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C.C.S.M. c. C223
The Cooperatives Act
| Table of Contents | Regulations |
| Sections: 1 - 91 | 92 - 217 | 218 - 321 | 322 - 404 |
PART 6
SHARE CERTIFICATES, MEMBERSHIPS AND TRANSFERS
92(1) 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 »)
92(2) 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).
92(3) 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.
92(4) 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.
92(5) 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.
92(6) 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.
93 This Part governs the transfer or transmission of securities of cooperatives.
94(1) 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.
94(2) 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.
95(1) 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.
95(2) 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.
95(3) 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.
96(1) 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.
96(2) A signature required under subsection (1) shall be either a signature manually written or a facsimile signature mechanically or otherwise reproduced.
96(3) 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
96(4) 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
97 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
(a) the name of the cooperative;
(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;
(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.
98(1) 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
(a) the name of the cooperative;
(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;
(c) the name of the person to whom it is issued;
(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.
98(2) 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.
98(3) 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.
98(4) 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.
98(5) 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
98(6) 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.
99(1) 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.
99(2) 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.
100(1) 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 bearer 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(2) 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.
100(3) 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.
100(4) 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.
101(1) 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.
101(2) 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.
102 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
103 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.
104 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.
105 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
106 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.
107 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.
108 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.
109(1) 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;
together with
(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.
109(2) 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.
109(3) 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.
110(1) 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.
110(2) 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.
110(3) A cooperative may maintain additional branch securities registers in other places designated by its directors.
110(4) 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.
111 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.
112 A cooperative may appoint an agent to maintain securities registers on its behalf.
113 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.
114(1) 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
114(2) 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.
114(3) 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.
115 Subsection 64(2) and sections 66, 67 and 80 do not apply to a payment or purchase by a cooperative under section 114.
116 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.
117(1) 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.
117(2) 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.
118(1) 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.
118(2) 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.
119 A security of a cooperative is valid in the hands of a good faith purchaser.
120 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.
121 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.
122(1) 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.
122(2) 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.
123(1) Subject to subsection (2), an unauthorized signature on the certificate for a security of a cooperative is ineffective.
123(2) 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.
124 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.
125 A security of a cooperative that was completed incorrectly is enforceable by a good faith purchaser of the security.
126 A completed security of a cooperative that was improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.
127(1) 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.
127(2) 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.
128(1) 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.
128(2) A good faith purchaser of a security of a cooperative acquires it free from any adverse claim.
128(3) 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.
129 A purchaser of a limited interest in a security of a cooperative acquires rights only to the extent of the interest purchased.
130(1) 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.
130(2) 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.
131(1) 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.
131(2) 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.
132 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
133(1) 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.
133(2) 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
(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 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.
134(1) 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.
134(2) 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.
135 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.
136 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.
137 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.
138 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"
139(1) 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.
139(2) The authority of a person signing an endorsement on a security of a cooperative is determined as of the time of signing.
140(1) 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.
140(2) An endorsement referred to in subsection (1) may be
(a) in blank; or
(b) special.
140(3) For the purposes of this Act an endorsement of a security of a cooperative in blank includes an endorsement of the security to bearer.
140(4) 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.
140(5) A holder of a security of a cooperative may convert an endorsement of the security in blank into a special endorsement.
141 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.
142 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
143 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
144 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.
145 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
146(1) 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.
146(2) 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
147(1) 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
147(2) 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.
147(3) 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.
148 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.
149(1) 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
149(2) 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
149(3) 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.
150(1) 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.
150(2) 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.
150(3) 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.
151(1) 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
151(2) 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
152(1) 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.
152(2) 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.
153 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
154 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.
155(1) 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.
155(2) 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.
156(1) 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).
156(2) 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.
156(3) A cooperative may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).
Evidence of appointment or incumbency
156(4) 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.
156(5) A cooperative may adopt reasonable standards with respect to evidence referred to in clause (4)(b).
156(6) 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
157 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.
158(1) 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.
158(2) 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
158(3) 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.
159 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
160(1) 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.
160(2) 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.
161(1) 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.
161(2) 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.
161(3) 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.
161(4) 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.
162 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.
163 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.
PART 7
TRUST INDENTURES
164 In this Part,
"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 »)
165(1) 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.
165(2) The Registrar 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.
166(1) 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
166(2) 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.
166(3) 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.
166(4) 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.
167 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.
168(1) 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.
168(2) 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).
168(3) 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
168(4) 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).
168(5) 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.
169(1) 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.
169(2) 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.
170 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
171 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
172(1) 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.
172(2) 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.
173 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.
174 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.
175 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.
176 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.
PART 8
DIRECTORS AND BY-LAWS
177 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.
178 A cooperative shall have at least three directors or any greater minimum number that is set out in the articles.
179(1) 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
179(2) 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.
179(3) 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.
179(4) 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.
179(5) 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
180(1) 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
180(2) 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.
180(3) 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.
180(4) 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.
181 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.
182(1) 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.
182(2) 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.
183(1) 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
183(2) 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.
184(1) 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.
184(2) 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.
184(3) 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.
184(4) A majority of the directors of a cooperative shall be resident in Canada.
185 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.
186(1) 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.
186(2) It is not necessary that all directors of a cooperative elected at a meeting of its members hold office for the same term.
186(3) 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.
186(4) 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.
186(5) 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.
186(6) 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.
187(1) 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.
187(2) 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
187(3) 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.
187(4) 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
187(5) 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
187(6) 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.
187(7) 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.
Where run-off election not practical
187(8) 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.
188 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.
189(1) 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.
189(2) 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 x C
In this formula
A is the number of votes that may be cast,
B is the number of investment shares that the shareholder holds and that entitle the shareholder to a vote in the election,
C 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.
190(1) 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.
190(2) 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.
191(1) 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.
191(2) 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.
192 A director of a cooperative is entitled to receive notice of, to attend and to be heard at every meeting of the cooperative.
193(1) A director of a cooperative who resigns is entitled to submit to the cooperative a written statement giving the reasons for the resignation.
193(2) 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).
193(3) 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.
193(4) 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).
194(1) 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.
194(2) 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.
194(3) 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.
194(4) 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.
194(5) 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.
194(6) 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).
194(7) 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.
195 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.
196(1) 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.
196(2) 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.
197 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.
198(1) 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 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.
198(2) Notwithstanding any vacancy among the directors of a cooperative, a quorum of its directors may exercise all the powers of the directors.
199(1) 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.
199(2) 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.
200(1) 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.
200(2) 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.
200(3) 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.
201(1) 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.
201(2) 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.
202(1) The directors of a cooperative may appoint from their number a managing director of the cooperative or a committee of directors.
202(2) The managing director of a cooperative shall be resident in Canada.
202(3) 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.
202(4) 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.
202(5) 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.
202(6) 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
203 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.
204(1) 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.
204(2) 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.
205(1) 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.
205(2) 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.
205(3) 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.
205(4) 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).
205(5) 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.
205(6) 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.
205(7) 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
206(1) 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
206(2) 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.
206(3) 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.
206(4) 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.
206(5) 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.
206(6) 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
207(1) 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.
207(2) 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
207(3) 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
207(4) 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
207(5) 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.
207(6) 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.
207(7) 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.
208(1) 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.
208(2) 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.
209 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.
210(1) 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.
210(2) 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.
211 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
212(1) 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.
212(2) 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.
212(3) 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.
212(4) 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.
213(1) 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.
213(2) 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.
213(3) 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.
213(4) 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.
214(1) 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.
214(2) 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
214(3) 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).
214(4) 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.
Directors' and officers' insurance
214(5) 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.
215(1) 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.
215(2) 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.
216 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
217(1) 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.
217(2) 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.
217(3) 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.
217(4) 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.
217(5) 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.
217(6) 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.
217(7) 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.
217(8) 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.
| Sections: 1 - 91 | 92 - 217 | 218 - 321 | 322 - 404 |
