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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 |
(Assented to June 29, 1998)
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:
PART 1
INTERPRETATION AND APPLICATION
1(1) In this Act,
"affairs" means the relationship between
(a) a cooperative and its affiliates,
(b) a cooperative and its members, shareholders, directors and officers, and
(c) an affiliate of a cooperative and the members, shareholders, directors and officers of the cooperative,
but does not include a relationship that arises out of the ordinary course of a business carried on by the cooperative or an affiliate of the cooperative; (« affaires »)
"arrangement" means a reconstruction under which a cooperative transfers or sells, or proposes to transfer or sell, to another body corporate all or a substantial part of its undertaking for consideration consisting in whole or in part of securities of, or memberships in, that other body corporate, and under which the cooperative proposes to distribute a part or all of that consideration among its members or to cease carrying on its undertaking or that part of its undertaking so transferred or sold, or proposed to be transferred or sold; (« arrangement »)
"articles" means the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of arrangement, articles of continuance, articles of reorganization, articles of dissolution and articles of revival of a body corporate and any amendments thereto, and includes any Act, statute or ordinance by or under which a body corporate has been incorporated, and any letters patent, supplementary letters patent, certificate of incorporation, memorandum of association, and any other document evidencing corporate existence; (« statuts »)
"bearer", in respect of a security, means the person who is in possession of a security that is payable to bearer or endorsed in blank; (« porteur »)
"beneficial ownership" includes ownership through a trustee, legal representative, agent or other intermediary; (« propriété véritable »)
"body corporate" means any body that is incorporated wherever or however incorporated; (« personne morale »)
"broker" means a person who is engaged in whole or in part in the business of acting for others in the buying and selling shares in the capital stock of bodies corporate, interests in partnerships and syndicates, government and corporate bonds or similar issues, or options, warrants and similar rights in respect of such shares, bonds or interests, but not including such a person while the person is acting in the buying or selling of such shares, interests, bonds, issues, options, warrants or rights for the person's own account; (« courtier »)
"business" of a body corporate includes any undertaking carried on by the body corporate in the ordinary course of its activities; (« activité commerciale »)
"common-law partner" of a person means a person who, not being married to the other person, is cohabiting with him or her in a conjugal relationship of some permanence; (« conjoint de fait »)
"cooperative" means any body corporate to which this Act applies; (« coopérative »)
"cooperative entity" means a body corporate that, by the law under which it is organized and operated, is required to be organized and operated, and is organized and operated, on cooperative principles; (« entité coopérative »)
"corporation" means a body corporate incorporated by or under an Act of the Legislature; (« corporation »)
"court" means the Court of Queen's Bench; (« tribunal »)
"Crown" means Her Majesty in right of Manitoba; (« Couronne »)
"debt obligation" means a bond, debenture, note or other evidence of indebtedness or guarantee, whether secured or unsecured; (« titre de créance »)
"delegate" means an individual elected to represent a division of the members of a cooperative at meetings of the cooperative; (« délégué »)
"director" means an individual occupying the position of director, by whatever name called, of a cooperative, and "directors" and "board of directors" refers to the directors as a body; (« administrateur »)
"distributing cooperative" means a cooperative any of whose issued securities, other than membership shares, member loans and patronage loans, are or were part of a distribution to the public and remain outstanding and are held by more than one person; (« coopérative ayant fait appel au public »)
"entity" means a body corporate, a trust, a partnership, a fund or an unincorporated organization; (« entité »)
"federation" means a cooperative whose membership is composed substantially of other cooperative entities or leagues of cooperative entities; (« fédération »)
"former Act cooperative" means a body corporate that was in existence immediately before this Act comes into force and that is
(a) a cooperative that was incorporated under The Cooperative Associations Act, being chapter 8 of the Statutes of Manitoba, 1925, now repealed,
(b) a corporation that was incorporated under The Companies Act, being chapter C160 of the Revised Statutes of Manitoba, 1970, now repealed, or under any previous Act of the Legislature for which that Act was substituted, as a corporation to be operated on a cooperative basis, or
(c) a cooperative that was incorporated under The Cooperatives Act being chapter C223 of the Re-enacted Statutes of Manitoba, 1987, or under any previous Act of the Legislature for which that Act was substituted; (« coopérative régie par l'ancienne loi »)
"holder" means
(a) in respect of a certificate evidencing a security of a cooperative, the person in possession of the certificate issued or endorsed to the person or to bearer or in blank,
(b) in respect of a membership share of a cooperative, the member of the cooperative who, according to the cooperative's register of members or like record, is the owner of the share or the person who is entitled to be entered in that register or record as the owner of the share, and
(c) in respect of an investment share of a cooperative, the shareholder of the cooperative who according to the cooperative's register of shareholders or like record, is the owner of the share, or the person who is entitled to be entered in that register or record as the owner of the share; (« détenteur »)
"housing cooperative" means a cooperative that is authorized by its articles to carry on a business of providing residential housing to its members; (« coopérative d'habitation »)
"incorporated", when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, includes a body corporate that is continued by or under any such Act; (« constituée »)
"incorporator" of a cooperative means a person who signs the articles of incorporation of the cooperative; (« fondateur »)
"individual" means a natural person; (« particulier »)
"issuer", in respect of a security, means the entity that issues the security; (« émetteur »)
"investment share" of a cooperative means a share in the capital of the cooperative that is not a membership share; (« part de placement »)
"meeting of a cooperative" means
(a) a meeting of members of a cooperative, or
(b) a meeting of the holders of investment shares of a cooperative, or of a class or series of investment shares; (« assemblée d'une coopérative »)
"member" means a person having rights through a membership interest in a cooperative in accordance with the provisions of this Act and the articles or by-laws of the cooperative; (« membre »)
"member loan" means a loan required by a cooperative from its members as a condition of membership or to continue membership in the cooperative; (« prêt de membre »)
"membership share" of a cooperative means a share of the cooperative the ownership of one or more of which entitles the owner to become a member of the cooperative; (« part de membre »)
"minister" means the member of the Executive Council charged by the Lieutenant Governor in Council with the administration of this Act; (« ministre »)
"ordinary resolution" means a resolution passed at a meeting of a cooperative or of its directors
(a) where its articles or a unanimous agreement of the cooperative fix a greater number or percentage of votes than a majority for the passing of an ordinary resolution at the meeting, by that number or percentage of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution, and
(b) where its articles or a unanimous agreement of the cooperative do not fix a greater number or percentage than a majority for the passing of an ordinary resolution at the meeting, by a majority of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution; (« résolution ordinaire »)
"patronage loan" means a loan by a member to a cooperative of all or part of a patronage return; (« prêt de ristourne »)
"patronage return" means an amount that under this Act is allocated among and credited or paid by a cooperative to its members, or to its members and non-member patrons, based upon the business done by each of them with or through the cooperative; (« ristourne »)
"person" means an individual or an entity, and includes a legal representative; (« personne »)
"prescribed" means prescribed by the regulations;
"proxy" means a completed and executed document by means of which a member or shareholder appoints a proxyholder to attend and act on the member's or shareholder's behalf at a meeting of the members or shareholders; (« procuration »)
"redeemable", in respect of an investment share issued by a cooperative, means that the share is one
(a) that the cooperative may acquire or redeem on the demand of the cooperative, or
(b) that the cooperative is required by its articles to acquire or redeem at a specified time or on the demand of the holder; (« rachetable »)
"Registrar" means the individual designated under section 7 as the Registrar; (« registraire »)
"security" of a cooperative means an investment share of the cooperative, a debt obligation of the cooperative and a certificate evidencing such a share or debt obligation; (« valeur mobilière »)
"security interest" in a cooperative means an interest in, or charge on, property of the cooperative to secure payment of a debt, or the performance of an obligation, of the cooperative; (« sûreté »)
"send" includes deliver; (« envoyer »)
"series", in respect of investment shares of a cooperative, means a division of a class of the investment shares; (« série »)
"share" of a cooperative means a membership share of the cooperative or an investment share of the cooperative; (« part »)
"shareholder" of a cooperative means a person who, according to the cooperative's register of its shareholders, or other like record, is the owner of an investment share of the cooperative, or who is entitled to be entered in the cooperative's register of shareholders or, other like record, as the owner of an investment share of the cooperative; (« détenteur de parts de placement »)
"special resolution" means a resolution passed at a meeting of a cooperative or of its directors
(a) where its articles or a unanimous agreement of the cooperative fix a greater number or percentage of votes than 2/3 for the passing of a special resolution at the meeting, by that number or percentage of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution, and
(b) where its articles or a unanimous agreement of the cooperative do not fix a greater number or percentage of votes than 2/3 for the passing of a special resolution at the meeting, by 2/3 of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution; (« résolution spéciale »)
"surplus", of a cooperative for any financial year of the cooperative, means the amount that remains after deducting from its operating revenue, charges to members and patrons, and other revenue in that financial year,
(a) its operating expenses and losses in that financial year, including proper allowances for depreciation, for expenses incurred but not paid and for other proper charges against its operations, and
(b) any refunds and interim and final payments to members and patrons made in that financial year or required to be made under contracts or under its articles or by-laws in that financial year or in respect of that financial year and not made in a previous financial year; (« surplus »)
"trust indenture" means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a cooperative after its incorporation or continuance under this Act, under which the cooperative issues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations issued thereunder; (« acte de fiducie »)
"unanimous agreement" of a cooperative means an agreement in writing into which all members and all shareholders, if any, of the cooperative have entered; (« convention unanime »)
"worker cooperative" means a cooperative that is authorized by its articles to carry on a business of providing employment to its members. (« coopérative de travailleurs »)
Registered common-law relationship
1(2) For the purposes of this Act, while they are cohabiting, persons who have registered their common-law relationship under section 13.1 of The Vital Statistics Act are deemed to be cohabiting in a conjugal relationship of some permanence.
S.M. 2000, c. 14, s. 2; S.M. 2002, c. 24, s. 14; S.M. 2002, c. 48, s. 28.
2(1) For the purposes of this Act,
(a) a body corporate is controlled by a person if securities of the body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate; and
(b) a cooperative entity is controlled by a person if the person has the right to exercise more than 50% of the votes that may be cast at an annual meeting or to appoint or elect a majority of the directors.
2(2) A particular body corporate is the holding body corporate of another body corporate if that other body corporate is the subsidiary of the particular body corporate.
2(3) A particular body corporate is a subsidiary of another body corporate if
(a) the particular body corporate is controlled by
(i) the other body corporate,
(ii) the other body corporate and one or more bodies corporate each of which is controlled by the other body corporate, or
(iii) two or more bodies corporate each of which is controlled by that other body corporate; or
(b) the particular body corporate is a subsidiary of a body corporate that is a subsidiary of the other body corporate.
2(4) For the purposes of this Act, a body corporate is an affiliate of another body corporate
(a) if one of them is a subsidiary of the other;
(b) if each of them is a subsidiary of the same body corporate;
(c) if each of them is controlled by the same person; and
(d) if each of them is an affiliate of the same body corporate because of clause (a), (b) or (c) or this clause.
2(5) For the purposes of this Act, a person is an associate of
(a) a body corporate of which the person beneficially owns or controls, directly or indirectly, shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or because of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase such shares or such convertible securities;
(b) a cooperative entity of which the person beneficially owns more than 10% of the voting rights that can be cast at a meeting of the cooperative entity;
(c) a partnership, other than a limited partnership, of which the person is a partner;
(d) a limited partnership of which the person is the operating partner or of which the person beneficially owns more than 10% of the partnership interests;
(e) an unincorporated entity, other than a partnership, of which the person beneficially owns more than 10% of the ownership interests or of which the person is the chief operating officer or chief administrative officer;
(f) a partner of a partnership of which the person is also a partner;
(g) a trust or an estate or succession in which the person has a substantial beneficial interest or serves as a trustee, administrator, executor or liquidator of the trust or of the estate or succession or in a similar capacity;
(h) a spouse or common-law partner of the person if the spouse or common-law partner and the person are not living separate and apart because of a breakdown in their relationship;
(i) a child, grandchild, parent, grandparent, brother or sister of the person;
(j) a child, grandchild, parent or grandparent of the spouse or common-law partner of the person if the person and the spouse or common-law partner are not living separate and apart because of a breakdown in their relationship; and
(k) a relative of the person or of the spouse or common-law partner of the person if the relative and the person have the same residence.
Deemed distribution to the public
3(1) For the purposes of this Act, securities of a body corporate
(a) issued upon a conversion of other securities; or
(b) issued in exchange for other securities;
are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.
3(2) For the purposes of this Act but subject to subsection (3), a security of a body corporate
(a) is part of a distribution to the public if, in respect of the security, there has been a filing of an offering statement, a prospectus, a statement of material facts, a registration statement, a securities exchange take-over bid circular or a similar document under the laws of Manitoba, or any jurisdiction outside Manitoba;
(b) is deemed to be part of a distribution to the public if the security has been issued and a filing referred to in clause (a) would be required if the security were being issued currently; or
(c) is deemed to be part of a distribution to the public if it is listed on a stock exchange.
3(3) Upon the application of a cooperative, the Registrar may determine that a security of the cooperative is not part of a distribution to the public if the Registrar is satisfied that to so determine would not prejudice any security holder, and where the Registrar makes that determination in respect of the security, the security is deemed, for the purposes of this Act not to be part of a distribution to the public.
4(1) For the purposes of this Act, a cooperative is organized and operated, and carries on business, on a cooperative basis if,
(a) subject to subsection (2), membership in the cooperative is open, in a non-discriminatory manner, to persons who can use the services of the cooperative and who are willing and able to accept the responsibilities of membership;
(b) subject to subsection (3), each of its members or each delegate representing a division of its members has only one vote;
(c) interest on its member loans is limited to a maximum rate fixed in its articles, which maximum rate shall not exceed the prescribed maximum rate of interest on member loans;
(d) interest on its patronage loans is limited to a maximum rate fixed in its articles, which maximum rate shall not exceed the prescribed maximum rate of interest on patronage loans;
(e) dividends on its membership shares are limited to the maximum percentage, fixed in its articles, of the par value of its membership shares, which maximum percentage shall not exceed the prescribed maximum percentage for dividends on membership shares of cooperatives;
(f) to the extent feasible, its members provide the capital required by the cooperative;
(g) surplus funds arising from the cooperative's operations are used
(i) to develop its business,
(ii) to provide or improve common services to its members,
(iii) to provide for reserves or the payment of interest on its member loans or dividends on its membership shares and investment shares,
(iv) for community welfare or the propagation of cooperative enterprises, or
(v) as a distribution among its members as a patronage return based on the business the members have done with the cooperative; and
(h) it educates its members, officers, employees and the public on the principles and techniques of cooperative enterprise.
4(2) The articles of a cooperative may restrict the classes of persons to which membership in the cooperative is available if the restrictions
(a) reasonably relate to any business restriction set out in its articles and to the reasonable commercial ability of the cooperative to provide services to prospective members; and
(b) are consistent with applicable laws in respect of human rights.
4(3) The articles of a federation may provide that its members or delegates representing divisions of its members have unequal number of votes determined in accordance with rules set out in the articles.
5(1) This Act, except where it is otherwise expressly provided, applies to
(a) every cooperative incorporated under this Act;
(b) every former Act cooperative that has not been continued under an Act of Parliament or of the legislature of a province, dissolved or wound-up; and
(c) every body corporate that is continued under this Act.
No application to credit unions
5(2) This Act does not apply to a body corporate that is a credit union within the meaning of The Credit Unions and Caisses Populaires Act.
Powers of existing cooperatives
6 Where, immediately before the coming into force of this Act, the articles of a former Act cooperative excluded any of the powers authorized by any former Act by or under which the cooperative was incorporated, the articles are deemed to restrict the cooperative from exercising any similar power authorized by this Act until the exclusion is removed by subsequent articles of the cooperative.
7(1) The minister may designate an individual employed by the government under The Civil Service Act as the Registrar to carry out the duties and exercise the powers of the Registrar under this Act and may designate one or more Deputy Registrars.
7(2) The Registrar shall assist persons desirous of applying for incorporation under this Act, shall prepare and have available model forms of articles and by-laws for the use of cooperatives, shall generally be an adviser to cooperatives, and shall perform such other duties as this Act requires or as may be prescribed.
7(3) Where this Act authorizes the Registrar to do any act or thing, the Registrar may in writing delegate that authority to a Deputy Registrar designated under subsection (1).
PART 2
INCORPORATION
8(1) Any three or more individuals, none of whom
(a) is less than 18 years of age; or
(b) has the status of a bankrupt;
may apply for incorporation of a cooperative by sending to the Registrar, in duplicate, articles of incorporation.
8(2) Any two or more bodies corporate may apply for incorporation of a cooperative by sending to the Registrar, in duplicate, articles of incorporation.
8(3) Any one or more cooperative entities may apply for incorporation of a cooperative by sending to the Registrar, in duplicate, articles of incorporation.
9(1) Articles of incorporation of a cooperative shall be in a form approved by the Registrar and shall set out
(a) the name of the cooperative;
(b) the place in Manitoba where the registered office of the cooperative is to be situated;
(c) whether the cooperative is to be incorporated with or without membership share capital, and if without, a statement that the interest of each member of the cooperative is the same as that of every other member;
(d) where there is membership share capital in the cooperative
(i) the par value of the membership shares,
(ii) whether the number of membership shares to be issued is unlimited or limited, and where limited, the maximum number of membership shares that may be issued, and
(iii) the maximum percentage, or the maximum number, of the issued and outstanding membership shares of the cooperative that any one member may own;
(e) whether or not there is to be investment share capital in the cooperative and, if so, the particulars of the investment share capital as required by subsection 42(1);
(f) if the issue, transfer or ownership of shares of the cooperative is to be restricted, a statement to that effect, and a statement as to the nature of the restrictions;
(g) the number, or the minimum and maximum number, of directors of the cooperative, and the names and residence address, giving the street and number if any, of each individual who is to be a first director of the cooperative;
(h) a statement of the type of cooperative that the cooperative will be;
(i) any restrictions on the business or businesses that the cooperative may carry on;
(j) any restrictions on or qualifications for membership in the cooperative;
(k) a statement that the cooperative will be organized and operated and will carry on business on a cooperative basis;
(l) the maximum rate of return that may be paid on its membership shares, which maximum rate shall not exceed the prescribed maximum rate of return payable on membership shares of cooperatives;
(m) the maximum rate of interest that may be paid on its member loans or patronage loans, which maximum rate shall not exceed the prescribed maximum rate of interest payable on member loans or patronage loans of cooperatives; and
(n) provisions for the distribution of the property of the cooperative on its dissolution.
9(2) The articles of a cooperative may
(a) restrict, in whole or in part, the powers of its directors to manage the business of the cooperative; or
(b) set out any provisions that could be set out in the by-laws of the cooperative, and if the articles do, any reference in this Act to such provisions in the by-laws of a cooperative is also a reference to those provisions in the articles of the cooperative.
9(3) Subject to subsection (4), the articles of a cooperative, or a unanimous agreement of the cooperative, may require a greater number of votes of directors, members or shareholders of the cooperative than is required by this Act to effect an action.
9(4) Neither the articles of a cooperative nor a unanimous agreement of the cooperative may require, in order to remove a director of the cooperative or a delegate representing a division of its members, that more than a majority of the votes cast by or on behalf of the persons who are entitled to vote be cast in favour of the removal.
10(1) The articles of incorporation of a cooperative must be signed by its incorporators.
10(2) The articles of incorporation of a cooperative shall have attached to them, in a form approved by the Registrar, the consent of each of its first directors who is not an incorporator of the cooperative.
10(3) As soon as possible after a site is acquired for the first registered office of a cooperative, whether before or after the cooperative is incorporated, the incorporators, or the cooperative if it has been incorporated, shall send to the Registrar a notice indicating the address of the site giving the street and number, if any, at which the site is located.
11(1) A cooperative shall send a copy of its by-laws adopted at the first meeting of its members to the Registrar within 30 days after they are adopted and shall send a copy of any by-laws passed subsequently and any amendments to its by-laws, and notice of any repeal of a by-law of the cooperative, to the Registrar within 30 days of the passing of the by-law or amendment or the repeal of the by-law, as the case may be.
11(2) The Registrar may order a cooperative to enact a by-law consistent with, or to amend or repeal a by-law that is inconsistent with, any provision of this Act, the regulations or the cooperative's articles or any other provisions of its by-laws, and the cooperative shall enact, amend or repeal the by-law as ordered.
12(1) The by-laws of a cooperative shall provide for
(a) the qualifications, and the procedures for acceptance, of members of the cooperative;
(b) the rights of persons, if any, who hold memberships in the cooperative jointly;
(c) the membership obligations of members of the cooperative, including any obligation to use the services of the cooperative and any fees to be paid by the members;
(d) whether the interest of a member of the cooperative may, subject to section 102, be transferred or assigned, and any conditions or restrictions that apply to such a transfer or assignment;
(e) subject to sections 244, 245 and 246 and Parts 12 and 13, the conditions on which membership in the cooperative is terminated, whether by withdrawal or by involuntary termination;
(f) the mode of holding meetings of its members, the quorum for the meetings, the rights of voting of its members, the procedures for making, repealing, and amending its by-laws or regulations, the right of its members to vote by ballot or mail or both, and the manner, form and effect of votes at the meetings;
(g) the election, qualifications, term of office, removal and replacing of its directors, committee members and officers, and their powers, duties and remuneration, and the procedure and quorum at meetings of its board of directors;
(h) the terms of any contract between the cooperative and its members that all its members may be required to sign, and of any renewals of such contracts;
(i) the appointment of auditors of the cooperative;
(j) the refunds and the interim and final payments to be made to its members; and
(k) the distribution of the surplus earnings arising from the operations of the cooperative.
12(2) The by-laws of a cooperative may provide for
(a) the division of the territory in which members of the cooperative are located into districts and the alteration thereof, the election of delegates to represent the members located in each district and the defining of the powers, duties, election and voting rights of district delegates;
(b) the separation of members of the cooperative into divisions and if so,
(i) the qualifications for membership in each division,
(ii) the conditions precedent to membership in each division,
(iii) the method, time and manner of withdrawing from a division or transferring membership from one division to another and any applicable conditions on a transfer, and
(iv) the conditions on which membership in a division ends;
(c) the representation of divisions of members of the cooperative by delegates and, if so,
(i) the designation of the divisions of members, to be represented by delegates,
(ii) the procedures for altering divisions of members, if applicable, and
(iii) the powers, duties, selection, voting rights and procedures for appointment or election, and for removal, of delegates;
(d) the referral of disputes between the cooperative and a member of the cooperative to a process of dispute resolution;
(e) the holding of a referendum on any matter of general concern to its members; and
(f) any other matter that the members of the cooperative consider necessary or desirable.
13 Every cooperative shall be organized and operated, and shall carry on business, on a cooperative basis.
Issuance of certificate of incorporation
14(1) The Registrar shall issue a certificate of incorporation for a cooperative if the Registrar is satisfied that
(a) the articles are in accordance with section 9 and, if applicable, section 276 and subsection 290(1);
(b) the cooperative will be organized and operated, and will carry on business, on a cooperative basis; and
(c) the cooperative will comply with Part 12 or 13, if applicable.
14(2) The Registrar may request additional information that the Registrar considers necessary to be satisfied that the requirements set out in subsection (1) have been met, but for the purposes of clauses (1)(b) and (c), the Registrar may rely on the articles.
15 If the membership of a cooperative is reduced to a number less than the number of members required for incorporation and, after 30 days notice remains at less than that number, the Registrar may require the cooperative
(a) to apply for a certificate of continuance under The Corporations Act if it was incorporated with membership capital; or
(b) to be liquidated or dissolved under Part 17.
16 A cooperative comes into existence on the day indicated in its certificate of incorporation.
17(1) The corporate name of every cooperative shall include the word "Cooperative", "Co-operative" or "Coopérative", or the abbreviation "Co-op", or the word "Pool", as part thereof; and the word "Limited" or "limitée" or the abbreviation "Ltd." or "ltée" shall be the last word of the corporate name of every cooperative with share capital, and the word "Incorporated" or "Incorporée", or the abbreviation "Inc." shall be the last word of the corporate name of every cooperative without share capital but a cooperative may use and may be legally designated by either the full or the abbreviated form.
17(2) A cooperative shall have as part of its name one or more words that suggest what type of cooperative it is.
17(3) A former Act cooperative is not required to change its name to conform with subsection (2), but if such a cooperative makes any change to its name after the coming into force of this Act, the new name shall conform with subsection (2).
17(4) Subject to section 20, a cooperative may set out its name in its articles in an English form or a French form or a combined English and French form, and may be legally designated by that form.
17(5) Subject to section 20, a cooperative may set out its name in its articles in any language form and it may be legally designated by that form, but, if that language form is in characters other than the Roman alphabet, the articles shall set out an alternative name for the cooperative that is the English or French equivalent, in the Roman alphabet, of its name in that language form.
17(6) A cooperative may have as part of its name a symbol prescribed for use as part of names of cooperatives.
17(7) A cooperative shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the cooperative.
17(8) Subject to section 20 and the provisions of The Business Names Registration Act, a cooperative may carry on business under or identify itself by a name other than its corporate name.
Prohibited use of cooperative designations
18(1) Subject to subsection (3), no person other than a cooperative entity shall use any of the words "cooperative", "co-operative", "coopérative" and "pool" or any derivative thereof, or the abbreviation "co-op" or any other abbreviation of those words, as part of its name.
Prohibition against holding out
18(2) Subject to subsection (3), no person other than a cooperative entity shall hold itself out as, or use as part of its name or otherwise any word or abbreviation suggesting, indicating or implying that it is, carrying on business on a cooperative basis.
18(3) Subsections (1) and (2) do not apply to a body corporate incorporated by or under the authority of an Act of the Parliament of Canada or of the legislature of a province or of an ordinance of a territory that expressly authorizes the use of any of the words "cooperative", "co-operative", "coopérative" and "pool", or the abbreviation "co-op", or to any corporation heretofore incorporated in respect of which the Registrar consents in writing to the continued use of any of those words or that abbreviation.
19(1) The Registrar may, on the request in writing of any person and upon payment of the prescribed fee, reserve a corporate name for use by, and the benefit of, the person or the person's nominee for a period of 90 days, if, at the time of the request, a cooperative is not prohibited by section 20 from having that name.
19(2) If requested to do so by the incorporators of a cooperative, the Registrar shall assign to the cooperative, as its name, a number determined by the Registrar plus one or more words that suggest what type of cooperative the cooperative is.
"Business" or "association" defined
20(1) In this section, "business" or "association" means an individual or an entity carrying on business.
20(2) A cooperative shall not have a name
(a) that is known to the Registrar to be the same as the name of an existing body corporate or of a dissolved body corporate;
(b) that, subject to subsection (4), is known to the Registrar to be the same as the name of a business or association;
(c) that suggests or implies a connection with the Crown, or any member of the Royal Family, or the Government of Canada or the government of any province or territory of Canada or any department, branch, bureau, service, agency, or activity of any of those governments, without the consent in writing of the appropriate authority;
(d) that includes the word "Loan" or "Trust"; or
(e) that the Registrar for any good and valid reason disapproves.
Names similar to other bodies corporate
20(3) A cooperative shall not have a name that is the same as similar to the name of any other body corporate if the use of that name by the cooperative would be likely to confuse or mislead, unless the body corporate consents in writing to its name being given in whole or in part to the cooperative and, if required by the Registrar, the body corporate undertakes to dissolve or to change its name within six months after the incorporation of the cooperative.
Names similar to other businesses or associations
20(4) A cooperative shall not have a name that is the same as or similar to the name of a business or association, if the use of that name by the cooperative would be likely to confuse or mislead, unless the business or association consents in writing to its name being given in whole or in part to the cooperative and, if required by the Registrar, the business or association undertakes to cease carrying on its business or activities or to change its name within six months after the incorporation of the cooperative.
20(5) A cooperative shall not have a name that is reserved for another body corporate under this Act or The Corporations Act, unless the consent in writing is obtained from the person for whose use and benefit the name is reserved.
20(6) Where a cooperative is granted a name subject to an undertaking given under subsection (3) or (4) and the undertaking is not carried out within the specified time, the Registrar may direct the cooperative to which the name is granted to change its name to a name that complies with this Act; and if the cooperative fails to comply with the directive within 60 days of the service thereof, the Registrar may revoke the name of the cooperative and assign to it a number plus one or more words that suggest what type of cooperative it is, and until changed in accordance with section 297 the name of the corporation is thereafter the number and words so assigned.
20(7) Where, through inadvertence or otherwise, a cooperative
(a) comes into existence or is continued with; or
(b) upon an application to change its name, is granted;
a name that contravenes this section, the Registrar may direct the cooperative to change its name in accordance with section 297.
Directing change of where number assigned
20(8) Where a cooperative has an assigned number as its name, the Registrar may direct the cooperative to change its name, in accordance with section 7, to a name that complies with this Act.
20(9) Where a cooperative is directed under subsection (7) to change its name and fails within 60 days from the service of the directive to change its name to a name that complies with this Act, the Registrar may revoke the name of the cooperative and assign to it a number plus one or more words that suggest what type of cooperative it is, and until changed in accordance with section 297 the name of the cooperative is thereafter the number and words so assigned.
21(1) Where a cooperative has had its name revoked and a number assigned to it under subsection 20(6) or (9), the Registrar shall issue a certificate of amendment in respect of the cooperative showing the new name of the cooperative and shall forthwith give notice of the change of name in the gazette.
21(2) The articles of the cooperative are amended accordingly on the date shown in the certificate of amendment in respect of the cooperative.
Personal liability under pre-incorporation contracts
22(1) Except as provided in this section, a person who enters into a written contract in the name of or on behalf of a cooperative before it comes into existence is personally bound by the contract and is entitled to the benefits of the contract.
Adoption of pre-incorporation contracts
22(2) A cooperative may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound by the contract, adopt a written contract made before it came into existence in its name or on its behalf, and upon the adoption
(a) the cooperative is bound by the contract and is entitled to the benefits thereof as if the cooperative had been in existence on the day when the contract was made and had been a party thereto; and
(b) the person who originally entered into the contract ceases, except as provided in subsection (3), to be bound by or entitled to the benefits of the contract.
22(3) Except as provided in subsection (4), whether or not a written contract made before the coming into existence of a cooperative is adopted by the cooperative, a party to the contract may apply to the court for an order fixing obligations under the contract as joint and several or apportioning liability between or among the cooperative and any person who originally entered into the contract, and upon the application the court may make any order it thinks fit.
Exemption from personal liability
22(4) If expressly so provided in the written contract, a person who entered into a contract in the name of or on behalf of a cooperative before it came into existence is not in any event bound by the contract or entitled to the benefits of the contract.
PART 3
CAPACITY AND POWERS
23(1) A cooperative has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.
23(2) A cooperative has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Manitoba to the extent that the laws of that jurisdiction permit.
24(1) It is not necessary for a by-law to be passed in order to confer any particular power on the cooperative or its directors.
24(2) No cooperative and no subsidiary of a cooperative may carry on any business or exercise any power contrary to a restriction set out in the articles of the cooperative.
24(3) No act of a cooperative, including any transfer of property to or by a cooperative, is invalid solely because the act or transfer is contrary to its articles or this Act.
25(1) Subject to subsection (2), no person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a cooperative solely because the document has been filed with the Registrar or is available for inspection at an office of the cooperative.
Constructive notice of articles and by-laws
25(2) Each member of a cooperative is deemed to have notice and knowledge of the contents of the articles and by-laws of the cooperative.
Restrictions on defences by cooperatives and guarantors
26 A cooperative or a guarantor of an obligation of the cooperative may not assert against a person dealing with the cooperative or with any person who has acquired rights from the cooperative that
(a) its articles or by-laws have not been complied with;
(b) the individuals named in the most recent notice sent to the Registrar under this Act are not the directors of the cooperative;
(c) the place named in the most recent notice sent to the Registrar under this Act is not the registered office of the cooperative;
(d) a person held out by the cooperative as a director, an officer or an agent of the cooperative has not been duly appointed or has no authority to exercise the powers or perform the duties that are customary in the business of the cooperative or usual for that director, officer or agent;
(e) a document issued by any director, officer or agent of the cooperative with actual or usual authority to issue the document is not valid or not genuine;
(f) any financial assistance to a member, director, officer, shareholder or employee of the cooperative was not authorized; or
(g) any sale, lease or exchange of all or substantially all of the property of the cooperative was not authorized;
unless the person has or ought to have, because of a position with or relationship to the cooperative, knowledge to the contrary.
PART 4
REGISTERED OFFICE, RECORDS AND RETURNS
27(1) A cooperative shall at all times have a registered office in the place in Manitoba specified in its articles or in a special resolution under subsection (2).
27(2) A cooperative may by special resolution of its members change the location of its registered office to another place in Manitoba.
27(3) The directors of a cooperative may change the address of the registered office within the place specified in the articles or a special resolution.
27(4) A cooperative shall send to the Registrar
(a) a copy of a resolution changing the location of its registered office to another place in Manitoba within 15 days after the resolution is passed; and
(b) a notice, in form approved by the Registrar, of any change of address of its registered office within 15 days after the address is changed.
Annexation or amalgamation of municipalities
27(5) Where the location of the registered office of a cooperative is changed solely because of the annexation or amalgamation of the municipality or place in which the registered office is situated to or with another municipality or place, that change does not constitute and is deemed not to constitute a change in the location of the registered office of the cooperative.
28(1) A cooperative shall prepare and maintain, at its registered office or, subject to subsection (5), at any other place in Manitoba designated by its directors, records containing
(a) its articles and by-laws, and all amendments thereto, and a copy of any unanimous agreement of the cooperative;
(b) the minutes of meetings and resolutions of its members and shareholders;
(c) a register of its directors setting out the names, addresses and occupations of all individuals who are or have been directors of the cooperative, with the several dates when each became a director and, where they have ceased to be directors, the several dates when they ceased to be directors;
(d) a members' register setting out the names, alphabetically arranged, and the latest known addresses of all its members, and the number of membership shares and other securities, if any, of the cooperative owned by each;
(e) if the cooperative issues investment shares, a list of all its shareholders, setting out their names and their latest known addresses and the number of those investment shares owned by each; and
(f) if the cooperative issues securities in registered form, a securities register that complies with section 110.
Accounting and directors' records
28(2) In addition to the records described in subsection (1), a cooperative shall prepare and maintain adequate accounting records and records containing minutes of meetings and resolutions of its directors and any committee of its directors.
28(3) The records of a cooperative described in subsection (2) shall be kept at its registered office or at such other place in Manitoba as its directors think fit and shall at all reasonable times be open to inspection by its directors.
Accounting records in Manitoba
28(4) Where accounting records of a cooperative are kept at a place outside Manitoba, there shall be kept at its registered office or other office in Manitoba accounting records adequate to enable its directors to ascertain the financial position of the cooperative with reasonable accuracy.
28(5) Where a cooperative
(a) shows, to the satisfaction of the Registrar, the necessity of keeping any of the documents or records mentioned in subsections (1) and (2) at a place other than its registered office; and
(b) gives assurance, to the satisfaction of the Registrar, that those documents or records will at all reasonable times be open for inspection, at its registered office or some other place in Manitoba approved by the Registrar, by any person who is entitled to inspect them and who applies to the cooperative for an inspection thereof;
the Registrar may, by order and upon such terms as are set out in the order, permit the cooperative to keep such of them at such place or places, other than its registered office, as the Registrar thinks fit.
28(6) The Registrar for any good and valid reason may, by order and upon such terms as the Registrar thinks fit, vary or rescind any order made under subsection (5).
Trustee's register of securities
28(7) The trustee for the owners of securities of a cooperative may maintain at the trustee's office a duplicate register of those securities.
28(8) The Registrar shall cause notice of every order made by the Registrar under this section to be given forthwith in the gazette.
29(1) Members, shareholders and creditors of the cooperative, their agents and legal representatives, and the Registrar may examine the records of a cooperative referred to in clauses 28(1)(a) to (c) during the usual business hours of the cooperative, and may make copies of the records or parts of them free of charge and, where the cooperative has made a distribution to the public, any other person may do so upon payment to the cooperative of a reasonable fee.
29(2) Every member and shareholder of a cooperative is entitled on request and without charge to one copy of the articles and by-laws of the cooperative, including any amendments thereto, and one copy of any unanimous agreement of the cooperative, including any amendments thereto.
Copies of by-laws and articles to creditors
29(3) A cooperative shall, upon payment to it of a reasonable fee, provide a copy of its articles and by-laws and any unanimous agreement of the cooperative
(a) upon the written request of a creditor of the cooperative, to the creditor; and
(b) where the cooperative is a distributing cooperative, upon the written request of any other person, to the other person.
30(1) Every register or record required by this Act to be prepared or maintained shall be prepared and maintained in a form, whether
(a) a bound or loose-leaf form;
(b) a photographic form;
(c) a system of mechanical or electronic data processing; or
(d) any other form of or device for storing information;
that allows any information recorded or stored in it to be reproduced within a reasonable time in an intelligible, written English form or written French form.
30(2) A cooperative and its agents shall take reasonable precautions
(a) to prevent loss or destruction of the records and registers of the cooperative required by this Act to be prepared or maintained;
(b) to prevent falsification of entries in those records and registers; and
(c) to facilitate detection and correction of inaccuracies in those records and registers.
31(1) The directors of a cooperative may, but need not, adopt a corporate seal for the cooperative and may change a corporate seal that is adopted.
Seal not necessary for validity
31(2) No instrument or agreement executed on behalf of a cooperative by a director, an officer or an agent of the cooperative is invalid merely because a corporate seal of the cooperative is not affixed thereto.
32 Every cooperative shall send the Registrar an annual return in a form approved by the Registrar and before a day fixed by the Registrar.
Copies of financial statements to Registrar
33(1) A cooperative referred to in subsection (1.1) shall send the Registrar copies of the documents described in subsection 257(1)
(a) at least 21 days before the annual members' meeting at which they are to be placed before the members; or
(b) not more than 15 months after the previous annual members' meeting if one is not held during those months.
33(1.1) Subsection (1) applies to
(a) a distributing cooperative, if any of its shares that were part of a distribution to the public are outstanding and held by more than one person;
(b) a cooperative that requires its members to hold more than $500. of membership shares per member; and
(c) a cooperative that requires its members to make member loans of more than $500. per member.
33(2) A cooperative that is a subsidiary of a holding cooperative entity is not required to comply with this section if its financial statements are consolidated or combined with those of its holding cooperative entity and the statements of its holding cooperative entity are sent to the Registrar in compliance with this section.
34(1) The minister may, at any time, by notice sent to a cooperative or a director or an officer thereof, require the cooperative or the director or officer, as the case may be, to make a special return within the time specified in the notice about any subject connected with the business and affairs of the cooperative.
34(2) The special return required under subsection (1) may be in respect of any matter that is certified by the minister to be in the public interest.
35(1) A person who fails, within the time specified in the notice sent by the minister, to file the special return required under subsection 34(1) is guilty of an offence and liable on summary conviction to a fine not exceeding $2,000 or to imprisonment for a term not exceeding one year or both.
35(2) Where it appears to the court that a person is or may be liable in respect of an offence under subsection (1) but the person has acted honestly and reasonably and that, having regard to all the circumstances of the case, the person ought fairly to be excused for the offence, the court may relieve the person, either wholly or partly, from liability on such terms as the court thinks fit.
PART 5
CORPORATE FINANCE
36 The capital of a cooperative without membership shares may be in the form of member loans and those loans may be in such amounts, payable at such times, and with or without interest, as the articles of the cooperative provide.
Certificate of membership and right to vote
37 Where a cooperative does not have share capital, it shall issue a certificate of membership in the cooperative to each member of the cooperative who has paid the full membership fee; but a member of a cooperative has a right to vote immediately upon being accepted as a member in accordance with the by-laws of the cooperative, whether or not a certificate of membership has been issued to the member.
38 Membership shares of a cooperative with share capital shall have a par value.
39(1) A cooperative with membership shares shall have one class of membership shares, designated as such in the articles.
39(2) Subject to section 221 and Parts 12 and 13, each member of a cooperative has equal rights.
39(3) The articles of a cooperative may not include any preference, right, condition, restriction, limitation or prohibition on its membership shares or member loans, except as provided by this Act.
40(1) Subject to section 221, a member of a cooperative has one vote on all matters to be decided by the members of the cooperative.
40(2) The right to vote at meetings of members of a cooperative attaches to membership in the cooperative in accordance with subsection (1) and not to the membership share of the cooperative.
41(1) Membership shares of a cooperative may be issued only to, and member loans of a cooperative may be accepted only from, persons whose applications for membership in the cooperative have been approved in accordance with subsection 219(3).
Membership shares at par value
41(2) A cooperative shall sell its membership shares at the par value thereof, and this subsection applies to the resale of any shares purchased or redeemed by the cooperative.
42(1) The articles of a cooperative may provide that the cooperative may issue investment shares, and if they do, the articles shall set out
(a) whether the investment shares may be issued to non-members;
(b) the maximum number of investment shares that may be issued;
(c) the number of classes of investment shares;
(d) the preferences, rights, conditions, restrictions, limitations, and prohibitions attaching to the investment shares and, if there is to be more than one class, the designation of each class and the special preferences, rights, conditions, restrictions, limitations and prohibitions attaching to each class;
(e) the amounts payable to owners of the investment shares, or of shares of any class of the investment shares, on redemption of the shares or on the dissolution of the cooperative; and
(f) the mode of holding meetings of its shareholders, the quorum for the meetings, the rights of voting of its shareholders, the right of its shareholders to vote by ballot or mail or both and the manner, form and effect of votes at the meetings.
42(2) Subject to the articles of a cooperative and to this Act, no right to vote at a meeting of the members of the cooperative attaches to an investment share of the cooperative.
42(3) The articles of a cooperative may
(a) constrain
(i) the issue or transfer of its investment shares, or of any class or series thereof, to persons who are not resident in Canada,
(ii) the issue or transfer of its investment shares, or of any class or series thereof, to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province
(A) to obtain a licence to carry on any business,
(B) to become a publisher of a Canadian newspaper or periodical, or
(C) to acquire investment shares of a financial intermediary as defined in the regulations, or
(iii) the issue, transfer or ownership of its investment shares, or of any class or series thereof, to assist the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits because of attaining or maintaining a specified level of Canadian ownership or control; or
(b) provide that
(i) an investment share of the cooperative confers on its holder the right to vote at an election of directors of the cooperative because of an event that has occurred and is continuing or because of a condition that has been fulfilled, or
(ii) the shareholders, any class of shareholders or the holders of a series of investment shares of the cooperative, may elect a fixed number or a percentage of the directors of the cooperative.
Limit on shareholders' directors
42(4) Notwithstanding subsections (2) and (3), neither the articles of a cooperative nor a unanimous agreement of the cooperative may provide that the shareholders of the cooperative have the right to elect more than 20% of the directors of the cooperative.
Election of director by shareholders
42(5) A director of a cooperative who is to be elected by the shareholders of a class or series of its investment shares shall be elected at a meeting of those shareholders.
42(6) If shareholders of a cooperative are entitled to vote in accordance with subsection (3) or otherwise in accordance with this Act, each investment share of the cooperative entitles the holder to one vote.
Members may exercise rights of an investment shareholder
42(7) Notwithstanding section 40, a member of a cooperative who holds an investment share of the cooperative may exercise any voting right that holders of investment shares of the cooperative have.
42(8) The articles of a cooperative may provide
(a) that the cooperative may issue a special class of investment shares that may be issued only to members of the cooperative;
(b) that each member of the cooperative who owns shares of the special class is entitled or obliged to conduct a specific amount or percentage of business with the cooperative that is dependent on the number or percentage of such shares owned by the member; and
(c) that, notwithstanding clause (1)(e) and subsections 338(1) and 341(7), each member of the cooperative who owns shares of the special class is entitled, on the liquidation and dissolution of the cooperative, to a pro rata share, dependent on the number or percentage of such shares owned by the member, of all remaining property of the cooperative after payment of all debts and liabilities of the cooperative including unpaid dividends, the amounts to be paid to the owners of its investment shares of other classes and any amounts to be paid on the redemption of its membership shares and the repayment of its member loans and patronage loans.
43(1) Investment shares of a cooperative shall be in registered form and shall be without nominal or par value.
43(2) Where a body corporate is continued under this Act, an issued share with par value of the body corporate, other than a share that on the continuance is converted into a membership share, shall be deemed to be a share without nominal or par value.
44(1) The articles of a cooperative may, subject to the limitations set out in them and subject to subsection (2), authorize the issue of any class of investment shares of the cooperative in one or more series and may
(a) fix the number of investment shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the investment shares of, each series; or
(b) authorize the directors to fix the number of investment shares in, and to determine the designation, rights , privileges, restrictions and conditions attaching to the investment shares of, each series.
44(2) If any cumulative dividends or amounts payable on return of capital in respect of a series of investment shares of a cooperative are not paid in full, the investment shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.
44(3) No rights, privileges, restrictions or conditions attached to a series of investment shares of a cooperative authorized under this section confer a priority in respect of dividends or return of capital on a series over any other series of the same class of investment shares of the cooperative that are then outstanding.
Copy of resolution to Registrar
44(4) If the directors of a cooperative exercise their authority granted by the articles under clause (1)(b) in respect of a series of shares, they shall, before the issue of the shares of the series, send to the Registrar a certified copy of the resolution of the directors by which they exercised the authority.
45(1) If the articles of a cooperative so provide, no shares of a class of investment shares of the cooperative shall be issued unless the shares are first offered to the shareholders of that class, and the shareholders of that class have a pre-emptive right to acquire the offered investment shares in proportion to their holdings of the investment shares of that class, at the price at which and on the terms on which those shares are to be offered to others.
45(2) Even if the articles of a cooperative provide the pre-emptive right referred to in subsection (1), shareholders of investment shares of the cooperative have no pre-emptive right to acquire investment shares that are to be issued
(a) in exchange for a thing or service other than money;
(b) as an investment share dividend; or
(c) on the exercise of conversion privileges, options or rights previously granted by the cooperative.
46 The directors of a cooperative may authorize the cooperative to pay a reasonable commission to any person in consideration of the person
(a) purchasing or agreeing to purchase, as a broker, investment shares of the cooperative from the cooperative or from some other person; or
(b) procuring or agreeing to procure purchasers for investment shares of the cooperative.
47(1) Subject to subsection 98(2), the articles of a cooperative may provide that the cooperative has a charge on an investment share of the cooperative registered in the name of a shareholder or the legal representative of a shareholder for a debt of the shareholder to the cooperative, including an amount unpaid as of the date the cooperative was continued under this Act, in respect of an investment share issued by it.
47(2) A cooperative may enforce a charge referred to in subsection (1) in accordance with its by-laws.
48(1) A cooperative that has issued investment shares that are or were part of a distribution to the public, that remain outstanding and that are held by more than one person may, by a special resolution of its members and by a separate special resolution of the shareholders of each class of its investment shares, amend its articles to constrain
(a) the issue or transfer of its investment shares, or of any class or series thereof, to persons who are not resident in Canada;
(b) the issue or transfer of its investment shares, or of any class or series thereof, to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province
(i) to obtain a licence to carry on any business,
(ii) to become a publisher of a Canadian newspaper or periodical, or
(iii) to acquire investment shares of a financial intermediary as defined in the regulations; or
(c) the issue, transfer or ownership of its investment shares, or of any class or series thereof, to assist the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province or territory to receive licences, permits, grants, payments or other benefits because of attaining or maintaining a specified level of Canadian ownership or control.
Limitation of prohibition of investment shares
48(2) If the ownership by a person or class of persons of investment shares of a cooperative, or of any class or series thereof, would adversely affect the ability of the cooperative or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in clause (1)(c), the cooperative may, under that clause, limit the number of its investment shares, or of any class or series thereof, that may be owned, or prohibit the ownership of its investment shares, or any class or series thereof, by that person or that class of persons.
Change or removal of constraint
48(3) A cooperative referred to in subsection (1) may, by a special resolution of its members and by a separate special resolution of the shareholders of each class of its investment shares, amend its articles to change or remove any constraint on the issue, transfer or ownership of its investment shares.
48(4) The directors of a cooperative may, without further approval, revoke special resolutions referred to in subsection (1) or (3) before they are acted on if the special resolutions authorize the directors to do so.
49 The Lieutenant Governor in Council may make regulations
(a) in respect of cooperatives or a class of cooperatives that constrains the issue, transfer or ownership of their investment shares, prescribing
(i) the disclosure required of the constraints in documents issued or published by the cooperatives,
(ii) the duties and powers of the directors of the cooperatives to refuse to issue or register transfers of investment shares of the cooperative in accordance with its articles,
(iii) the limitations on voting rights of any investment shares of the cooperatives held contrary to its articles,
(iv) the powers of the directors of the cooperatives to require disclosure of beneficial ownership of its investment shares and the right of the cooperatives and their directors, employees and agents to rely on that disclosure and the effects of that reliance, and
(v) the rights of any persons owning investment shares of the cooperatives at the time of an amendment to its articles constraining investment share issues or transfers; and
(b) defining "financial intermediary" for the purposes of subclause 48(1)(b)(iii).
50 An issue or a transfer of an investment share of a cooperative or an act of a cooperative is valid notwithstanding any failure to comply with section 48 or regulations made under section 49.
51(1) Subject to this Act, and to the articles, the by-laws and any unanimous agreement of a cooperative, its investment shares may be issued to any person, at any time and for money or in exchange for any thing or service that its directors may decide to accept.
Liability of members and shareholders
51(2) Shares issued by a cooperative are non-assessable and its members and shareholders are not liable to the cooperative or to its creditors beyond the sum remaining unpaid on their subscriptions for shares or their undertakings to make member loans.
51(3) A share of a cooperative shall not be issued until it is fully paid, and a certificate for a member loan of a cooperative shall not be issued until the minimum amount for a member loan of the cooperative is fully paid,
(a) in money; or
(b) in property or past services that is the fair equivalent of the money that the cooperative would have received if the share had been issued for, or the member loan had been paid in, money.
Consideration other than money
51(4) In determining whether property or past services is the fair equivalent of a money consideration, the directors of a cooperative may take into account reasonable charges and expenses of organization and reorganization of the cooperative and payments for property and past services reasonably expected to benefit it.
51(5) For the purposes of this section, "property" does not include a promissory note or a promise to pay.
Requirements respecting distribution of surplus
52 Every cooperative
(a) shall, by its by-laws, provide that, before any distribution of its surplus for a financial year is made, such part thereof as may be necessary for those purposes shall be appropriated for, and transferred to, reserve funds duly established by by-laws or by resolution passed by the members at a general meeting, and shall be used to retire all or a part of any accumulated deficits;
(b) may provide, in the manner set out in its by-laws, for payment out of the surplus of dividends or interest on its investment shares; and
(c) may, by its by-laws, provide for payment, out of surplus, of interest or dividends on its member loans, its membership shares or its patronage loans at rates not exceeding the prescribed maximum rates nor exceeding the maximum rates specified in its articles.
53 Except as in this Act otherwise expressly provided, each cooperative shall allocate among, and credit to its members its surplus for each financial year of the cooperative, and each of its members shall be entitled to a share thereof proportionate to the business done by that member with or through the cooperative in that financial year as computed by its directors at a rate approved by a resolution of its directors.
54 The directors of a cooperative shall compute the amount of the business done by each of its members with and through the cooperative in each financial year of the cooperative in relation to
(a) the quantity, quality, kind and value of the goods bought, sold, handled, marketed or dealt in by the cooperative; and
(b) the services rendered
(i) by the cooperative on behalf of or to the member, whether as principal or agent of the member or otherwise, or
(ii) by the member on behalf of or to the cooperative;
with appropriate differences for the different classes, grades or qualities of the goods and services.
Allocation of surplus to non-members
55 The by-laws of a cooperative may provide that it may in each of its financial years allocate among, and credit to, patrons of the cooperative who are not members thereof a share of the surplus at a rate that is equal to, or less than, the rate at which it is distributable to its members; and the business done by its non-member patrons shall be computed in the manner in which business done by its members is computed.
Use of return to non-members for memberships
56 Where its by-laws so provide, a cooperative may in each of its financial years credit to the account of a non-member patron the share of the surplus allocated to the patron, until such time as the amount to the patron's credit is equal to or greater than the par value of a membership share of the cooperative, where the cooperative has membership share capital, or the membership fee for a member of the cooperative in other cases; and thereupon an amount equal to that par value or the membership fee, as the case may be, shall be charged to the account of the non-member patron and transferred to the credit of the cooperative; and, subject to compliance with the other provisions of this Act,
(a) where there is a membership fee for membership in the cooperative, the patron thereupon becomes a member of the cooperative entitled to receive a certificate of membership; or
(b) where it has membership share capital, when the number of membership shares purchased for the non-member patron equals the minimum number of shares required for membership the patron thereupon becomes a member of the cooperative entitled to receive a certificate for the fully paid-up membership shares.
57 A cooperative may by by-law provide that, where the patronage return that would otherwise be payable to any person from its surplus for a financial year does not exceed $2, or such smaller amount as may be specified in the by-law, no patronage return be paid to that person from that surplus, and that the amount that would otherwise be payable to the person as a patronage return shall be the property of the cooperative to be used as its board of directors may decide.
Use of patronage return for shares
58(1) A cooperative that has share capital may by by-law provide that, in each financial year of the cooperative, the whole of any patronage return credited to a person or such part thereof as may be specified in the by-laws shall be applied to purchase on behalf of the person membership shares of the cooperative, up to such number, if any, as may be specified in the by-laws.
58(2) The by-laws of a cooperative shall provide for the giving of notice to each of its members or non-member patrons of the number of shares purchased or to be purchased for them, the manner of issuance or transfer to them of its shares, the payment for the shares out of their patronage returns and, if applicable, the issuance and forwarding of certificates to them in respect of the shares so issued or transferred to them.
59 Where the by-laws of a cooperative contain provisions referred to in section 58, its by-laws shall also provide for the repurchase of the shares by the cooperative in accordance with this Act, within such period and subject to such conditions as may be specified in its by-laws.
Compulsory loan of patronage returns
60 A cooperative may by by-law require its members to lend to it the whole, or such part as may be specified in its by-laws, of the patronage return to which the members may become entitled in respect of any financial year, upon such terms and at such rate of interest, or without interest, as the by-laws may provide; and where its by-laws require such loans, they shall also provide for the repayment of any loan so made.
61 Where members of a cooperative are required by a marketing plan established under an Act of the Legislature or of the Parliament of Canada to sell or deliver goods or render services to or through a producer board, marketing commission or agency, then for the purposes of allocating, crediting and paying patronage returns among or to its members and for the purposes of making payments to its members as part of the price or proceeds of their goods or services, its members shall be deemed to have sold, delivered or rendered those goods or services to the cooperative, but the by-laws of the cooperative may provide that this section does not apply to a member unless conditions set out in the by-laws as to the delivery or rendering of the goods and services are fulfilled.
Community service cooperatives
62 Where a cooperative is, in the opinion of the Registrar, operating entirely for purposes of community service, the articles of the cooperative shall provide that no patronage returns shall be paid, and that its surplus for any financial year shall be used for the purposes of the cooperative or donated for community welfare.
Purchase of membership shares by cooperative
63 Subject to section 66, a cooperative may purchase or redeem any of its membership shares that are offered for sale or redemption or are available for compulsory purchase under section 243 or 246, and it shall, within one year of the date of purchase, pay in cash for shares so purchased.
Redemption of investment shares
64(1) Subject to its articles and subsection (2), a cooperative may at any time redeem or otherwise acquire any investment share issued by it.
64(2) A cooperative shall not make a payment to redeem or otherwise acquire its investment shares if there are reasonable grounds for believing that
(a) it is or would, after the payment, be unable to pay its liabilities as they become due; or
(b) the realizable value of its assets after the payment would be less than the total of the stated capital of all its issued shares and its liabilities.
Purchase or redemption of investment shares
64(3) Subject to section 66 and its articles, a cooperative may, at any time, redeem any investment share that is redeemable, in accordance with such price or formula as may be set out in its articles or, if the articles do not so provide, at fair market value.
Alternative investment share acquisition
65 Notwithstanding subsection 64(2), but subject to section 66 and its articles, a cooperative may purchase, redeem or otherwise acquire its investment shares
(a) to satisfy the claim of its members or shareholders who dissent under section 320;
(b) to comply with an order under section 365;
(c) to settle or compromise a debt or claim by or against the cooperative;
(d) to eliminate fractional shares of the cooperative;
(e) to fulfil the terms of a non-assignable option or obligation to purchase its shares owned by a director, officer or employee of the cooperative.
Limitation on purchase or redemption
66(1) A cooperative shall not make any payment to acquire or redeem a share under section 63 or 65 or subsection 64(3), or to repay a member loan or a patronage loan, if there are reasonable grounds to believe that
(a) it is or would, after the payment, be unable to pay its liabilities as they became due; or
(b) the realizable value of its assets after the payment would be less than the total of:
(i) its liabilities, and
(ii) the amount that would be required to be paid to the holders of shares that have a right to be paid, on a redemption or liquidation, rateably with or in priority to the holders of the shares to be purchased or redeemed.
66(2) No cooperative shall exercise its powers to purchase its membership shares under section 63 if the result of so doing would be to reduce the number of holders of membership shares
(a) to fewer than three non-incorporated members, in a case where it has fewer than two members that are bodies corporate or one member that is a cooperative;
(b) to fewer than two members that are bodies corporate in a case where it has fewer than three non-incorporated members or one member that is a cooperative; or
(c) to fewer than one member that is a cooperative in a case where it has fewer than three non-incorporated members or two members that are bodies corporate.
Cancellation or resurrection of shares
67 Shares of a cooperative that are redeemed or otherwise acquired by it are cancelled or, if the articles limit the number of authorized shares, restored to the status of unissued shares.
Enforcement of contract to buy shares
68(1) A cooperative shall fulfil its obligations under a contract to buy shares or to repay member loans of the cooperative, except if the cooperative can prove that enforcement of the contract would put it in breach of subsection 64(2) or 66(1).
68(2) Until the cooperative has fulfilled all its obligations under a contract referred to in subsection (1), the other party to the contract retains the status of claimant entitled to be paid as soon as the cooperative is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors and to the rights of any class of shareholders whose rights were in priority to the rights given to the class of investment shares to be purchased under the contract, but in priority to the rights of members and any other class of shareholders.
69 All moneys payable by any member to a cooperative under its articles or by-laws are a debt due from the member to the cooperative.
Prohibited loans and guarantees
70(1) A cooperative shall not, directly or indirectly, give financial assistance by means of a loan, guarantee or otherwise to any member, director, officer, shareholder or employee of the cooperative or of any affiliate of it for any purpose, or to any person for the purpose of or in connection with the purchase of a share of the cooperative, where there are reasonable grounds for believing that
(a) it is or would, after giving the financial assistance, be unable to pay its liabilities as they become due; or
(b) the realizable value of its assets, excluding the amount of the financial assistance, would after giving the financial assistance be less than the total of the stated capital of all its issued shares and its liabilities.
Permitted loans and guarantees
70(2) Notwithstanding clause (1)(b), but subject to clause (1)(a), a cooperative may give financial assistance by means of a loan, guarantee or otherwise
(a) to any person in the ordinary course of business, if the lending of money or the extending of credit is part of the ordinary business of the cooperative;
(b) to any person on account of expenditures incurred or to be incurred on behalf of the cooperative;
(c) to a subsidiary of the cooperative; and
(d) to employees of the cooperative or of any of its affiliates
(i) to enable or assist them to purchase or erect living accommodation for their own occupation, or
(ii) in accordance with a plan for the purchase of shares of the cooperative or any of its affiliates to be held by a trustee.
70(3) A contract made by a cooperative in contravention of this section may be enforced by the cooperative or by a lender for value in good faith without notice of the contravention.
71 The members and shareholders of a cooperative are not liable, solely because of being members or shareholders, for any liability, act or default of a cooperative, except as provided in this Act.
72(1) A cooperative has a lien on any membership share of the cooperative registered in the name of a member of the cooperative or the member's legal representative, and on any other interest of the member in the property of the cooperative and on any sum payable by the cooperative to the member, for a debt owing by that member to the cooperative.
72(2) Subject to subsection 98(2), the articles of a cooperative may provide that it has a charge on an investment share registered in the name of a shareholder of the cooperative or the shareholder's legal representative for a debt owing by the shareholder to the cooperative in respect of a share issued by it, including such a debt unpaid as of the date the cooperative was continued under this Act.
Enforcement of liens and charges
73 A cooperative may enforce liens and charges referred to in section 72 in accordance with its by-laws.
74 Subject to the articles and by-laws of a cooperative, its directors may without authorization of the members
(a) borrow money upon the credit of the cooperative;
(b) issue, reissue, sell or pledge debt obligations of the cooperative; and
(c) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the cooperative, owned or subsequently acquired, to secure any debt obligation of the cooperative.
75(1) A cooperative that is authorized to issue shares must maintain a stated capital account for each class and series of shares that it issues.
75(2) A cooperative must add to the appropriate stated capital account the full amount of any money, or the value of any thing or service, that it receives for shares it issues.
Exception for non arm's length transactions
75(3) Notwithstanding subsection (2), where a cooperative issues shares
(a) in exchange for
(i) property of a person who immediately before the exchange did not deal with the cooperative at arm's length within the meaning assigned to that expression in the Income Tax Act (Canada), or
(ii) shares of, or another interest in, an entity that immediately before the exchange, or that because of the exchange, did not deal with the cooperative at arm's length within the meaning assigned to that expression in the Income Tax Act (Canada); or
(b) under an amalgamation agreement or arrangement, to members or shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated cooperative;
the cooperative may, subject to subjection (4), add to the stated capital accounts maintained for shares of the classes or series of the shares issued the whole or any part of the amounts of the money, or the value of the things or services, it receives in the exchange.
Limit on additions to a stated capital account
75(4) On issuing a share, a cooperative shall not add to a stated capital account in respect of the share an amount greater than the amount of money, or the value of the thing or service, it received for the share.
Constraint on additions to a stated capital account
75(5) The proposed addition of an amount to a stated capital account maintained by a cooperative in respect of a class or series of its shares must be approved in advance by special resolution of its members and, if the cooperative has issued investment shares, by a separate special resolution of its shareholders or its shareholders of each class or series of its investment shares, if
(a) the amount to be added was not received by the cooperative as consideration for the issue of shares; and
(b) the cooperative has issued shares of more than one class or series that are outstanding.
75(6) For greater certainty, if a cooperative issues membership shares, it is deemed for the purposes of subsection 64(2), section 80 and clauses 70(1)(b), 86(b) and 308(2)(d), to have a stated capital account for its membership shares that includes each amount that it has received for the membership shares.
Other additions to stated capital account
76(1) When a body corporate is continued under this Act, it may add to a stated capital account any money, or the value of any thing or service, received by it for a share it issued.
76(2) When a body corporate is continued under this Act, subsection 75(2) does not apply to the money, or the value of things or services, received by it before it was so continued unless the share in respect of which the money, thing or service received is issued after the body corporate is continued.
76(3) When a body corporate is continued under this Act, any amount unpaid in respect of a share of any class or series issued by it before it was so continued and paid after it was so continued is added to the stated capital account maintained for shares of that class or series.
76(4) For the purposes of subsection 64(2), section 80 and clauses 70(1)(b), 86(b) and 308(2)(d), when a cooperative is continued under this Act, its stated capital accounts are deemed to include the amounts that would have been included in those accounts if the cooperative had been incorporated under this Act.
Membership shares with a par value
76(5) When a cooperative with membership shares is continued under this Act, subsection 75(6) applies to the cooperative.
77 A cooperative shall not reduce its stated capital or any stated capital account except as provided in this Act.
78 Subject to subsection 75(5), a cooperative continued under this Act may at any time add to a stated capital account any amount it has at the time of the continuance to the credit of a retained earnings or other similar account.
79(1) Subject to subsection (2), a cooperative may reduce its stated capital for any purpose by special resolution of its members and, if an investment share of the cooperative, or a share of any class or series thereof is proposed to be affected by the resolution, by separate special resolution of the holders of the investment shares or that class or series thereof.
79(2) A cooperative shall not reduce its stated capital if there are reasonable grounds to believe that
(a) it is or would, after the reduction, be unable to pay its liabilities as they became due; or
(b) the realizable value of its assets after the reduction would be less than the total of its liabilities.
79(3) Where the stated capital of a cooperative is not wholly represented by realizable assets, subsection (2) does not apply to a reduction of its stated capital to an amount that is represented by realizable assets.
If several stated capital accounts
79(4) If a cooperative maintains more than one stated capital account, the special resolution to reduce stated capital required by subsection (1) shall specify the stated capital account or accounts from which the reduction will be deducted and the amount to be deducted from each.
79(5) A creditor of a cooperative may apply to a court for an order compelling a person
(a) to pay to the cooperative an amount equal to any liability of the person that was extinguished or reduced contrary to this section; or
(b) to pay or deliver to the cooperative any money or property that was paid or distributed to the person as a consequence of a reduction of stated capital made contrary to this section.
79(6) No application may be made under subsection (5) more than two years after the day
(a) the liability of the person to whom the application relates was extinguished or reduced; or
(b) the money or property was paid or distributed to the person to whom the application relates;
as the case may be.
Adjustment of stated capital account
80(1) On the redemption or acquisition by a cooperative of shares of a class or series of its shares, the cooperative shall deduct from the stated capital account for that class or series an amount calculated in accordance with the following formula:
A = B x C / D
In this formula,
A is the amount to be deleted;
B is the amount of the stated capital account for the class or series of shares immediately before the redemption or acquisition;
C is the number of shares of the class or series that were redeemed or acquired on the redemption or acquisition;
D is the number of shares of that class or series that had been issued and that were, immediately before the redemption or acquisition, outstanding.
80(2) &