract was made and had been a party thereto; and
(b) the person who originally entered into the contract ceases, except as provided in subsection (3), to be bound by or entitled to the benefits of the contract.
Application to court
Except as provided in subsection (4), whether or not a written contract made before the coming into existence of a cooperative is adopted by the cooperative, a party to the contract may apply to the court for an order fixing obligations under the contract as joint and several or apportioning liability between or among the cooperative and any person who originally entered into the contract, and upon the application the court may make any order it thinks fit.
Exemption from personal liability
If expressly so provided in the written contract, a person who entered into a contract in the name of or on behalf of a cooperative before it came into existence is not in any event bound by the contract or entitled to the benefits of the contract.
CAPACITY AND POWERS
Capacity of a cooperative
A cooperative has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.
Extra-territorial capacity
A cooperative has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Manitoba to the extent that the laws of that jurisdiction permit.
Powers of a cooperative
It is not necessary for a by-law to be passed in order to confer any particular power on the cooperative or its directors.
Restricted business or powers
No cooperative and no subsidiary of a cooperative may carry on any business or exercise any power contrary to a restriction set out in the articles of the cooperative.
Rights preserved
No act of a cooperative, including any transfer of property to or by a cooperative, is invalid solely because the act or transfer is contrary to its articles or this Act.
No constructive notice
Subject to subsection (2), no person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a cooperative solely because the document has been filed with the Registrar or Superintendent or is available for inspection at an office of the cooperative.
Constructive notice of articles and by-laws
Each member of a cooperative is deemed to have notice and knowledge of the contents of the articles and by-laws of the cooperative.
Restrictions on defences by cooperatives and guarantors
A cooperative or a guarantor of an obligation of the cooperative may not assert against a person dealing with the cooperative or with any person who has acquired rights from the cooperative that
(a) its articles or by-laws have not been complied with;
(b) the individuals named in the most recent notice sent to the Registrar under this Act are not the directors of the cooperative;
(c) the place named in the most recent notice sent to the Registrar under this Act is not the registered office of the cooperative;
(d) a person held out by the cooperative as a director, an officer or an agent of the cooperative has not been duly appointed or has no authority to exercise the powers or perform the duties that are customary in the business of the cooperative or usual for that director, officer or agent;
(e) a document issued by any director, officer or agent of the cooperative with actual or usual authority to issue the document is not valid or not genuine;
(f) any financial assistance to a member, director, officer, shareholder or employee of the cooperative was not authorized; or
(g) any sale, lease or exchange of all or substantially all of the property of the cooperative was not authorized;
unless the person has or ought to have, because of a position with or relationship to the cooperative, knowledge to the contrary.
REGISTERED OFFICE, RECORDS
A cooperative shall at all times have a registered office in the place in Manitoba specified in its articles or in a special resolution under subsection (2).
Change of location
A cooperative may by special resolution of its members change the location of its registered office to another place in Manitoba.
The directors of a cooperative may change the address of the registered office within the place specified in the articles or a special resolution.
Notice of change
A cooperative shall send to the Registrar
(a) a copy of a resolution changing the location of its registered office to another place in Manitoba within 15 days after the resolution is passed; and
(b) a notice, in form approved by the Registrar, of any change of address of its registered office within 15 days after the address is changed.
Annexation or amalgamation of municipalities
Where the location of the registered office of a cooperative is changed solely because of the annexation or amalgamation of the municipality or place in which the registered office is situated to or with another municipality or place, that change does not constitute and is deemed not to constitute a change in the location of the registered office of the cooperative.
A cooperative shall prepare and maintain, at its registered office or, subject to subsection (5), at any other place in Manitoba designated by its directors, records containing
(a) its articles and by-laws, and all amendments thereto, and a copy of any unanimous agreement of the cooperative;
(b) the minutes of meetings and resolutions of its members and shareholders;
(c) a register of its directors setting out the names, addresses and occupations of all individuals who are or have been directors of the cooperative, with the several dates when each became a director and, where they have ceased to be directors, the several dates when they ceased to be directors;
(d) a members' register setting out the names, alphabetically arranged, and the latest known addresses of all its members, and the particulars of the membership shares, investment shares, member loans, patronage loans or other securities, if any, owned or held by each member;
(e) if the cooperative issues investment shares, a list of all its shareholders, setting out their names and their latest known addresses and the number of those investment shares owned by each; and
(f) if the cooperative issues securities in registered form, a securities register that complies with section 110.
Accounting and directors' records
In addition to the records described in subsection (1), a cooperative shall prepare and maintain adequate accounting records and records containing minutes of meetings and resolutions of its directors and any committee of its directors.
Place for keeping records
The records of a cooperative described in subsection (2) shall be kept at its registered office or at such other place in Manitoba as its directors think fit and shall at all reasonable times be open to inspection by its directors.
Accounting records in Manitoba
Where accounting records of a cooperative are kept at a place outside Manitoba, there shall be kept at its registered office or other office in Manitoba accounting records adequate to enable its directors to ascertain the financial position of the cooperative with reasonable accuracy.
Where a cooperative
(a) shows, to the satisfaction of the Registrar, the necessity of keeping any of the documents or records mentioned in subsections (1) and (2) at a place other than its registered office; and
(b) gives assurance, to the satisfaction of the Registrar, that those documents or records will at all reasonable times be open for inspection, at its registered office or some other place in Manitoba approved by the Registrar, by any person who is entitled to inspect them and who applies to the cooperative for an inspection thereof;
the Registrar may, by order and upon such terms as are set out in the order, permit the cooperative to keep such of them at such place or places, other than its registered office, as the Registrar thinks fit.
Rescind order
The Registrar for any good and valid reason may, by order and upon such terms as the Registrar thinks fit, vary or rescind any order made under subsection (5).
Trustee's register of securities
The trustee for the owners of securities of a cooperative may maintain at the trustee's office a duplicate register of those securities.
Notice of order
The Registrar shall cause notice of every order made by the Registrar under this section to be given forthwith in the gazette.
Examination of records
Members, shareholders and creditors of the cooperative, their agents and legal representatives, and the Registrar or Superintendent may examine the records of a cooperative referred to in clauses 28(1)(a) to (c) during the usual business hours of the cooperative, and may make copies of the records or parts of them free of charge and, where the cooperative has made a distribution to the public, any other person may do so upon payment to the cooperative of a reasonable fee.
Copies of records
Every member and shareholder of a cooperative is entitled on request and without charge to one copy of the articles and by-laws of the cooperative, including any amendments thereto, and one copy of any unanimous agreement of the cooperative, including any amendments thereto.
Copies of by-laws and articles to creditors
A cooperative shall, upon payment to it of a reasonable fee, provide a copy of its articles and by-laws and any unanimous agreement of the cooperative
(a) upon the written request of a creditor of the cooperative, to the creditor; and
(b) where the cooperative is a distributing cooperative, upon the written request of any other person, to the other person.
S.M. 2002, c. 27, s. 2; S.M. 2019, c. 25, s. 15.
Form of records
Every register or record required by this Act to be prepared or maintained shall be prepared and maintained in a form, whether
(a) a bound or loose-leaf form;
(b) a photographic form;
(c) a system of mechanical or electronic data processing; or
(d) any other form of or device for storing information;
that allows any information recorded or stored in it to be reproduced within a reasonable time in an intelligible, written English form or written French form.
A cooperative and its agents shall take reasonable precautions
(a) to prevent loss or destruction of the records and registers of the cooperative required by this Act to be prepared or maintained;
(b) to prevent falsification of entries in those records and registers; and
(c) to facilitate detection and correction of inaccuracies in those records and registers.
Corporate seal
The directors of a cooperative may, but need not, adopt a corporate seal for the cooperative and may change a corporate seal that is adopted.
Seal not necessary for validity
No instrument or agreement executed on behalf of a cooperative by a director, an officer or an agent of the cooperative is invalid merely because a corporate seal of the cooperative is not affixed thereto.
Every cooperative shall send the Registrar an annual return in a form approved by the Registrar and before a day fixed by the Registrar.
Copies of financial statements to Superintendent
A cooperative referred to in subsection (1.1) shall send the Superintendent copies of the documents described in subsection 257(1)
(a) at least 21 days before the annual members' meeting at which they are to be placed before the members; or
(b) not more than 15 months after the previous annual members' meeting if one is not held during those months.
Application of subsection (1)
Subsection (1) applies to
(a) a distributing cooperative, if any of its shares that were part of a distribution to the public are outstanding and held by more than one person;
(b) a cooperative that requires its members to hold a quantity of membership shares per member that is greater in value than the value prescribed in the regulations; and
(c) a cooperative that requires its members to make member loans in an amount per member that is greater than the amount prescribed in the regulations.
Subsidiary cooperative
A cooperative that is a subsidiary of a holding cooperative entity is not required to comply with this section if its financial statements are consolidated or combined with those of its holding cooperative entity and the statements of its holding cooperative entity are sent to the Superintendent in compliance with this section.
S.M. 2002, c. 27, s. 3; S.M. 2011, c. 7, s. 6; S.M. 2019, c. 25, s. 16.
Special return
The minister may, at any time, by notice sent to a cooperative or a director or an officer thereof, require the cooperative or the director or officer, as the case may be, to make a special return within the time specified in the notice about any subject connected with the business and affairs of the cooperative.
Contents of special return
The special return required under subsection (1) may be in respect of any matter that is certified by the minister to be in the public interest.
Offence
A person who fails, within the time specified in the notice sent by the minister, to file the special return required under subsection 34(1) is guilty of an offence and liable on summary conviction to the penalties set out in subsection 374(1).
Relief by court
Where it appears to the court that a person is or may be liable in respect of an offence under subsection (1) but the person has acted honestly and reasonably and that, having regard to all the circumstances of the case, the person ought fairly to be excused for the offence, the court may relieve the person, either wholly or partly, from liability on such terms as the court thinks fit.
The following definitions apply in this section.
"designated jurisdiction" means a jurisdiction designated by regulation under subsection (3). (« autorité législative désignée »)
"extra-provincial registrar" means a person in a designated jurisdiction whose responsibilities relating to the registration of cooperative entities are similar to those of the Registrar under this Act. (« registraire extraprovincial »)
"multi-jurisdictional registry access service" means a service that
(a) allows for the electronic access of data from and transmission of data to a business registry; and
(b) is operated by or on behalf of the Government of Canada or one or more provinces or territories of Canada for the joint use by
(i) more than one province or territory of Canada, or
(ii) the Government of Canada and one or more provinces or territories of Canada. (« service d'accès à un registre multiterritorial »)
Agreements re extra-provincial matters
The Registrar may enter into an agreement with the Government of Canada, the government of a province or territory of Canada, an extra-provincial registrar or the operator of a multi-jurisdictional registry access service in respect of
(a) the collection and disclosure by the Registrar of fees, records, applications, forms, notices and other documents or information required under an enactment of another jurisdiction that is similar to this Act;
(b) the transmission or sharing of anything referred to in clause (a) between the Registrar and an extra-provincial registrar or operator of a multi-jurisdictional registry access service;
(c) the powers and duties of the Registrar and an extra-provincial registrar or operator of a multi-jurisdictional registry access service in respect of the agreement; and
(d) any other matters related to clauses (a) to (c) that the Registrar considers appropriate.
The Lieutenant Governor in Council may make regulations
(a) designating another province or territory of Canada, or the Government of Canada, as a designated jurisdiction for the purposes of this section;
(b) respecting the collection and disclosure by the Registrar of fees, records, applications, forms, notices and other documents or information required under this Act or an enactment of a designated province that is similar to this Act;
(c) respecting the transmission by the Registrar to an extra-provincial registrar or operator of a multi-jurisdictional registry access service of anything referred to in clause (b);
(d) specifying the form and manner in which anything referred to in clause (b) is to be collected, disclosed or transmitted;
(e) respecting the forms required for the purposes of a regulation made under this section;
(f) prescribing fees for the provision of services under a regulation made under this section and respecting the payment and collection of such fees.
Application of regulations
A regulation under this section may be general or particular in its application and apply in whole or in part to or in respect of
(a) one or more classes of cooperative entities specified in the regulations; or
(b) one or more designated jurisdictions, extra-provincial registrars or multi-jurisdictional registry access services.
Regulation prevails
If there is a conflict or inconsistency between a provision of a regulation made under this section and a provision of this Act or of a regulation made under another section of this Act, the provision of the regulation made under this section prevails to the extent of the conflict or inconsistency.
The capital of a cooperative may be in the form of member loans and those loans may be in such amounts, payable at such times, and with or without interest, as the articles of the cooperative provide.
Holders of member loans rank equally
The holders of member loans rank equally with each other in relation to the repayment of those loans.
Certificate of membership and right to vote
Where a cooperative does not have share capital, it shall issue a certificate of membership in the cooperative to each member of the cooperative who has paid the full membership fee; but a member of a cooperative has a right to vote immediately upon being accepted as a member in accordance with the by-laws of the cooperative, whether or not a certificate of membership has been issued to the member.
Par value of membership shares
Membership shares must have a par value, and the par value must be the same for all membership shares.
Membership shares
The articles of a cooperative may provide for one or more classes of membership shares in accordance with this section.
Shares required to qualify as member
If a person is required to own one or more shares in order to qualify as a member, the articles must designate a class of shares as membership shares and authorize the cooperative to issue a share of that class only to a member or a person whose application for membership has been approved. Unless the regulations provide otherwise or the cooperative is a multi-stakeholder cooperative, only one class of shares may be designated as membership shares.
Shares to be issued as patronage shares
The articles may create one or more classes of shares, designated as patronage shares in the articles, that may be issued only in consideration for patronage returns applied to the purchase of the shares under a by-law described in section 56 or 58.
Attributes of membership shares
If the articles of a cooperative provide for membership shares,
(a) the articles must set out
(i) the par value of the membership shares,
(ii) for each class of membership shares,
(A) whether the number of shares of that class is limited or unlimited and, if limited, the maximum number that may be issued, and
(B) the maximum number of shares of that class, or the maximum percentage of the issued and outstanding shares of that class, that any one member may own, and
(iii) the maximum rate at which dividends may be paid on the membership shares, which must not exceed the maximum rate permitted by the regulations;
(b) the articles must set out, for each class of membership shares, the rights, privileges, restrictions and conditions respecting the redemption, or repurchase by the cooperative, of those shares, unless the cooperative's membership share capital does not include shares that are designated in the articles as patronage shares;
(c) the articles may authorize a class of shares designated in the articles as patronage shares to be issued in series, and if they do the articles must set out for each series
(i) whether the number of shares of that series is limited or unlimited and, if limited, the maximum number that may be issued, and
(ii) any special rights, privileges, restrictions and conditions respecting the redemption or repurchase of shares of that series by the cooperative;
(d) any rights, privileges, restrictions and conditions set out in the articles or by-laws for any class or series of membership shares must be consistent with this Act;
(e) whenever a dividend is declared on any membership share, the same dividend must be declared and paid on all membership shares; and
(f) on the liquidation and dissolution of a cooperative, after the payment of any declared and unpaid dividends, all membership shares rank equally with each other in relation to amounts to be paid on the redemption or repurchase of those shares.
Member's right to vote
Subject to section 221, a member of a cooperative has one vote on all matters to be decided by the members of the cooperative.
Voting right not attached to share
The right to vote at meetings of members of a cooperative attaches to membership in the cooperative in accordance with subsection (1) and not to the membership share of the cooperative.
Equal membership rights
Subject to section 221 and Parts 12 to 13.1, the members of a cooperative have equal rights as members.
Issuance of membership shares
Membership shares of a cooperative may be issued only to, and member loans of a cooperative may be accepted only from, persons whose applications for membership in the cooperative have been approved in accordance with subsection 219(3).
Membership shares at par value
Membership shares of a cooperative may be issued or sold by the cooperative only at their par value.
Investment shares
The articles of a cooperative may provide that the cooperative may issue investment shares, and if they do, the articles shall set out
(a) whether the investment shares may be issued to non-members;
(b) the maximum number of investment shares that may be issued;
(c) the number of classes of investment shares;
(d) the preferences, rights, conditions, restrictions, limitations, and prohibitions attaching to the investment shares and, if there is to be more than one class, the designation of each class and the special preferences, rights, conditions, restrictions, limitations and prohibitions attaching to each class;
(e) the amounts payable to owners of the investment shares, or of shares of any class of the investment shares, on redemption of the shares or on the dissolution of the cooperative; and
(f) the mode of holding meetings of its shareholders, the quorum for the meetings, the rights of voting of its shareholders, the right of its shareholders to vote by ballot or mail or both and the manner, form and effect of votes at the meetings.
No voting rights
Subject to the articles of a cooperative and to this Act, no right to vote at a meeting of the members of the cooperative attaches to an investment share of the cooperative.
(a) constrain
(i) the issue or transfer of its investment shares, or of any class or series thereof, to persons who are not resident in Canada,
(ii) the issue or transfer of its investment shares, or of any class or series thereof, to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province
(A) to obtain a licence to carry on any business,
(B) to become a publisher of a Canadian newspaper or periodical, or
(C) to acquire investment shares of a financial intermediary as defined in the regulations, or
(iii) the issue, transfer or ownership of its investment shares, or of any class or series thereof, to assist the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits because of attaining or maintaining a specified level of Canadian ownership or control; or
(b) provide that
(i) an investment share of the cooperative confers on its holder the right to vote at an election of directors of the cooperative because of an event that has occurred and is continuing or because of a condition that has been fulfilled, or
(ii) the shareholders, any class of shareholders or the holders of a series of investment shares of the cooperative, may elect a fixed number or a percentage of the directors of the cooperative.
Limit on shareholders' directors
Notwithstanding subsections (2) and (3), neither the articles of a cooperative nor a unanimous agreement of the cooperative may provide that the shareholders of the cooperative have the right to elect more than 20% of the directors of the cooperative.
Election of director by shareholders
A director of a cooperative who is to be elected by the shareholders of a class or series of its investment shares shall be elected at a meeting of those shareholders.
One share, one vote
If shareholders of a cooperative are entitled to vote in accordance with subsection (3) or otherwise in accordance with this Act, each investment share of the cooperative entitles the holder to one vote.
Members may exercise rights of an investment shareholder
Notwithstanding section 40, a member of a cooperative who holds an investment share of the cooperative may exercise any voting right that holders of investment shares of the cooperative have.
Special investment shares
The articles of a cooperative may provide
(a) that the cooperative may issue a special class of investment shares that may be issued only to members of the cooperative;
(b) that each member of the cooperative who owns shares of the special class is entitled or obliged to conduct a specific amount or percentage of business with the cooperative that is dependent on the number or percentage of such shares owned by the member; and
(c) that, notwithstanding clause (1)(e) and subsections 338(1) and 341(7), each member of the cooperative who owns shares of the special class is entitled, on the liquidation and dissolution of the cooperative, to a pro rata share, dependent on the number or percentage of such shares owned by the member, of all remaining property of the cooperative after payment of all debts and liabilities of the cooperative including unpaid dividends, the amounts to be paid to the owners of its investment shares of other classes and any amounts to be paid on the redemption of its membership shares and the repayment of its member loans and patronage loans.
Non par value shares
Investment shares of a cooperative shall be in registered form and shall be without nominal or par value.
Continued cooperative
Where a body corporate is continued under this Act, an issued share with par value of the body corporate, other than a share that on the continuance is converted into a membership share, shall be deemed to be a share without nominal or par value.
Shares in series
The articles of a cooperative may, subject to the limitations set out in them and subject to subsection (2), authorize the issue of any class of investment shares of the cooperative in one or more series and may
(a) fix the number of investment shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the investment shares of, each series; or
(b) authorize the directors to fix the number of investment shares in, and to determine the designation, rights , privileges, restrictions and conditions attaching to the investment shares of, each series.
Series participation
If any cumulative dividends or amounts payable on return of capital in respect of a series of investment shares of a cooperative are not paid in full, the investment shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.
Restrictions on series
No rights, privileges, restrictions or conditions attached to a series of investment shares of a cooperative authorized under this section confer a priority in respect of dividends or return of capital on a series over any other series of the same class of investment shares of the cooperative that are then outstanding.
Copy of resolution to Superintendent
If the directors of a cooperative exercise their authority granted by the articles under clause (1)(b) in respect of a series of shares, they shall, before the issue of the shares of the series, send to the Superintendent a certified copy of the resolution of the directors by which they exercised the authority.
Pre-emptive right
If the articles of a cooperative so provide, no shares of a class of investment shares of the cooperative shall be issued unless the shares are first offered to the shareholders of that class, and the shareholders of that class have a pre-emptive right to acquire the offered investment shares in proportion to their holdings of the investment shares of that class, at the price at which and on the terms on which those shares are to be offered to others.
Even if the articles of a cooperative provide the pre-emptive right referred to in subsection (1), shareholders of investment shares of the cooperative have no pre-emptive right to acquire investment shares that are to be issued
(a) in exchange for a thing or service other than money;
(b) as an investment share dividend; or
(c) on the exercise of conversion privileges, options or rights previously granted by the cooperative.
The directors of a cooperative may authorize the cooperative to pay a reasonable commission to any person in consideration of the person
(a) purchasing or agreeing to purchase, as a broker, investment shares of the cooperative from the cooperative or from some other person; or
(b) procuring or agreeing to procure purchasers for investment shares of the cooperative.
Charge on investment shares
Subject to subsection 98(2), the articles of a cooperative may provide that the cooperative has a charge on an investment share of the cooperative registered in the name of a shareholder or the legal representative of a shareholder for a debt of the shareholder to the cooperative, including an amount unpaid as of the date the cooperative was continued under this Act, in respect of an investment share issued by it.
A cooperative may enforce a charge referred to in subsection (1) in accordance with its by-laws.
Constraints on shares
A cooperative that has issued investment shares that are or were part of a distribution to the public, that remain outstanding and that are held by more than one person may, by a special resolution of its members and by a separate special resolution of the shareholders of each class of its investment shares, amend its articles to constrain
(a) the issue or transfer of its investment shares, or of any class or series thereof, to persons who are not resident in Canada;
(b) the issue or transfer of its investment shares, or of any class or series thereof, to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province
(i) to obtain a licence to carry on any business,
(ii) to become a publisher of a Canadian newspaper or periodical, or
(iii) to acquire investment shares of a financial intermediary as defined in the regulations; or
(c) the issue, transfer or ownership of its investment shares, or of any class or series thereof, to assist the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province or territory to receive licences, permits, grants, payments or other benefits because of attaining or maintaining a specified level of Canadian ownership or control.
Limitation of prohibition of investment shares
If the ownership by a person or class of persons of investment shares of a cooperative, or of any class or series thereof, would adversely affect the ability of the cooperative or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in clause (1)(c), the cooperative may, under that clause, limit the number of its investment shares, or of any class or series thereof, that may be owned, or prohibit the ownership of its investment shares, or any class or series thereof, by that person or that class of persons.
Change or removal of constraint
A cooperative referred to in subsection (1) may, by a special resolution of its members and by a separate special resolution of the shareholders of each class of its investment shares, amend its articles to change or remove any constraint on the issue, transfer or ownership of its investment shares.
The directors of a cooperative may, without further approval, revoke special resolutions referred to in subsection (1) or (3) before they are acted on if the special resolutions authorize the directors to do so.
(a) in respect of cooperatives or a class of cooperatives that constrains the issue, transfer or ownership of their investment shares, prescribing
(i) the disclosure required of the constraints in documents issued or published by the cooperatives,
(ii) the duties and powers of the directors of the cooperatives to refuse to issue or register transfers of investment shares of the cooperative in accordance with its articles,
(iii) the limitations on voting rights of any investment shares of the cooperatives held contrary to its articles,
(iv) the powers of the directors of the cooperatives to require disclosure of beneficial ownership of its investment shares and the right of the cooperatives and their directors, employees and agents to rely on that disclosure and the effects of that reliance, and
(v) the rights of any persons owning investment shares of the cooperatives at the time of an amendment to its articles constraining investment share issues or transfers; and
(b) defining "financial intermediary" for the purposes of subclause 48(1)(b)(iii).
Validity of acts
An issue or a transfer of an investment share of a cooperative or an act of a cooperative is valid notwithstanding any failure to comply with section 48 or regulations made under section 49.
Power to issue shares
Subject to this Act, and to the articles, the by-laws and any unanimous agreement of a cooperative, its investment shares may be issued to any person, at any time and for money or in exchange for any thing or service that its directors may decide to accept.
Liability of members and shareholders
Shares issued by a cooperative are non-assessable and its members and shareholders are not liable to the cooperative or to its creditors beyond the sum remaining unpaid on their subscriptions for shares or their undertakings to make member loans.
A share of a cooperative shall not be issued until it is fully paid, and a certificate for a member loan of a cooperative shall not be issued until the minimum amount for a member loan of the cooperative is fully paid,
(a) in money; or
(b) in property or past services that is the fair equivalent of the money that the cooperative would have received if the share had been issued for, or the member loan had been paid in, money.
Consideration other than money
In determining whether property or past services is the fair equivalent of a money consideration, the directors of a cooperative may take into account reasonable charges and expenses of organization and reorganization of the cooperative and payments for property and past services reasonably expected to benefit it.
For the purposes of this section, "property" does not include a promissory note or a promise to pay.
Requirements respecting distribution of surplus
Every cooperative
(a) shall, by its by-laws, provide that, before any distribution of its surplus for a financial year is made, such part thereof as may be necessary for those purposes shall be appropriated for, and transferred to, reserve funds duly established by by-laws or by resolution passed by the members at a general meeting, and shall be used to retire all or a part of any accumulated deficits;
(b) may provide, in the manner set out in its by-laws, for payment out of the surplus of dividends on its investment shares; and
(c) may, by its by-laws, provide for payment, out of surplus, of interest on its member or patronage loans or dividends on its membership shares at rates not exceeding the prescribed maximum rates nor exceeding the maximum rates specified in its articles.
Allocation of surplus
Except as in this Act otherwise expressly provided, each cooperative shall allocate among, and credit to its members its surplus for each financial year of the cooperative, and each of its members shall be entitled to a share thereof proportionate to the business done by that member with or through the cooperative in that financial year as computed by its directors at a rate approved by a resolution of its directors.
Computation of business done
The directors of a cooperative shall compute the amount of the business done by each of its members with and through the cooperative in each financial year of the cooperative in relation to
(a) the quantity, quality, kind and value of the goods bought, sold, handled, marketed or dealt in by the cooperative; and
(b) the services rendered
(i) by the cooperative on behalf of or to the member, whether as principal or agent of the member or otherwise, or
(ii) by the member on behalf of or to the cooperative;
with appropriate differences for the different classes, grades or qualities of the goods and services.
Allocation of surplus to non-members
The by-laws of a cooperative may provide that it may in each of its financial years allocate among, and credit to, patrons of the cooperative who are not members thereof a share of the surplus at a rate that is equal to, or less than, the rate at which it is distributable to its members; and the business done by its non-member patrons shall be computed in the manner in which business done by its members is computed.
Credit to non-member patron's account
Where a cooperative's by-laws provide for a share of the surplus to be allocated to non-member patrons, the by-laws may provide
(a) for any amount so allocated to a non-member patron to be credited to an account for the patron;
(b) for the amounts credited to the patron's account to be used to purchase membership shares for the patron, or pay the patron's membership fee, if the patron applies for membership and the application is approved; and
(c) for the balance in the patron's account to be transferred back to the cooperative if the patron does not apply for membership in accordance with the by-law, or the application is not approved.
Non-payment of small returns
A cooperative may by by-law provide that, where the patronage return that would otherwise be payable to any person from its surplus for a financial year does not exceed $2, or such smaller amount as may be specified in the by-law, no patronage return be paid to that person from that surplus, and that the amount that would otherwise be payable to the person as a patronage return shall be the property of the cooperative to be used as its board of directors may decide.
Use of patronage return for shares
A cooperative that has share capital may by by-law provide that, in each financial year of the cooperative, the whole of any patronage return credited to a person or such part thereof as may be specified in the by-laws shall be applied to purchase on behalf of the person membership shares of the cooperative, up to such number, if any, as may be specified in the by-laws.
Contents of by-law
A by-law under subsection (1) must require the following notices to be given:
(a) a notice to each member of
(i) the number and purchase price of the shares purchased or to be purchased for the member,
(ii) if the membership share capital consists of more than one class of shares, the class, and if applicable the series, of the shares purchased or to be purchased,
(iii) the manner in which the shares will be issued or transferred to the member, and
(iv) if applicable, details regarding the issuance and delivery of certificates for those shares;
(b) if a patronage return is credited to a non-member patron, a notice to the patron of the amount so credited.
Use of patronage returns for any class of membership shares
If a cooperative's membership share capital consists of more than one class of shares, a by-law described in section 56 or 58 must specify which class or classes of shares may be purchased under that by-law, which may be
(a) shares designated in the articles as membership shares; or
(b) shares designated in the articles as patronage shares.
Repurchase of shares
Where the by-laws of a cooperative contain provisions referred to in section 58, its articles or by-laws shall also provide for the repurchase of the shares by the cooperative in accordance with this Act, within such period and subject to such conditions as may be specified in its articles or by-laws.
Compulsory loan of patronage returns
A cooperative may by by-law require its members to lend to it the whole, or such part as may be specified in its by-laws, of the patronage return to which the members may become entitled in respect of any financial year, upon such terms and at such rate of interest, or without interest, as the by-laws may provide; and where its by-laws require such loans, they shall also provide for the repayment of any loan so made.
Effect of marketing plans
Where members of a cooperative are required by a marketing plan established under an Act of the Legislature or of the Parliament of Canada to sell or deliver goods or render services to or through a producer board, marketing commission or agency, then for the purposes of allocating, crediting and paying patronage returns among or to its members and for the purposes of making payments to its members as part of the price or proceeds of their goods or services, its members shall be deemed to have sold, delivered or rendered those goods or services to the cooperative, but the by-laws of the cooperative may provide that this section does not apply to a member unless conditions set out in the by-laws as to the delivery or rendering of the goods and services are fulfilled.
Community service cooperatives
Where a cooperative is, in the opinion of the Registrar, operating entirely for purposes of community service, the articles of the cooperative shall provide that no patronage returns shall be paid, and that its surplus for any financial year shall be used for the purposes of the cooperative or donated for community welfare.
Purchase of membership shares by cooperative
Subject to section 66 and its articles and by-laws, a cooperative may purchase or redeem any of its membership shares that are offered for sale or redemption or are available for compulsory purchase under section 243, and it shall, within one year of the date of purchase, pay in cash for shares so purchased.
Redemption of investment shares
Subject to its articles and subsection (2), a cooperative may at any time redeem or otherwise acquire any investment share issued by it.
A cooperative shall not make a payment to redeem or otherwise acquire its investment shares if there are reasonable grounds for believing that
(a) it is or would, after the payment, be unable to pay its liabilities as they become due; or
(b) the realizable value of its assets after the payment would be less than the total of the stated capital of all its issued shares and its liabilities.
Purchase or redemption of investment shares
Subject to section 66 and its articles, a cooperative may, at any time, redeem any investment share that is redeemable, in accordance with such price or formula as may be set out in its articles or, if the articles do not so provide, at fair market value.
Alternative investment share acquisition
Notwithstanding subsection 64(2), but subject to section 66 and its articles, a cooperative may purchase, redeem or otherwise acquire its investment shares
(a) to satisfy the claim of its members or shareholders who dissent under section 320;
(b) to comply with an order under section 365;
(c) to settle or compromise a debt or claim by or against the cooperative;
(d) to eliminate fractional shares of the cooperative;
(e) to fulfil the terms of a non-assignable option or obligation to purchase its shares owned by a director, officer or employee of the cooperative.
Limitation on purchase or redemption
A cooperative shall not make any payment to acquire or redeem a share under section 63, 65 or 246 or subsection 64(3), or to repay a member loan or a patronage loan, if there are reasonable grounds to believe that
(a) it is or would, after the payment, be unable to pay its liabilities as they became due; or
(b) the realizable value of its assets after the payment would be less than the total of:
(i) its liabilities, and
(ii) the amount that would be required to be paid to the holders of shares that have a right to be paid, on a redemption or liquidation, rateably with or in priority to the holders of the shares to be purchased or redeemed.
Further limitations
No cooperative shall exercise its powers to purchase its membership shares under section 63 if the result of so doing would be to reduce the number of holders of membership shares
(a) to fewer than three non-incorporated members, in a case where it has fewer than two members that are bodies corporate or one member that is a cooperative;
(b) to fewer than two members that are bodies corporate in a case where it has fewer than three non-incorporated members or one member that is a cooperative; or
(c) to fewer than one member that is a cooperative in a case where it has fewer than three non-incorporated members or two members that are bodies corporate.
Cancellation or resurrection of shares
Shares of a cooperative that are redeemed or otherwise acquired by it are cancelled or, if the articles limit the number of authorized shares, restored to the status of unissued shares.
Enforcement of contract to buy shares
A cooperative shall fulfil its obligations under a contract to buy shares or to repay member loans of the cooperative, except if the cooperative can prove that enforcement of the contract would put it in breach of subsection 64(2) or 66(1).
Right of claimant
Until the cooperative has fulfilled all its obligations under a contract referred to in subsection (1), the other party to the contract retains the status of claimant entitled to be paid as soon as the cooperative is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors and to the rights of any class of shareholders whose rights were in priority to the rights given to the class of investment shares to be purchased under the contract, but in priority to the rights of members and any other class of shareholders.
Money owing a debt
All moneys payable by any member to a cooperative under its articles or by-laws are a debt due from the member to the cooperative.
Prohibited loans and guarantees
A cooperative shall not, directly or indirectly, give financial assistance by means of a loan, guarantee or otherwise to any member, director, officer, shareholder or employee of the cooperative or of any affiliate of it for any purpose, or to any person for the purpose of or in connection with the purchase of a share of the cooperative, where there are reasonable grounds for believing that
(a) it is or would, after giving the financial assistance, be unable to pay its liabilities as they become due; or
(b) the realizable value of its assets, excluding the amount of the financial assistance, would after giving the financial assistance be less than the total of the stated capital of all its issued shares and its liabilities.
Permitted loans and guarantees
Notwithstanding clause (1)(b), but subject to clause (1)(a), a cooperative may give financial assistance by means of a loan, guarantee or otherwise
(a) to any person in the ordinary course of business, if the lending of money or the extending of credit is part of the ordinary business of the cooperative;
(b) to any person on account of expenditures incurred or to be incurred on behalf of the cooperative;
(c) to a subsidiary of the cooperative; and
(d) to employees of the cooperative or of any of its affiliates
(i) to enable or assist them to purchase or erect living accommodation for their own occupation, or
(ii) in accordance with a plan for the purchase of shares of the cooperative or any of its affiliates to be held by a trustee.
A contract made by a cooperative in contravention of this section may be enforced by the cooperative or by a lender for value in good faith without notice of the contravention.
No personal liability
The members and shareholders of a cooperative are not liable, solely because of being members or shareholders, for any liability, act or default of a cooperative, except as provided in this Act.
Lien on member's interest
A cooperative has a lien on any membership share of the cooperative registered in the name of a member of the cooperative or the member's legal representative, and on any other interest of the member in the property of the cooperative and on any sum payable by the cooperative to the member, for a debt owing by that member to the cooperative.
Subject to subsection 98(2), the articles of a cooperative may provide that it has a charge on an investment share registered in the name of a shareholder of the cooperative or the shareholder's legal representative for a debt owing by the shareholder to the cooperative in respect of a share issued by it, including such a debt unpaid as of the date the cooperative was continued under this Act.
Enforcement of liens and charges
A cooperative may enforce liens and charges referred to in section 72 in accordance with its by-laws.
Borrowing powers
Subject to the articles and by-laws of a cooperative, its directors may without authorization of the members
(a) borrow money upon the credit of the cooperative;
(b) issue, reissue, sell or pledge debt obligations of the cooperative; and
(c) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the cooperative, owned or subsequently acquired, to secure any debt obligation of the cooperative.
Stated capital account
A cooperative that is authorized to issue shares must maintain a stated capital account for each class and series of shares that it issues.
Consideration for shares
A cooperative must add to the appropriate stated capital account the full amount of any money, or the value of any thing or service, that it receives for shares it issues. For this purpose, if a membership share is purchased with patronage returns under a by-law described in section 56 or 58, the cooperative is deemed to have received an amount equal to the par value of the share.
Exception for non arm's length transactions
Notwithstanding subsection (2), where a cooperative issues shares
(a) in exchange for
(i) property of a person who immediately before the exchange did not deal with the cooperative at arm's length within the meaning assigned to that expression in the Income Tax Act (Canada), or
(ii) shares of, or another interest in, an entity that immediately before the exchange, or that because of the exchange, did not deal with the cooperative at arm's length within the meaning assigned to that expression in the Income Tax Act (Canada); or
(b) under an amalgamation agreement or arrangement, to members or shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated cooperative;
the cooperative may, subject to subjection (4), add to the stated capital accounts maintained for shares of the classes or series of the shares issued the whole or any part of the amounts of the money, or the value of the things or services, it receives in the exchange.
Limit on additions to a stated capital account
On issuing a share, a cooperative shall not add to a stated capital account in respect of the share an amount greater than the amount of money, or the value of the thing or service, it received for the share.
Constraint on additions to a stated capital account
The proposed addition of an amount to a stated capital account maintained by a cooperative in respect of a class or series of its shares must be approved in advance by special resolution of its members and, if the cooperative has issued investment shares, by a separate special resolution of its shareholders or its shareholders of each class or series of its investment shares, if
(a) the amount to be added was not received by the cooperative as consideration for the issue of shares; and
(b) the cooperative has issued shares of more than one class or series that are outstanding.
Membership share inclusion
For greater certainty, if a cooperative issues membership shares, it is deemed for the purposes of subsection 64(2), section 80 and clauses 70(1)(b), 86(b) and 308(2)(d), to have a separate stated capital account for each class of membership shares that includes each amount that it has received, or is deemed by subsection (2) to have received, for the shares of that class.
Other additions to stated capital account
When a body corporate is continued under this Act, it may add to a stated capital account any money, or the value of any thing or service, received by it for a share it issued.
When a body corporate is continued under this Act, subsection 75(2) does not apply to the money, or the value of things or services, received by it before it was so continued unless the share in respect of which the money, thing or service received is issued after the body corporate is continued.
When a body corporate is continued under this Act, any amount unpaid in respect of a share of any class or series issued by it before it was so continued and paid after it was so continued is added to the stated capital account maintained for shares of that class or series.
For the purposes of subsection 64(2), section 80 and clauses 70(1)(b), 86(b) and 308(2)(d), when a cooperative is continued under this Act, its stated capital accounts are deemed to include the amounts that would have been included in those accounts if the cooperative had been incorporated under this Act.
Membership shares with a par value
When a cooperative with membership shares is continued under this Act, subsection 75(6) applies to the cooperative.
A cooperative shall not reduce its stated capital or any stated capital account except as provided in this Act.
Retained earnings accounts
Subject to subsection 75(5), a cooperative continued under this Act may at any time add to a stated capital account any amount it has at the time of the continuance to the credit of a retained earnings or other similar account.
Reduction of capital
Subject to subsection (2), a cooperative may reduce its stated capital for any purpose by special resolution of its members and, if an investment share of the cooperative, or a share of any class or series thereof is proposed to be affected by the resolution, by separate special resolution of the holders of the investment shares or that class or series thereof.
Limitation on reductions
A cooperative shall not reduce its stated capital if there are reasonable grounds to believe that
(a) it is or would, after the reduction, be unable to pay its liabilities as they became due; or
(b) the realizable value of its assets after the reduction would be less than the total of its liabilities.
Where the stated capital of a cooperative is not wholly represented by realizable assets, subsection (2) does not apply to a reduction of its stated capital to an amount that is represented by realizable assets.
If several stated capital accounts
If a cooperative maintains more than one stated capital account, the special resolution to reduce stated capital required by subsection (1) shall specify the stated capital account or accounts from which the reduction will be deducted and the amount to be deducted from each.
A creditor of a cooperative may apply to a court for an order compelling a person
(a) to pay to the cooperative an amount equal to any liability of the person that was extinguished or reduced contrary to this section; or
(b) to pay or deliver to the cooperative any money or property that was paid or distributed to the person as a consequence of a reduction of stated capital made contrary to this section.
Limitation period
No application may be made under subsection (5) more than two years after the day
(a) the liability of the person to whom the application relates was extinguished or reduced; or
(b) the money or property was paid or distributed to the person to whom the application relates;
as the case may be.
Adjustment of stated capital account
On the redemption or acquisition by a cooperative of shares of a class or series of its shares, the cooperative shall deduct from the stated capital account for that class or series an amount calculated in accordance with the following formula:
A = B × C/D
is the amount to be deleted;
is the amount of the stated capital account for the class or series of shares immediately before the redemption or acquisition;
is the number of shares of the class or series that were redeemed or acquired on the redemption or acquisition;
is the number of shares of that class or series that had been issued and that were, immediately before the redemption or acquisition, outstanding.
If special resolution
A cooperative shall adjust its stated capital accounts in accordance with any special resolution made under subsection 79(1).
Class or series
On a conversion of investment shares of a class or series of investment shares of a cooperative into investment shares of another class or series of the investment shares of the cooperative or a change under section 297, a reorganization under section 321 or the redemption or exchange of investment shares under an order made under section 365, the cooperative shall
(a) deduct from the stated capital account for the class or series of shares converted or changed, or subject to the reorganization, redemption or exchange, an amount calculated in accordance with the following formula:
is the amount to be deducted,
is the amount of the stated capital account for the class or series of shares immediately before the conversion, change, reorganization, redemption or exchange,
is the number of shares of the class or series that were converted, changed, redeemed or exchanged on the conversion, change, reorganization, redemption or exchange,
is the number of shares of that class or series that had been issued and that were, immediately before the conversion, change, reorganization, redemption or exchange, outstanding; and
(b) add the result obtained under paragraph (a) and any additional amount received pursuant to the conversion, change, reorganization, redemption or exchange to the stated capital account for the other class or series of shares.
Stated capital of interconvertible shares
For the purposes of subsection (3) and subject to its articles, if a cooperative issues two classes of investment shares and there is attached to the shares of each of the classes a right to convert an investment share of that class into an investment share of the other class, and an investment share of one of the classes is converted into a share of the other class, the amount of stated capital attributable to a share in either class is the total of the stated capital accounts for both classes divided by the number of investment shares of both classes that had been issued and were, immediately before the conversion, outstanding.
For the purposes of this section, a cooperative holding shares in itself as permitted by section 84 is deemed not to have redeemed or acquired them.
Conversion or change of investment shares
Investment shares issued by a cooperative and converted into shares of another class or series or changed under section 297, or subject to a reorganization under section 321 or the redemption or exchange of investment shares under an order made under section 365, become shares of the other class or series of shares.
Effect on number of unissued shares
If the articles of a cooperative limit the number of authorized shares of a class of its investment shares and issued shares of that class or of shares of that class have become, under subsection (6), issued investment shares of another class or of a series of another class, the number of unissued shares of the first-mentioned class is, unless the articles provide otherwise, increased by the number of investment shares that, under subsection (6), became investment shares of another class or series.
Options and rights
A cooperative may issue certificates, warrants or other evidence of conversion privileges, options or rights to acquire its shares or securities.
Conversion for members only
A conversion privilege, option or right to acquire membership shares of a cooperative may be granted only to members of the cooperative, and is non-transferable.
The conditions of a conversion privilege, option or right to acquire shares or securities of a cooperative must be set out in
(a) the certificate, warrant or other evidence of the privilege, option or right; or
(b) the certificate evidencing the security to which the privilege, option or right is attached.
Subject to subsection (2), a conversion privilege, option or right to acquire securities of a cooperative may be made transferable or non-transferable, and options and rights to acquire securities of a cooperative may be made separable or inseparable from the securities to which they are attached.
Restriction regarding bearer investment shares
Despite section 81, a cooperative must not issue, in bearer form, a certificate, warrant or other evidence of a conversion privilege, option or right to acquire an investment share of the cooperative.
A cooperative must, on the request of a holder of a certificate, warrant or other evidence of a conversion privilege, option or right to acquire an investment share of the cooperative that was issued in bearer form before the coming into force of this section, issue in exchange to that holder, in registered form, a certificate, warrant or other evidence, as the case may be.
If the articles of a cooperative limit the number of shares of any class or series that it may issue, it must reserve sufficient shares of that class or series to meet the exercise of any conversion privileges, options or rights issued or granted by the cooperative to acquire shares of that class or series.
Holding own shares
Subject to sections 63 to 65 and 84, a cooperative shall not
(a) hold any shares in itself;
(b) hold any shares in its holding body corporate, other than, where the holding body corporate is a cooperative entity, the minimum number of membership shares required by the articles or by-laws of the holding body corporate to qualify for membership in the holding body corporate; or
(c) permit any of its subsidiaries to hold shares in the cooperative, other than the minimum number of membership shares required by the articles or by-laws of the cooperative to qualify for membership in it.
Disposal of shares
A cooperative shall cause any of its subsidiaries that holds shares in the cooperative contrary to subsection (1) to dispose of those shares no later than five years after the later of
(a) the day the subsidiary became a subsidiary of the cooperative; and
(b) the day the cooperative was continued under this Act.
Exception for holding own shares
A cooperative may, and may permit its subsidiaries to, hold in the capacity of a legal representative, shares in itself or in its holding body corporate, but only if the cooperative, holding body corporate or subsidiary does not have a beneficial interest in the shares.
Holding own shares by way of security
A cooperative may hold shares in itself or its holding body corporate by way of security for the purposes of a transaction entered into by it in the ordinary course of a business that includes the lending of money or the extending of credit.
Form of dividend
A cooperative may pay a dividend by issuing fully paid shares of the cooperative and, subject to section 86, a cooperative may pay a dividend in money or property, except that membership shares of a cooperative issued in payment of a dividend may only be issued to members of the cooperative.
If shares of a cooperative or of a class or series of its shares are issued in payment of a dividend, the declared amount of the dividend so paid stated as an amount of money shall be added to the stated capital account for the shares or that class or series of shares, as the case may be.
If shares of a cooperative or of a class or series of its shares are issued in payment of a patronage return, the amount of the patronage return so paid stated as an amount of money shall be added to the stated capital account for the shares or that class or series of shares, as the case may be.
Limitation on paying dividends
A cooperative shall not declare or pay a dividend if there are reasonable grounds to believe that
(a) it is, or would after the payment be, unable to pay its liabilities as they become due; or
(b) the realizable value of its assets after payment of the dividend would be less than the total of its liabilities and the stated capital of all its issued shares.
Debt obligations issued by a cooperative are not redeemed solely because the indebtedness evidenced by the debt obligation is repaid.
Cancellation, etc.
Debt obligations issued by a cooperative and purchased, redeemed or otherwise acquired by the cooperative may be cancelled or may be reissued to secure any obligation of the cooperative then existing or later incurred.
Application of The Securities Act
The Securities Act
(a) applies to the sale or issue by a cooperative of securities of the cooperative where the securities may be issued or sold to the public; and
(b) does not apply to the sale or issue by a cooperative of
(i) membership shares of the cooperative, or
(ii) securities of the cooperative where the sale or issue of the securities is restricted to members of the cooperative and where only members of the cooperative are eligible to own the securities.
Application of sections 89 to 91
Sections 89 to 91
(a) apply to the sale or issue by a cooperative of
(ii) securities of the cooperative where The Securities Act does not apply to the issue or sale; and
(b) do not apply to the sale or issue of securities by a cooperative where The Securities Act applies to the issue or sale.
Offering statement
Before a cooperative issues any shares or other securities, it shall send to the Superintendent, and receive a receipt from the Superintendent for, an offering statement in a form approved by the Superintendent
(a) that provides a full, true and plain disclosure of all the material facts relating to the shares or securities and the purposes for which the funds to be raised by their issue are to be used;
(b) that complies as to content with, and otherwise is in accordance with, this Act and the regulations; and
(c) that is accompanied by such documents, reports and other materials as are required by this Act and the regulations.
Material changes
Where there is a material change in the facts set out in an offering statement sent to the Superintendent by a cooperative, whether before or after the cooperative receives a receipt therefor from the Superintendent, the cooperative shall, within 30 days after the change, or after the cooperative becomes aware of the change, send to the Superintendent an amending statement giving full, true and plain particulars of the change.
Further offering statements
A cooperative may, and shall if so required by the Superintendent, send to the Superintendent, in the place of an amending statement required under subsection (2), a further offering statement in respect of an issue of shares or other securities by the cooperative, revised to give effect to all previous material changes to an earlier offering statement in respect of the shares or securities that was sent to the Superintendent.
Restraint on issue after material change
Where there is a material change in the facts set out in an offering statement in respect of the issue of shares or other securities by a cooperative that was sent to the Superintendent by the cooperative, the cooperative shall not issue any more of the shares or securities until it has sent to the Superintendent, and received from the Superintendent a receipt for, an amending statement under subsection (2) or a further offering statement under subsection (3) in respect of the shares or securities.
Issue of receipts
The Superintendent may, in the Superintendent's discretion, file and issue a receipt for any offering statement, amending statement or further offering statement sent by a cooperative to the Superintendent under subsection (1), (2) or (3) unless it appears to the Superintendent that
(a) the statement or any document required to be sent with the statement
(i) does not comply in any substantial respect with any of the requirements of this Act or the regulations,
(ii) contains a statement, promise, estimate or forecast that is misleading, false or deceptive, or
(iii) conceals or omits to state a material fact necessary in order to make information or statement contained therein not misleading in the light of the circumstances in which it is provided or made;
(b) the proceeds from the issue or sale of the shares or securities to which the statement relates that are to be paid into the treasury of the cooperative, together with other resources of the cooperative, are insufficient to accomplish the purpose of the issue indicated in the offering statement;
(c) an unconscionable consideration has been, or is intended to be, paid or given for promotional purposes or for the acquisition of property;
(d) an escrow or pooling agreement that the Superintendent considers necessary or advisable has not been entered into; or
(e) any agreement that the Superintendent considers necessary or advisable to accomplish the purpose indicated in the offering statement for the holding in trust of the proceeds payable to the cooperative from the issue or sale of the shares or securities pending the distribution of the shares or securities has not been entered into.
The Superintendent shall not refuse to file, and to issue a receipt for, an offering statement, amending statement or further offering statement sent by a cooperative under subsection (5) without making a ruling or order and without giving the cooperative an opportunity to be heard before making the ruling or order.
[Repealed] S.M. 2009, c. 19, s. 19.
S.M. 2009, c. 19, s. 19; S.M. 2019, c. 25, s. 20.
When no offering statement required
Section 89 does not apply to an issue of shares or other securities of a cooperative that are exempted from the requirements of that section under the regulations or by an exemption order made under section 89.2.
Request for exemption order
A cooperative seeking to issue shares or other securities may request an order exempting the cooperative from the requirements of section 89. The request must be made in writing to the Superintendent.
Approval of disclosure documents
The Superintendent may require a cooperative requesting an exemption order to provide disclosure documents respecting the shares or securities that meet with the Superintendent's approval.
Issuing and amending exemption order
The Superintendent may issue or amend an exemption order if he or she considers it appropriate.
Conditions of exemption order
The Superintendent may impose any terms or conditions on a cooperative in an exemption order that he or she considers appropriate.
Notice of material changes
Where there is a material change in the facts set out in a disclosure document approved by the Superintendent, the cooperative shall, within 30 days after the change, or after the cooperative becomes aware of the change, send an amended disclosure document to the Superintendent that gives full particulars of the change.
Where there is a material change in the facts set out in a disclosure document provided to the Superintendent, the cooperative shall not issue any more of the shares or securities until it has provided the Superintendent with amended disclosure documents that meet with the Superintendent's approval and the Superintendent issues an amended exemption order to the cooperative.
Duty to provide disclosure documents
Where a cooperative is required to provide the Superintendent with disclosure documents under this section, no share or security of the cooperative shall be sold to a person unless the latest disclosure documents approved by the Superintendent are given to the person before the agreement for the sale and purchase of the share or security is entered into.
Cease trading order
The Superintendent may order that trading in a cooperative's shares or other securities cease, if the Superintendent believes
(a) that the offering statement or a disclosure document, or a document provided with an offering statement or disclosure document,
(i) contains a statement, promise, estimate or forecast that is misleading, false or deceptive, or
(ii) conceals or fails to state a material fact necessary in order to make information or a statement contained therein not misleading in light of the circumstances in which it is provided or made;
(b) that the cooperative has failed to comply with a commitment or undertaking contained in an offering statement or a disclosure document, or a document provided with an offering statement or disclosure document; or
(c) that the cooperative has failed to comply with a term or condition imposed on it in an exemption order.
Notice of cease trading order
Without delay after making a cease trading order, the Superintendent shall give notice of it to
(a) the cooperative; and
(b) any agent of the cooperative of whom the Superintendent has been notified and who is acting in connection with the issue or sale of the shares or securities.
Opportunity to be heard
The Superintendent shall not make an order under subsection (1) in respect of the trading of shares or securities of a cooperative without giving the cooperative an opportunity to be heard before the order is made unless the Superintendent thinks that the time required for a hearing would be prejudicial to the public interest, in which case the Superintendent may make a temporary order under subsection (1) the effect of which expires 15 days after the order is made.
S.M. 2000, c. 14, s. 6; S.M. 2009, c. 19, s. 21; S.M. 2019, c. 25, s. 20.
Offering statement and cooling-off period
When a cooperative is required to provide an offering statement to the Superintendent before issuing any shares or other securities,
(a) no share or security of the issue shall be sold to a person unless, before the agreement for the sale and purchase of the share or security is entered into, the cooperative or its agent provides the person with
(i) a copy of the latest offering statement in respect of the issue for which a receipt has been received from the Superintendent; and
(ii) any amending statements in respect of the issue for which a receipt has been received from the Superintendent; and
(b) an agreement for the sale and purchase of the share or security is not binding on the purchaser under the agreement if, not later than midnight of the second day, not including Saturdays and holidays, after the day the purchaser received the copy of the offering statement and amending statements, if any, referred to in clause (a), the cooperative or its agent through whom the purchaser entered into the agreement receives written or telegraphic notice of the intention of the purchaser not to be bound by the agreement.
Cooling-off period if no offering statement required
When a cooperative is not required to provide an offering statement under section 89.1, an agreement for the purchase of a share or security of the cooperative is not binding on the purchaser if the cooperative or its agent through whom the purchaser entered into the agreement receives written notice of the purchaser's intention not to be bound by the agreement, within the following deadlines:
(a) if the cooperative is required to provide disclosure documents to the purchaser under subsection 89.2(7), by midnight of the second day, not including Saturdays and holidays, after the purchaser receives the required disclosure documents;
(b) in any other case, by midnight of the second day, not including Saturdays and holidays, after the purchaser agreed to purchase the share or security.
Notice to purchasers
If the Superintendent
(a) has issued a cease trading order against a cooperative under subsection 90(1); or
(b) believes that a cooperative
(i) has engaged in conduct that would warrant the making of a cease trading order, or
(ii) has failed to provide an offering statement or disclosure document as required by clause 91(1)(a) or subsection 89.2(7);
the Superintendent may do one or more of the following:
(c) order the cooperative to inform purchasers of any share or security of the cooperative about any right of rescission or other rights that the purchasers may have, in the manner specified by the Superintendent in the order;
(d) give notice to the purchasers of any share or security of the cooperative about any right of rescission or other rights that the purchasers may have in relation to the purchase, by publishing a notice in a newspaper or on a website, or in any other manner that the Superintendent considers appropriate;
(e) if a cease trading order has been made, order the cooperative to inform purchasers under clause (c) or give notice under clause (d) that a cease trading order has been made and the reasons for the making of the order.
SHARE CERTIFICATES, MEMBERSHIPS
AND TRANSFERS
In this Part,
"adverse claim", in respect of a security, 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 the security; (« opposition »)
"delivery" means voluntary transfer of possession; (« livraison » ou « remise »)
"fiduciary" means a trustee, guardian, committee, curator, tutor, executor, administrator, representative of a deceased person, and any other person acting in a fiduciary capacity; (« représentant »)
"fungible", in relation to securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (« fongibles »)
"genuine" means free of forgery or counterfeiting; (« authentique »)
"good faith", in respect of a transaction, means honesty in fact in the conduct of the transaction; (« bonne foi »)
"good faith purchaser", in respect of a security in bearer form or order form or a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank, means a purchaser of the security for value in good faith and without notice of any adverse claim in respect of the security who takes delivery of the security; (« acquéreur de bonne foi »)
"overissue" means the issue of securities
(a) the total number of which is in excess of any maximum number of such securities that the issuer is authorized by its articles or a trust indenture to issue, or
(b) the total value of which is in excess of the total value of such securities that the issuer is authorized by its articles or a trust indenture to issue; (« émission excédentaire »)
"purchaser" means a person who takes an interest in a security by sale, mortgage, hypothec, pledge, issue, reissue, gift or any other voluntary transaction; (« acquéreur »)
"security" or "security certificate" means a document issued by a cooperative 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 documents, and
(d) evidence of an investment share of, participation or other interest in, or obligation of, the cooperative,
but does not include
(e) a membership share or a document evidencing a membership share,
(f) a member loan or a document evidencing a member loan, or
(g) a patronage loan or a document evidencing a patronage loan; (« valeur mobilière » ou « certificat de valeurs mobilières »)
"transfer" includes transmission by operation of law; (« transfert »)
"valid", in respect of a security, means issued in accordance with the applicable law and the articles of the issuer, or validated under section 114. (« valide »)
For the purposes of this Part, a security is a negotiable instrument except where its transfer is restricted and the restriction or a reference to it is noted on the security in accordance with subsection 98(2).
Registered form
For the purposes of this Part, a security is in registered form if it
(a) specifies that the name of the 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) bears a statement that it is registered or in registered form.
For the purposes of this Part, a debt obligation is in order form if, by its terms, it is payable to the order of a person specified with reasonable certainty in it or, if that person assigns it, to the person to whom it is so assigned.
Bearer form
For the purposes of this Part, a security is in bearer form if it is payable to bearer according to its terms and not because of an endorsement.
Guarantor for issuer
For the purposes of this Part, a guarantor who guarantees a security issued by a cooperative is deemed to be the cooperative to the extent of the guarantee whether the guarantee or a reference to it is noted on the security.
This Part governs the transfer or transmission of securities of cooperatives.
Shares in the capital stock of a cooperative and memberships in a cooperative are transferable in such manner and subject to such conditions and restrictions as are contained in this Act and the regulations and in the articles and by-laws of the cooperative.
Where a security of a cooperative is transferred, the cooperative may charge a reasonable fee for a new security certificate issued in respect of the security and may require any security certificate previously issued in respect of the security to be deposited with the cooperative.
Allotment of shares
Subject to this Act and in the absence of any provision to the contrary in the articles or by-laws of a cooperative, shares in the capital stock of the cooperative may be allotted at such times, in such manner and to such persons or classes of persons as its directors may from time to time determine by resolution that is consistent with applicable laws in respect of human rights.
Security certificate
Every owner of a security of a cooperative may, on written request, require the cooperative to issue to the owner
(a) a security certificate that complies with this Act; or
(b) a non-transferable written acknowledgment of the owner's right to obtain a security certificate.
Joint owners
If a security of a cooperative is held jointly by more than one person
(a) the cooperative is not required to issue more than one security certificate in respect of the security; and
(b) delivery of a security certificate in respect of the security to one of the joint owners is deemed to be delivery to all of them.
A security certificate issued by a cooperative shall be signed by
(a) at least one director or officer of the cooperative;
(b) an individual on behalf of a director, transfer agent or branch transfer agent of the cooperative; or
(c) a trustee who certifies the certificate in accordance with a trust indenture.
Form of signature
A signature required under subsection (1) shall be either a signature manually written or a facsimile signature mechanically or otherwise reproduced.
Former director
A cooperative may issue security certificates that contain the signature of a person who is no longer a director or officer and the validity of the certificate is not adversely affected.
Certificates as evidence of title
A share certificate for shares in a cooperative is evidence of the title of the person named in the certificate to the shares mentioned in it.
Membership share and member loan certificates
The face of each certificate issued by a cooperative in respect of membership shares or a member loan after the coming into force of this section shall contain
(b) a statement that the cooperative is subject to this Act;
(c) the name of the person to whom it is issued;
(d) a statement that the certificate represents membership shares in or a member loan to the cooperative, and the number of the membership shares or the amount of the member loan;
(d.1) if the cooperative has more than one class or series of membership shares, the class and series of the share or shares represented by the certificate;
(e) a statement that the certificate is not transferable without the approval of the directors; and
(f) a statement that there is a charge on the membership shares or member loan represented by the certificate in favour of the cooperative for any indebtedness of the member named in the certificate to the cooperative.
Certificates for securities
The face of each certificate that a cooperative issues in respect of a security of the cooperative, other than a certificate for a membership share or a member loan, shall contain
(b) a statement that the cooperative is subject to this Act and the words "Incorporated under the Laws of Manitoba" or words of like effect;
(d) the number of investment shares that the certificate represents; and
(e) if the investment shares that the certificate represents are shares of a particular class or series, the designation of that class or series.
Notation of restrictions
A restriction, charge or endorsement described in subsection (3) in respect of a security issued by a cooperative or a body corporate before it is continued under this Act is not effective against a transferee of the security who has no actual knowledge of the restriction, charge or endorsement unless the restriction, charge or endorsement or a reference to it is noted conspicuously on the certificate for the security.
Restrictions, etc.
The restrictions, charges and endorsements referred to in subsection (2) in respect of a security of a cooperative or a body corporate are
(a) a restriction, other than a constraint under section 48, on transfer of investment shares of the cooperative or body corporate;
(b) a charge in favour of the cooperative or body corporate;
(c) an endorsement required by a unanimous agreement of the cooperative or body corporate; and
(d) an endorsement required under subsection 320(10) in respect of the security.
If the issued investment shares of a cooperative are or were part of a distribution to the public, remain outstanding and are held by more than one person, the cooperative shall not restrict the transfer or ownership of its investment shares of any class or series except by way of a constraint under section 48.
Conspicuous notation
A reference to a constraint on the issue, transfer or ownership of any class or series of investment shares shall be noted conspicuously on every security certificate evidencing such a share that is issued after the share becomes subject to the constraint under this Act, if the constraint is for the purpose of
(a) attaining or maintaining a level of Canadian ownership or control specified in its articles or required by law to carry on business or qualify for a benefit; or
(b) complying with any Act of Parliament or the legislature
(i) that requires any body corporate that carries on a particular business or activity to have a specified portion of its shares, or any class of its shares, owned, or to be controlled, by a specified class of persons, or
(ii) that disqualifies from carrying on a particular business or activity certain bodies corporate because a specified portion of their shares, or a class of their shares, are owned, or because they are controlled, by a specified class of persons.
Effect of failure to note constraint
A failure to note a constraint described in subsection (5) in respect of an investment share of a cooperative on the certificate issued for the share does not invalidate the share or the certificate and does not render the constraint ineffective.
Contents of certificate
Every share certificate for an investment share of a cooperative that is authorized to issue shares of more than one class or series shall clearly state
(a) the rights, privileges, restrictions, and conditions that attach to the shares of the class and series to which the certificate relates and that exist when the share certificate is issued; or
(b) that the class or series of shares to which the certificate relates has rights, privileges, restrictions or conditions attached to it and that the cooperative will provide a shareholder, on demand and without charge, a copy of any provisions of the articles and by-laws of the cooperative and any resolution
(i) that authorizes the issue of the classes or series or that fixes, changes or removes any rights, privileges, restrictions, and conditions attached to each class authorized to be issued, and to each series, that have been fixed or determined by the directors, or
(ii) that grants authority to the directors to fix or determine the rights, privileges, restrictions, and conditions of subsequent series.
Copy of information
If a share certificate for an investment share of a cooperative contains the statement referred to in clause (1)(b), the cooperative shall provide the shareholder, on demand and without charge, with a copy of the provisions and resolutions described in that clause.
A cooperative may issue a certificate for a fraction of an investment share in the cooperative or may instead issue a scrip certificate for the fraction of the share in registered form that entitles the holder to receive a certificate for a full investment share in the cooperative in exchange for scrip certificates for fractions of a share the total of which equals a full investment share.
100(1.1)
A cooperative must, on the request of a holder of a certificate for a fraction of an investment share or scrip certificate that is in bearer form and that was issued before the coming into force of this subsection, issue in exchange to that holder, in registered form, a certificate for a fraction of an investment share or a scrip certificate, as the case may be.
The directors of a cooperative may attach conditions to scrip certificates issued by the cooperative, including conditions that
(a) the scrip certificates become null or void if not used in an exchange for a full investment share before a specified date; and
(b) any investment shares for which the scrip certificates are exchangeable may, notwithstanding any pre-emptive right, be issued by the cooperative to any single person and the cooperative is not responsible for any rateable or other distribution among the former holders of the scrip certificates of any dividends or other proceeds arising out of the ownership of the scrips or the shares.
A holder of a fraction of an investment share of a cooperative is not entitled to exercise voting rights or to receive a dividend in respect of the fraction of the share unless
(a) the fraction of the share results from a consolidation of investment shares; or
(b) the articles of the cooperative provide otherwise.
Exercise of voting rights
A holder of a scrip certificate issued by a cooperative is not entitled to exercise voting rights in the cooperative or to receive a dividend in respect of the scrip certificate.
Membership certificates
The by-laws of a cooperative may provide that it is not required to issue membership share certificates or certificates in respect of member loans, and in that case
(a) the members register kept by the cooperative under section 28 is prima facie proof of the number of membership shares held by each member; and
(b) the cooperative shall, if requested in writing by a member, provide a statement to the member showing the interest of the member in the cooperative, including the number of membership shares held by, and the amounts of any member loan and patronage loan owed to, the member.
Where a cooperative has no share capital, every person who is a member of the cooperative is, upon request and without payment, entitled to a certificate signed by the proper officer or officers of the cooperative stating that the person is a member of the cooperative, but such a certificate is not a security certificate.
Transfers of memberships etc.
A transfer of a membership, a member loan, a patronage loan or a membership share in a cooperative is not valid for any purpose, except as evidence of, or exhibiting, the rights of the parties to the transfer as between those parties,
(a) unless a written application for membership by the transferee has been approved and the transfer has been authorized by a resolution of the directors of the cooperative or by a person authorized by a resolution of the directors to approve applications and transfers of that kind;
(b) the transferee has otherwise complied with the articles and by-laws of the cooperative and, if applicable, become a party to any unanimous agreement; and
(c) until notification of any approval given under clause (a) has been sent to the transferee and the transferee's name has been entered on the members register.
Dealings with registered owner
Subject to section 225, subsection 226(3) and section 231, where a person is named in the members register or securities register of a cooperative as a member of the cooperative or as the owner of a security of the cooperative, the cooperative or a trustee (as defined in section 164) may treat the person as a member of the cooperative or as the owner of the security, as the case may be, for all purposes.
Constructive registered owner
Notwithstanding section 103, a cooperative shall treat a person as the owner of a security of, membership share of or membership in the cooperative entitled to exercise all the rights of the registered owner of the security, share or membership, if the person furnishes evidence satisfactory to the cooperative that the person is
(a) where the registered owner is deceased, the executor, administrator, heir or legal representative of the heirs of the estate of the registered owner;
(b) where the registered owner is a minor, an incompetent person or a missing person, the guardian, committee, trustee, curator or tutor representing the minor, incompetent person or missing person; or
(c) where the registered owner is in liquidation or is a bankrupt, the liquidator of, or a trustee in bankruptcy for, the registered owner.
Permissible registered owner
If a person, other than a person described in section 104, upon whom the ownership of a security of a cooperative that is not registered in the person's name devolves by operation of law, furnishes proof of the person's authority to exercise rights or privileges in respect of the security, the cooperative shall treat the person as entitled to exercise those rights or privileges.
Limitation on duties of cooperative
A cooperative 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 member of the cooperative or the registered owner of any of its securities or by anyone whom it is permitted or required by section 103, 104 or 105 to treat as a member of the cooperative or as the owner or registered owner of the securities.
If a minor exercises any rights of a member of a cooperative or of ownership in the securities of a cooperative, no subsequent repudiation or avoidance by the minor is effective against the cooperative.
If a cooperative receives proof satisfactory to it of the death of any of the joint owners of a membership in the cooperative or of a security of the cooperative, it may treat the survivors of the joint owners as the owners of the membership or security, as the case may be.
Transmission of securities
Subject to any applicable law relating to the collection of taxes, a person who is the executor, administrator, heir or legal representative of the heirs of the estate of a deceased registered owner of a membership share, member loan, patronage loan or security of a cooperative is entitled to become the registered owner or to designate a registered owner of the share, loan or security, if the person deposits with the cooperative or its transfer agent
(a) the original grant of probate or of letters of administration, in respect of the estate of the deceased 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 laws of Canada or a province, or
(iii) a lawyer or notary acting on behalf of the person; or
(b) in the case of transmission by notarial will in the Province of Quebec, a copy of the will of the deceased authenticated pursuant to the laws of that Province;
(c) an affidavit or declaration in respect of the transmission made by the person, stating particulars of the transmission; and
(d) the certificate for the share, loan or security that was owned by the deceased owner, endorsed by the person and accompanied by any assurance the cooperative may require that the endorsement is genuine and effective.
Excepted transmissions
Notwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of the personal estate of a deceased owner of a membership share, member loan, patronage loan or security of a cooperative do not require a grant of probate or of letters of administration in respect of the transmission, the legal representative of the deceased owner is entitled, subject to any applicable law relating to the collection of taxes, to become the registered owner or to designate a registered owner of the share, loan or security, as the case may be, if the legal representative deposits with the cooperative or its transfer agent
(a) the certificate for the share, loan or security that was owned by the deceased owner; and
(b) reasonable proof of the governing laws, of the interest of the deceased owner in share, loan or the security and of the right of the legal representative or the person the representative designates to become the registered owner.
Right of cooperative
Where the documents referred to in subsection (1) or (2) have been deposited with a cooperative for the purpose of the transmission of a membership share, member loan, patronage loan or security of the cooperative, the cooperative or its transfer agent shall record in the members or other securities register of the cooperative the transmission of the share, loan or security from the deceased owner to the person entitled under subsection (1) or (2) to become the registered owner of the security or to such other person as that person may designate and, thereafter, to treat the person who thus becomes a registered owner as the owner of that share, loan or security, as the case may be.
Securities register
A cooperative that issues securities shall maintain a securities register in which it records the securities issued by it in registered form, showing with respect to each class or series of securities
(a) the names, in alphabetical order, and the last known address of each person who owns or previously owned the security;
(b) the number of securities owned by each security owner; and
(c) the date and particulars of the issue and transfer of each security.
Location of register
The securities register of a cooperative shall be maintained at the cooperative's registered office or at any other place in Manitoba designated by its directors.
Branch registers
A cooperative may maintain additional branch securities registers in other places designated by its directors.
Contents of branch register
A branch securities register of a cooperative shall only contain particulars of securities issued or transferred at the branch, and the same information shall also be recorded in the central securities register of the cooperative.
Destruction of certificates
A cooperative or its agent or a trustee, as defined in section 164, is not required to produce
(a) a security certificate in registered form that is cancelled, an instrument referred to in any of subsections 81(1), (2) or (3) in registered form that is cancelled or a like instrument in registered form that is cancelled, after six years after its cancellation;
(b) a security certificate in bearer form that is cancelled, an instrument referred to in any of subsections 81(1), (2) or (3) in bearer form that is cancelled or a like instrument in bearer form that is cancelled, after its cancellation; or
(c) an instrument referred to in any of subsections 81(1), (2) or (3) that has expired or a like instrument after it has expired, irrespective of its form, after the its expiration.
A cooperative may appoint an agent to maintain securities registers on its behalf.
The registration in a securities register maintained by a cooperative of the issue or transfer of an investment share of the cooperative is complete and valid registration for all purposes.
Overissue
Subject to this section, the provisions of this Part that validate a security or compel its issue or reissue do not apply if the validation, issue or reissue of a security would result in overissue.
Rights of recipient of overissued security
A person who is entitled to the validation or issue of a security of a cooperative may, where the validation or issue has resulted or would result in overissue
(a) if a valid security of the cooperative that is similar in all respects to the security involved in the validation or issue is reasonably available for purchase, compel the cooperative to purchase and deliver that valid security against the surrender of the entitlement of the person or the overissued security, if it has been issued to the person; and
(b) if a valid security of the cooperative that is similar in all respects to the security involved in the validation or issue is not reasonably available for purchase, recover from the cooperative an amount equal to the price that the last purchaser for value of the invalid security paid for it.
Increase in capital
Overissued securities of a cooperative are valid from the date they were issued only if the cooperative increases the number of its authorized securities to a number equal to or greater than the number of securities previously authorized plus the number of the securities overissued.
Subsection 64(2) and sections 66, 67 and 80 do not apply to a payment or purchase by a cooperative under section 114.
Rules of action
In any action on or in respect of a security of a cooperative in which the validity of a security is in issue
(a) each signature on the certificate for the security or in a necessary endorsement is admitted unless specifically denied in the pleadings;
(b) a signature on the certificate for the security is presumed to be genuine and authorized but, if the effectiveness of the signature is in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;
(c) if a signature on the certificate for the security is admitted or established, production of the certificate entitles the holder or a person claiming under the holder to recover on the security unless the other party establishes a defence or defect going to the validity of the security; and
(d) if the other party establishes a defence or defect going to the validity of the security, the holder or other person claiming under the holder has the burden of establishing that the defect is ineffective against the holder or the other person, as the case may be.
Delivery of securities
A person who is required to deliver securities of a cooperative may, in performance of the requirement deliver any security of the cooperative of the specified class or series
(a) in bearer form;
(b) in registered form in the name of the transferee; or
(c) endorsed to the person or endorsed in blank.
Subsection (1) is subject to any agreement to the contrary, to any applicable Act of Parliament or the Legislature or to any applicable regulation or stock exchange rule.
Incorporation by reference
The terms of a security of a cooperative include those stated on the certificate for the security and those incorporated by reference in the certificate to another document, an Act of Parliament or the Legislature, a regulation, a rule, or an order, to the extent that the incorporated terms do not conflict with those stated on the security.
Purchaser without notice
Subsection (1) applies to a good faith purchaser of a security of a cooperative, but the incorporation by reference in the certificate for the security to another document , an Act, a regulation , a rule or an order is itself not notice of a defect to the purchaser even if the certificate expressly states that a person accepting it admits that notice.
Validity of security
A security of a cooperative is valid in the hands of a good faith purchaser.
Subject to section 123, the fact that something purporting to be a security of a cooperative is not genuine is a complete defence for the cooperative even against a good faith purchaser of the thing.
Other defences fail
All other defences of a cooperative to a claim under a security of the cooperative, including non-delivery and conditional delivery of the security or of a certificate for the security, are ineffective against a good faith purchaser.
Deemed notice
Where a person purchases a security of a cooperative, if the security becomes stale, the purchaser is deemed to have notice of
(a) any defect in the issue of a security or the certificate for the security; and
(b) any defence of the cooperative.
Stale security
For the purpose of subsection (1), a security of a cooperative becomes stale if
(a) the purchaser acquires the security more than two years after
(i) the day on which performance of the principal obligation evidenced by the security was due, or
(ii) the day on or after which the security is to be presented or surrendered for redemption or exchange; or
(b) the payment of money or the delivery of securities is required in order to present or surrender the security, the money or securities are available on the day for the payment or delivery and the purchaser acquires the security more than one year after that day.
Unauthorized signature
Subject to subsection (2), an unauthorized signature on the certificate for a security of a cooperative is ineffective.
Limited effectiveness
An unauthorized signature on the certificate for a security of a cooperative is effective in favour of a good faith purchaser of the security if the signature was made by
(a) an authenticating trustee, transfer agent or other person entrusted by the cooperative with the duty to sign the certificate for the security, or similar certificates, or to prepare them for signing; or
(b) an employee of the cooperative, or a person referred to in clause (a), whose regular duties include the handling of securities of the cooperative.
Completion of form
If a certificate for a security of a cooperative contains the signatures necessary for its issue or transfer but is incomplete in any other respect, any person may complete it in accordance with their authority.
A security of a cooperative that was completed incorrectly is enforceable by a good faith purchaser of the security.
A completed security of a cooperative that was improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.
A person who has signed a security of a cooperative as an authenticating trustee, transfer agent or other person entrusted by the cooperative with the duty to sign the security guarantees to a good faith purchaser of the security that
(a) the security is genuine;
(b) the person's acts in connection with the security are within the person's authority; and
(c) the person has reasonable grounds for believing that the security is in the form and within the amount the cooperative is authorized to issue.
Unless agreed otherwise, a person referred to in subsection (1) does not assume any further liability for the validity of the security of a cooperative.
Acquisition of rights
On delivery of a certificate for a security of a cooperative to a purchaser of the security, the purchaser acquires the rights in the security that the assignor or transferor had or had authority to convey.
Claim free
A good faith purchaser of a security of a cooperative acquires it free from any adverse claim.
No better position
A purchaser of a security of a cooperative who was a party to a fraud or illegality affecting the security or who, as a prior holder, had notice of an adverse claim does not acquire a better position by purchasing or acquiring the security from a later good faith purchaser.
Limited interests
A purchaser of a limited interest in a security of a cooperative acquires rights only to the extent of the interest purchased.
A purchaser of a security of a cooperative, or a broker for a seller or purchaser of the security, is deemed to have notice of an adverse claim if
(a) the security has been endorsed "for collection" or "for surrender" or for some other purpose other than transfer; or
(b) the security is in bearer form and has a statement on it that it belongs to a person other than the transferor.
For the purposes of clause (1)(b), the mere writing of a person's name on a security of a cooperative is not a statement that it belongs to the person named.
No duty to inquire
A purchaser of a security of a cooperative, or a broker for the seller of the security or the purchaser, has no duty to inquire into the rightfulness of the sale or transfer and, subject to sections 130 and 132, has no notice of an adverse claim.
Third party holding
Subsection (1) applies to the purchaser of a security of a cooperative or a broker for the seller of the security or the purchaser even if the purchaser or broker has notice that the security is held by a third person or is registered in the name of or endorsed by a fiduciary.
A purchaser of a security of a cooperative or a broker for the seller of the security or the purchaser, who knows that the sale or transfer is for the personal benefit of a fiduciary and not for the benefit of the person lawfully entitled to the benefit through the fiduciary or that the sale or transfer is otherwise in breach of the fiduciary's duty, is deemed to have notice of an adverse claim.
Events not constituting adverse claim
The following events do not constitute notice of an adverse claim in respect of a security of a cooperative, except if the security becomes stale:
(a) an event that creates a right to performance of the principal obligation evidenced by the security;
(b) an event that sets the day on or after which the security is to be presented or surrendered for redemption or exchange.
Staleness
For the purposes of subsection (1), a security of a cooperative becomes stale if
(a) the purchaser acquires the security more than one year after
(ii) the day on or after which the security was to be presented or surrendered for redemption or exchange; or
(b) the payment of money or the delivery of securities is required in order to present or surrender the security, the money or securities are available on the day for the payment or delivery and the purchaser takes the security more than six months after that day.
A person who presents a security of a cooperative for registration of transfer or for payment or exchange guarantees to the cooperative that the person is entitled to do so.
Limitation on guarantee
A good faith purchaser of a security of a cooperative who receives a new, reissued or re-registered security and who registers a transfer guarantees only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.
Content of guarantee
A person who transfers a security of a cooperative to a purchaser of the security for value guarantees to the purchaser by that transfer only that
(a) the transfer is effective and rightful;
(b) the security is genuine and has not been materially altered; and
(c) the person knows of nothing that might impair the validity of the security.
Guarantee of intermediary
An intermediary delivering a security of a cooperative to a purchaser who knows that the intermediary is an intermediary guarantees only the good faith of the intermediary.
Guarantee of broker
A broker for the seller or purchaser of a security of a cooperative gives to a customer, to the cooperative and to a purchaser the guarantees provided in sections 134, 135 and 136 and has the rights and privileges of a purchaser under those sections, and those guarantees of and in favour of the broker acting as an agent are in addition to guarantees given by the customer and guarantees given in favour of the customer.
Right to compel endorsement
If a registered security of a cooperative is delivered to a purchaser of the security without a necessary endorsement, the purchaser has the right to demand the endorsement and the purchaser becomes a good faith purchaser after the endorsement.
Definition of "appropriate person"
In this section, section 140, subsections 147(1) and 155(1) and section 159, "appropriate person", in respect of the endorsement on, or the endorsing of, a security of a cooperative, means
(a) the person who is specified by the security or by special endorsement on the certificate for the security to be entitled to the security;
(b) if a person described in clause (a) is described as a fiduciary but is no longer serving as one, either that person or that person's successor;
(c) if the security or a special endorsement on the certificate for the security specifies more than one person as fiduciaries and one or more of those persons is no longer a fiduciary, the remaining fiduciary or fiduciaries, whether a successor for the departed fiduciary has been appointed or qualified;
(d) if a person described in clause (a) is an individual and is without capacity to act because of death, incompetence, minority or other incapacity, the person's fiduciary;
(e) if the security or a special endorsement on the certificate for the security specifies more than one person with right of survivorship and because of the death of one or more of them, not all of the persons can sign, the survivor or survivors;
(f) any person who has the legal power to endorse the security or to sign the endorsement on the security; or
(g) to the extent that a person described in any of clauses (a) to (f) may act through an agent, the person's authorized agent.
Time for determination
The authority of a person signing an endorsement on a security of a cooperative is determined as of the time of signing.
An endorsement of a security of a cooperative in registered form made for the purposes of an assignment or transfer of the security is made when an appropriate person signs either the certificate for the security or a separate document assigning or transferring the security, or when the signature of an appropriate person is written without more on the back of the certificate for the security.
Blank or special
An endorsement referred to in subsection (1) may be
(a) in blank; or
(b) special.
Blank endorsement
For the purposes of this Act an endorsement of a security of a cooperative in blank includes an endorsement of the security to bearer.
Special endorsement
An endorsement referred to in subsection (1) is a special endorsement if it specifies the person to whom the security is to be assigned or transferred, or who has power to assign or transfer it.
Right of holder
A holder of a security of a cooperative may convert an endorsement of the security in blank into a special endorsement.
Immunity of endorser
Unless otherwise agreed, the endorser of a security of a cooperative does not by the endorsement, guarantee or warrant that the security will be honoured by the cooperative.
Partial endorsement
An endorsement on a certificate for a security of a cooperative that purports to be an endorsement for the purpose of assigning or transferring only a part of the security representing units intended by the cooperative to be separately transferable is effective to the extent of the part of the security referred to in the endorsement.
Effect of failure by fiduciary to comply
Where a fiduciary endorses a security of a cooperative for the purpose of assigning or transferring the security and, in so doing, fails to comply with the document that is the source of the fiduciary's power or with the law of the jurisdiction governing the fiduciary relationship, the failure does not render the fiduciary's endorsement unauthorized for the purposes of this Part.
Effect of endorsement without delivery
An endorsement of a security of a cooperative does not constitute a transfer of the security until delivery of the certificate for the security on which the endorsement appears or, if the endorsement is on a separate document, until delivery of both the certificate and that document.
Endorsement in bearer form
An endorsement of a security of a cooperative in bearer form may give notice of an adverse claim in respect of the security under section 130 but does not otherwise affect any of the holder's rights.
Effect of unauthorized endorsement
The owner of a security of a cooperative may assert the ineffectiveness of an endorsement of the security against the cooperative or against a purchaser of the security, other than a good faith purchaser who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the owner
(a) has ratified the endorsement that the owner asserts is ineffective; or
(b) is otherwise prevented from calling into question the effectiveness of an unauthorized endorsement.
Liability of issuer
A cooperative that registers an assignment or transfer of a security of the cooperative based on an unauthorized endorsement is liable for improper registration.
Guarantee of guarantor of signature
A person who guarantees the signature of an endorser of a security of a cooperative guarantees that, at the time of signing, the signer was an appropriate person to endorse and the signature was genuine, but does not otherwise guarantee the rightfulness of the assignment or transfer to which the endorsement relates.
Guarantee of guarantor of endorsement
A person who guarantees the endorsement of a security of a cooperative guarantees both the signature of the endorser and the rightfulness, in all respects, of the assignment or transfer to which the endorsement relates, but a cooperative may not require a guarantee of endorsement as a condition to registration of assignment or transfer.
Extent of liability
A guarantee referred to in subsections (1) or (2) is made to any person who, relying on the guarantee, acquires or deals with the security to which the guarantee relates, and the guarantor is liable to the person for any loss resulting from breach of the guarantee.
Presumption of delivery
Delivery of a security of a cooperative to a purchaser occurs when
(a) the purchaser or a person designated by the purchaser acquires possession of the security or the certificate for the security;
(b) the purchaser's broker acquires possession of the security or a certificate for it specially endorsed to or issued in the name of the purchaser;
(c) the purchaser's broker sends the purchaser confirmation of the purchase of the security and the broker in the broker's records identifies the security, or another specific security that is identical to it, as belonging to the purchaser; or
(d) where the security is an identified security to be delivered while still in the possession of a third person, that third person acknowledges that it is held for the purchaser.
Presumption of ownership
A purchaser is the owner of a security of a cooperative held for the purchaser by a broker, but the purchaser is not a holder of the security held by the broker unless delivery of it has occurred in accordance with clause 148(b) or (c).
Ownership of part of fungible bulk
If a security of a cooperative is part of a fungible bulk, a purchaser of the security is the owner of the purchaser's proportionate interest in the fungible bulk.
Notice to securities broker of adverse claim
Where a broker for a purchaser takes delivery as a holder for value of a security of a cooperative, notice of an adverse claim in respect of the security received by the broker or the purchaser after the delivery 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.
Delivery of security
Unless agreed otherwise, if a sale of a security of a cooperative is made on a stock exchange or otherwise through brokers,
(a) the duty of the seller to deliver the security is fulfilled when the seller delivers the security to the seller's broker or to a person designated by the seller's broker or when the seller causes an acknowledgement to be made to the seller's broker that the security is held for the purchaser; and
(b) the broker, including a correspondence broker, acting for the seller fulfils that broker's duty to deliver by delivering the security or a like security to the purchaser's broker or to a person designated by the purchaser's broker or by affecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.
Duty to deliver
Except as provided otherwise in this section and unless agreed otherwise, a seller's duty to deliver a security of a cooperative under a contract of purchase of the security is not fulfilled until the seller 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.
Delivery to securities broker
Subsection (1) does not apply to a sale of a security of a cooperative to a broker purchasing for the broker's own account, unless the sale is made on a stock exchange.
Right to reclaim possession
A person against whom an assignment or transfer of a security of a cooperative is wrongful may, against anyone except a good faith 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.
Recovery when unauthorized endorsement
If the assignment or transfer of a security of a cooperative is wrongful because of an unauthorized endorsement, the rightful owner of the security may reclaim possession of it or a new security even from a good faith purchaser if the ineffectiveness of the purported endorsement for the assignment or transfer is asserted against the purchaser under section 146.
Right to requisites for registration
Unless agreed otherwise, a transferor of a security of a cooperative shall, on demand, supply a purchaser of the security with proof of the transferor's authority to transfer the security or with any other requisite that is necessary to obtain registration of the transfer of the security, but if the transfer is not for value, it is not necessary for the transferor to provide proof of authority to transfer the security unless the purchaser pays the reasonable and necessary costs of the proof and transfer.
Rescission of transfer
If a transferor of a security of a cooperative fails to comply, within a reasonable time, with a demand under subsection (1) by the purchaser, the purchaser may reject or rescind the transfer.
Seizure of security
No seizure of a security of a cooperative or other interest evidenced by the security is effective until the person making the seizure obtains possession of the security or the certificate for the security.
Not liable if good faith delivery
An agent, bailee or depository, who in good faith has received a security of a cooperative and sold, pledged or delivered it in accordance with the instructions of the principal, bailor or depositor is not in breach of a fiduciary duty or otherwise liable even though the principal, bailor or depositor had no right to dispose of the security.
Duty to register transfer
If a security of a cooperative in registered form or a transfer thereof is presented for registration, the cooperative shall register the security or transfer if
(a) the security is endorsed or the transfer is signed by an appropriate person;
(b) the cooperative is given reasonable assurance that the endorsement or signature is genuine and effective;
(c) the cooperative has no duty to inquire into adverse claims or has discharged that duty;
(d) all applicable laws relating to the collection of taxes have been complied with;
(e) the transfer is rightful or is to a good faith purchaser; and
(f) any fee in respect of the transfer authorized under section 94 has been paid.
Liability for delay
A cooperative that has a duty to register a transfer of a security is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from failure or refusal to register the transfer.
Assurance of endorsement
Where a security of a cooperative or a transfer thereof is presented to the cooperative for registration, the cooperative may require an assurance that each necessary endorsement on the security or the transfer is genuine and effective by requiring a guarantee of the signature of the person endorsing the security or signing the transfer and by requiring
(a) if the endorsement or transfer is signed by an agent, reasonable assurance of authority to sign;
(b) if the endorsement or transfer is made by a fiduciary, evidence of the appointment or incumbency of the fiduciary;
(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 is feasible to cases set out in clauses (a) to (c).
Sufficiency of guarantee
For the purposes of subsection (1), a guarantee of the signature of a person given to a cooperative is sufficient if it is signed by or on behalf of a person whom the directors of the cooperative believe, or the officer of the cooperative designated by the directors for the purpose believes, on reasonable grounds, to be a responsible person.
A cooperative may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).
Evidence of appointment or incumbency
For the purpose of satisfying a requirement of a cooperative under clause (1)(b) in respect of an endorsement on or a transfer of a security of the cooperative, the following constitutes sufficient evidence of appointment or incumbency of a fiduciary
(a) in the case of a fiduciary of a deceased security holder's estate or succession, a certified copy of the document referred to in clause 109(1)(a) or (b) and a certified copy of the document referred to in 109(1)(c) dated not earlier than 60 days before the day the security or transfer is presented for registration; and
(b) in the case of any other fiduciary, a certified copy of the document that evidences the appointment or other appropriate evidence satisfactory to the cooperative.
A cooperative may adopt reasonable standards with respect to evidence referred to in clause (4)(b).
No notice to issuer
Subject to section 157, a cooperative is deemed not to have notice of the content of a document referred to in subsection (4) that is obtained by the cooperative except to the extent that the contents relate directly to appointment or incumbency of a fiduciary.
Notice from additional documentation
If a cooperative, in relation to a transfer of its securities, demands assurance other than an assurance specified in subsection 156(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the cooperative is deemed to have notice of all matters contained in the document that affect the transfer.
Limited duty of inquiry
Where a security of a cooperative is presented to the cooperative for registration, it has a duty to inquire into adverse claims in respect of the security if the cooperative
(a) receives written notice of an adverse claim in respect of the security at a time and in a manner that provides the cooperative with a reasonable opportunity to act on the notice 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) is deemed to have notice of an adverse claim in respect of the security from a document referred to in section 157 that it obtained and that discloses, either directly or by inference, an adverse claim in respect of the security.
Discharge of duty
A cooperative may discharge a duty of inquiry into an adverse claim in respect of a security of the cooperative by any reasonable means, including notifying the 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 the security or a transfer thereof has been presented for registration by a named person and that the security or transfer will be registered unless, not later than 30 days after the day the notice is sent, the cooperative
(a) is served with a restraining order or other order of the court; or
(b) is provided with an indemnity bond sufficient in the judgment of directors of the cooperative to protect the cooperative and its transfer agent and other agents from any loss that may be incurred by any of them as a result of complying with the adverse claim.
Duration of notice of adverse claim
A written notice received by a cooperative of an adverse claim is ineffective after a day that is 12 months after the day the notice was received unless the notice is renewed in writing, in which case the notice is effective for an additional 12 months after the day the renewal is received.
Inquiry into adverse claim
Unless a cooperative is deemed to have notice of an adverse claim in respect of a security of the cooperative from a document referred to in section 157 that it obtained or has received notice of an adverse claim in respect of the security under subsection 158(1), if the security is presented to it for registration and is endorsed by the appropriate person, the cooperative has no duty to inquire into adverse claims and, in particular,
(a) if the security or a transfer thereof is presented to the cooperative for registration in the name of a person who is a fiduciary or who is described as a fiduciary, the cooperative is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and it may then assume, without inquiry, that the newly registered owner continues to be the fiduciary until the cooperative receives written notice that the fiduciary is no longer acting as such in respect of the security;
(b) if the security or a transfer thereof is presented to the cooperative for registration on an endorsement or transfer signed by a fiduciary, the cooperative 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) the cooperative is deemed not to have notice of the contents of a court record or any registered document even if the record or document is in its possession and the transfer is made, on an endorsement or transfer signed by a fiduciary, to the fiduciary or to the fiduciary's nominee.
Limitation on issuer's liability
Except as provided otherwise in any applicable law relating to the collection of taxes, a cooperative 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 of the cooperative if
(a) the necessary endorsements were on or with the security when it, or a transfer of the security, were presented to the cooperative or its transfer agent for registration; and
(b) the cooperative had no duty to inquire into adverse claims in respect of the security or had discharged that duty.
Duty of issuer on default
If a cooperative has registered a transfer of a security of the cooperative to a person who is not entitled to it, the cooperative shall on demand deliver a like security to the owner of the security unless
(a) the cooperative is not liable because of subsection (1);
(b) the owner is not entitled, because of subsection 161(1), to assert a claim to a new security; or
(c) the delivery would result in an overissue.
Lost or stolen security
The owner of a security of a cooperative who fails to notify the cooperative of an adverse claim in respect of the security, in writing, within a reasonable time after the owner knows of a loss, apparent destruction or wrongful acquisition, of the security is not entitled to assert against the cooperative a claim to a new security if the cooperative has registered a transfer of the security.
Duty to issue new security
If the owner of a security of a cooperative claims that the security has been lost, destroyed or wrongfully acquired, the cooperative shall issue a new security in place of the original security if the owner
(a) so requests before the cooperative has notice that the security has been acquired by a good faith purchaser;
(b) provides the cooperative with an indemnity bond in an amount sufficient to protect the cooperative from loss arising from claims of any other person who may claim a right to or interest in the security; and
(c) satisfies any other reasonable requirements imposed by the cooperative.
If, after the issue under subsection (2) of a new security of a cooperative, a good faith purchaser of the original security presents the original security for registration of transfer, the cooperative shall register the transfer unless registration would result in an overissue.
Right of issuer to recover
Where a cooperative has issued a new security of the cooperative under subsection (2), and is required, under subsection (3), to register a transfer of the security, in addition to the rights that the cooperative has under an indemnity bond, it 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 good faith purchaser of that new security.
An authenticating trustee, transfer agent or other agent of a cooperative has, in respect of the issue, registration of transfer and cancellation of a security of the cooperative,
(a) a duty to the cooperative to exercise good faith and reasonable diligence;
(b) the same obligations to the holder or owner of the security as the cooperative; and
(c) the same rights, privileges and immunities, as the cooperative.
Notice to agent
Notice to an authenticating trustee, transfer agent or other agent of a cooperative is notice to the cooperative in respect of the functions performed by the trustee or agent, as the case may be.
TRUST INDENTURES
"event of default" means an event specified in a trust indenture on the occurrence of which
(a) a security interest constituted by the trust indenture becomes enforceable, or
(b) the principal, interest and other moneys payable under the trust indenture become or may be declared to be payable before maturity,
but the event is not an event of default until all conditions prescribed by the trust indenture in connection with the event for the giving of notice or the lapse of time or otherwise have been satisfied; (« cas de défaut »)
"trustee" means any person appointed as trustee under the terms of a trust indenture to which a cooperative is a party and includes any successor trustee. (« fiduciaire »)
This Part applies to trust indentures if the debt obligations issued or to be issued under the trust indenture are part of a distribution to the public.
The Superintendent may exempt a trust indenture from the application of this Part if the trust indenture, the debt obligations issued thereunder and the security interest effected thereby are subject to the law of a province other than Manitoba, or of Canada, or a country other than Canada that is substantially equivalent to this Part.
No person shall be appointed as trustee if there is a material conflict of interest between the person's role as trustee and the person's role in any other capacity.
Eliminating conflict of interest
A trustee shall, within 90 days after the trustee becomes aware that a material conflict of interest exists,
(a) eliminate the conflict of interest; or
(b) resign from office.
Validity despite conflict
A trust indenture, any debt obligations issued thereunder and a security interest effected thereby are valid notwithstanding any material conflict of interest of the trustee.
Removal of trustee
If a trustee contravenes subsection (1) or (2), any interested person may apply to the court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.
Qualification of trustee
A trustee under a trust indenture or, if more than one trustee is appointed under the indenture, at least one of them shall be a body corporate incorporated under the laws of Canada or a province of Canada and authorized to carry on the business of a trust company.
List of security holders
The holder of a debt obligation issued by a cooperative under a trust indenture may, upon payment of a reasonable fee to the trustee under the indenture, require the trustee to furnish, within 15 days after delivering to the trustee the statutory declaration referred to in subsection (4), a list setting out
(a) the names and addresses of the registered owners of outstanding debt obligations of the cooperative;
(b) the principal amount of the outstanding debt obligations owned by each of the owners described in clause (a); and
(c) the total of the principal amounts of all the outstanding debt obligations of the cooperative;
as shown on the records maintained by the trustee on the day that the statutory declaration is delivered.
Duty of issuer
Upon the demand of a trustee under a trust indenture made by a cooperative, the cooperative shall furnish the trustee with the information required to enable the trustee to comply with subsection (1).
Corporate applicant
If the person requiring a trustee to furnish a list under subsection (1) is a body corporate, the statutory declaration required under that subsection shall be made by a director or officer of the body corporate.
Contents of statutory declaration
The statutory declaration required under subsection (1) shall state
(a) the name and address of the person requiring the trustee to furnish the list and, if the person is a body corporate, the address for service thereof; and
(b) that the list will not be used except as permitted under subsection (5).
Use of list
A list obtained under this section by the holder of a debt obligation issued by a cooperative under a trust indenture shall not be used by any person except in connection with
(a) an effort to influence the voting of the holders of debt obligations issued under the indenture;
(b) an offer to acquire debt obligations issued under the indenture; or
(c) any other matter relating to the debt obligations or the affairs of the cooperative or a guarantor thereof.
Evidence of compliance
A cooperative or a guarantor of its debt obligations issued or to be issued under a trust indenture made by the cooperative shall, before doing any act referred to in clause (a), (b), or (c), furnish the trustee with evidence of compliance with the conditions in the indenture relating to
(a) the issue, certification and delivery of debt obligations under the indenture;
(b) the release or release and substitution of property subject to a security interest constituted by the indenture; or
(c) the satisfaction and discharge of the indenture.
Duty of issuer or guarantor
Upon the demand of a trustee under a trust indenture made by a cooperative, the cooperative or the guarantor of its debt obligations issued or to be issued under the indenture shall furnish the trustee with evidence of compliance with conditions in the indenture by the cooperative or guarantor in respect of any act to be done by the trustee at the request of the cooperative or guarantor.
Contents of declaration, etc.
Evidence required under section 169 of compliance by a cooperative or the guarantor of its debt obligations with conditions in a trust indenture made by the cooperative shall consist of
(a) a statutory declaration or certificate made by a director or an officer of the cooperative or guarantor stating that the conditions referred to in that section have been complied with; and
(b) where the trust indenture requires compliance with conditions that are subject to review
(i) by legal counsel, an opinion of legal counsel that those conditions have been complied with, and
(ii) by an auditor or accountant, an opinion or report of the auditor of the cooperative or guarantor, or such other accountant as the trustee may select, that those conditions have been complied with.
Further evidence of compliance
The evidence of compliance referred to in section 170 shall include a statement by the person giving the evidence
(a) declaring that the person has read and understands the conditions of the trust indenture described in section 169;
(b) describing the nature and scope of the examination or investigation upon which the certificate, statement or opinion is based; and
(c) declaring that the person has made such examination or investigation as the person believes necessary to enable the statements, or the opinions contained or expressed therein, to be made or given, as the case may be.
Trustee may require evidence of compliance
Upon the demand of a trustee under a trust indenture made by a cooperative, the cooperative or the guarantor of its debt obligations issued under the indenture shall furnish the trustee with evidence, in such form as the trustee may require, as to compliance with any condition thereof relating to any action required or permitted to be taken by the cooperative or guarantor under the indenture.
Upon the demand of a trustee under a trust indenture made by a cooperative, the cooperative or the guarantor of its debt obligations issued under the indenture shall, at least once in each 12 month period beginning on the date of the indenture and at any other time, furnish the trustee with a certificate that the cooperative or the guarantor, as the case may be, has complied with all the requirements contained in the indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars of the failure.
Notice of default
The trustee under a trust indenture made by a cooperative shall give to the holders of debt obligations issued under the indenture, within 30 days after becoming aware of the occurrence of any event of default arising under the indenture and continuing at the time the notice is given, notice of the event of default, unless the trustee reasonably believes that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs the cooperative or guarantor in writing.
A trustee under a trust indenture, in exercising powers and discharging duties under the indenture, shall
(a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the indenture; and
(b) exercise the care, diligence and skill of a reasonably prudent trustee.
Reliance on statements
Notwithstanding section 174, a trustee under a trust indenture is not liable for any act or omission that the trustee performs or makes if the act or omission was performed or made on the basis of the trustee's reliance, in good faith, upon statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the indenture.
No exculpation
No term of a trust indenture made by a cooperative or of any agreement between the trustee under the indenture and the holders of debt obligations issued under the indenture or between the trustee and the cooperative or the guarantor of its debt obligations issued under the indenture shall operate to relieve the trustee from the duties imposed upon trustees under section 174.
DIRECTORS AND BY-LAWS
Functions of directors
Subject to this Act and to the articles of a cooperative and any unanimous agreement of the cooperative, the directors of the cooperative shall
(a) exercise the powers of the cooperative directly or indirectly through the employees and agents of the cooperative; and
(b) direct the management of the business and affairs of the cooperative.
Number of directors
A cooperative shall have at least three directors or any greater minimum number that is set out in the articles.
Power to enact by-laws
The members of a cooperative may, subject to this Act and its articles, by resolution passed at any annual meeting of the members, or any special general meeting of the members called for the purpose, enact by-laws of the cooperative not contrary to law and amend, repeal or replace any of the by-laws.
Making or amendment of by-law by directors
Unless the by-laws of a cooperative provide otherwise, its directors may, by ordinary resolution, enact a by-law or amend a by-law of the cooperative, but only if the by-law or amendment is not contrary to a by-law enacted by the members of the cooperative.
Member approval
The directors of a cooperative shall submit any by-law of the cooperative enacted under subsection (2), and any amendment, repeal or replacement thereof, to the members of the cooperative at their next meeting, and the members may at the meeting confirm, reject or amend the by-law, amendment, repeal or replacement.
By-law not confirmed
If a by-law of a cooperative, or an amendment thereto, made by the directors of the cooperative is not confirmed, with or without amendments, at a meeting of its members in accordance with subsection (3), the by-law or amendment is repealed as of the day of the meeting of members of the cooperative at which it was not confirmed.
Notice required
Where a proposal to enact, amend, repeal, replace or confirm a by-law of a cooperative is to be considered at a meeting of its members, written notice of the proposal shall be sent to each of its members with the notice of the meeting at which the proposal is to be considered.
Effect of by-law passed by members
A by-law of a cooperative, or an amendment thereto or the repeal thereof, enacted by its members is effective from the later of the day the resolution under subsection 179(1) in respect of the by-law, amendment, or repeal is passed and the day specified in the by-law or amendment or in the resolution repealing the by-law.
Effect of by-law passed by directors
A by-law of a cooperative, or an amendment thereto, enacted by its directors is effective from the later of the day the resolution under subsection 179(2) in respect of the by-law or amendment is passed by the directors and the day specified in the by-law or amendment, until it is confirmed, with or without amendments, under subsection 179(3) or repealed under subsection 179(4) and, if the by-law is confirmed, or confirmed as amended, it is in effect in the form in which it was so confirmed.
Where by-law not approved
If a by-law of a cooperative, or an amendment thereto, enacted by its directors under subsection 179(2) is not submitted by the directors to the next meeting of the members of the cooperative, as required under subsection 179(3), the by-law or amendment ceases to be effective from the day that meeting is held.
New resolution of directors
If a by-law of a cooperative, or an amendment thereto, enacted by its directors under subsection 179(2), is repealed under subsection 179(4) or ceases to be effective under subsection (3), no subsequent resolution of its directors to enact or amend a by-law that has substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the members of the cooperative.
Proposal of by-law
A member of a cooperative may, in accordance with section 230, make a proposal to enact, amend, repeal or replace a by-law of the cooperative.
Organizational meeting
After the issue of the certificate of incorporation of a cooperative, a meeting of its directors shall be held at which the directors may
(a) adopt forms of security certificates and corporate records for the cooperative;
(b) authorize the issue of securities of the cooperative;
(c) admit persons to membership in the cooperative and issue or authorize the issue of membership shares and member loan certificates, as the case requires, to those persons;
(d) appoint officers of the cooperative;
(e) appoint an auditor of the cooperative to hold office until the first meeting of the members;
(f) make banking or other like financial arrangements for the cooperative; and
(g) transact any other business necessary to organize the cooperative.
Calling meeting
An incorporator or a director of a cooperative may call the meeting of its directors referred to in subsection (1) by giving not less than five days notice thereof by mail to each of its directors, and the notice shall state the time and place of the meeting.
Directors to be members
All directors of a cooperative, other than its directors elected by its shareholders, shall be members of the cooperative or representatives of its members that are entities.
Where shareholders elect directors
Where the shareholders of a cooperative have the right to elect one or more of its directors, not less than 80% of the directors of the cooperative, or any greater percentage that is provided for by its articles, shall be members of the cooperative or representatives of its members that are entities.
Qualifications of directors
A person is not qualified to be a director of a cooperative if the person
(a) is not an individual;
(b) is less than 18 years of age;
(c) is of unsound mind and has been so found by a court in Canada or elsewhere; or
(d) is bankrupt.
A cooperative may provide in its by-laws for qualifications or disqualifications of its directors that are in addition to those set out in subsection (1) and that are consistent with applicable laws in respect of human rights.
Status of directors
Unless a cooperative is a worker cooperative, a majority of its directors shall be individuals who are not full-time officers or employees of the cooperative.
Resident in Canada
A majority of the directors of a cooperative shall be resident in Canada.
Each director of a cooperative named in its articles holds office from the issue of the certificate of its incorporation until the first meeting of its members.
The members of a cooperative shall, by ordinary resolution at the first meeting of its members and at each succeeding annual meeting of its members at which an election of directors of the cooperative is required, elect directors to hold office for a term expiring not later than the close of the third annual meeting of its members following the election.
Staggered terms
It is not necessary that all directors of a cooperative elected at a meeting of its members hold office for the same term.
No stated term
A director of a cooperative not elected for an expressly stated term ceases to hold office at the close of the first annual meeting of its members following the meeting at which the director is elected.
Incumbent directors
Notwithstanding section 185 and subsections (1) and (3), if directors of a cooperative are not elected at a meeting of its members, its incumbent directors continue in office until their successors are elected.
Consent to nomination
An election or appointment of an individual as a director of a cooperative is not valid unless
(a) not later than ten days after the election or appointment, the individual consents in writing to the election or appointment; or
(b) if the individual is elected or appointed at a meeting which the individual attended, the individual did not refuse at the meeting to act as a director of the cooperative.
Consent in writing
A written consent given under clause (5)(a) by an individual to the individual's election or appointment as a director of a cooperative is effective during the term of office for which the individual was elected or appointed, unless the consent states that it is valid until
(a) a day specified in the consent; or
(b) the individual delivers a written revocation of the consent to the cooperative;
in which case, the individual's term of office ends on the day so specified or the day the revocation is delivered to the cooperative.
Secret ballot
Directors of a cooperative shall be elected by secret ballot if the number of nominees in an election for directors exceeds the number of directors to be elected at the election.
Casting ballot
In an election for directors of a cooperative, a ballot that is cast for the election of more than the number of directors to be elected is null and void.
Determining election of directors
In an election for directors of a cooperative, the individual who receives the greatest number of votes in the election is elected a director and the other individuals who receive, in descending order, the next greatest number of votes are also elected director, until the number of directors to be elected has been elected.
Run-off elections
If in an election for directors of a cooperative held at a meeting of the cooperative, two or more individuals receive an equal number of votes for the last vacancy in the directors, the chairperson of the meeting shall, if it is practical to do so, arrange for a run-off election to be held at the meeting in accordance with subsection (1) to decide which of those individuals is to be elected as a director to fill that vacancy.
Where run-off election not practical
If in an election for directors of a cooperative held at a meeting of the cooperative, two or more individuals receive an equal number of votes for the last vacancy in the directors and it is not practical to hold under subsection (4) a run-off election at the meeting, the directors of the cooperative who have already been elected in the election and any directors of the cooperative whose terms of office do not end at or before the end of the meeting at which the election is held shall determine which of the two individuals is to be elected.
Determining election with staggard terms
If in an election for directors of a cooperative, individuals are to be elected for different terms of office, the individual who receives the greatest number of votes in the election is elected for the longest term, and the other individuals who receive, in descending order, the next greatest number of votes are elected to the longest remaining terms to be filled, until the number of directors to be elected have been elected.
If in an election for directors of a cooperative in which individuals are to be elected for different terms of office held at a meeting of the cooperative, two or more individuals receive an equal number of votes for the last position of a particular term, the chairperson of the meeting shall, if it is practical to do so, arrange for a run-off election to be held at the meeting in accordance with subsection (1) to decide which of those individuals is to be elected as a director for the particular term.
If in an election for directors of a cooperative in which individuals are to be elected for different terms of office held at a meeting of the cooperative, two or more individuals receive an equal number of votes for the last position of a particular term and it is not practical to hold under subsection (7) a run-off election at the meeting, the directors of the cooperative, other than those individuals, who have already been elected as directors of the cooperative at the election or whose terms of office do not end at or before the end of the meeting at which the election is held shall determine which of the two individuals is to be elected for the longer term.
Separate election
If shareholders of a cooperative have a right to elect one or more directors, they shall vote at an election that is separate from the election for directors of the cooperative to be elected by the members of the cooperative.
If the holders of a class or series of investment shares of a cooperative have, under its articles, a right to elect or appoint one or more directors, or have a right to elect or appoint one or more directors because of an event that has occurred and is continuing or because of a condition that has been fulfilled, the directors shall, for the purpose of electing or appointing the director or directors, call
(a) a special meeting of the holders of the class or series of investment shares, to be held on a day that is not more than six months, or such shorter period as may be specified in the articles, after the day on which investment shares of the class or series are first issued or after the event has occurred or the condition has been fulfilled, as the case may be; and
(b) an annual meeting of those holders for every subsequent year.
Cumulative voting
If the articles of a cooperative so provide, its directors who are to be elected by holders of its investment shares may be elected by cumulative voting, and if they do
(a) the articles shall require a fixed number of its directors to be elected by the holders of its investment shares, and not a minimum or maximum number of directors;
(b) each shareholder of the cooperative who is entitled to vote at an election of its directors by holders of investment shares has the right to cast a number of votes calculated by the following formula:
A = B × C
In this formula
is the number of votes that may be cast,
is the number of investment shares that the shareholder holds and that entitle the shareholder to a vote in the election,
is the number of directors to be elected in the election;
(c) a shareholder of the cooperative who is entitled to cast more than one vote at an election of the directors may cast all the votes in favour of one candidate or distribute them among the candidates in any manner;
(d) a separate vote of shareholders of the cooperative shall be taken with respect to each candidate nominated for director in the election unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;
(e) if a shareholder of the cooperative has voted for more than one candidate in the election without specifying the distribution of votes among the candidates, the shareholder is deemed to have distributed the shareholder's votes equally among the candidates for whom the shareholder voted;
(f) if the number of candidates nominated for election as director in the election exceeds the number of positions to be filled, the candidates who receive the least number of votes are eliminated until the number of candidates remaining equals the number of positions to be filled;
(g) each director of the cooperative elected by its shareholders ceases to hold office at the close of the first annual meeting of the shareholders entitled to elect that director held after their election;
(h) a director of the cooperative who was elected by its shareholders may not be removed from office if the votes cast against the removal of the director would be sufficient to elect the director in an election by cumulative voting in which
(i) the same total number of votes were cast, and
(ii) the number of directors required by the articles to be elected by the shareholders were then being elected; and
(i) the number of directors of the cooperative required by the articles to be elected by its shareholders may not be decreased if the votes cast by shareholders against the resolution to decrease that number would be sufficient to elect a director of the cooperative to be elected by the shareholders in an election by cumulative voting in which
(i) the same number of votes were cast, and
(ii) the number of directors required by the articles to be elected, before the decrease, were then being elected.
Ceasing to hold office
A director of a cooperative ceases to hold office when the director
(a) dies;
(b) resigns;
(c) is removed from office in accordance with section 191; or
(d) becomes disqualified under subsection 184(1) or under the by-laws of the cooperative.
Effective date of resignation
The resignation of a director of a cooperative shall be in writing signed by the director and becomes effective at the time the written resignation is received by the cooperative, or at the time specified in the resignation, whichever is later.
Removal of directors
Subject to clause 189(2)(h), a director of a cooperative may be removed from office by ordinary resolution at a special meeting of the persons who are entitled to vote in an election or appointment of that director.
The vacancy created by the removal of a director of a cooperative may be filled at the meeting at which the director was removed or, if not so filled, may be filled under section 194.
Right to attend meetings
A director of a cooperative is entitled to receive notice of, to attend and to be heard at every meeting of the cooperative.
Resignation statement
A director of a cooperative who resigns is entitled to submit to the cooperative a written statement giving the reasons for the resignation.
Opposition statement
A director of a cooperative who learns of
(a) a meeting of the cooperative called for the purpose of removing the director, or
(b) a meeting of the cooperative, or of its directors, at which another person is to be appointed or elected to succeed or replace the director,
is entitled to attend and address the meeting, or to submit a written statement to the cooperative, giving reasons why the director opposes any action or resolution proposed at the meeting for a purpose described in clause (a) or (b).
Circulation of statement
When a cooperative receives a statement under subsection (1) or (2) it shall ensure that a copy of it is sent without delay to the Registrar and to every person who is entitled to receive notice
(a) in the case of a statement received under subsection (1) from a resigning director, of the meeting of the cooperative that would be required to replace the director; and
(b) in the case of a statement received under subsection (2) from a director, of the meeting of the cooperative referred to in that subsection.
Immunity for statement
A cooperative or person acting on its behalf does not incur any liability solely because of circulating a director's statement in compliance with subsection (3).
Vacancy on board
Subject to subsections (3) and (6), if there is a vacancy on the board of directors of a cooperative, except a vacancy caused by an increase in the number or minimum number of its directors or by a failure to elect or appoint the number of directors required by its articles, and there is still a quorum on the board, the remaining directors may
(a) continue to fulfil their functions without filling the vacancy; or
(b) appoint a director to fill the vacancy.
Vacancy among candidates
If a meeting of a cooperative at which directors are to be elected or appointed fails to elect or appoint the number or minimum number of directors required by its articles because of the disqualification, incapacity or death of any candidate, the directors elected or appointed at that meeting plus the incumbent directors, if any, may exercise all the powers of directors if the number of directors so elected or appointed plus the number of incumbent directors, if any, whose term did not expire at the close of the meeting constitutes a quorum.
The articles of a cooperative may provide that if there is a vacancy on its board of directors, the remaining directors shall call a special meeting of the persons who are entitled to vote for the purpose of electing or appointing directors to fill the vacancy.
If there is not a quorum of the directors of a cooperative, or if there is a failure to elect the number or minimum number of directors required by its articles, its directors then in office shall forthwith call a special meeting of the persons who are entitled to vote at an election of a director to fill the vacancy for the purpose of filling the vacancy and, if they fail to call a meeting or if there are no directors then in office, the meeting may be called by any person who is entitled to vote at an election of a director to fill the vacancy.
Vacant board
If there are no directors on the board of directors of a cooperative, any person who is entitled to vote at an election of a director to fill any of the vacancies may call a special meeting of the cooperative to elect directors to fill the vacancies.
Special directors
Subject to subsection (3), if there is a vacancy in the office of a director of a cooperative and the vacancy is required to be filled by an individual elected by a vote of either a division of the members or a class of the holders of the investment shares or a class of investment shares,
(a) any remaining directors elected or appointed by that division or class may fill the vacancy under subsection (1); or
(b) if there are no such remaining directors, any member of the division or class may call a meeting under subsection (5).
Unexpired term
Unless the by-laws of a cooperative provide otherwise, a director of the cooperative who is elected or appointed to fill a vacancy holds office for the unexpired term of the predecessor in the office.
Effect of decrease
If the articles of a cooperative are amended to decrease the number of its directors, the terms of any of its incumbent directors are not affected.
Notice of change of directors
Within 15 days after a change is made among its directors, a cooperative shall send to the Registrar a notice in a form approved by the Registrar setting out the change, and the Registrar shall file the notice.
Effect of notice
A director named in the articles or in a notice sent by the cooperative to the Registrar under subsection(1) and filed by the Registrar is deemed for the purposes of this Act to be a director of the cooperative referred to in the notice.
Meeting of directors
Unless the articles or by-laws of a cooperative otherwise provide, its directors may meet at such place and upon such notice as the directors may determine.
Unless the articles, the by-laws or a unanimous agreement of a cooperative provides for a greater proportion, a majority of the number or minimum number of its directors, subject to subsection (1.1) and section 199, constitutes a quorum at any meeting of directors and a majority of the members of a committee of its directors constitutes a quorum at any meeting of the committee.
Quorum re multi-stakeholder cooperatives
Unless otherwise provided by the articles, the by-laws or a unanimous agreement of a multi-stakeholder cooperative, at least one director elected by each stakeholder group must be present at a meeting of the directors to constitute a quorum of the directors.
Quorum may act
Notwithstanding any vacancy among the directors of a cooperative, a quorum of its directors may exercise all the powers of the directors.
Qualifications of majority
To constitute a quorum at a directors' meeting of a cooperative that has directors who are not resident in Canada, a majority of the directors at the meeting must be
(a) resident in Canada; and
(b) members of the cooperative or representatives of members that are entities.
Notwithstanding subsection (1), a meeting of the directors of a cooperative may be held without the required majority of directors who are resident in Canada if
(a) a director who is resident in Canada and who is not present approves, in writing or by telephonic, electronic or other communication facilities, the business transacted at the meeting; and
(b) the required majority would have been present had that director been present at the meeting.
A notice of a meeting of directors of a cooperative shall specify any matter referred to in subsection 202(3) that is to be dealt with at the meeting but, unless the by-laws of the cooperative otherwise provide, the notice need not specify any other matter that is to be dealt with at the meeting.
Waiver of notice
A director of a cooperative may in any manner waive notice of a meeting of the directors of the cooperative, and attendance of a director at a meeting of directors is a waiver of notice of the 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 was not lawfully called.
Where notice not required
There is no need to give notice for a meeting of the directors of a cooperative that
(a) is the continuation of a meeting of directors that is adjourned;
(b) immediately follows an annual meeting of the cooperative; or
(c) immediately follows a special meeting of the cooperative that was called for the purpose of electing directors.
Electronic meeting
Subject to the by-laws of the cooperative, a director of the cooperative may attend a meeting of the directors of the cooperative by means of a telephonic, electronic or other communication facility if the facility permits all persons participating in the meeting to communicate adequately with each other during the meeting.
A director of a cooperative participating in a meeting of its directors by a means referred to in subsection (1) is deemed to be present at the meeting.
The directors of a cooperative may appoint from their number a managing director of the cooperative or a committee of directors.
The managing director of a cooperative shall be resident in Canada.
The directors of a cooperative may delegate to its managing director, or to a committee composed of at least three of its directors, any powers of the directors, except the power to
(a) submit to the members or shareholders of the cooperative any question or matter requiring the approval of the members or shareholders;
(b) fill a vacancy among its directors or in the office of its auditor, or appoint additional directors;
(c) issue securities of the cooperative, except in the manner and on the terms authorized by the directors;
(d) declare dividends on shares, interest on member loans or patronage returns;
(e) purchase, redeem or otherwise acquire shares issued by the cooperative;
(f) approve any financial statement of the cooperative of a kind referred to in section 257;
(g) enact, amend or repeal by-laws of the cooperative;
(h) make decisions that by this Act, its articles or a unanimous agreement of the cooperative are required to be made by a vote of greater than a majority of the directors;
(i) authorize the payment of commissions referred to in section 46; or
(j) approve a management proxy circular referred to in Part 10.
A managing director of a cooperative or a committee of its directors referred to in subsection (1) may exercise the powers that have been delegated to the managing director or the committee, as the case may be, subject to any restrictions imposed by the directors.
Membership on committee
A director of a cooperative who is appointed to a committee of its directors may remain on the committee until the appointment is revoked or that individual ceases to be a director.
A committee of the directors of a cooperative appointed under this section shall
(a) fix its quorum at not less than a majority of its members;
(b) keep minutes of its proceedings; and
(c) report, at each meeting of the directors of the cooperative, on the proceedings of the committee since the last meeting of the directors.
Validity of acts of directors and officers
An act of a director or officer of a cooperative is valid notwithstanding any irregularity in the election or appointment, or any defect in the qualifications, of the director or officer.
Resolution in lieu of meeting
A resolution in writing, signed by all the directors of a cooperative entitled to vote on that resolution at a meeting of its directors or a committee of its directors, is as valid as if it had been passed at a meeting of its directors or a committee of its directors and is effective from the day specified in the resolution, but that day shall not be before the day on which the first director to sign the resolution signed it.
Keeping resolution
A copy of every resolution of the directors of a cooperative, or of a committee of its directors, referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors or the committee of directors, as the case may be.
Liability of directors
Directors of a cooperative who vote for or consent to a resolution authorizing the issue of a share of the cooperative for a consideration other than money are jointly and severally liable to the cooperative to make good any amount by which the value of the consideration received is less than the fair equivalent of the money that the cooperative would have received if the share had been issued for money on the day the resolution is passed.
Further liability
Directors of a cooperative who vote for or consent to resolutions authorizing any of the following matters are jointly and severally liable to restore to the cooperative any amounts so distributed or paid and not otherwise recovered by the cooperative:
(a) the redemption or other acquisition of shares of the cooperative or the repayment of its member loans or patronage loans contrary to this Act;
(b) the payment of a commission contrary to this Act;
(c) the payment of a dividend, patronage return or interest contrary to this Act or its articles;
(d) the granting of financial assistance contrary to this Act;
(e) the payment of an indemnity contrary to this Act;
(f) any other payment contrary to this Act.
A director of a cooperative who satisfies a judgment rendered in respect of the director's liability under this section is entitled to contribution from the other directors of the cooperative who voted for or consented to the unlawful act upon which the judgment was founded.
A director of a cooperative who is liable under subsection (2) is entitled to apply to the court for an order compelling a member or shareholder of the cooperative, or other recipient, to pay or deliver to the director any money or property referred to in clauses (2)(a) to (f).
Order of court
Upon an application under subsection (4) by a director of a cooperative, the court may, if it is satisfied that it is equitable to do so,
(a) order any person to pay or deliver to the director any money or property referred to in clauses (2)(a) to (f) that was paid or distributed to that person;
(b) order the cooperative to return or issue shares to a person from whom the cooperative has purchased, redeemed or otherwise acquired shares;
(c) order any person to repay to the cooperative the amount of a member loan or patronage loan that was repaid; or
(d) make any further order that it thinks fit.
No liability
A director of a cooperative is not liable under subsection (1) in respect of the issue of a share if it is proven that the director did not know and could not reasonably have known that the share was issued for a consideration the value of which was less than the fair equivalent of the money that the cooperative would have received if the share had been issued for money.
An action to enforce a liability imposed by this section may not be commenced after two years from the day the resolution authorizing the thing complained of was passed.
Liability of directors for wages
Where a cooperative has failed to pay to an employee of the cooperative wages or salary for services performed by the employee for the cooperative in any period not exceeding six months, each individual who was a director of the cooperative in that period is jointly and severally liable, together with the cooperative and the other directors of the cooperative in that period, for payment of the wages or salary payable to the employee for the period, or that portion of those wages or that salary that was earned by the employee while the individual was a director of the cooperative.
Conditions precedent to liability
A director of a cooperative is not liable under subsection (1) unless
(a) the cooperative 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 cooperative has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proved within six months after the earlier of
(i) the day the liquidation and dissolution proceedings are commenced, and
(ii) the day the cooperative is dissolved; or
(c) the cooperative has made an assignment, or a receiving order has been made against it under the Bankruptcy and Insolvency Act (Canada), and a claim for the debt has been proved within six months after the date of the assignment or receiving order.
An individual is not liable under this section because of being or having been a director of a cooperative unless the individual is sued for a debt referred to in subsection (1) while the individual is a director of the cooperative or within two years after ceasing to be a director.
Amount due after execution
Where the execution referred to in clause (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after applying the proceeds of the execution to the debt.
Where a director of a cooperative pays a debt referred to in subsection (1) that is proved in liquidation and dissolution or bankruptcy proceedings, the director is entitled to any preference that the employee would have been entitled to and, where the employee has obtained a judgment against the cooperative for the debt, is entitled to an assignment of the judgment.
A director of a cooperative who pays a debt referred to in subsection (1) is entitled to contribution from the other directors of the cooperative who were liable for the debt.
Disclosure of director's interest in contract
A director or officer of a cooperative who
(a) is a party to a material contract or proposed material contract with the cooperative; or
(b) is a director or an officer of or has a material interest in any person who is a party to a material contract or proposed material contract with the cooperative;
shall disclose in writing to the cooperative or request to have entered in the minutes of meetings of its directors the nature and extent of the director's or officer's interest.
This section does not require the disclosure of an interest in any contract that is available to and customarily entered into between the cooperative and its members, if the contract is on the same terms as are generally available to its members.
Time of disclosure for director
The disclosure required by subsection (1) shall be made, in the case of a director of a cooperative,
(a) at the meeting 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;
(d) if an individual who is interested in a contract later becomes a director of the cooperative, at the first meeting after the individual becomes a director; or
(e) if there is a material change in the director's interest in the contract, transaction, proposed contract or proposed transaction, at the first meeting after the change.
Time of disclosure for officer
The disclosure required by subsection (1) shall be made, in the case of an officer of a cooperative who is not a director of the cooperative,
(a) forthwith after the officer becomes aware that the contract or proposed contract is to be considered or has been considered at a meeting of the directors of the cooperative;
(b) if the officer becomes interested after a contract is made, forthwith after the officer becomes so interested; or
(c) if an individual who is interested in a contract later becomes an officer of the cooperative, forthwith after the individual becomes an officer.
Time of disclosure for director or officer
If a material contract or proposed material contract with a cooperative is one that, in the ordinary course of the cooperative's business, would not require approval by its directors or members, a director or officer of the cooperative shall disclose in writing to the cooperative, or request to have entered in the minutes of meetings of its 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.
The members and shareholders of a cooperative may, during the usual business hours of the cooperative, examine the portions of minutes of meetings of its directors, or other documents of the cooperative, that contain disclosures under this section or a general notice referred to in section 209.
The members and shareholders of a cooperative may, by unanimous agreement, modify the procedural requirements of this section in so far as they relate to the cooperative.
Limitation on voting
A director of a cooperative who is a party to a material contract or proposed material contract with the cooperative, or is a director or an officer of or has a material interest in any person who is a party to a material contract or proposed material contract with the cooperative, shall not 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 cooperative or its subsidiary;
(b) a contract relating primarily to the director's remuneration as a director, officer, employee or agent of the cooperative or its subsidiary; or
(c) a contract for indemnity or insurance under section 214.
Approval by members
Where a director of a cooperative who is described in subsection 207(1) votes on a resolution to approve a contract that is not a contract described in clause (1)(a), (b) or (c), the resolution is not valid unless
(a) notice is given to all the members of the cooperative declaring and disclosing in reasonable detail the nature and extent of the director's interest in the contract or transaction; and
(b) the resolution is approved by not less than 2/3 of the votes of all the members of the cooperative.
Continuing disclosure
For the purposes of section 207, a general notice by an individual who is a director or officer of a cooperative to its directors, declaring that the individual is a director or officer of or has a material interest in a person and is to be regarded as interested in any contract made by the cooperative with that person, is a sufficient disclosure of interest in relation to any contract so made.
Avoidance standards
A material contract between a cooperative and one or more individuals who are directors or officers of the cooperative, or between a cooperative and another person of which an individual who is a director or officer of the cooperative is a director or officer or in which the individual has a material interest, is neither void nor voidable solely because
(a) of that relationship; or
(b) the individual is present at or is counted to determine the presence of a quorum at a meeting of directors of the cooperative or committee of its directors at which the contract was authorized;
if the individual disclosed the individual's interest in accordance with section 207 or 209, and the contract was approved by the directors and it was reasonable and fair to the cooperative at the time it was approved.
Where a director or officer of a cooperative fails to disclose an interest of the director or officer in a material contract in accordance with section 207 or 209, the court may, upon the application of the cooperative or a member or shareholder of the cooperative, set aside the contract on such terms as it thinks fit.
Subject to its articles, its by-laws and any unanimous agreement of the cooperative, the directors of a cooperative may
(a) designate the offices of the cooperative;
(b) specify the powers and duties of the incumbent of each office;
(c) appoint an individual of full capacity, including a director, to be an officer of the cooperative;
(d) appoint an individual to hold more than one office; and
(e) delegate to its officers the power to manage the business and affairs of the cooperative, except a power referred to in subsection 202(3).
Duty of care of directors and officers
Every director and officer of a cooperative, in exercising the powers and discharging the duties of office, shall
(a) act honestly and in good faith with a view to the best interests of the cooperative; and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
Duty to comply
Every director and officer of a cooperative shall comply with this Act and the regulations, its articles and by-laws and any unanimous agreement of the cooperative.
A director or officer of a cooperative is not relieved from the duty to act in accordance with this Act and the regulations, or from liability for non-compliance with this Act or the regulations, by any provision in a contract, the articles or by-laws of the cooperative or a unanimous agreement or a resolution of the cooperative.
This section is in addition to, and not in derogation of, any enactment or rule of law relating to the duty or liability of directors or officers of a cooperative.
A director of a cooperative who is present at a meeting of its directors or of a committee of its directors is deemed to have consented to any resolution passed or action taken at the meeting, unless
(a) the director's dissent from the resolution or action is entered in the minutes of the meeting or the director requests that the dissent be entered in the minutes;
(b) the director sends a written dissent from the resolution or action to the secretary of the meeting before the meeting is adjourned; or
(c) the director sends a written dissent from the resolution or action by registered mail or delivers it to the registered office of the cooperative immediately after the meeting is adjourned.
Loss of right to dissent
A director of a cooperative who votes for or consents to a resolution or action is not entitled to dissent under subsection (1) from the resolution or action.
Dissent of absent director
A director of a cooperative who was not present at a meeting at which a resolution was passed or action taken is deemed to have consented to the resolution or action unless within seven days after becoming aware of the resolution or action the director
(a) causes the director's dissent in writing from the resolution or action to be placed with the minutes of the meeting; or
(b) sends the director's dissent in writing from the resolution or action by registered mail or delivers it to the registered office of the cooperative.
A director of a cooperative is not liable under section 205, 206 or 212 if the director relies in good faith on
(a) financial statements of the cooperative represented to the director by an officer of the cooperative or in a written report of its auditor fairly to reflect the financial condition of the cooperative; or
(b) a report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to the report.
A cooperative may indemnify an individual who is a director or officer of the cooperative or a former director or officer of the cooperative, or who acts or acted at the cooperative's request as a director or officer of a body corporate of which the cooperative is or was a member, shareholder or creditor, and the individual's heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal or administrative action or proceeding (except an action or proceeding brought by or on behalf of the cooperative or the body corporate to procure a judgment in its favour) to which the individual is made a party because of being or having been a director or officer of the cooperative or body corporate, if
(a) the individual acted honestly and in good faith with a view to the best interests of the cooperative or the body corporate of which the individual was a director or officer; and
(b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual's conduct was lawful.
Advance of costs
A cooperative may advance moneys to an individual referred to in subsection (1) for the costs of a proceeding referred to in that subsection, and the individual shall repay the moneys if the court determines that the individual did not fulfil the conditions of subsection (3), unless the members and shareholders decide, by separate resolutions, that the individual need not repay the moneys.
Indemnification in derivative actions
A cooperative may with the approval of the court indemnify an individual referred to in subsection (1) or advance to the individual costs under subsection (2) in respect of an action by or on behalf of the cooperative, or a body corporate of which the cooperative is or was a member, shareholder or creditor, to procure a judgment in its favour, to which the individual is made a party because of being or having been a director or an officer of the cooperative or body corporate, against all costs, charges and expenses reasonably incurred by the individual in connection with the action if the individual fulfils the conditions set out in clauses (1)(a) and (b).
Right to indemnify
Notwithstanding anything in this section, a cooperative shall indemnify an individual referred to in subsection (1) who has been substantially successful in the defence of any civil, criminal or administrative action or proceeding to which the individual is made a party because of being or having been a director or officer of the cooperative, or of a body corporate of which the cooperative is or was a member, shareholder or creditor, against all costs, charges and expenses reasonably incurred by the individual in respect of the action or proceeding.
A cooperative may purchase and maintain insurance for the benefit of any individual referred to in subsection (1) against any liability incurred by the individual
(a) as a director or officer of the cooperative, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the cooperative; or
(b) as a director or officer of another entity where the individual acts or acted in that capacity at the request of the cooperative, 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.
A cooperative or an individual referred to in subsection 214(1) may apply to the court for an order approving an indemnity under section 214, and the court may so order and make any further order it thinks fit.
Upon 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 be heard in person or by counsel.
Unless its articles or by-laws, or a unanimous agreement of the cooperative, provide otherwise, the directors of a cooperative may fix the remuneration of its directors, officers and employees.
Restricting powers of directors
A provision in the articles of a cooperative, or in a unanimous agreement of the cooperative, that restricts, in whole or in part, the discretion or powers of its directors to manage, or supervise the management of, the business and affairs of the cooperative, is valid, if
(a) the cooperative continues to comply with section 178; and
(b) the discretion and powers that the directors are prevented from exercising by the restriction are vested in members of the cooperative.
Deemed unanimous agreement
For the purpose of subsection (1), an agreement that would be a unanimous agreement of a cooperative except that a person who is neither a member nor a shareholder of the cooperative is a party to the agreement is deemed to be a unanimous agreement of the cooperative.
Investment shareholders
Notwithstanding subsection 98(2) but subject to this section, a purchaser or transferee of an investment share in a cooperative that is subject to a unanimous agreement is deemed to be party to that agreement.
Where no notice given
If notice is not given to the purchaser or transferee of an investment share of a cooperative of the existence of a unanimous agreement of the cooperative, the purchaser or transferee may, not later than the day the purchaser or transferee becomes aware of the existence of the agreement, rescind the transaction by which the purchaser or transferee acquired the share.
Rights of members
To the extent that a provision in the articles of a cooperative, or in a unanimous agreement of the cooperative, restricts the powers of its directors to manage, or supervise the management of, its business and affairs, members who are given that power to manage or supervise the management of its business and affairs have all the rights, powers, duties and liabilities of directors, whether they arise under this Act or otherwise, including any defences available to the directors, and its directors are relieved of their rights, powers, duties and liabilities, including their liabilities under section 206, to the same extent.
Provisions re meetings
A unanimous agreement of a cooperative may contain provisions respecting the rules and procedures governing meetings of its members, shareholders or directors under this Act and provisions that eliminate the need for annual meetings of shareholders and meetings of directors.
If there is to be no annual meeting of the shareholders of a cooperative because of a provision in a unanimous agreement of the cooperative, the cooperative shall send a copy of the documents referred to in section 257 to any shareholder who requests it.
Notice of unanimous agreement
Where a unanimous agreement of a cooperative is executed or terminated, the cooperative shall, not later than 15 days after it is so executed or terminated, send to the Registrar a notice, in a form approved by the Registrar, of the execution, with a copy of the agreement, or the termination, as the case may be.