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S.M. 2009, c. 19

Bill 22, 3rd Session, 39th Legislature

The Cooperatives Amendment Act

(Assented to June 11, 2009)

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

C.C.S.M. c. C223 amended

1           The Cooperatives Act is amended by this Act.

2           Subsection 1(1) is amended by replacing the definitions "membership share", "redeemable" and "series" with the following:

"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 »)

"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 »)

"series", in relation to shares of a cooperative, means a division of a class of shares of the cooperative; (« série »)

3           Subsection 9(1) is amended

(a) by replacing clause (d) with the following:

(d) if the cooperative is to have membership share capital, the particulars of the membership share capital as required by section 39;

(b) by repealing clause (l); and

(c) by replacing clause (m) with the following:

(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

4            Subsection 17(1) is replaced with the following:

Name of cooperative

17(1)       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

17(1.1)     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.

5           Clause 28(1)(d) is amended by striking out everything after "all of its members," and substituting "and the particulars of the membership shares, investment shares, member loans, patronage loans or other securities, if any, owned or held by each member;".

6           Subsection 35(1) is amended by striking out everything after "summary conviction" and substituting "to the penalties set out in subsection 374(1)."

7(1)        Section 36 is renumbered as subsection 36(1) and is amended by striking out "without membership shares".

7(2)        The following is added as subsection 36(2):

Holders of member loans rank equally

36(2)       The holders of member loans rank equally with each other in relation to the repayment of those loans.

8           Sections 38 and 39 are replaced with the following:

Par value of membership shares

38          Membership shares must have a par value, and the par value must be the same for all membership shares.

Membership shares

39(1)       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

39(2)       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, only one class of shares may be designated as membership shares.

Shares to be issued as patronage shares

39(3)       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

39(4)       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.

9           Section 40 is amended

(a) by replacing the section heading for subsection (1) with "Member's right to vote";

(b) by replacing the section heading for subsection (2) with "Voting right not attached to share"; and

(c) by adding the following after subsection (2):

Equal membership rights

40(3)       Subject to section 221 and Parts 12 and 13, the members of a cooperative have equal rights as members.

10          Subsection 41(2) is replaced with the following:

Membership shares at par value

41(2)       Membership shares of a cooperative may be issued or sold by the cooperative only at their par value.

11          Section 52 is amended

(a) in clause (b), by striking out "or interest"; and

(b) in clause (c), by striking out "of interest or dividends on its member loans, its membership shares or its patronage loans" and substituting "of interest on its member or patronage loans or dividends on its membership shares".

12          Section 56 is replaced with the following:

Credit to non-member patron's account

56          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.

13          Subsection 58(2) is replaced with the following:

Contents of by-law

58(2)       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.

14          The following is added after section 58:

Use of patronage returns for any class of membership shares

58.1        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.

15          Section 59 is amended by striking out "its by-laws" wherever it occurs and substituting "its articles or by-laws".

16          Section 63 is amended

(a) by adding "and its articles and by-laws" after "Subject to section 66"; and

(b) by striking out "or 246".

17           Subsection 66(1) is amended by striking out "63 or 65" and substituting "63, 65 or 246".

18(1)       The following sentence is added at the end of subsection 75(2):

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.

18(2)       Subsection 75(6) is amended by striking out everything after "to have" and substituting "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."

19          Subsection 89(7) is repealed.

20          The following is added after section 89:

When no offering statement required

89.1        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

89.2(1)     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 Registrar.

Approval of disclosure documents

89.2(2)     The Registrar may require a cooperative requesting an exemption order to provide disclosure documents respecting the shares or securities that meet with the Registrar's approval.

Issuing and amending exemption order

89.2(3)     The Registrar may issue or amend an exemption order if he or she considers it appropriate.

Conditions of exemption order

89.2(4)     The Registrar may impose any terms or conditions on a cooperative in an exemption order that he or she considers appropriate.

Notice of material changes

89.2(5)     Where there is a material change in the facts set out in a disclosure document approved by the Registrar, 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 Registrar that gives full particulars of the change.

Restraint on issue after material change

89.2(6)     Where there is a material change in the facts set out in a disclosure document provided to the Registrar, the cooperative shall not issue any more of the shares or securities until it has provided the Registrar with amended disclosure documents that meet with the Registrar's approval and the Registrar issues an amended exemption order to the cooperative.

Duty to provide disclosure documents

89.2(7)     Where a cooperative is required to provide the Registrar 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 Registrar are given to the person before the agreement for the sale and purchase of the share or security is entered into.

21          Subsection 90(1) is replaced with the following:

Cease trading order

90(1)       The Registrar may order that trading in a cooperative's shares or other securities cease, if the Registrar 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.

22(1)       Section 91 is amended

(a) by renumbering it as subsection 91(1); and

(b) by replacing everything before clause (a) with the following:

Offering statement and cooling-off period

91(1)       When a cooperative is required to provide an offering statement to the Registrar before issuing any shares or other securities,

22(2)       The following is added after subsection 91(1):

Cooling-off period if no offering statement required

91(2)        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.

23          The following is added after section 91:

Notice to purchasers

91.1        If the Registrar

(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 Registrar 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 Registrar 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 Registrar 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.

24          The following is added after clause 97(d):

(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;

25(1)       Subsection 246(3) is amended by striking out everything after "set out in" and substituting "the articles and the by-laws of the cooperative."

25(2)       The following is added after subsection 246(3):

Rights and obligations re former member's shares

246(3.1)    After a person ceases to be a member of a cooperative, the provisions of this Act and the regulations relating to membership shares or their holders continue to apply in respect of his or her membership shares in the cooperative as if he or she were still a member.

26          Subsection 269(10) is repealed.

27          Subsection 273(4) is repealed.

28          Subsection 297(1) is amended

(a) by replacing clauses (d) and (e) with the following:

(d) change the par value of its membership shares;

(e) convert it from a cooperative without membership shares to one with membership shares and establish the par value of the membership shares;

(b) by replacing clause (g) with the following:

(g) establish, change or remove a limit to the number of shares of any class that may be issued;

(c) by striking out "investment" wherever it occurs in clauses (i) to (n) and (p).

29(1)       Subsection 299(1) is amended

(a) by striking out "investment" wherever it occurs; and

(b) in clause (f), by striking out "investments".

29(2)       Subsection 299(4) is amended

(a) in the English version, by striking out "shareholders" wherever it occurs and substituting "holders"; and

(b) by striking out "investment" wherever it occurs.

29(3)       Subsections 299(5) and (6) are replaced with the following:

Right to vote

299(5)      A person entitled to vote under subsection (1) in respect of an amendment affecting a class or series of shares has the following right to vote, even if the shares do not otherwise carry a voting right:

(a) in the case of a class or series of membership shares, each member holding one or more shares belonging to that class or series is entitled to one vote;

(b) in the case of a class or series of investment shares, each shareholder holding one or more shares belonging to that class or series is entitled to one vote for each such share.

Separate resolutions

299(6)      The articles of a cooperative may be amended as described in subsection (1) only if the proposed amendment is approved by a special resolution of the members and by separate special resolutions of those who are entitled to vote separately as a class or series.

30          Clause 305(1)(d) of the English version is amended by striking out "membersip" and substituting "membership".

31(1)       Subsection 306(1) is replaced with the following:

Agreement to be submitted for approval

306(1)      The directors of each amalgamating cooperative must submit the amalgamation agreement for approval to

(a) a meeting of its members;

(b) a meeting of its shareholders, if any; and

(c) each class of persons entitled under subsection (4) to vote separately as a class in respect of the agreement.

31(2)       Subsections 306(4) and (5) are replaced with the following:

Class vote

306(4)      The holders of a class or series of shares are entitled to vote separately as a class, as set out in clauses 299(5)(a) and (b), in respect of the amalgamation agreement if it contains a provision that, if contained in an amendment to the articles, would entitle them to vote on the amendment as a class or series under section 299.

Approvals required

306(5)      An amalgamation agreement for the amalgamation of two or more cooperatives may be implemented only after it is approved by separate special resolutions of

(a) the members of each amalgamating cooperative;

(b) the shareholders of each amalgamating cooperative that has issued investment shares; and

(c) each class of persons entitled under subsection (4) to vote separately as a class in respect of the agreement.

32          Subsection 310(1) is replaced with the following:

Arrangement

310(1)      A cooperative may make an arrangement in accordance with this section and sections 311 to 313.

33(1)       Subsection 311(1) is replaced with the following:

Arrangement to be submitted for approval

311(1)      The directors of a cooperative proposing an arrangement must submit the scheme of arrangement for approval to

(a) a meeting of its members;

(b) a meeting of its shareholders, if any; and

(c) each class of persons entitled under subsection (4) to vote separately as a class in respect of the arrangement.

33(2)       Subsections 311(4) and (5) are replaced with the following:

Class vote

311(4)      The holders of a class or series of shares are entitled to vote separately as a class, as set out in clauses 299(5)(a) and (b), in respect of the scheme of arrangement if it contains a provision that, if contained in an amendment to the articles, would entitle them to vote on the amendment as a class or series under section 299.

Approvals required

311(5)      A scheme of arrangement may be implemented only after it is approved by separate special resolutions of

(a) the members of the cooperative;

(b) the shareholders of the cooperative; and

(c) each class of persons entitled under subsection (4) to vote separately as a class in respect of the arrangement.

34          Clause 315(7)(a) is replaced with the following:

(a) its common shares are deemed to be membership shares that

(i) belong to the class of shares designated in the articles as membership shares,

(ii) have the par value set out in the articles, and

(iii) have the rights, restrictions, privileges and conditions set out in this Act and the cooperative's articles and by-laws;

35(1)       Clause 320(1)(a) is replaced with the following:

(a) amend its articles in a manner that adversely affects his or her rights as a member or as a holder of a share of the cooperative;

35(2)       Clause 320(6)(b) is replaced with the following:

(b) if the person holds one or more shares of the cooperative, the number of shares held and, if applicable, the class and series of those shares;

36(1)       Subsection 338(1) is amended

(a) by adding "in one or more of the following ways:" at the end of the part before clause (a);

(b) by repealing clauses (d) to (g); and

(c) by replacing clause (h) with the following:

(h) in accordance with the regulations.

36(2)       Subsection 338(2) is amended

(a) by adding "in one or more of the following ways:" at the end of the part before clause (a);

(b) by repealing clause (d); and

(c) by replacing clause (e) with the following:

(e) in accordance with the regulations.

37(1)        Subsection 373(1) is amended by striking out everything after "summary conviction" and substituting "to the penalties set out in subsection 374(1)."

37(2)       Subsection 373(2) is repealed.

37(3)       Subsection 373(3) is amended by striking out "or (2)".

38          Section 374 is replaced with the following:

Offence and penalty

374(1)      A person who contravenes a provision of this Act or the regulations or who fails to comply with an order made by the Registrar is guilty of an offence and is liable, on summary conviction,

(a) in the case of an individual, to a fine not exceeding $5,000. or imprisonment for a term not exceeding six months, or both; or

(b) in any other case, to a fine not exceeding $25,000.

Liability of directors and officers

374(2)      If a body corporate commits an offence under this Act, a director or officer of the body corporate who authorized, permitted or acquiesced in the commission of the offence is also guilty of an offence and is liable on summary conviction to the penalties set out in clause (1)(a), whether or not the body corporate has been prosecuted or convicted.

Coming into force

39(1)       This Act, except section 36, comes into force on the day it receives royal assent.

39(2)       Section 36 comes into force on a day to be fixed by proclamation.

 

 
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