Alberta Queen's Printer:

COOPERATIVES ACT

Chapter C‑28.1

Table of Contents

1 Interpretation

2 Cooperative principles

Part 1
Incorporating a Cooperative

Division 1
Application to Incorporate

3 Who may incorporate a cooperative

4 How to apply for incorporation

5 Contents of articles of incorporation

6 Capital structure

7 Conditions for incorporation and Director’s decision

Division 2
Bylaws and Amendments to Bylaws

8 Adoption of bylaws

9 Contents of bylaws

10 Making or amending bylaws

11 Proposal for bylaw

12 Effective date of bylaw

13 Binding effect of articles and bylaws

14 Copies of articles, bylaws and unanimous agreements

15 Pre‑incorporation contracts

Division 3
Cooperative Names and Control over Names

16 Names of cooperatives

17 Use of other names

18 Reservation of name

19 Prohibited names

20 Change of name

21 Improper use of protected names

Division 4
Legal Capacity and Powers of Cooperatives

22 Legal capacity

23 Restriction on powers

24 Knowledge of articles and bylaws

25 Reliance on cooperative’s records

26 No personal liability of members and shareholders

Division 5
Registered Office, Records and Corporate Seal

27 Registered office

28 Record keeping

29 Form of records

30 Lists of members and shareholders

31 Corporate seal

Part 2
Membership in Cooperatives

Division 1
Becoming a Member

32 Bylaws govern membership

33 Application for membership

34 Right to vote

35 Members under 18 years of age

Division 2
Cessation of Membership

36 Withdrawal of membership

37 Redemption of membership shares and loans

38 Termination of membership by directors

39 Right of appeal

40 Appeal to members

41 Redemption of member interests

42 Termination does not release debts

43 Reserve fund for missing members

44 Limitation on bylaw

45 Termination of inactive membership

46 Non‑profit housing cooperatives

Division 3
Readmission and Transfer of Memberships

47 Readmission to membership

48 Member interest

Part 3
Meetings

49 Regulations

Part 4
Directors and Officers of Cooperatives

Division 1
Number, Qualifications and Functions of Directors

50 Number of directors

51 Member/non‑member directors

52 Disqualification of director

53 Functions of directors

54 Duties of directors

55 First directors

56 Organizational meeting

Division 2
Rules for Election of Directors

57 Rules for election of directors

58 Court review of election

Division 3
Terms and Vacancies

59 Terms of office for directors

60 Vacancy on the board of directors

61 Board of directors vacant

62 Unexpired term of director’s office

63 Right to attend meetings

64 Continuation in office

Division 4
Resignation and Termination of Directors

65 Ceasing to hold office

66 Removal of directors

67 Resignation statement

68 Notice of change

Division 5
Meetings and Quorum of Directors

69 Place of directors meetings

70 Contents of notice

71 Waiver of notice

72 When notice not required

73 Quorum

74 How a quorum is constituted

75 Electronic meeting

76 Validity of acts

77 Resolution in place of directors meeting

Division 6
Liability of Directors

78 General liability

79 Directors’ liability for wages

Division 7
Disclosure of Interests

80 What must be disclosed

81 When disclosure must be made

82 Disclosure of interest by officers

83 Access to disclosures

84 Modification of procedural requirements

85 Voting on contracts and transactions when there is a conflict

86 Continuing disclosure

87 Effect of disclosure

88 Court order to set aside transaction

89 Appointment of managing director or committee

90 Deemed consent of directors

91 Defence for directors

92 Remuneration

Division 8
Officers of a Cooperative

93 Types of offices and functions

Division 9
Indemnification of Directors and Officers

94 Nature of indemnification

95 Application to Court to approve indemnity

Division 10
Unanimous Agreements

96 Restricting powers of directors

97 Rights of members

98 Provisions for meetings in unanimous agreements

99 Financial information when no annual meeting required

Part 5
Capital Structure

Division 1
Membership Capital

100 Loan capital

101 Membership shares

102 Issuance to members

Division 2
Certificates

103 Issue of membership certificates

104 Authorized capital

105 Fixed or determined value

106 Distribution on dissolution

107 Charge on membership shares for amounts

Division 3
Investment Shares

108 Investment shares

109 No‑par‑value shares

110 Shares in series

111 Pre‑emptive right

112 Commissions

113 Charge on investment shares

Division 4
Constraints

114 Constraints on shares

115 Election of directors by investment shareholders

116 Amendment of articles

Division 5
Corporate Finance

117 Power to issue investment shares

118 Payment for investment shares

119 Borrowing

120 Stated capital account

121 Other additions to stated capital account

122 Surplus accounts

123 Shares not assessable

124 Options and rights

125 Reserves

126 Holding own shares

127 Exception for holding own shares

128 Redemption of membership shares

129 Acquisition of investment shares

130 Alternative investment share acquisition

131 Limitation on acquisition or redemption

132 Cancellation or redemption of shares

133 Reduction of stated capital

134 Adjustment of stated capital account

135 Form of dividend

136 Limitation on paying dividends

137 Patronage returns

138 Investment of patronage return

139 Loans from patronage returns

Division 6
Loans and Guarantees

140 Financial assistance

141 When no disclosure required

142 Enforcement of contract to buy shares

143 Debt obligations

Part 6
Proxies

144 Interpretation

145 Appointing proxy holder

146 Mandatory solicitation

147 Soliciting proxies

148 Exemption order

149 Attendance at meeting

150 Duty of intermediary

151 Restraining order

Part 7
Insider Trading

152 Interpretation

153 Prohibition of short sale

154 Specified insider

Part 8
Compulsory Acquisition

155 Definitions

156 Right to acquire

157 Distributing cooperative

Part 9
Security Certificates, Registers and Transfers

Division 1
Interpretation and Application

158 Interpretation

159 Application

Division 2
Security Certificates

160 Security certificate

161 Fee

162 Joint owners

163 Signatures

164 Contents of certificate

165 Contents of certificate for investment share

166 Fractional shares

Division 3
Registers

167 Securities register

168 Agent

169 Registration

170 Dealing with registered holders

171 Evidence of ownership

172 Proof of ownership

173 Joint holders

174 Duties of cooperative

175 Minors

176 Deceased owner

177 Overissue

178 Exemptions

Division 4
Proceedings

179 Rules of action

Division 5
Delivery

180 Delivery of securities

Division 6
General

181 Incorporation by reference

182 Validity of security

183 Defence

184 Defences

185 Deemed notice

186 Unauthorized signature

187 Completion of form

188 Enforceability

189 Fraud

190 Guarantees

191 Acquisition of rights

192 Limited interests

193 Deemed notice of adverse claim

194 No duty to inquire

195 Deemed notice

196 Staleness

197 Guarantee

198 Contents of guarantee

199 Guarantee of intermediary

200 Guarantee of broker

201 Right to compel endorsement

202 Appropriate person

203 Endorsement

204 Immunity of endorser

205 Partial endorsement

206 Effect of failure by fiduciary to comply

207 Effect of endorsement without delivery

208 Endorsement in bearer form

209 Effect of unauthorized endorsement

210 Warranties of guarantor of signature

211 Presumption of delivery

212 Presumption of ownership

213 Delivery of security

214 Right to reclaim possession

215 Right to requisites for registration

216 Seizure of security

217 Not liable if good faith delivery

218 Duty to register transfer

219 Assurance of endorsement

220 Notice from additional documentation

221 Limited duty of inquiry

222 Inquiry into adverse claim

223 Duration of notice of adverse claim

224 Limitation on issuer’s liability

225 Lost or stolen security

226 Duty

227 Notice to agent

Part 10
Financial Disclosure

228 Annual financial statements to members

229 Exemption for distributing cooperative

230 Consolidated statements

231 Approval of financial statements

232 Copies to investment shareholders

233 Copies of financial statements re distributing cooperatives

234 Qualifications of auditor

235 Appointment of auditor

236 Dispensing with auditor

237 Ceasing to hold office

238 Removal of auditor

239 Filling vacancy

240 Court‑appointed auditor

241 Right to attend meeting

242 Examination

243 Right to information

244 Audit committee

245 Notice of error

246 Qualified privilege

Part 11
Trust Indentures

Division 1
Interpretation and Application

247 Definitions

248 Application of Part

Division 2
General

249 Conflict of interests

250 Validity despite conflict

251 Removal of trustee

252 Qualification of trustee

253 List of security holders

254 Compliance with trust indentures

255 Trustee may require evidence

256 Notice of default

257 Duty

258 No exculpation

Part 12
Fundamental Changes

259 Definition of “common share”

260 Continuance

261 Continuance - other jurisdictions

262 Restriction from continuance in other jurisdiction

263 Shareholders’ right to vote

264 Amendment of articles

265 Proposal to amend

266 Delivery of articles

267 Certificate of amendment

268 Effect of certificate

269 Restated articles

270 Amalgamation

271 Amalgamation agreement

272 Approval

273 Short‑form amalgamation

274 Sending of articles

275 Effect of certificate

276 Extraordinary disposition

277 Right to dissent

278 Reorganization

279 Definition of “arrangement”

280 Certificate of arrangement

Part 13
Investigations and Inspections

Division 1
Inspections

281 Identification of inspectors

282 Inspection

283 Order compelling assistance in inspections

284 Director’s decision and official director

285 Effect of appointment of official director

286 Application for directions

287 Court restraining or compliance order

288 Director not compellable

Division 2
Court‑ordered Investigations

289 Court‑ordered investigation

290 Conditions for Court order

291 Powers of the Court

292 Court-appointed inspector’s powers and duties

293 Additional powers of Court‑appointed inspector

294 Application for hearing in private

295 Compellable witnesses

296 Protection of witnesses

297 Absolute privilege

298 Solicitor‑client privilege

Part 14
Winding‑up, Liquidation and
Dissolution of Cooperatives

Division 1
Receivers and Receiver‑managers

299 Appointment of a receiver or receiver‑manager

300 Duties of receivers and receiver‑managers

301 Obligations of receivers and receiver‑managers

302 Court directions

303 Duties of receivers and receiver‑managers

Division 2
Liquidation and Dissolution

304 Application of Part

305 Proceedings stayed if cooperative insolvent

306 Dissolution of cooperatives

307 If membership too low

308 Proposing liquidation and dissolution

309 Liquidation and dissolution

310 Supervision by Court

311 Revocation of intention to dissolve

312 Dissolution by Director

313 Court‑ordered dissolution for non‑compliance

314 Court‑ordered dissolution for questionable activities

315 Application for supervision

316 Application to Court

317 Powers of Court

318 Effect of order

319 Cessation of business and powers

320 Who may be appointed liquidator

321 Duties of liquidator

322 Powers of liquidator

323 Costs of liquidator

324 Right to distribution in money

325 Powers of Court

326 Custody of records

327 Heirs and representatives

328 Unknown claimants

329 Revival

330 Vesting in the Crown

Part 15
Administrative Matters and Regulations

Division 1
Director’s Appointment and Delegation

331 Appointment of Director and inspectors/delegation

Division 2
Document Filing, Appeals

332 Copies of documents

333 Annual return

334 Notice of refusal by Director

335 Appeal from Director’s decision

336 Appeal from Commission refusal

337 Filing statements

338 Electronic filing

339 Certificate of Director is proof

340 When notices or documents need not be sent

341 Proof required by Director

342 Certificate of compliance

343 Alteration of documents

344 Records maintained by Director

345 Public access to records

Division 3
Notices and Service of Documents

346 Notices to members, shareholders and directors

347 Notice to a cooperative, Commission, Executive Director

348 Waiver of notice

Division 4
Certificates, Declarations and Copies

349 Certificate of cooperative

350 Declaration of directors

Division 5
Regulations

351 Regulations

352 Ministerial regulations

Part 16
Remedies, Offences and Penalties

Division 1
Court Intervention

353 Definitions

354 Application to Court by originating notice

355 Commencing derivative legal proceedings

356 Powers of the Court

357 Oppressive or prejudicial actions

358 Evidence of member or shareholder approval not decisive

359 Application to Court to rectify records

360 Appeal of Court orders

Division 2
Offences and Penalties

361 Offences

362 Director’s liability

363 Court order to comply with Act

364 Alternative resolution of disputes

Part 17
Extra‑provincial Cooperatives and
Extra‑provincial Matters

365 Definitions

366 Carrying on business in Alberta

367 Application of Part

Division 1
Registration of Extra‑provincial Cooperatives

368 Requirement to register

369 Application for registration

371 Names of extra‑provincial cooperatives

372 Registration by pseudonym

373 Certificate of registration

374 Cancellation of registration

375 New certificate of registration

Division 2
Information

376 Use of extra‑provincial cooperative’s name

377 Attorney for service of an extra‑provincial cooperative

378 Changes in charter, head office, directors

379 Filing instrument of amalgamation

380 Notices and returns respecting liquidation

381 Annual and other returns

382 Certificate of compliance

Division 2.1
Special Rules Respecting
Extra‑provincial Matters

382.1 Definitions

382.2 Agreements

382.3 Regulations

382.4 Regulation prevails

Division 3
Legal Capacity, Disabilities and Penalties
Applicable to Extra‑provincial Cooperatives

383 Validity of acts

384 Capacity to commence and maintain legal proceedings

Part 18
Specific Cooperatives

Division 1
Housing Cooperatives

385 Definitions

386 Application of Part

387 Name

388 Articles of non-profit housing cooperatives

389 Special limitations on non-profit housing cooperatives

390 Amending articles

391 Non-member unit

392 Non-profit continuing housing cooperatives

393 Non-application of other Acts

394 Right to occupy

395 Termination of membership

396 Termination procedure

397 Appeal procedure

398 No right of appeal

399 Compensation and arrears

400 Writ of possession

401 Application for writ of possession

402 Non-profit home ownership cooperatives

403 Withdrawal from membership

404 Termination of membership

405 Amalgamation

Division 2
Employment Cooperatives

406 Definition of “employment cooperative”

407 Requirements of articles

408 Non-member employees

409 Permanent employees

410 Bylaws

411 Time for appeal

412 Laid-off or terminated member

413 Name

414 Directors

415 Reorganization

416 Dissolution

Division 3
Multi-stakeholder Cooperatives

417 Definitions

418 Membership

419 Articles of cooperative

420 Passing of resolutions

421 Directors

Division 4
New Generation Cooperatives

422 Definitions

423 Names of new generation cooperatives

424 Membership share

425 Redemption of membership shares and repayment of loans

426 Transfer of member interest

427 Capital structure: investment shares

428 Patronage returns

429 Bylaws

430 Regulations

Part 19
Transitional Provisions, Consequential Amendments, Repeals and Coming into Force

Transitional Provisions

431 Definitions

432 Continuation under former Act

433 Prohibition

434 Continuing association as a cooperative

435 Certificate of continuance

436 Effect of the certificate of continuance

437 Effect of continuation

438 Contracts

439 Director of Co‑operative Activities

440 Bylaws

441 Shares with nominal or par value

442 Names

443 Appointment of directors and officers continued

444 Auditor

445 Non‑member units

446 Regulations

Consequential Amendments

447 - 473 Consequential amendments

Repeals

474 Repeal

Coming into Force

475 Coming into force

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

Interpretation

1(1) In this Act,

(a) “affairs” means the relationship between a cooperative and its affiliates and their members, shareholders, directors and officers, but does not include the business carried on by those corporations;

(b) “affiliate” means an affiliated corporation within the meaning of subsection (2);

(d) “associate”, in respect of a relationship with a person, means

(i) a corporation 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 by reason 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;

(ii) a cooperative entity of which the person beneficially owns more than 10% of the voting rights in respect of which votes can be cast at a meeting of the cooperative entity;

(iii) an unincorporated entity of which the person beneficially owns more than 10% of the ownership interests;

(iv) a partner of the person acting on behalf of the partnership in which they are partners;

(v) 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 a succession or in a similar capacity;

(vi) a spouse or adult interdependent partner or child of the person;

(vii) any of the following who has the same residence as the person:

(A) a relative of the person;

(B) the spouse or adult interdependent partner of a relative of the person;

(D) the spouse or adult interdependent partner of a relative referred to in paragraph (C);

(e) “auditor” includes a firm of accountants;

(f) “auxiliary member” means a person who is not, or who is no longer, a full member of a cooperative but has an association with it, as determined by the articles or the bylaws;

(g) “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;

(h) “beneficial ownership” includes ownership through a trustee, legal representative, agent or other intermediary;

(i) “Commission” means the Alberta Securities Commission;

(j) “cooperative” means a cooperative incorporated under this Act;

(k) “cooperative basis” has the meaning given to it by section 2;

(l) “cooperative entity” means a corporation that, by the law under which it is organized and operated, must be organized and operated on, and is organized and operated on, a cooperative basis;

(m) “corporation” means a corporate entity, however incorporated;

(n) “Court” means the Court of Queen’s Bench;

(o) “debt obligation” means a bond, debenture, note or other evidence of indebtedness or guarantee of an entity, whether secured or unsecured;

(p) “delegate” means an individual who is appointed or elected to represent a member at a meeting of members;

(q) “director” means a member of the board of directors of a cooperative by whatever name the director or board is called;

(r) “Director” means the Director of Cooperatives appointed under this Act;

(s) “distributing cooperative” means a cooperative any of whose issued securities, other than membership shares, investment shares issued to members or member loans, are or were part of a distribution to the public and remain outstanding and are held by more than one person;

(t) “entity” means a corporation, a trust, a partnership, a fund or an unincorporated organization;

(u) “Executive Director” means the Executive Director of the Alberta Securities Commission as defined in the Securities Act;

(v) “extra‑provincial cooperative” means a cooperative entity that is incorporated as a cooperative otherwise than by or under an enactment of Alberta;

(w) “federation” means a cooperative whose membership is composed wholly or substantially of other cooperatives;

(x) “firm of accountants” means a partnership whose partners and accountant employees are accountants engaged in a public accounting practice as defined in the Regulated Accounting Profession Act, or a corporation that is incorporated by or under an Act of the legislature of a province other than Alberta and is engaged in a public accounting practice;

(y) “holder” means

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

(ii) in respect of the ownership of a membership share, the person referred to in section 102(2), and

(iii) in respect of the ownership of an investment share, the person referred to in section 108(2);

(z) “individual” means a natural person;

(aa) “investment share” means a share in the capital of a cooperative that is not a membership share;

(bb) “investment shareholder” means the person referred to in section 108(2);

(cc) “issuer”, in respect of a security, means the entity that issues the security;

(dd) “meeting of the cooperative” means

(i) a meeting of members or of a class of member, or

(ii) a meeting of holders of investment shares or of holders of any class or series of investment shares of a cooperative,

as the context requires;

(ee) “member” means a member of a cooperative other than an auxiliary member;

(ff) “member loan” means a loan required by the cooperative from its members as a condition of membership or to continue membership in the cooperative and, if a cooperative is incorporated without membership shares, a member loan is deemed to be a membership share issued at par value for the purpose of Parts 5, 12, 14 and 16 and section 144(2);

(gg) “membership share” means a share described in section 102;

(hh) “Minister” means the Minister determined under section 16 of the Government Organization Act as the Minister responsible for this Act;

(ii) “officer” includes the chair of the board of directors, a vice‑chair of the board of directors, the president, a vice‑president, the secretary, an assistant secretary, the treasurer, an assistant treasurer and the general manager of a cooperative and any other individual designated as an officer of the cooperative by bylaw or by resolution of the directors, or any other individual who performs functions for the cooperative similar to those normally performed by an individual occupying any such office;

(jj) “ordinary resolution” means a resolution that is submitted to a meeting of the cooperative or a meeting of the directors and passed at the meeting by a majority of the votes cast;

(kk) “patronage return” means an amount that the cooperative allocates among and credits or pays to its members or to its member and non‑member patrons based on the business done by them with or through the cooperative, and includes patronage dividends or bonus payments issued to members who hold investment shares issued by a cooperative referred to in Part 18, Division 4;

(ll) “person” means an individual or an entity and includes a legal representative;

(mm) “prescribed” means prescribed by regulation;

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

(oo) “record date” means the date fixed or determined as the record date by the regulations;

(pp) “redeemable”, with respect to a share, means

(i) that the cooperative may acquire or redeem the share on the demand of the cooperative, or

(ii) that the cooperative is required by its articles to acquire or redeem the share at a specified time or on the demand of the holder;

(rr) “security” includes an investment share, a debt obligation of a cooperative and a certificate evidencing such a share or debt obligation and, for the purposes of Part 16, includes a membership share;

(ss) “security interest” means an interest in or charge on property of a cooperative to secure payment of a debt or the performance of an obligation of the cooperative;

(tt) “send” includes deliver;

(uu) “series”, in respect of investment shares, means a division of a class of those shares;

(vv) “share” means a membership share or an investment share;

(ww) “special resolution” means a resolution that is submitted to a meeting of the cooperative or a meeting of the directors and passed at the meeting by at least 2/3 of the votes cast;

(ww.1) “spouse” means the husband or wife of a married person but does not include a spouse who is living separate and apart from the person if the person and spouse have separated pursuant to a written separation agreement or if their support obligations and family property have been dealt with by a court order;

(xx) “unanimous agreement” means a written agreement to which all the members and investment shareholders, if any, of a cooperative are or are deemed to be parties, whether or not any other person is also a party, that provides for any of the matters listed in Part 4, Division 10.

(2) For the purposes of this Act,

(a) a corporation is affiliated with another corporation if one of them is a subsidiary of the other, if both are subsidiaries of the same corporation or if each of them is controlled by the same person, and

(b) if 2 corporations are affiliated with the same corporation at the same time, they are deemed to be affiliated with each other.

(3) For the purposes of this Act, a corporation is the holding corporation of another corporation if that other corporation is its subsidiary.

(4) For the purposes of this Act, a corporation is a subsidiary of another corporation if

(a) it is controlled by

(i) that other corporation,

(ii) that other corporation and one or more corporations, each of which is controlled by that other corporation, or

(iii) 2 or more corporations, each of which is controlled by that other corporation,

(b) it is a subsidiary of a corporation that is that other corporation’s subsidiary.

(5) For the purposes of this Act, securities of a cooperative

(a) issued on 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.

(6) Subject to subsection (7), for the purposes of this Act, a security of a corporation

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

(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.

(7) On the application of a cooperative, the Commission may determine that a security of the cooperative is not or was not part of a distribution to the public if it is satisfied that its determination would not prejudice any holder of a security certificate of the cooperative.

(8) This Act applies to a cooperative incorporated or continued under this Act.

(9) No provisions of any Act specified in the regulations apply to a cooperative incorporated or continued under this Act.

2001 cC‑28.1 s1;2002 cA‑4.5 s28

Cooperative principles

2(1) For the purposes of this Act, a cooperative is organized and operated, and carries on business, on a cooperative basis if

(a) membership is available to persons who can use the services of the cooperative and who are willing and able to accept the responsibilities of and abide by the terms of membership,

(b) each member or delegate has only one vote,

(d) interest on any member loan is limited to a maximum rate fixed in the articles,

(e) dividends on any membership share are limited to the maximum rate fixed in the articles,

(f) to the extent feasible, 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 members,

(iii) to provide for reserves or the payment of interest on member loans or dividends on shares,

(iv) for community welfare or the propagation of cooperative enterprises, or

(v) as a distribution among its members as a patronage return,

and

(h) it provides education on the principles of cooperative enterprises.

(2) Subsection (1)(a) is subject to any restrictions set out in the articles so long as the restrictions are consistent with applicable laws with respect to human rights.

Part 1
Incorporating a Cooperative

Division 1
Application to Incorporate

Who may incorporate a cooperative

3(1) Three or more persons who intend to be members of the cooperative may apply to the Director to become incorporated as a cooperative.

(2) One or more cooperatives, with or without other persons who intend to be members of the cooperative, may apply to the Director to become incorporated as a cooperative.

(3) A person may not apply to incorporate a cooperative if

(a) that person is an individual under 18 years of age,

(b) the person

(i) has the status of bankrupt,

(ii) is a represented adult under the Adult Guardianship and Trusteeship Act,

(iii) is a formal patient under the Mental Health Act, or

(iv) is the subject of or detained by a warrant of committal or assessment order, or is detained otherwise, under the Criminal Code (Canada).

2001 cC‑28.1 c3;2008 cA‑4.2 s125

How to apply for incorporation

4 To make an application for incorporation as a cooperative, the applicant must send to the Director

(a) articles of incorporation;

(b) a notice of the registered office in the detail required by the Director;

(d) a declaration signed by the one or more incorporators that after incorporation the cooperative will be organized and operated, and will carry on business, on a cooperative basis;

(e) information about the applicants that may be required by regulations made under the Agricultural and Recreational Land Ownership Act or section 35 of the Citizenship Act (Canada) in the form and manner prescribed by those regulations;

(f) if applicable, a declaration signed by the one or more incorporators that after incorporation the cooperative will comply with the applicable division of Part 18;

(g) any other information that the Director may require to make a decision about whether to incorporate a cooperative;

(h) the fee prescribed by the regulations, if any;

(i) anything else required by the regulations.

Contents of articles of incorporation

5(1) Articles of incorporation must be signed by the incorporators and must contain the following particulars:

(a) the name of the cooperative;

(b) where in Alberta the cooperative’s proposed registered office will be located;

(d) the number of directors or the minimum and maximum numbers of directors;

(e) any restriction on the business that the cooperative may carry on;

(f) any restriction on the class of membership in the cooperative;

(g) a statement that the cooperative will be organized and operated, and will carry on business, on a cooperative basis;

(h) whether the cooperative is to be incorporated with or without membership share capital;

(i) if there is to be membership share capital, whether the number of membership shares to be issued is unlimited or limited and, if limited the maximum number of membership shares that may be issued and, if the membership shares are to have a par value, their par value and, if they are not to have par value, whether the membership shares are to be issued, purchased, redeemed or otherwise acquired at a fixed price or at a price determined in accordance with a formula and, if a formula is used, the particulars of the formula;

(j) any provision for a maximum rate of return that may be paid on member loans;

(k) any provision for a maximum dividend that may be paid on membership shares;

(l) whether there is to be investment share capital and, if so, the rights and restrictions attaching to investment shares, or each class of them;

(m) the price or formula to be used for the issuance of investment shares and the redemption of redeemable investment shares;

(n) if there is to be investment share capital, procedures for member authorization of the issuance of investment shares;

(o) if there are to be constraints on investment shares, any constraints respecting

(i) the issue or transfer of investment shares of any class or series to persons who are not resident in Canada,

(ii) the issue or transfer of investment shares of any class or series to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province or territory

(A) to obtain a licence to carry on a business,

(B) to become a publisher of a Canadian newspaper or periodical, or

(iii) the issue, transfer or ownership of investment shares of any class or series 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 obtain licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control;

(p) any provisions for the distribution of the property of the cooperative on its dissolution;

(q) any provision by which the members, other than by means of a unanimous agreement, may restrict, in whole or in part, the powers of the directors to manage the business of the cooperative;

(r) any provisions for the transfer of a member interest as defined in section 48(1);

(s) anything else that is required by the regulations.

(2) The articles may include any provisions that could be included in the bylaws of the cooperative and if they do, any reference in this Act to the bylaws of the cooperative is also a reference to those provisions of the articles.

(3) The articles or a unanimous agreement may, in order to effect an action, require a greater number of votes of directors, members or investment shareholders than is required by this Act to effect the action.

Capital structure

6 A cooperative may be incorporated with or without membership shares and with or without the power to issue investment shares.

Conditions for incorporation and Director’s decision

7(1) No cooperative is to be incorporated under this Act unless

(a) the cooperative will carry on its undertaking, in whole or in part, in Alberta, and

(b) the cooperative has its registered office in Alberta.

(2) An association that may be incorporated under the Rural Utilities Act is not to be incorporated as a cooperative under this Act, and this Act does not apply to that association.

(3) Subject to subsections (1) and (2), the Director must issue an incorporation certificate for a cooperative if the Director is satisfied that

(a) the articles comply with this Act and the regulations;

(b) the cooperative will be organized and operated, and will carry on business, on a cooperative basis;

(4) For the purposes of deciding whether to issue an incorporation certificate, the Director may rely on the articles and the declarations of the incorporators.

(5) A cooperative comes into existence and the incorporators become members of the cooperative on the day set out in its incorporation certificate.

Division 2
Bylaws and Amendments to Bylaws

Adoption of bylaws

8 The directors must hold a meeting of members within 180 days of the issuance of the certificate of incorporation to make bylaws for the cooperative.

Contents of bylaws

9(1) The Minister may make regulations governing the subject‑matter that must be included in the bylaws of a cooperative.

(2) The bylaws of a cooperative may provide for

(a) the representation of members by delegates and, if so,

(i) the designation of the classes of members, if any, who may be represented by delegates,

(ii) the procedure for altering classes of members, if applicable, and

(iii) the powers, duties, selection, qualifications, term of office, voting rights and procedures for the removal of delegates;

(b) the division of members into classes and, if so,

(i) the qualifications for membership in each class,

(ii) the conditions precedent to membership in each class,

(iii) the method, time and manner of withdrawing from a class or transferring membership from one class to another and any applicable conditions on a transfer, and

(iv) the conditions on which membership in a class ends;

(d) the referral of disputes between a member and the cooperative to a process of dispute resolution, including mediation, or arbitration under the Arbitration Act, or both, and for that purpose may adopt, with or without modifications, model clauses prescribed by the regulations;

(e) any other matter that the members consider necessary or desirable.

Making or amending bylaws

10(1) Unless the bylaws provide otherwise, the members may make, amend or repeal any bylaw by ordinary resolution.

(2) If the bylaws so provide, the directors may, by ordinary resolution, make a bylaw or amend a bylaw of the cooperative on the terms and conditions set out in the bylaw, but the bylaw or amendment may not be contrary to a bylaw made by the members.

(3) The directors must present a bylaw or an amendment to a bylaw made by them to the members at the next meeting of members, and the members may confirm it or amend it.

(4) If a bylaw or an amendment to a bylaw made by the directors

(a) is not submitted to the members, or

(b) is not confirmed under subsection (3), with or without amendments,

the bylaw or amendment is repealed as of the date of the meeting of members at which it was not confirmed.

Proposal for bylaw

11 A member may make a proposal in accordance with the regulations to make, amend or repeal a bylaw.

Effective date of bylaw

12 A bylaw or an amendment to a bylaw comes into force on the day on which the bylaw or amendment is made, or on any later date specified in the bylaw or amendment or in the resolution adopting either of them.

Binding effect of articles and bylaws

13(1) The articles and bylaws of a cooperative bind it and its members to the same extent as if the articles and bylaws

(a) had been signed by the cooperative and every member, and

(b) contained undertakings by all members and their successors, assigns and legal representatives to observe all the provisions of the articles and bylaws.

(2) A cooperative must file a bylaw or an amendment to a bylaw with the Director within 60 days of the date the bylaw or amendment comes into force.

Copies of articles, bylaws and unanimous agreements

14(1) Each member and investment shareholder is entitled to receive free of charge from the cooperative, on request, not more than once in each calendar year, one copy of the cooperative’s articles, bylaws and any unanimous agreement, and one copy of any amendments to them.

(2) The cooperative must, on payment of a reasonable fee, provide each creditor and, where the cooperative is a distributing cooperative, any other person, with a copy of the cooperative’s articles, bylaws and any unanimous agreement and any amendments to them.

Pre-incorporation contracts

15(1) This section applies unless the person referred to in subsection (2) and all parties to the contract referred to in that subsection

(a) believe that the cooperative exists and is incorporated under, or

(b) intend that the cooperative is to be incorporated under

the laws of a jurisdiction other than Alberta.

(2) Except as provided in this section, if a person enters into a written contract in the name of or on behalf of a cooperative before it comes into existence,

(a) that person is deemed to warrant to the other party to the contract

(i) that the cooperative will come into existence within a reasonable time, and

(ii) that the contract will be adopted within a reasonable time after the cooperative comes into existence,

(b) that person is liable to the other party to the contract for damages for a breach of that warranty, and

(c) the measure of damages for that breach of warranty is to be the same as if the cooperative existed when the contract was made, the person who made the contract on behalf of the cooperative had no authority to do so and the cooperative refused to ratify the contract.

(3) A cooperative may, within a reasonable time after it comes into existence, by any act or conduct signifying its intention to be bound by it, adopt a written contract made in its name or on its behalf before it came into existence, and on the adoption

(a) the cooperative is bound by the contract and is entitled to the benefits of the contract as if the cooperative had been in existence at the date of the contract and had been a party to it, and

(b) a person who purported to act in the name of or on behalf of the cooperative ceases, except as provided in subsection (5), to be liable under subsection (2) in respect of the contract.

(4) If a person enters into a contract in the name of or on behalf of a cooperative before it comes into existence and the contract is not adopted by the cooperative within a reasonable time after it comes into existence, that person or the other party to the contract may apply to the Court for an order directing the cooperative to restore to the applicant any benefit received by the cooperative under the contract, in the form directed by the Court.

(5) Except as provided in subsection (6), 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

(a) fixing obligations under the contract as joint or joint and individual, or

(b) apportioning liability between the cooperative and a person who purported to act in the name of or on behalf of the cooperative,

and on the application the Court may make any order it thinks fit.

(6) A person who enters into a written contract in the name of or on behalf of a cooperative before it comes into existence is not in any event liable for damages under subsection (2) if the contract expressly provides that the person is not to be so liable.

Division 3
Cooperative Names and
Control over Names

Names of cooperatives

16(1) A cooperative

(a) must have the word “cooperative”, “co‑operative”, “coop”, “co-op”, “coopérative”, “united” or “pool”, or another grammatical form of any of those words, as part of its name, and

(b) may use and be legally designated by any of those words or forms.

(2) Subject to section 19, the name of a cooperative may be in an English form or a French form or in a combined English and French form, and the cooperative may use and be legally designated by any of those forms.

(3) A cooperative must set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for things or services made by or on behalf of the cooperative and in all documents filed with the Director.

(4) The name of a cooperative must comply with this Act and the regulations.

Use of other names

17 Subject to sections 16 and 19, a cooperative may carry on business or identify itself by a name in addition to the name set out in its articles.

Reservation of name

18 The Registrar or a deputy registrar of Corporations under the Business Corporations Act may, on request, reserve a name for an intended cooperative or for one that intends to change its name.

Prohibited names

19 A cooperative may not be incorporated with, have, carry on business under or identify itself by a name that is

(a) prohibited, or deceptively misdescriptive, or otherwise contrary to the regulations, or

(b) reserved under this or any other enactment for another cooperative or corporation or prospective cooperative or corporation.

Change of name

20(1) The Director may direct a cooperative to change its name if the cooperative’s name contravenes this Act or the regulations when the cooperative comes into existence or is continued.

(2) If a cooperative does not comply with a Director’s direction to change its name within 60 days after it is served with a written copy of the direction, the Director may issue a certificate of amendment revoking the name of the cooperative and assigning a new name to it.

(3) The articles of a cooperative are deemed to be amended on the date shown in the certificate of amendment.

(4) On issuing a certificate of amendment, the Director must give notice of the change of name without delay in a publication generally available to the public.

(5) If a cooperative acquires a name as a result of a person undertaking to dissolve or to change names and the undertaking is not honoured, the Director may direct the cooperative to change its name in accordance with section 264(1)(a) unless the undertaking is honoured within the period specified in subsection (2).

Improper use of protected names

21(1) Except as provided in subsection (2), a person is guilty of an offence who uses or authorizes the use of the word “cooperative”, “co‑operative”, “coop”, “co‑op” or “coopérative” or an abbreviation of any of those words or any other grammatical form of any of those words as part of its name, or in any manner in connection with the conduct of its business.

(2) Subsection (1) does not apply to

(a) a cooperative incorporated or continued under this Act or any other enactment,

(b) an extra‑provincial cooperative, or

Division 4
Legal Capacity and
Powers of Cooperatives

Legal capacity

22(1) Subject to this Act, a cooperative

(a) has the capacity and the rights, powers and privileges of a natural person, and

(b) may carry on business in accordance with this Act and its articles and bylaws.

(2) Subject to this Act, a cooperative has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Alberta to the extent and in the manner that the laws of that other jurisdiction permit.

Restriction on powers

23(1) It is not necessary for a cooperative to make a bylaw in order to confer any particular power on a cooperative or its directors.

(2) No cooperative and no subsidiary of a cooperative may carry on any business contrary to a restriction set out in the articles of the cooperative.

(3) No act of a cooperative, including a transfer of property, is invalid by reason only that the act is contrary to its articles or this Act.

Knowledge of articles and bylaws

24(1) A member of a cooperative is deemed to have knowledge of the contents of the articles and bylaws of the cooperative.

(2) Subject to subsection (1), no person is deemed to have knowledge of the contents of a document by reason only that it is filed with the Director or is available for inspection at the cooperative.

Reliance on cooperative’s records

25(1) No cooperative and no guarantor of an obligation of a cooperative may assert against a person dealing with the cooperative or against a person who acquired rights from the cooperative that

(a) the cooperative’s articles, bylaws or any unanimous agreement have not been complied with;

(b) the persons named in the most recent notice of directors filed with the Director are not the directors;

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

(e) a document issued by a director, officer or agent of the cooperative with actual or usual authority to issue it is not valid or genuine;

(f) any financial assistance referred to in section 140 was not disclosed in accordance with that section;

(g) a sale, lease or exchange of all or substantially all of the property of the cooperative was not authorized.

(2) Subsection (1) does not apply in respect of a person who has, or ought to have, knowledge to that effect by virtue of that person’s relationship to the cooperative.

No personal liability of members and shareholders

26 The members and holders of shares of a cooperative are not liable, by reason only of being members or holders of shares, for any liability, act or default of the cooperative except as provided in this Act.

Division 5
Registered Office, Records
and Corporate Seal

Registered office

27(1) A cooperative must maintain a registered office in the place set out in its articles.

(2) A notice of registered office in the form set by the Director must be sent to the Director together with any articles that designate or change the cooperative’s registered office.

(3) The directors may change the address of the cooperative’s registered office within the place specified in the articles.

(4) A cooperative must send to the Director, within 15 days after any change of address of its registered office, a notice in a form set by the Director.

Record keeping

28(1) A cooperative must prepare and maintain the following records at its registered office or at any other place in Alberta designated by the directors:

(a) the cooperative’s articles and bylaws, including any amendments, and a copy of any unanimous agreement;

(b) the minutes of meetings of the members and investment shareholders;

(d) a list of its members in a members register, setting out their names and addresses, the number of any membership shares owned and the amount of any member loans;

(e) a list of its investment shareholders, setting out their names and addresses and the number of investment shares owned;

(f) a register of its directors, setting out the names and addresses of the individuals who are or who have been directors and the dates on which they became or ceased to be directors;

(g) if the cooperative issues securities in registered form, a securities register that complies with section 167.

(2) In addition to the records under subsection (1), a cooperative must prepare and maintain adequate

(a) accounting records,

(b) records containing minutes of meetings and resolutions of directors and any committee of directors, and

(c) records sufficient for the purpose of calculating patronage returns that show for each member particulars of the transactions between the cooperative and the member.

(3) A cooperative may keep all or any of the records mentioned in subsections (1)(a), (b), (c) and (f) and (2)(a) and (b) at a place other than its registered office if the records are available for inspection during regular office hours at the registered office or another office in Alberta by means of electronic technology, in which case the cooperative must provide a means by which the records can be accessed.

(4) Subject to any other enactment that provides for a longer retention period, a cooperative must retain its accounting records for a period of 6 years after the end of the financial year to which they relate.

(5) For the purposes of subsection (1)(b) and subsections (2) to (4), “records” includes similar records required by law to be maintained by a cooperative before it was continued under this Act.

(6) Unless the bylaws provide otherwise, the records described in this section, other than those described in subsection (2)(c), must be open for inspection by the directors at any reasonable time.

(7) Members, creditors and investment shareholders of the cooperative, their legal representatives and the Director may examine the records referred to in subsection (1)(a), (b), (c) and (f) during the cooperative’s usual business hours and may take extracts from the records, free of charge, or have copies of them made after payment of a reasonable fee.

Form of records

29(1) Any register or record required by this Act must be prepared and maintained in a form that is capable of reproducing any required information in legible written form within a reasonable time.

(2) A cooperative and its agents must take reasonable precautions respecting the registers and records required by this Act

(a) to prevent their loss or destruction,

(b) to prevent the falsification of entries in them, and

Lists of members and shareholders

30(1) Members and investment shareholders of a cooperative and their legal representatives and, when the cooperative is a distributing cooperative, any other person may, in accordance with and for the reasons specified in the bylaws, request that the cooperative provide them with a list of members or investment shareholders.

(2) A request for the list must be accompanied by

(a) a reasonable fee set by the cooperative, if any;

(b) the name and address of the applicant;

(c) an undertaking that the list of members or investment shareholders obtained will not be used except as permitted in the bylaws.

(3) The cooperative must provide the list no later than 10 days after the cooperative receives a complete and valid request under this section.

(3.1) Where a list is provided under this section, it may be used by the person to whom it was provided for the following purposes:

(a) to carry out, in relation to the affairs of the cooperative, efforts to influence the voting of members or investment shareholders of the cooperative;

(b) to carry out activities to promote an offer to acquire shares of the cooperative;

(c) to carry out any activity or matter, not referred to in clause (a) or (b), relating to the affairs of the cooperative.

(4) Unless the bylaws provide otherwise, a member or investment shareholder may advise the cooperative in writing that that person’s name is not to be included in a list referred to in this section, in which case the cooperative must delete that name from the list and must mention on the list that the list is incomplete.

2001 cC‑28.1 s30;2003 cP‑6.5 s66

Corporate seal

31(1) A cooperative may, but need not, adopt a corporate seal and may change a corporate seal that is adopted.

(2) A document executed on behalf of a cooperative is not invalid merely because a corporate seal is not affixed to it.

Part 2
Membership in Cooperatives

Division 1
Becoming a Member

Bylaws govern membership

32 Membership in a cooperative is governed by its bylaws unless this Act or the articles provide otherwise.

Application for membership

33(1) No person may become a member of a cooperative unless

(a) the person applies for membership in accordance with the bylaws,

(b) the application is approved by the directors, and

(2) The directors may delegate any of the powers vested by subsection (1)(b) to one or more members or officers of the cooperative.

(3) Subject to the bylaws, 2 or more persons may hold a joint membership.

(4) Subject to the bylaws, where a membership is jointly held, the membership may be held as a joint tenancy or a tenancy in common, but where the members do not specify to the cooperative how the membership is to be held, the membership is deemed to be held as a joint tenancy and the joint members are jointly and severally liable for all obligations proposed or payable by members.

Right to vote

34(1) Subject to subsection (2) and the delegate system of voting provided for in the bylaws of a cooperative, a member has one vote on all matters to be decided by the members.

(2) If the bylaws provide that the voting rights of a member are vested in one or more delegates to be elected or appointed by the members, the delegates so elected or appointed may exercise all or any of those rights.

(3) When a cooperative has a bylaw providing for the appointment of delegates, a reference in this Act to a meeting of members refers, for that cooperative, to a meeting of delegates.

Members under 18 years of age

35(1) Subject to the bylaws, an individual under 18 years of age may be a member of a cooperative and may vote at meetings of the cooperative.

(2) The articles and bylaws of a cooperative and any unanimous agreement are binding on a member who is under 18 years of age.

Division 2
Cessation of Membership

Withdrawal of membership

36(1) A member may voluntarily withdraw from membership in a cooperative on the terms and conditions provided in the bylaws by giving written notice to the cooperative.

(2) Unless the bylaws provide otherwise, the withdrawal is effective on the later of

(a) the date stated in the notice, and

(b) the date on which the cooperative receives the notice.

Redemption of membership shares and loans

37(1) Unless the bylaws provide otherwise, the cooperative must, no later than one year after the effective date of a notice of voluntary withdrawal of a member,

(a) redeem all membership shares held by the withdrawing member at the redemption price determined in accordance with section 128, and

(b) repay to the member all member loans, all other amounts held to the member’s credit and all amounts outstanding on loans made to the cooperative by the member, if any, together with any interest accrued on those amounts up to the date of the payment.

(2) Notwithstanding subsection (1), the directors may delay the redemption and payment if

(a) the directors believe, on reasonable grounds, that the redemption or payment would affect the financial well‑being of the cooperative, or

(b) the directors believe, on reasonable grounds, that

(i) the cooperative is, or after the redemption or payment would be, unable to pay its liabilities as they become due, or

(ii) the realizable value of the cooperative’s assets after the redemption or payment would be less than the total of

(A) its liabilities, and

(B) the amount that would be required to pay 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.

(3) Unless the directors decide otherwise,

(a) the withdrawal of a member from the cooperative does not release the member from any debt or obligation to the cooperative or contract with the cooperative, and

(b) despite subsection (1), the cooperative need not repay to the member amounts outstanding on loans made to the cooperative that have a fixed maturity date, until that date arrives.

Termination of membership by directors

38(1) The directors may terminate the membership of a member by special resolution.

(2) Unless a shorter time period is specified in the bylaws, the cooperative must give to the member written notice of the termination and the reasons for it within 10 days after the date on which the special resolution terminating membership is made.

(3) The effective date of the termination is the later of

(a) the date specified in the written notice, and

(b) 30 days, or any shorter or longer period specified in the bylaws, after the member receives the notice.

Right of appeal

39(1) Within 30 days, or a longer or shorter period specified in the bylaws, after receiving notice of termination of membership, the member may give to the cooperative written notice of intention to appeal the decision of the directors at the next meeting of members.

(2) If a member gives a written notice of intention to appeal, the member remains a member until the appeal is determined.

Appeal to members

40(1) If a member appeals a termination of membership, a vote of members must be taken at the next meeting of members as to whether the membership should be terminated as of the effective date referred to in section 38(3).

(2) The vote must be by ordinary resolution unless a greater number of votes is specified in the articles or a unanimous agreement.

Redemption of member interests

41(1) If a member’s membership is terminated, a cooperative must, no later than one year after the effective date of the termination under section 38(3) or a vote of the members under section 40, whichever is later,

(a) redeem all membership shares held by the member at the redemption price determined in accordance with section 128;

(2) Notwithstanding subsection (1), the directors may delay the redemption and payment if

(a) the directors believe, on reasonable grounds, that the redemption of shares or payment would affect the financial well‑being of the cooperative, or

(b) the directors believe, on reasonable grounds, that

(i) the cooperative is, or after the redemption or payment would be, unable to pay its liabilities as they become due, or

(ii) the realizable value of the cooperative’s assets after the redemption or payment would be less than the total of

(A) its liabilities, and

Termination does not release debts

42 The termination of the membership of a member does not release the member from any debt or obligation to the cooperative or contract with the cooperative unless the directors determine otherwise.

Reserve fund for missing members

43(1) If

(a) the address of a member whose membership has been terminated by the directors is unknown to the cooperative after all reasonable efforts have been made to ascertain it, and

(b) at least 2 years has passed since the membership was terminated,

the cooperative must transfer all amounts owing to the former member to a reserve fund, but despite section 41(1)(b) those amounts are not to include any interest that would have accrued after the end of the 2 years.

(2) No interest is payable in respect of the amounts owing after 2 years from the date the membership was terminated.

(3) If any amounts are transferred to the reserve fund, the cooperative must pay those amounts to any person who, within 10 years after the transfer, shows evidence of entitlement satisfactory to the cooperative.

(4) If no person appears to show the evidence referred to in subsection (3) within the 10 years, the amounts become the property of the cooperative and cease to be owned by any other person.

Limitation on bylaw

44 No bylaw governing the withdrawal of a member from membership or the termination of the membership of a member may authorize a redemption of shares or member loans if

(a) the cooperative is, or after redeeming the member’s shares and repaying loans and other money held to the member’s credit would be, unable to pay its liabilities as they become due, or

(b) the realizable value of the cooperative’s assets after the redemption or payment would be less than the total of

(i) its liabilities, and

(ii) the amount that would be required to pay 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.

Termination of inactive membership

45(1) A cooperative may, by written notice to a member, terminate the membership if the member

(a) is a corporation and winding‑up proceedings have commenced with respect to that corporation, or

(b) has failed, for at least 2 consecutive years, to transact any business with the cooperative.

(2) Sections 41 to 44 apply to a termination under this section.

Non-profit housing cooperatives

46 If the membership of a person in a non‑profit housing cooperative is terminated, any right of the person to possession or occupancy of residential premises acquired by virtue of membership in the cooperative is subject to Part 18, Division 1.

Division 3
Readmission and
Transfer of Memberships

Readmission to membership

47(1) Subject to the bylaws, a person whose membership has been terminated by the directors may be readmitted to membership by the directors.

(2) A person whose membership has been terminated by the members may be readmitted to membership only by special resolution of the members.

(3) The bylaws may specify

(a) how long this section applies with respect to former members;

(b) the conditions to be met by a former member before a readmission may be considered;

Member interest

48(1) In this section, “member interest” means a membership, membership shares, member loans or investment shares designated pursuant to section 427(a).

(2) A transfer of a member interest is valid if it is approved by the directors and the transferee meets the requirements of the articles and the bylaws of the cooperative and, if applicable, becomes a party to a unanimous agreement.

(3) If an individual who is under 18 years of age exercises a right of ownership in a member interest, no subsequent repudiation or avoidance is effective against the cooperative.

(4) Subject to the articles and the bylaws, if satisfactory proof of death of a joint holder of a member interest is provided to the cooperative, it may treat any surviving joint holder as the owner of the member interest.

(5) If a personal representative of a deceased holder of a member interest is entitled, pursuant to the articles and bylaws of the cooperative, to become the holder of the member interest or to designate the holder of the member interest, the personal representative must deposit with the cooperative, together with any reasonable assurances that the cooperative may require,

(a) any certificates or other documents reasonably required by the cooperative to prove that the deceased held the member interest,

(b) a document proving the death of the holder of the member interest, and

(c) a document proving that the personal representative has the right under the law of the place in which the deceased was domiciled immediately before death to deal with the member interest.

(6) Deposit of the documents required by subsection (5) empowers a cooperative to record the transfer of a member interest from the deceased member to the personal representative or to any person that the personal representative may designate and to treat the transferee as the owner of the member interest.

Part 3
Meetings

Regulations

49 The Minister may make regulations

(a) respecting the location of meetings of members and investment shareholders of a cooperative;

(b) governing the holding of meetings by means of a telephonic, electronic or other communication facility;

(c) prescribing the time within which the directors of a cooperative must hold a first meeting of the members after the issuance of a certificate of incorporation;

(d) respecting the business that must be conducted at the first meeting of the cooperative;

(e) prescribing the time within which the directors of a cooperative must hold the first annual meeting of members or a special meeting of the cooperative;

(f) respecting the rights of a director, member or investment shareholder to call a meeting where a meeting is not called within the time provided for in the regulations, the articles, the bylaws or a unanimous agreement;

(g) respecting the right of an investment shareholder to call a special meeting of the investment shareholders;

(h) governing the giving of a notice of the date, time and place of a meeting of members or investment shareholders of a cooperative and the manner of giving notice and the persons entitled or not entitled to receive the notice;

(i) respecting any additional requirements for notice of meetings of investment shareholders;

(j) respecting waiver of a notice of a meeting;

(k) determining the right to vote of a person entitled to vote who does not receive a notice of a meeting;

(l) respecting or determining the record dates of a cooperative and the manner of giving notice of record dates;

(m) providing that all matters dealt with at an annual general meeting or a special meeting of the cooperative are special business and providing for any matters that are not special business;

(n) governing the contents of a notice of a meeting where special business is to be transacted;

(o) governing the manner in which the text of any special resolution not included in a notice referred to in clause (n) must be available to the members and the shareholders;

(p) respecting the rules for requisition of a meeting of members or investment shareholders and the requirement for directors to transact the business stated in the requisition and any exceptions to that requirement and the rights of any person who signed the requisition to call a meeting of members if a meeting is not called within the prescribed time;

(q) providing that the manner of calling a meeting referred to in clause (p) may be determined in accordance with the articles, the bylaws or a unanimous agreement;

(r) respecting the reimbursement by the cooperative of persons who sign a requisition referred to in clause (p);

(s) providing for a person who is entitled to vote at a meeting or, in the case of a distributing cooperative, the Executive Director to apply to the Court for an order to call, hold and conduct a meeting of a cooperative;

(t) respecting the submission and contents of proposals submitted by a member to a cooperative for meetings of members other than special meetings;

(u) governing the categories of persons who may submit a proposal to the cooperative to amend the articles, any proof required to demonstrate that a person is authorized to submit a proposal and the time for providing that proof;

(v) respecting the liability incurred for circulating a proposal referred to in clause (t);

(w) providing for

(i) exceptions from the requirement for a cooperative to include a proposal for consideration at a meeting of members, and

(ii) written notice of a refusal by a cooperative to include a proposal in a notice of meeting, the time for that written notice to be given and a requirement for reasons for the refusal to be provided by the cooperative;

(x) respecting applications to the Court by a person aggrieved by a refusal referred to in clause (w)(ii) or a person aggrieved by a proposal;

(y) providing for rules governing the preparation of lists of members, delegates of members or investment shareholders and the number of investment shares held by each investment shareholder for the purpose of determining the entitlement to vote at meetings of the cooperative and prescribing the right of members, delegates and investment shareholders to examine the list that relates to the meeting;

(z) respecting the number of votes a member or investment shareholder is entitled to at a meeting of the cooperative;

(aa) respecting quorum at meetings of members or investment shareholders;

(bb) respecting the voting rights of members who are not individuals, holders of joint memberships and investment shares;

(cc) respecting the manner of voting at meetings of the cooperative or authorizing resolutions instead of a meeting of the cooperative;

(dd) respecting any other matter for the operation of this Part.

Part 4
Directors and Officers
of Cooperatives

Division 1
Number, Qualifications and
Functions of Directors

Number of directors

50(1) A cooperative must have at least 3 directors or any greater minimum number that is set out in the articles.

(2) The term of any incumbent director is not affected by an amendment to the articles to decrease the number of directors.

(3) At a meeting to amend the articles to increase the number of directors, the persons who are entitled to do so may elect or appoint the additional directors.

Member/non-member directors

51(1) Not fewer than 2/3 of the directors, or any greater proportion that is provided for by the articles, must be members of the cooperative, or representatives of members that are entities, or members of members that are cooperative entities.

(2) Nothing in subsection (1) prevents more than one director being elected or appointed as director by a person entitled to elect or appoint directors as provided for in the bylaws.

(3) The articles may provide for the appointment of directors who are representatives of an entity, government or any other person or organization having an interest in the activities of the cooperative, but who are not members of the cooperative, as not more than 20% of the directors.

Disqualification of director

52(1) A person is disqualified from becoming or continuing as a director if that person

(a) is not an individual;

(b) is under 18 years of age;

(i) is a represented adult as defined in the Adult Guardianship and Trusteeship Act or is the subject of a certificate of incapacity that is in effect under the Public Trustee Act,

(ii) is a formal patient as defined in the Mental Health Act,

(iii) is the subject of an order under the Mentally Incapacitated Persons Act (RSA 1970 c232) appointing a committee of the individual’s person or estate or both, or

(iv) has been found to be a person of unsound mind by a court elsewhere than in Alberta;

(d) has the status of bankrupt.

(2) A cooperative may provide in its bylaws for additional qualifications or disqualifications.

(3) Unless Division 2 of Part 18 applies to the cooperative, a majority of the directors must be individuals who are not full‑time officers or employees of the cooperative.

(4) A majority of the directors must be resident in Canada.

(5) Subject to section 51(3) and section 108(4) and (5), all directors must be elected by the members or, if members are represented by delegates, by the delegates of members.

2001 cC‑28.1 s52;2008 cA‑4.2 s125

Functions of directors

53 The directors must manage or supervise the management of the business and affairs of the cooperative, subject to this Act, the regulations and the articles, any unanimous agreement and the bylaws.

Duties of directors

54(1) Every director and officer must, in exercising the powers and performing the duties of office,

(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.

(2) Every director and officer must comply with this Act, the regulations, the articles, the bylaws and any unanimous agreement.

(3) Subject to section 97, no provision in a contract, the articles, the bylaws, a unanimous agreement or a resolution relieves a director or officer from complying with this Act and the regulations or relieves the director from liability for breach of that duty.

(4) In determining whether a particular transaction or course of action is in the best interests of the cooperative, a director who is elected or appointed by the holders of a class or series of investment shares or by employees or creditors or a class of employees or creditors may give special, but not exclusive, consideration to the interests of those who elected or appointed the director.

First directors

55(1) When a cooperative comes into existence, the individuals identified in the notice of directors provided with the application for incorporation are members and directors and have all the powers and duties of directors until the end of the first meeting of members.

(2) At the first meeting of members after a cooperative comes into existence, the directors must be elected or appointed in accordance with this Act, the articles, the bylaws and any unanimous agreement.

Organizational meeting

56(1) After a cooperative comes into existence, a meeting of directors must be held at which the directors may

(a) adopt forms of security certificates and of cooperative records;

(b) admit persons to membership in the cooperative and issue or authorize the issuance of membership shares and arrange for member loans;

(d) appoint an auditor to hold office until the close of the first meeting of members;

(e) make financial arrangements for the cooperative;

(f) transact any other business necessary to organize the cooperative.

(2) An incorporator or a director may call a meeting of directors referred to in subsection (1) by giving at least 5 days’ notice of the meeting to each director, stating the date, time and place of the meeting.

Division 2
Rules for Election of Directors

Rules for election of directors

57(1) Unless the articles, the bylaws or a unanimous agreement provides otherwise, the election and appointment of the directors must be in accordance with this section and sections 52(5), 59, 60, 61, 62, 64, 65, 66(2) and 108(4) and (5).

(2) Elections of directors must be held and appointment of directors must be made annually at a meeting of the persons who are entitled to elect or appoint them.

(3) A cooperative’s directors hold office until the close of the meeting at which their successors are elected.

(4) It is not necessary that all directors elected at a meeting of the cooperative hold office for the same term.

(5) A person who is elected or appointed as a director is not a director unless

(a) that person was present at the meeting when the election was held or appointment was made and did not refuse to act as a director, or

(b) if that person was not present at the meeting,

(i) the person, before the election or appointment or within 10 days after it, consented in writing to act as a director, or

(ii) the person has acted as a director pursuant to the election or appointment.

(6) A person who is elected or appointed as a director and refuses or fails to consent or act is deemed not to have been elected or appointed as a director.

(7) If the number of nominees exceeds the number of directors to be elected, directors are to be elected by secret ballot.

(8) A ballot that is cast for the election of more directors than the number to be elected is to be considered a spoiled ballot.

(9) The individual who receives the greatest number of votes at an election of directors is elected a director and the individuals who receive the next greatest numbers of votes are also elected directors, in descending order until the number of directors to be elected has been elected, but if 2 individuals receive an equal number of votes for the last vacancy, the directors already elected must determine which of the 2 individuals is to be elected.

(10) If investment shareholders have a right to elect one or more directors, they must vote separately from the members.

(11) Where the articles of a cooperative provide that

(a) an investment share confers on its holder the right to vote at an election of directors, or

(b) under section 108(4), the investment shareholders, any class of investment shareholders or the holders of a series of investment shares may elect a fixed number or percentage of directors,

a director may only be elected either as a director elected by the investment shareholders or as a director elected by the members.

Court review of election

58(1) A cooperative, a director or any person who is entitled to vote in the election or appointment of a director or an auditor may apply to the Court to resolve any dispute in respect of the election or appointment of a director or an auditor of the cooperative.

(2) The Court may make any order it thinks fit, including an order

(a) restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

(b) declaring the result of a disputed election or appointment;

(c) requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the cooperative until a new election is held or a new appointment is made;

(d) determining the voting rights of persons claiming to be entitled to vote.

Division 3
Terms and Vacancies

Terms of office for directors

59 Subject to section 64, no director may hold office for a term of more than 3 years, but a director may be re‑elected or reappointed.

Vacancy on the board of directors

60(1) Unless the bylaws provide otherwise, if there is a vacancy on the board of directors the remaining directors must, subject to subsection (3), call a special meeting of the persons who are entitled to vote for the purpose of electing or appointing directors to fill the vacancy.

(2) If, at the close of a meeting of a cooperative, the persons at the meeting have failed to elect or appoint the number or minimum number of directors required by this Act or the articles, the purported election or appointment of directors at the meeting

(a) is valid if the directors purported to be elected or appointed and the incumbent directors, if any, whose terms did not expire at the close of the meeting together constitute a quorum, or

(b) is void if the directors purported to be elected or appointed and the incumbent directors, if any, whose terms did not expire at the close of the meeting together do not constitute a quorum.

(3) If there is a vacancy on the board of directors, except a vacancy because of an increase in the number or minimum number of directors or because of a failure to elect or appoint the number of directors required by the 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) subject to subsection (5), appoint a director to fill the vacancy.

(4) If the directors holding office no longer constitute a quorum, the remaining directors must, without delay, call a special meeting of the persons who are entitled to vote to fill the vacancy, and if they fail to do so, any person who is entitled to vote at a meeting of the cooperative may call the meeting.

(5) If there is a vacancy in the position of a director who is to be elected by a class vote of either the members or the investment shareholders,

(a) any remaining directors elected or appointed by that class may act under subsection (3), or

(b) if there are no remaining directors of that class, any member of the class may call a special meeting to elect a director to fill a vacancy.

Board of directors vacant

61(1) If the board of directors is vacant, any person who is entitled to vote at a meeting of the cooperative may call a special meeting to elect directors to fill the vacancies.

(2) If all of the directors have resigned or been removed without replacement, a person who manages or supervises the management of the business and affairs of the cooperative is, subject to any unanimous agreement, deemed to be a director for the purposes of this Act.

(3) Subsection (2) does not apply to

(a) an officer who manages the business or affairs of the cooperative under the direction or control of a member, shareholder or other person,

(b) a lawyer, accountant or other professional who participates in the management of the cooperative solely for the purpose of providing professional services, or

(c) a trustee in bankruptcy, receiver, receiver‑manager or secured creditor who participates in the management of the cooperative or exercises control over its property solely for the purpose of the realization of security or, in the case of a trustee in bankruptcy, the administration of a bankrupt’s estate.

Unexpired term of director’s office

62 Unless the bylaws provide otherwise, a director who is elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.

Right to attend meetings

63 A director is entitled to receive notice of, to attend and to be heard at every meeting of the cooperative.

Continuation in office

64 If the election of directors does not occur at the time fixed by this Act, the bylaws or a unanimous agreement, the directors then in office continue in office until their successors are elected.

Division 4
Resignation and Termination
of Directors

Ceasing to hold office

65(1) A director ceases to hold office when that director

(a) dies,

(b) resigns,

(d) becomes disqualified from continuing as a director under section 52.

(2) The resignation of a director becomes effective on the later of

(a) the day a written letter of resignation is received by the cooperative, and

(b) the date specified in the letter of resignation.

Removal of directors

66(1) A director may be removed from office at a special meeting by an ordinary resolution cast by or on behalf of the persons who, pursuant to the bylaws, are entitled to vote on the resolution.

(2) The vacancy created by the removal of a director may be filled at the meeting at which the director was removed.

Resignation statement

67(1) A director who

(a) resigns,

(b) receives a notice or otherwise learns of a meeting of members called for the purpose of removing the director from office, or

(c) receives a notice or otherwise learns of a meeting of directors or members at which another person is to be elected or appointed to fill the office of director, whether because of resignation or removal or because the director’s term of office has expired or is about to expire,

is entitled to submit to the cooperative a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

(2) When the cooperative receives a written statement from a director giving reasons why the director opposes any proposed action or resolution, it must ensure that a copy of the statement is given or sent without delay, in the same way in which a notice of meeting is given or sent pursuant to the regulations, to every person who is entitled to receive notice of the meeting.

(3) No cooperative or person acting on its behalf incurs any liability by reason only of circulating a director’s statement to comply with subsection (2).

Notice of change

68 Within 15 days after a change of its directors, the cooperative must send the Director a notice setting out the change in the form set by the Director.

Division 5
Meetings and Quorum of Directors

Place of directors meetings

69(1) Unless the articles or bylaws provide otherwise, the directors may meet anywhere.

(2) Unless the bylaws provide otherwise, notice of the date, time and place of a meeting of directors must be given to every director by sending the notice at least 10 days before the date of the meeting to the latest address of the director as shown on the records of the cooperative.

Contents of notice

70 Notice of a meeting of directors must specify the date, time and place of the meeting but need not specify the matters to be dealt with at the meeting, except the matters listed in section 89(3).

Waiver of notice

71 A director may, in any manner, waive notice of a meeting of directors, and attendance at a meeting constitutes waiver of notice unless the director is attending for the purpose of objecting to the meeting on the ground that it was not lawfully called.

When notice not required

72 There is no need to give notice for the continuation of a meeting of directors that is adjourned or for a meeting of directors that immediately follows an annual meeting.

Quorum

73 Unless the articles, the bylaws or a unanimous agreement provides for a greater proportion, a majority of directors, subject to section 74, constitutes a quorum at any meeting of directors or of a committee of directors and, despite any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

How a quorum is constituted

74(1) To constitute a quorum, a majority of the directors at the meeting must be

(a) resident in Canada, and

(b) members of the cooperative, representatives of members that are entities, or members of members that are cooperative entities.

(2) Notwithstanding subsection (1), a meeting of directors 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.

Electronic meeting

75(1) Subject to the bylaws, a director may attend a meeting of directors by means of a telephonic, electronic or other communication facility that permits all persons participating in the meeting to communicate adequately with each other during the meeting.

(2) A director participating in a meeting by a means referred to in subsection (1) is considered to be present at the meeting.

Validity of acts

76 An act of a director or officer is valid despite an irregularity in the person’s election or appointment or a defect in that person’s qualifications.

Resolution in place of directors meeting

77(1) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors or of a committee of directors is as valid as if it had been passed at a meeting of directors or of a committee of directors.

(2) A copy of every resolution signed by the directors must be kept with the minutes of the meetings of the directors or committee of directors.

(3) An entry in the minutes of a meeting of a cooperative of a vote taken, including one taken in a meeting held in accordance with section 75, or a resolution made under subsection (1) is, in the absence of evidence to the contrary, proof of the outcome of the vote or resolution.

Division 6
Liability of Directors

General liability

78(1) All directors who vote for or consent to a resolution authorizing the issue of a share in exchange for a thing or service other than money are jointly and individually liable to the cooperative for any amount by which the consideration received is less in value than the money that the cooperative would have received if the share had been issued for money on the date of the resolution.

(2) A director is not liable under subsection (1) if the director proves that the director did not know and could not reasonably have known that the share was issued for consideration less in value than the money that the cooperative would have received if the share had been issued for money on the date of the resolution.

(3) All directors who vote for or consent to a resolution authorizing any of the following matters are jointly and individually liable to the cooperative for any amounts so distributed or paid and not otherwise recovered by the cooperative:

(a) a redemption of shares or other acquisition of investment shares or the repayment of member loans contrary to this Act;

(b) a commission contrary to this Act;

(d) financial assistance contrary to this Act;

(e) a payment of an indemnity contrary to this Act;

(f) any other payment contrary to this Act.

(4) A director is not liable under subsection (3) if the director proves that the director did not know and could not reasonably have known that the amounts so distributed or paid were paid contrary to this Act.

(5) A director who satisfies a judgment for a debt owed under this section is entitled to contribution from the other directors who were liable for the debt.

(6) A director who is liable under subsection (3) may apply to the Court for an order to recover any money or property referred to in subsection (3).

(7) 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 subsection (3) that was paid or distributed to that person;

(b) order a cooperative to return or issue shares to a person from whom the cooperative redeemed or otherwise acquired shares;

(d) make any further order that it thinks fit.

(8) An action to enforce a liability imposed by this section may not be commenced more than 2 years after the date of the resolution authorizing the action complained of.

Directors’ liability for wages

79(1) The directors of a cooperative are jointly and individually liable to employees of the cooperative for all debts not exceeding 6 months’ wages payable to each employee for services performed for the cooperative while they are directors.

(2) Subsection (1) does not render a director liable for debts for wages

(a) if the director believes on reasonable grounds that the cooperative can pay the debts as they become due, or

(b) if the debts are payable to employees for services performed while the property of the cooperative is under the control of a receiver, receiver‑manager, trustee in bankruptcy or liquidator.

(3) A director is not liable under subsection (1) unless

(a) the cooperative has been sued for the debt within 6 months after it has become due and writ proceedings have 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 6 months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution, 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 6 months after the date of the assignment or receiving order.

(4) No action may be brought against a director under this section more than 2 years after the date that person ceased to be a director.

(5) If writ proceedings referred to in subsection (3)(a) have issued, the amount recoverable from a director is the amount remaining unsatisfied.

(6) If a director 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 if a judgment has been obtained, the director is entitled to an assignment of the judgment.

(7) A director who has satisfied a claim under this section is entitled to contribution from the other directors who were liable for the claim.

Division 7
Disclosure of Interests

What must be disclosed

80(1) A director or officer must, in accordance with this Division, disclose to the cooperative the nature and extent of any interest that the director or officer has in a material contract or transaction, or a proposed material contract or transaction, with the cooperative, and any material change to any such interest, if the director or officer

(a) is a party to the contract or transaction,

(b) is a director or officer, or an individual acting in a similar capacity, of a party to the contract or transaction, or

(2) This section does not require the disclosure of an interest in a contract or transaction that is available to and customarily entered into between the cooperative and its members if the contract or transaction is on the same terms as are generally available to members.

(3) The director or officer must make the disclosure in writing to the cooperative or request to have it entered in the minutes of a meeting of directors.

When disclosure must be made

81 A director must make the disclosure referred to in section 80(1)

(a) at the meeting of directors at which the proposed contract or transaction is first considered;

(b) if the director did not have an interest in the proposed contract or transaction at the time of the meeting referred to in clause (a), at the first meeting after the director acquires an interest in it;

(c) if the director acquires an interest in a contract or transaction after it is made, at the first meeting after the director acquires an interest in it;

(d) 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;

(e) if the director had an interest in the contract or transaction or proposed contract or proposed transaction before becoming a director, at the first meeting after becoming a director;

(f) if the contract or transaction or proposed contract or proposed transaction is one that would not, in the ordinary course of business, require the approval of the directors, as soon as the director becomes aware of the contract or transaction or proposed contract or proposed transaction.

Disclosure of interest by officers

82 An officer who is not a director must make the disclosure referred to in section 80(1)

(a) immediately after becoming aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors;

(b) if the officer acquires an interest in a contract or transaction after it is made, immediately after the officer acquires an interest in it;

(c) if there is a material change in the officer’s interest in the contract, transaction, proposed contract or proposed transaction, immediately after the change;

(d) if the officer had an interest in the contract or transaction or proposed contract or proposed transaction before becoming an officer, immediately after becoming an officer;

(e) if the contract or transaction or proposed contract or proposed transaction is one that would not, in the ordinary course of business, require the approval of the directors, as soon as the officer becomes aware of the contract or transaction or proposed contract or proposed transaction.

Access to disclosures

83 The members and investment shareholders may examine the portions of minutes of meetings of directors, of other documents that contain disclosures under sections 80 to 86 and of the general notice referred to in section 86 during the usual business hours of the cooperative.

Modification of procedural requirements

84 The members and investment shareholders may, by unanimous agreement, modify the procedural requirements of sections 80 to 88.

Voting on contracts and transactions when there is a conflict

85(1) A director who is interested in a contract or transaction or proposed contract or proposed transaction referred to in section 80(1) may not be present for the vote or vote on any resolution to approve the contract or transaction.

(2) Subsection (1) does not apply to

(a) a contract or transaction or proposed contract or proposed transaction that relates primarily to the director’s remuneration as a director, officer, employee or agent of the cooperative or of one of its subsidiaries, or

(b) a contract for indemnity or insurance under section 94.

Continuing disclosure

86 It is a sufficient declaration of interest in a contract or transaction or proposed contract or proposed transaction if the director or officer gives a general notice to the directors declaring that the director or officer has an interest in a contract or transaction or proposed contract or proposed transaction made with an entity

(a) because the director or officer is a director or officer of an entity, or acts in a similar capacity,

(b) because the director or officer has a material interest in an entity, or

Effect of disclosure

87 A contract or transaction for which disclosure must be made under section 80 is not invalid, and the director or officer is not accountable to the cooperative or its members or investment shareholders for any profit realized from the contract or transaction, by reason only of the interest of the director or officer in the contract or transaction, if

(a) disclosure of the interest was made in accordance with this Act, or

(b) disclosure of the interest was not made in accordance with this Act but

(i) disclosure of the interest was made,

(ii) the contract or transaction was approved by a majority of the members of the cooperative or a majority of the members present at a meeting of the members, and

(iii) the contract or transaction was reasonable and fair to the cooperative at the time it was approved.

Court order to set aside transaction

88 If a director or officer of a cooperative

(a) fails to disclose an interest in a material contract or transaction in accordance with section 80, 81, 82 or 86, or

(b) otherwise fails to comply with section 80, 81, 82, 85, 86 or 87,

the Court may, on the application of the cooperative or a member or investment shareholder, set aside the contract or transaction on any terms that it thinks fit or order that the director or officer account to the cooperative or its members or investment shareholders for any profit realized from the contract or transaction.

Appointment of managing director or committee

89(1) The directors may appoint any committee they consider necessary, which may exercise any powers that are delegated to it by the directors, subject to any restrictions imposed by the directors.

(2) The directors may appoint a managing director, who must be resident in Canada.

(3) The directors may delegate to a managing director or to a committee referred to in subsection (1) any powers of the directors except the power to

(a) fill a vacancy among the directors or in the office of the auditor, or appoint additional directors,

(b) declare dividends on shares, interest on member loans or patronage returns,

(d) submit to the persons who are entitled to vote on them questions or matters required to be approved at a meeting of the cooperative,

(e) make decisions that by this Act, the articles or a unanimous agreement are required to be made by a special resolution,

(f) redeem shares or otherwise acquire investment shares issued by the cooperative,

(g) pay a commission referred to in section 112,

(h) approve a management proxy circular referred to in Part 6, or

(i) issue securities, except in the manner and on the terms authorized by the directors.

(4) A director who is appointed to a committee may remain on the committee until the appointment is revoked or the person ceases to be a director.

Deemed consent of directors

90(1) A director who is present at a meeting of directors or a meeting of a committee of directors is deemed to have consented to any resolution made or action taken at the meeting unless

(a) the director requests that a dissent be entered in the minutes of the meeting or the dissent is so entered,

(b) the director sends a written dissent to the secretary of the meeting before it is adjourned, or

(c) the director sends a written dissent by confirmed delivery service, or delivers it personally, to the registered office of the cooperative immediately after the meeting is adjourned.

(2) A director who votes for or expressly consents to a resolution or action taken at a meeting of directors or of a committee of directors is not entitled to dissent later.

(3) A director who is not present at a meeting of directors or of a committee of directors is deemed to have consented to any resolution made or action taken at the meeting unless the director, within 7 days after becoming aware of the resolution or action,

(a) causes a dissent to be entered in the minutes of the meeting, or

(b) sends a written dissent by confirmed delivery service, or delivers it personally, to the registered office of the cooperative.

Defence for directors

91 A director is not liable under this Part if the director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances to prevent the failure to fulfil the director’s duties, including reliance in good faith on financial statements of the cooperative, on the reports of experts and on information presented by officers or professionals.

Remuneration

92 Unless the articles, the bylaws or a unanimous agreement provides otherwise, the directors may fix the remuneration of the directors, officers and employees of the cooperative.

Division 8
Officers of a Cooperative

Types of offices and functions

93 Subject to the articles, the bylaws and any unanimous agreement, the directors may

(a) designate the offices of the cooperative;

(b) specify the powers and duties of each office;

(d) appoint one individual to hold more than one office;

(e) delegate to the officers the power to manage the business and affairs of the cooperative, except a power referred to in section 89(3).

Division 9
Indemnification of Directors and Officers

Nature of indemnification

94(1) A cooperative may indemnify an individual who is or was a director or officer of the cooperative or who at the cooperative’s request acts or acted

(a) as a director or officer of the cooperative,

(b) as a director or officer of another entity, or

against all costs, charges and expenses, including an amount paid to settle an action or satisfy a claim reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved by reason of the individual’s association with the cooperative or entity.

(2) A cooperative may advance money to a director, officer or other individual for the costs of a proceeding referred to in subsection (1), but the individual must repay the money if the Court determines that the individual did not fulfil the conditions of subsection (3), unless the members and investment shareholders decide, by separate resolutions, that the individual need not repay the money.

(3) A cooperative may not indemnify an individual under subsection (1) unless the individual

(a) acted honestly and in good faith with a view to the best interests of the cooperative or, as the case may be, to the best interests of the entity for which the individual acted as director or officer or in a similar capacity at the cooperative’s request, and

(b) in the case of a criminal or administrative proceeding, had reasonable grounds for believing that the individual’s conduct was lawful.

(4) A cooperative may not indemnify an individual under subsection (1) or advance money for costs under subsection (2) in respect of an action by or on behalf of the cooperative or entity, unless the Court so orders.

(5) An individual referred to in subsection (1) is entitled to indemnity from the cooperative for the costs, charges and expenses referred to in that subsection if the individual

(a) was judged by the Court not to have committed any fault or omitted to do anything that the individual ought to have done,

(b) fulfils the conditions in subsection (3), and

(6) A cooperative may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual by reason of being or having been

(a) a director or officer of the cooperative,

(b) a director or officer of another entity, or

(c) an individual that has acted in a similar capacity for the cooperative or other entity, if the individual acts or acted in that capacity at the cooperative’s request.

Application to Court to approve indemnity

95(1) The Court may, on the application of a cooperative or an individual referred to in section 94, approve an indemnity under that section and make any further order that it sees fit.

(2) On an application under subsection (1), the Court may order notice to be given to any interested person, and the interested person is entitled to appear and be heard in person or by counsel.

Division 10
Unanimous Agreements

Restricting powers of directors

96(1) If a provision in the articles of a cooperative or in a unanimous agreement

(a) restricts, in whole or in part, the discretion or powers of the directors to manage, or supervise the management of, the business and affairs of the cooperative, or

(b) vests in the members, in whole or in part, the power to manage, or supervise the management of, the business and affairs of the cooperative,

that provision is valid as long as the cooperative has at least 3 directors or any greater minimum number that is set out in the articles.

(2) Subject to this section but notwithstanding section 164(2), any purchaser or transferee of a share that is subject to a unanimous agreement is deemed to be a party to the unanimous agreement.

(3) If notice of the existence of a unanimous agreement is not given to the purchaser or transferee, the purchaser or transferee may, no later than 30 days after becoming aware of its existence, rescind the transaction by which the shares were acquired.

(4) A notice of the initial execution or the termination of a unanimous agreement must be sent to the Director, in the form set by the Director, at the same time as the annual return referred to in section 333.

Rights of members

97 To the extent that a provision in the articles of the cooperative or in a unanimous agreement restricts the discretion or powers of the directors to manage, or supervise the management of, the business and affairs of the cooperative, members who are given the power to manage, or supervise the management of, the business and affairs of the cooperative have all the rights, powers, duties and liabilities of directors, whether they arise under this Act or otherwise, and any defences available to the directors, and the directors are relieved of their rights, powers, duties and liabilities, including their liability under section 79, to the same extent.

Provisions for meetings in unanimous agreements

98 A unanimous agreement may contain provisions respecting the rules and procedures governing meetings under this Act and provisions that eliminate the need for annual meetings of investment shareholders and meetings of directors.

Financial information when no annual meeting required

99 If there is to be no annual meeting of investment shareholders because of a provision in a unanimous agreement, the cooperative must send to any investment shareholder who requests them

(a) comparative financial statements referred to in section 228(1)(a),

(b) the report of the auditor, and

(c) any further information about the financial position of the cooperative required by the bylaws or unanimous agreement.

Part 5
Capital Structure

Division 1
Membership Capital

Loan capital

100 The capital of a cooperative without membership shares may be in the form of member loans, and those loans may be in the amounts, payable at the times, and with or without interest, as the articles of the cooperative provide.

Membership shares

101 A cooperative with membership shares must have at least one class of membership shares, designated as such in the articles.

Issuance to members

102(1) Where membership shares are issued by a cooperative, membership shares may only be issued to members, each of whom must hold the minimum number of membership shares specified in the bylaws.

(2) A member is the holder of a membership share of a cooperative when, according to the members register of the cooperative, the member is the owner of the membership share or is entitled to be entered in the members register as the owner of the membership share.

(3) Subject to Part 18, the membership shares of a cooperative confer on their holders equal rights, including equal rights

(a) to receive dividends declared on membership shares, and

(b) subject to the articles, to receive the remaining property of the cooperative on dissolution.

(4) The articles may not include any preference, right, condition, restriction, limitation or prohibition on membership shares, except as provided for by this Act.

(5) A transfer of membership shares is valid only if it complies with section 48.

(6) The right to vote attaches to membership in accordance with section 34, not to a membership share.

(7) Subject to sections 128 and 131, membership shares may be redeemed by the cooperative.

Division 2
Certificates

Issue of membership certificates

103(1) Unless required by the bylaws of a cooperative, no certificates need be issued in respect of membership shares or member loans.

(2) On the request of a member, a cooperative must issue a statement of the number of membership shares held by, or the amount of any member loan of, the member.

(3) Where a cooperative issues certificates in respect of membership shares or member loans, the face of each certificate that the cooperative issues after the coming into force of this section must contain

(a) the name of the cooperative,

(b) a statement that the cooperative is subject to this Act,

(d) a statement that the certificate represents membership shares in, or member loans to, the cooperative, and the number of membership shares or the amount of the member loans,

(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 loans represented by the certificate in favour of the cooperative for any indebtedness of the member to the cooperative.

(4) Each member is entitled to a certificate of membership.

Authorized capital

104(1) The membership shares of a cooperative may be issued with or without a par value.

(2) If the membership shares of a cooperative are issued with a par value, the articles must specify that fact and specify their par value and any limit on their number.

(3) If the membership shares of a cooperative are without par value, the articles must specify that fact and specify any limit on their number.

Fixed or determined value

105 If any no‑par‑value membership shares of a cooperative are to be issued and are to be redeemed at a fixed or determined value, the articles must set out those facts and state the fixed price or the formula to be used to determine the value.

Distribution on dissolution

106(1) The articles of a cooperative may provide for the payment of all debts and liabilities on dissolution of the cooperative, including

(a) any declared and unpaid dividends,

(b) the amount to be paid to the holders of any investment shares, and

(2) The articles of the cooperative, except the articles of a cooperative that is governed by Part 18, may provide that after the payment of all debts and liabilities pursuant to subsection (1), the value of the remaining property of the cooperative is to be distributed to any person, including distribution

(a) among the members at the time of dissolution in any manner, including equally among the members irrespective of the number of membership shares or amount of member loans, if any, held or made by a member,

(b) among the members at the time of dissolution on the basis of patronage returns accrued to those members during a stated period before the dissolution, or

Charge on membership shares for amounts

107(1) A cooperative has a charge on a membership share, membership loan or any amount standing to the credit of a member or the legal representative of a member for a debt of that member to the cooperative.

(2) A cooperative may

(a) enforce a charge referred to in subsection (1) in the manner set out in its bylaws, or

(b) apply any money standing to the credit of a member toward payment of a debt due by the member to the cooperative.

Division 3
Investment Shares

Investment shares

108(1) The articles of a cooperative may provide that the cooperative may issue investment shares, and if they do, the articles must set out the following:

(a) whether the investment shares may be issued to non‑members,

(b) whether the number of investment shares is to be unlimited and, if not, the maximum number of investment shares that may be issued,

(d) the preferences, rights, conditions, restrictions, limitations and prohibitions attaching to 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.

(2) A person is an investment shareholder of a cooperative when, according to the securities register of the cooperative, the person is the owner of an investment share or is entitled to be entered in the securities register of the cooperative as the owner of an investment share.

(3) Subject to the articles and to this Act, no right to vote at a meeting of the members attaches to an investment share.

(4) The articles may provide that

(a) an investment shareholder has the right to vote at an election of directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled, or

(b) the investment shareholders, any class of investment shareholders or the investment shareholders of a series of investment shares may elect a fixed number or a percentage of the directors.

(5) Notwithstanding subsections (3) and (4), neither the articles nor a unanimous agreement may provide that the investment shareholders have the right to elect more than 20% of the directors.

(6) If investment shareholders are entitled to vote in accordance with subsection (4) or otherwise in accordance with this Act, each investment share entitles the investment shareholder to one vote.

(7) Notwithstanding section 34, a member who holds an investment share may exercise any voting right that an investment shareholder has.

No‑par‑value shares

109(1) Investment shares of a cooperative must be in registered form and without par value.

(2) Investment shares of a cooperative that is continued under this Act are deemed to be investment shares without par value.

Shares in series

110(1) The articles may authorize, subject to any limitations set out in them and subject to subsection (2), the issue of any class of investment shares 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.

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

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

(4) If the directors exercise their authority under subsection (1)(b), they must, before the issue of investment shares of the series, send to the Director articles of amendment in the form that the Director sets to designate a series of investment shares.

(5) On receipt of articles of amendment designating a series of investment shares under subsection (4), the Director must issue a certificate of amendment.

Pre‑emptive right

111(1) If the articles so provide, no investment shares of any class may be issued unless the investment shares are first offered to the investment shareholders of that class in proportion to their holdings of the investment shares of that class, at the price at which and on the terms on which those investment shares are to be offered to others.

(2) No pre‑emptive right under subsection (1) will entitle an investment shareholder to acquire investment shares

(a) in exchange for a thing or service other than money,

(b) as an investment share dividend or as payment of a patronage return, or

Commissions

112 The directors may authorize the cooperative to pay a reasonable commission to any person in consideration of the person

(a) purchasing or agreeing to purchase investment shares from the cooperative or from some other person, or

(b) procuring or agreeing to procure purchasers for any such investment shares.

Charge on investment shares

113(1) Subject to section 164(2), the articles may provide that the cooperative has a charge on an investment share registered in the name of an investment shareholder or the legal representative of an investment shareholder for a debt obligation of the investment shareholder to the cooperative, including an amount in respect of an investment share issued by a corporation that is unpaid as of the date the corporation is continued under this Act.

(2) A cooperative may enforce a charge referred to in subsection (1) in accordance with its bylaws.

(3) If the articles of a cooperative provide that investment shares are subject to the charge referred to in subsection (1), the cooperative or transferor, as the case may be, must bring to the attention of a subscriber or transferee that the investment shares will be subject to the charge referred to in subsection (1).

Division 4
Constraints

Constraints on shares

114(1) Subject to section 265(4), a distributing 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 the members and by a separate special resolution of the investment shareholders of each class, amend its articles to incorporate any matter referred to in section 5(1)(o).

(2) If the ownership of investment shares by a person would adversely affect the ability of a cooperative or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles, the cooperative may limit the number of investment shares of the cooperative that may be owned, or prohibit the ownership of investment shares, by that person.

(3) A cooperative may, by a special resolution of the members and by a separate special resolution of the investment shareholders of each class, amend its articles to change or remove any constraint on the issue, transfer or ownership of its investment shares.

(4) The directors may, if authorized by a special resolution effecting an amendment under subsection (1) or (3), revoke the resolution before it is acted on without further approval.

(5) The Minister may make regulations with respect to a cooperative that constrains the issue, transfer or ownership of its investment shares, prescribing

(a) the disclosure of the constraints that is required in documents issued or published by the cooperative,

(b) the duties and powers of the directors to refuse to issue or register transfers of investment shares in accordance with the articles,

(d) the powers of the directors to require disclosure of beneficial ownership of investment shares of the cooperative and the right of the cooperative and its directors, employees and agents to rely on that disclosure and the effects of that reliance, and

(e) the rights of any person owning investment shares of the cooperative at the time of an amendment to its articles constraining investment share issues or transfers.

Election of directors by investment shareholders

115(1) If the investment shareholders of a class or series of investment shares of a cooperative have, under section 108, a right to elect one or more directors, or have a right to elect one or more directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled, the directors must call the following meetings for the purpose of electing the director or directors:

(a) a special meeting of the investment shareholders of the class or series of investment shares, to be called within 6 months, or at any earlier date that may be specified in the articles, after the date on which investment shares of the class or series are first issued or after the event has occurred or the condition has been fulfilled, and

(b) an annual meeting of those investment shareholders for every subsequent year.

(2) If the articles so provide, directors who are to be elected by investment shareholders may be elected by cumulative voting.

(3) If the articles provide for cumulative voting,

(a) the articles must require a fixed number of directors to be elected by the investment shareholders, not a minimum and maximum number of directors,

(b) each investment shareholder who is entitled to vote at an election of directors by investment shareholders has the right to cast a number of votes equal to the number of votes attached to the investment shares held by that investment shareholder multiplied by the number of directors to be elected, and the investment shareholder may cast all the votes in favour of one candidate or distribute them among the candidates in any manner,

(c) a separate vote of investment shareholders must be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting 2 or more persons to be elected at the same time,

(d) if an investment shareholder has voted for more than one candidate without specifying the distribution of votes among the candidates, the investment shareholder is deemed to have distributed votes equally among the candidates for whom the investment shareholder voted,

(e) if the number of candidates nominated for director 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,

(f) each director ceases to hold office at the close of the first annual meeting after election by the investment shareholders entitled to elect that director,

(g) a director may be removed from office only if the number of votes cast by or on behalf of the persons who pursuant to the bylaws are entitled to vote in favour of the director’s removal is greater than the product of the number of directors and the number of votes cast against the motion, and

(h) the number of directors required by the articles may be decreased only if the votes cast in favour of the motion to decrease the number of directors is greater than the product of the number of directors and the number of votes cast against the motion.

Amendment of articles

116(1) The holders of investment shares of a class or, subject to subsection (4), of a series are, unless the articles provide otherwise in the case of an amendment referred to in clause (a), (b) or (e), entitled to vote separately as a class or series on a proposal to amend the articles to

(a) increase or decrease any maximum number of authorized investment shares of the class, or increase any maximum number of authorized investment shares of a class having rights or privileges equal or superior to the rights or privileges attached to the investment shares of that class,

(b) effect an exchange, reclassification or cancellation of all or part of the investment shares of the class,

(c) add, change or remove the rights, privileges, restrictions or conditions attached to the investment shares of the class, including

(i) remove or prejudicially change rights to accrued dividends or rights to cumulative dividends,

(ii) add, remove or prejudicially change redemption rights,

(iii) reduce or remove a dividend preference or a liquidation preference, or

(iv) add, remove or prejudicially change conversion privileges, options, voting, transfer or pre‑emptive rights, or rights to acquire securities of a cooperative, or sinking fund provisions,

(d) increase the rights or privileges of any class of investment shares having rights or privileges equal or superior to the rights or privileges attached to the investment shares of that class,

(e) create a new class of investment shares having rights or privileges equal or superior to the rights or privileges attached to the investment shares of that class,

(f) make the rights or privileges attached to any class of investment shares having rights or privileges inferior to the rights or privileges attached to the investment shares of that class equal or superior to the rights or privileges attached to the investment shares of that class,

(g) effect an exchange or create a right of exchange of all or part of the investment shares of another class into the investment shares of the class, or

(h) constrain the issue, transfer or ownership of the investment shares of the class or change or remove a constraint.

(2) Subsection (1) does not apply in respect of a proposal to amend the articles to add a right or privilege for an investment shareholder to convert investment shares of a class or series into investment shares of another class or series that is subject to a constraint permitted under section 5(1)(o)(iii) but otherwise equal to the class or series first mentioned.

(3) For the purpose of subsection (1)(e), a new class of investment shares, the issue, transfer or ownership of which is to be constrained by an amendment to the articles under section 5(1)(o)(iii), that is otherwise equal to an existing class of investment shares is deemed not to be equal or superior to the existing class of shares.

(4) The investment shareholders of a class are entitled to vote separately as a series under subsection (1) only if the effect of an amendment on the series is different from the effect of the amendment on other investment shares of the same class.

(5) Subsection (1) applies whether or not investment shares of a class or series otherwise carry the right to vote.

(6) A proposed amendment to the articles referred to in subsection (1) is adopted when it is approved by a special resolution of the members and by a separate special resolution of the investment shareholders of each class.

Division 5
Corporate Finance

Power to issue investment shares

117 Subject to this Act, the articles, the bylaws and any unanimous agreement, membership shares may only be issued to members, and investment shares may be issued to any person, at any time and for money or in exchange for any thing or service that the directors may determine.

Payment for investment shares

118(1) A cooperative may not issue an investment share until it is fully paid in money, or past service or any other thing that is not less in value than the money that the cooperative would have received if the investment share had been issued for money, and neither a promissory note nor a promise to pay made by a person to whom the investment shares are to be issued is acceptable in payment of an investment share.

(2) Membership shares may be paid for in money, or past service or any other thing that is not less in value than the money that the cooperative would have received if the membership share had been issued for money.

Borrowing

119 Unless the articles, the bylaws or a unanimous agreement provides otherwise, the articles of a cooperative are deemed to state that the directors may, without the authorization of the members or investment shareholders,

(a) borrow money,

(b) give debt obligations,

(d) create security interests in its property, and

(e) notwithstanding sections 89(3) and 93(e), delegate any power referred to in clauses (a) to (d).

Stated capital account

120(1) A cooperative that is authorized to issue investment shares must maintain a stated capital account for each class and series of investment shares that it issues.

(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 investment shares it issues.

(3) Notwithstanding subsection (2), a cooperative may, subject to subsection (4), add to the stated capital accounts maintained for the investment shares of classes or series the whole or any part of the amount of the money, or the value of the things and services, it receives in an exchange if the cooperative issues investment shares

(a) in exchange for

(i) property, other than a promissory note or promise to pay, or

(ii) investment shares of, or another interest in, an entity that, immediately before the exchange, or because of the exchange, did not deal with the cooperative at arm’s length within the meaning of that expression in the Income Tax Act (Canada), or

(b) under an amalgamation or arrangement or to members or investment shareholders of an amalgamating corporation who receive the investment shares in addition to or instead of securities of the amalgamated cooperative.

(4) On the issue of an investment share, a cooperative must not add to a stated capital account in respect of the investment share it issues an amount greater than the amount of the money, or the value of the thing or service, it receives for the investment share.

(5) The proposed addition of an amount to a stated capital account maintained by a cooperative in respect of a class or series of investment shares must be approved in advance by a special resolution of the members and, if the cooperative has issued investment shares, by a separate special resolution of the investment shareholders, the class of investment shareholders or the investment shareholders of the series of investment shares that is affected by the special resolution, if

(a) the amount to be added was received by the cooperative but not as consideration for the issue of the investment shares, and

(b) the cooperative has issued investment shares of more than one class or series that are outstanding.

(6) If a cooperative issues membership shares with a par value, the cooperative is deemed, for the purposes of sections 129(2), 133, 136 and 274(2)(d), to have a stated capital account for its membership shares that includes each amount that has been received by the cooperative for the membership shares.

Other additions to stated capital account

121(1) When a corporation 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 an investment share it has issued.

(2) When a corporation is continued under this Act, section 120(2) does not apply to the money, or the value of things or services, received by it before it was so continued unless the investment share in respect of which the money, thing or service was received is issued after the corporation is continued.

(3) When a corporation is continued under this Act, any amount unpaid in respect of an investment share issued by the corporation before it was so continued and paid after it was so continued is added to the stated capital account maintained for the investment shares of that class or series.

(4) For the purposes of sections 129(2), 133, 136 and 274(2)(d), when a cooperative is continued under this Act, its stated capital account is deemed to include the amounts that would have been included if the cooperative had been incorporated under this Act.

(5) When a cooperative is continued under this Act, section 120(6) applies if the cooperative has membership shares with a par value.

(6) A cooperative must not reduce its stated capital or any stated capital account except in the manner provided for in this Act.

Surplus accounts

122 Subject to section 120(5), a cooperative continued under this Act may at any time add to a stated capital account any amount it has credited to a retained earnings or other surplus account.

Shares not assessable

123 The shares of a cooperative are non‑assessable and the members and investment shareholders are not liable to the cooperative or to its creditors in respect of them.

Options and rights

124(1) A cooperative may issue certificates, warrants or other evidence of conversion privileges, options or rights to acquire securities or membership shares of the cooperative.

(2) A conversion privilege, option or right to acquire membership shares may only be granted to members and is non‑transferable.

(3) Subject to subsection (2), conversion privileges, options or rights to acquire securities of a cooperative may be made transferable or non‑transferable, and options and rights to acquire securities of a cooperative may be made separable or inseparable from any securities to which they are attached.

(4) The terms and conditions of any conversion privilege, option or right must be set out in

(a) a certificate, a warrant or other evidence, or

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

Reserves

125 If the articles limit the number of authorized shares, the cooperative must reserve sufficient authorized shares to meet the exercise of any conversion privileges or any options or rights issued or granted by the cooperative to acquire shares.

Holding own shares

126(1) Subject to sections 127 to 131, a cooperative may not

(a) hold any shares in itself or in its holding corporation, or

(b) permit any of its subsidiaries to hold shares in the cooperative, other than

(i) the minimum number of membership shares required by the bylaws of the cooperative to qualify for membership in it, and

(ii) shares subscribed for and issued to the subsidiary by the application of patronage returns to their purchase.

(2) A cooperative must cause any subsidiary that holds shares in the cooperative contrary to subsection (1) to dispose of those shares no later than 5 years after the date on which

(a) it became a subsidiary, or

(b) the cooperative was continued under this Act.

Exception for holding own shares

127(1) A cooperative may hold and may permit its subsidiaries to hold, in the capacity of a legal representative, shares in itself, in its holding corporation, or in its subsidiaries only if the cooperative, holding corporation or subsidiaries do not have a beneficial interest in the shares.

(2) A cooperative may hold shares in itself, its holding corporation or its subsidiaries by way of security for the purposes of a transaction entered into by it in the ordinary course of a business that includes the lending of money.

Redemption of membership shares

128(1) Subject to section 131, a cooperative may at any time redeem any of its membership shares, if issued on a par‑value basis, at par value, and if issued on a no‑par‑value basis, in accordance with the price or formula that is set out in its articles, or, if no such price or formula is set out in the articles, at a fair market value.

(2) No cooperative may redeem its membership shares if a result of doing so would be to reduce the membership of the cooperative so that section 307 applies.

Acquisition of investment shares

129(1) Subject to its articles and to subsection (2), a cooperative may at any time acquire any investment share issued by it.

(2) A cooperative must not make a payment to acquire investment shares if there are reasonable grounds to believe that

(a) the cooperative is, or after the payment would be, unable to pay its liabilities as they become due, or

(b) the realizable value of the cooperative’s assets after the payment would be less than the total of the stated capital of all its issued shares and its liabilities.

(3) Subject to section 131, a cooperative may at any time exercise any right to redeem any of its investment shares in accordance with any price or formula that is set out in its articles or, if no such price or formula is set out in the articles, at fair market value.

Alternative investment share acquisition

130 Subject to section 131, a cooperative may acquire investment shares issued by it

(a) to satisfy the claim of investment shareholders who dissent under section 277,

(b) to comply with an order under section 357,

(d) to eliminate fractional investment shares, or

(e) to fulfil the terms of a non‑assignable option or obligation to purchase investment shares owned by a director, officer or employee.

Limitation on acquisition or redemption

131 A cooperative may not make a payment to acquire or redeem a share under section 128, 129(3) or 130 if there are reasonable grounds to believe that

(a) the cooperative is, or after the payment would be, unable to pay its liabilities as they become due, or

(b) the realizable value of the cooperative’s assets after the payment would be less than the total of

(i) its liabilities, and

Cancellation or redemption of shares

132 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.

Reduction of stated capital

133(1) Subject to subsection (2), a cooperative may reduce its stated capital for any purpose by a special resolution of its members and, if an investment share is proposed to be affected by the reduction, by a special resolution of the investment shareholders.

(2) A cooperative may not reduce its stated capital if there are reasonable grounds to believe that

(a) the cooperative is, or after the payment would be, unable to pay its liabilities as they become due, or

(b) the realizable value of the cooperative’s assets after the reduction would be less than the total of its liabilities.

(3) Subsection (2) does not apply to a reduction of stated capital by an amount that is not represented by realizable assets.

(4) If a cooperative maintains more than one stated capital account, the special resolution to reduce stated capital required by subsection (1) must specify the stated capital account or accounts that will be reduced.

(5) A creditor of a cooperative may apply to the 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.

(6) No action may be commenced to enforce a liability imposed by this section more than 2 years after the date of the act complained of.

Adjustment of stated capital account

134(1) On a redemption or acquisition of any of its shares, a cooperative must adjust the stated capital account in relation to those shares by the ratio of the stated capital for those shares to that class.

(2) A cooperative must adjust its stated capital account in accordance with any special resolution made under section 133(1).

(3) On a conversion of investment shares of a cooperative into investment shares of another class or series or a change under section 264, a reorganization under section 278 or the redemption or exchange of investment shares under an order made under section 357, the cooperative must

(a) deduct from the stated capital account maintained for the class or series of investment shares converted or changed, or subjected to the reorganization, redemption or exchange, an amount equal to the result obtained by multiplying the stated capital of the investment shares of that class or series by the number of investment shares of that class or series converted or changed, or subjected to the reorganization, redemption or exchange, divided by the number of issued investment shares of that class or series immediately before the conversion, change, reorganization, redemption or exchange, and

(b) add the result obtained under clause (a) and any additional amount received pursuant to the conversion, change, reorganization, redemption or exchange to the stated capital account maintained or to be maintained for the class or series of investment shares into which the investment shares have been converted or changed.

(4) For the purposes of subsection (3) and subject to the articles, if a cooperative issues 2 classes of investment shares and there is attached to each such class a right to convert an investment share of the one class into an investment share of the other class, if an investment share of one class is converted into an investment share of the other class, the amount of stated capital attributable to an investment share in either class is the aggregate of the stated capital of both classes divided by the number of issued investment shares of both classes immediately before the conversion.

(5) For the purposes of this section, a cooperative holding investment shares in itself as permitted by section 127 is deemed not to have redeemed or acquired them.

(6) Investment shares issued by a cooperative and converted into investment shares of another class or series, changed under section 264 or subjected to a reorganization under section 278 or the redemption or exchange of investment shares under an order made under section 357 become investment shares of the other class or series of investment shares.

(7) If the articles limit the number of authorized investment shares of a class of investment shares of a cooperative and issued investment shares of that class or of a series of that class have become, under subsection (6), issued investment shares of another class or series, the number of unissued investment shares of the first‑mentioned class is, unless the articles provide otherwise, increased by the number of investment shares that, under subsection (6), became investment shares of another class or series.

Form of dividend

135(1) A cooperative may pay a dividend by issuing fully paid shares of the cooperative and, subject to section 136, a cooperative may pay a dividend in money or property, except that membership shares may only be issued to members.

(2) If shares of a cooperative are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money must be added to the stated capital account.

Limitation on paying dividends

136 A cooperative may not declare or pay a dividend if there are reasonable grounds to believe that

(a) the cooperative is, or after the payment would be, unable to pay its liabilities as they become due, or

(b) the realizable value of the cooperative’s assets after payment of the dividend would be less than the total of its liabilities and the stated capital of all its issued shares.

Patronage returns

137(1) A cooperative may allocate among and credit or pay to the members, as a patronage return, all or a part of the surplus in a financial year in proportion to the business done by the members with or through the cooperative in that financial year calculated in the manner described in subsection (3) at a rate set by the directors or, where the bylaws provide, at a rate set by the members.

(2) Where the bylaws provide that the members may set the rate under subsection (1), the members may set the rate by an ordinary resolution.

(3) For the purpose of subsection (1), the directors may calculate the amount of the business done by each member with or through a cooperative in a financial year by taking into account

(a) the quantity, quality, kind and value of things bought, sold, handled, marketed or dealt in by the cooperative,

(b) the services rendered

(i) by the cooperative on behalf of or to the member, and

(ii) by the member on behalf of or to the cooperative,

and

(c) differences that are, in the opinion of the directors, appropriate for different classes, grades or qualities of things and services.

(4) The bylaws may provide that a cooperative may allocate among and credit or pay to persons who use the services of the cooperative but who are not members a share of any surplus at a rate that is equal to or less than the rate at which the surplus is distributed to members.

(5) If a cooperative allocates among and credits or pays a share of any surplus to persons referred to in subsection (4), the directors must calculate the business done by the non‑member patrons in the manner described in subsection (3).

Investment of patronage return

138(1) A cooperative may provide by bylaw that the whole, or any part that the directors may determine, of the patronage return of each member in respect of each financial year be applied to the purchase of shares in the cooperative for the member.

(2) A bylaw under subsection (1) must provide for the giving of notice to each member of the number of shares purchased or to be purchased for the member, the manner of issuance or transfer of shares, the payment for the shares out of the patronage returns of members and, if applicable, the issuance and forwarding of certificates to members representing shares so issued or transferred.

(3) No member is required under this section to purchase membership shares,

(a) in the case of membership shares with a par value, at a price in excess of their par value, and

(b) in the case of membership shares with no par value or investment shares,

(i) if the articles provide for a fixed price or a price determined in accordance with a formula, in excess of that price, and

(ii) in any other case, in excess of the fair market value of the membership shares or the fair market value of the investment shares.

(4) If shares of a cooperative are issued in payment of a patronage return, the amount of the patronage return, stated as an amount of money, must be added to the stated capital account.

Loans from patronage returns

139 A cooperative may, by bylaw, require its members to lend to it the whole, or any part that the directors may determine, of the patronage returns to which they may become entitled in each financial year, on the terms and at the rate of interest that the directors determine, so long as the rate of interest does not exceed the rate that is set out in the articles or the bylaws.

Division 6
Loans and Guarantees

Financial assistance

140(1) In this section and section 141, “financial assistance” means financial assistance by means of a loan, guarantee or otherwise.

(2) A cooperative may give financial assistance to any person for any purpose.

(3) Subject to section 141, a cooperative must disclose to its members and investment shareholders, in accordance with the regulations, financial assistance that the cooperative gives to

(a) a member, investment shareholder or director of the cooperative or of an affiliated cooperative,

(b) an associate of a member, investment shareholder or director of the cooperative or of an affiliated cooperative, or

(c) any person for the purpose of or in connection with a purchase of an investment share issued or to be issued by the cooperative or an affiliated cooperative.

When no disclosure required

141(1) A cooperative is not required to disclose to its members and investment shareholders financial assistance that it gives

(a) to any person in the ordinary course of business if the lending of money 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,

(d) to a subsidiary corporation of the cooperative,

(e) to employees of the cooperative or any of its affiliates

(i) to enable them to purchase or erect or to assist them in purchasing or erecting living accommodation for their own occupation, or

(ii) in accordance with a plan for the purchase of investment shares of the cooperative or any of its affiliates to be held by a trustee,

(f) to any person if all the members and investment shareholders have consented to giving the financial assistance.

(2) 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.

Enforcement of contract to buy shares

142(1) A cooperative must fulfil its obligations under a contract to buy investment shares of the cooperative unless the cooperative can prove that enforcement of the contract would put it in breach of section 129(2) or section 131.

(2) Until the cooperative has fulfilled all its obligations under a contract referred to in subsection (1), the other party 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 investment shareholders whose rights were in priority to the rights given to the class of investment shares being purchased, but in priority to the rights of members and other investment shareholders.

Debt obligations

143(1) Debt obligations issued by a cooperative are not redeemed by reason only that the indebtedness evidenced by the debt obligation is repaid.

(2) Debt obligations issued by a cooperative and purchased, redeemed or otherwise acquired may be cancelled or may secure any obligation of the cooperative existing then or incurred later.

Part 6
Proxies

Interpretation

144(1) In this Part,

(a) “form of proxy” means a written or printed form that, on completion and execution by or on behalf of an investment shareholder, becomes a proxy;

(b) “intermediary” means a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction and includes

(i) a securities depositary,

(ii) a financial institution,

(iii) in respect of a clearing agency, a securities dealer, trust company, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominees hold securities of an issuer,

(iv) a trustee or administrator of a self‑administered retirement savings plan, retirement income fund, education savings plan or other similar self‑administered savings or investment plan registered under the Income Tax Act (Canada),

(v) a nominee of a person referred to in subclauses (i) to (iv), and

(vi) a person that carries out functions similar to those carried out by individuals or entities referred to in subclauses (i) to (iv) and that holds a security registered in that person’s name, or in the name of that person’s nominee, on behalf of another person who is not the registered holder of the security;

(i) a request for a proxy whether or not accompanied with or included in a form of proxy,

(ii) a request to execute or not to execute a form of proxy or to revoke a proxy,

(iii) the sending of a form of proxy or other communication to an investment shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and

(iv) the sending of a form of proxy to an investment shareholder under section 146,

but does not include

(v) the sending of a form of proxy in response to an unsolicited request made by or on behalf of an investment shareholder,

(vi) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

(vii) the sending by an intermediary of the documents referred to in section 150,

(viii) a solicitation by a person in respect of investment shares of which that person is the beneficial owner,

(ix) a public announcement by an investment shareholder of how the investment shareholder intends to vote and the reasons for that decision,

(x) anything that would be a solicitation under this definition but is conveyed by public broadcast, speech or publication, if a proxy circular in final form is sent to the cooperative and is filed with the Executive Director, or

(xi) a communication other than a solicitation by or on behalf of the management of a cooperative that is made to investment shareholders in any circumstances that may be prescribed;

(d) “solicitation by or on behalf of the management of a cooperative” means a solicitation by a person pursuant to a resolution or instructions of, or with the acquiescence of, the directors or a committee of directors.

(2) This Part does not apply to a member or membership shares, but a member who is an investment shareholder may exercise the rights given to an investment shareholder by this Part for all investment shares held.

Appointing proxy holder

145(1) An investment shareholder who is entitled to vote at a meeting of investment shareholders may appoint a proxy holder or one or more alternate proxy holders, who are not required to be investment shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.

(2) For a proxy to be valid, it must be executed by the investment shareholder or by a legal representative of the investment shareholder authorized in writing.

(3) A proxy is valid only at the meeting in respect of which it is given or at any continuation of that meeting.

(4) An investment shareholder may revoke a proxy

(a) by depositing a document in writing executed by the investment shareholder or by a legal representative of the investment shareholder authorized in writing

(i) at the registered office of the cooperative at any time up to and including the last business day before the day of the meeting or continuation of the meeting at which the proxy is to be used, or

(ii) with the chair of the meeting on the day of the meeting or continuation of the meeting;

(b) in any other manner permitted by law.

(5) The directors may specify in a notice calling a meeting of investment shareholders a time not more than 48 hours, excluding Saturdays and holidays, before the meeting or the continuation of the meeting before which proxies to be used at the meeting must be deposited with the cooperative or its agent.

Mandatory solicitation

146(1) Subject to subsection (2), the management of a cooperative must, concurrently with giving notice of a meeting of investment shareholders, send a form of proxy in prescribed form to each investment shareholder who is entitled to receive notice of the meeting.

(2) The management of a cooperative is not required to send a form of proxy under subsection (1) if

(a) it is not a distributing cooperative, and

(b) it has fewer than 15 investment shareholders entitled to vote at a meeting, 2 or more joint holders being counted as one investment shareholder.

Soliciting proxies

147(1) No person may solicit a proxy unless the applicable circular described in subsection (2) is sent to the auditor of the cooperative, to each investment shareholder whose proxy is solicited, to each director and, if subsection (2)(b) applies, to the cooperative.

(2) The circular that is to be sent under subsection (1) is

(a) in the case of a solicitation by or on behalf of the management of a cooperative, a management proxy circular in the prescribed form, either as an appendix to or as a separate document accompanying the notice of the meeting, and

(b) in the case of any other solicitation, a dissident’s proxy circular in the prescribed form stating the purposes of the solicitation.

(3) If the cooperative is a reporting issuer under Alberta securities law as defined in the Securities Act, a copy of any management proxy circular or dissident’s proxy circular sent under subsection (1) must be sent to the Executive Director together with a statement in the prescribed form and a copy of any notice of meeting, form of proxy and any other documents for use in connection with the meeting.

(4) Notwithstanding subsection (1), a person may commence a solicitation if the person has filed a preliminary proxy circular with the cooperative and with the Executive Director, as long as the form of proxy is not sent before the proxy circular in final form is sent.

(5) A management proxy circular need not be sent

(a) if all the investment shareholders of a cooperative are members, and

(b) if the management has sent to the investment shareholders substantially the same information as that required to be sent in the circular, not less than 21 days and not more than 60 days before the meeting at which the vote to which the circular relates is to be held.

Exemption order

148 On the application of any interested person, the Commission may exempt the person, on any terms that the Commission thinks fit, from any of the requirements of section 146 or 147(1).

Attendance at meeting

149(1) An individual who solicits a proxy and is appointed as a proxy holder must

(a) attend the meeting in respect of which the proxy is given in person, or cause an alternate proxy holder to attend it, and

(b) comply with the directions of the investment shareholder who appointed the proxy holder.

(2) A proxy holder or an alternate proxy holder has the same rights as the investment shareholder who appointed the proxy holder

(a) to speak at a meeting of investment shareholders in respect of any matter,

(b) to vote by way of ballot at the meeting, and

(c) unless the proxy holder or alternate proxy holder has conflicting instructions from more than one investment shareholder, to vote at the meeting in respect of any matter by a show of hands.

(3) Notwithstanding subsections (1) and (2), if the chair of a meeting of investment shareholders declares to the meeting that, if a ballot is conducted, the total number of votes attached to investment shares represented at the meeting by proxy required to be voted against what to the knowledge of the chair will be the decision of the meeting in relation to any matter or group of matters is less than 5% of all the votes that might be cast by investment shareholders present in person or represented by proxy at the meeting on the ballot, unless an investment shareholder or proxy holder demands a ballot,

(a) the chair may conduct the vote in respect of that matter or group of matters by a show of hands, and

(b) a proxy holder or alternate proxy holder may vote in respect of that matter or group of matters by a show of hands.

Duty of intermediary

150(1) Investment shares of a cooperative that are registered in the name of an intermediary or a nominee of an intermediary and not beneficially owned by the intermediary must not be voted unless the intermediary, without delay after receipt of the notice of the meeting, management proxy circular, dissident’s proxy circular and any other documents other than the form of proxy sent to investment shareholders by or on behalf of any person for use in connection with the meeting, sends a copy of the document to the beneficial owner and, except when the intermediary has received written voting instructions from the beneficial owner, a written request for written voting instructions.

(2) An intermediary may not vote or appoint a proxy holder to vote investment shares that the intermediary does not beneficially own registered in the name of the intermediary or in the name of a nominee of the intermediary unless the intermediary receives written voting instructions from the beneficial owner.

(3) A person by or on behalf of whom a solicitation is made must provide, at the request of an intermediary, without delay, to the intermediary at the person’s expense the necessary number of copies of the documents referred to in subsection (1), other than the document requesting voting instructions.

(4) An intermediary must vote or appoint a proxy holder to vote any investment shares referred to in subsection (1) in accordance with any written voting instructions received from the beneficial owner.

(5) If requested by a beneficial owner, an intermediary must appoint the beneficial owner or a nominee of the beneficial owner as proxy holder.

(6) The failure of an intermediary to comply with this section does not render null or void any meeting of investment shareholders or any action taken at the meeting.

(7) Nothing in this section gives an intermediary the right to vote investment shares that the intermediary is otherwise prohibited from voting.

Restraining order

151(1) If a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement about a material fact or omits to state a material fact required in it or necessary to make a statement contained in it not misleading in the light of the circumstances in which it is made, the Executive Director or any other interested person may apply to the Court, and the Court may make any order it thinks fit, including

(a) an order restraining the solicitation or the holding of the meeting or restraining any person from implementing or acting on a resolution passed at the meeting to which the form of proxy, management proxy circular or dissident’s proxy circular relates,

(b) an order requiring correction of any form of proxy or proxy circular and a further solicitation, and

(2) An applicant under this section must give the Executive Director notice of the application, and the Executive Director is entitled to appear and to be heard in person or by counsel.

Part 7
Insider Trading

Interpretation

152(1) In this Part,

(a) “business combination” means an acquisition of all or substantially all the property of one entity by another or an amalgamation of 2 or more entities;

(b) “call” means an option, transferable by delivery, to demand delivery of a specific number or amount of securities at a fixed price within a specified time but does not include an option or right to acquire securities of the cooperative that granted the option or right to acquire;

(i) a director or officer of a distributing cooperative,

(ii) a member who controls more than 10% of the voting rights that may be exercised to elect or appoint a director of a distributing cooperative,

(iii) a person who beneficially owns more than 10% of a class or series of investment shares of a distributing cooperative or who exercises control or direction over more than 10% of the votes attached to a class or series of investment shares of a distributing cooperative, excluding a securities underwriter who owns investment shares under an underwriting agreement while those investment shares are in the course of a distribution to the public,

(iv) a distributing cooperative that acquires investment shares, except for the purpose of redemption, and

(v) a distributing cooperative that acquires or sells investment shares issued by any of its affiliates;

(d) “officer” means

(i) the chair of the board of directors, president, vice‑president, secretary, treasurer, comptroller, general counsel, general manager, managing director or any other individual who performs functions for an entity similar to those normally performed by an individual occupying any of those offices, and

(ii) each of the 5 highest paid employees of a distributing cooperative, including any individual referred to in subclause (i);

(e) “put” means an option, transferable by delivery, to deliver a specified number or amount of securities at a fixed price within a specified time;

(f) “share” means an investment share that carries voting rights under the articles or in the circumstances in which voting rights are exercisable with respect to it under this Act, and includes

(i) a security currently convertible into such an investment share, and

(ii) currently exercisable options and rights to acquire such an investment share or such a convertible security.

(2) For the purposes of this Part,

(a) a director or an officer, or an individual acting in a similar capacity, of an entity that is an insider of a distributing cooperative is deemed to be an insider of the distributing cooperative,

(b) a director or an officer, or an individual acting in a similar capacity, of an entity that is a subsidiary is deemed to be an insider of its holding distributing cooperative,

(c) a person is deemed to beneficially own shares beneficially owned by an entity controlled directly or indirectly by the person,

(d) an entity is deemed to beneficially own shares beneficially owned by its affiliates, and

(e) the acquisition or disposition by an insider of an option or right to acquire a share is deemed to be a change in the beneficial ownership of the share to which the option or right to acquire relates.

(3) For the purposes of this Part, the sale of membership shares to members or the making of a member loan to a cooperative is not a distribution to the public.

(4) For the purposes of this Part, a director or an officer of an entity, or an individual acting in a similar capacity, or a member or a holder of a share of the entity who is a person referred to in subsection (1)(c)(ii) or (iii) is deemed to have been an insider of the distributing cooperative for the previous 6 months or for any shorter period during which the person was a director, an officer, such an individual or such a member or holder of a share of the entity if

(a) the entity becomes an insider of the distributing cooperative or enters into a business combination with the distributing cooperative, or

(b) the distributing cooperative becomes an insider of the entity or enters into a business combination with the entity.

Prohibition of short sale

153(1) No insider shall knowingly sell, directly or indirectly, a share of the distributing cooperative or any of its affiliates if the insider selling the share does not own or has not fully paid for the share to be sold.

(2) No insider shall knowingly, directly or indirectly, buy a put or sell a call in respect of a share of the distributing cooperative or any of its affiliates.

(3) Notwithstanding subsection (1), an insider may sell a share that the insider does not own if the insider owns another share convertible into the share sold or an option or right to acquire the share sold and, no later than 10 days after the sale, the insider

(a) exercises the conversion privilege, option or right and delivers the share so acquired to the purchaser, or

(b) transfers the convertible share, option or right to the purchaser.

Specified insider

154(1) In this section, “specified insider”, with respect to a cooperative, means

(a) the cooperative;

(b) an affiliate of the cooperative;

(d) a member who controls more than 10% of the voting rights that may be exercised to elect or appoint a director of the cooperative;

(e) a person who beneficially owns more than 10% of a class or series of investment shares of the cooperative or who exercises control or direction over more than 10% of the votes attached to a class or series of investment shares of the cooperative, excluding a securities underwriter who owns investment shares under an underwriting agreement while those investment shares are in the course of a distribution to the public;

(f) a person employed or retained by the cooperative on a professional or consulting basis;

(g) an individual who receives specific confidential information from a person described in this subsection or in subsection (2), and who has knowledge that the information is given by such a person.

(2) For the purposes of this section, a director or an officer of an entity, or an individual acting in a similar capacity, is deemed to have been a specified insider of the cooperative for 6 months, or any shorter period during which the individual was a director or an officer of the entity, or acted in a similar capacity, before

(a) the entity becomes a specified insider of the cooperative or enters into a business combination with the cooperative, or

(b) the cooperative becomes a specified insider of the entity.

(3) A specified insider who, in connection with a transaction in a security of the cooperative or any of its affiliates, makes use of any specific confidential information for the insider’s own benefit or advantage that, if generally known, might reasonably be expected to have a material effect on the value of the security

(a) is liable to compensate any person for any direct loss suffered by that person as a result of the transaction unless the information was known or in the exercise of reasonable diligence should have been known to that person, and

(b) is accountable to the cooperative for any direct benefit or advantage received or receivable by the insider as a result of the transaction.

(4) An action under subsection (3) may be commenced only within 2 years after discovery of the facts that gave rise to the cause of action.

Part 8
Compulsory Acquisition

Definitions

155 In this Part,

(a) “dissenting offeree” means a holder of a share of a class for which a take‑over bid is made who does not accept the take‑over bid, and includes a subsequent holder of that share who acquires it from the first‑mentioned holder;

(b) “offer” includes an invitation to make an offer;

(d) “offeree cooperative” means a cooperative whose shares are the object of a take‑over bid;

(e) “offeror” means a person, other than an agent, who makes a take‑over bid, and includes 2 or more persons who, directly or indirectly,

(i) make take‑over bids jointly or in concert, or

(ii) intend to exercise jointly or in concert voting rights attached to shares for which a take‑over bid is made;

(f) “share” means an investment share, with or without voting rights, and includes

(i) a security currently convertible into such a share, and

(ii) currently exercisable options and rights to acquire such a share or such a convertible security;

(g) “take‑over bid” means an offer made by an offeror to investment shareholders at approximately the same time to acquire all of the shares of any class of issued shares of an offeree cooperative.

Right to acquire

156(1) If within 120 days after the date of a take‑over bid the take‑over bid is accepted by the holders of not less than 90% of the shares of any class of shares to which the bid relates, other than shares held at the date of the take‑over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with this section, to acquire the shares held by the dissenting offerees.

(2) An offeror may acquire shares held by a dissenting offeree by sending, by confirmed delivery service within 60 days after the date of termination of the take‑over bid or within 180 days after the date of the take‑over bid, a notice to each dissenting offeree stating that

(a) the offerees holding not less than 90% of the shares to which the take‑over bid relates accepted the bid,

(b) the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take‑over bid,

(i) to transfer the dissenting offeree’s shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take‑over bid, or

(ii) to demand payment of the fair value of the dissenting offeree’s shares in accordance with subsections (9) to (17) by notifying the offeror within 20 days after the offeree receives the notice,

(d) a dissenting offeree who does not notify the offeror as described in clause (c)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take‑over bid, and

(e) a dissenting offeree must send the shares to which the take‑over bid relates to the offeree cooperative within 20 days after the offeree receives the offeror’s notice.

(3) Concurrently with sending the notice under subsection (2), the offeror must send to the offeree cooperative a notice of adverse claim in accordance with section 221 with respect to each share held by a dissenting offeree.

(4) A dissenting offeree to whom a notice is sent under subsection (2) must, within 20 days after receiving the notice,

(a) send the share certificates of the class of shares to which the take‑over bid relates to the offeree cooperative, and

(b) elect

(i) to transfer the shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take‑over bid, or

(ii) to demand payment of the fair value of the shares in accordance with subsections (9) to (17) by notifying the offeror.

(5) A dissenting offeree who does not notify the offeror in accordance with subsection (4)(b)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take‑over bid.

(6) Within 20 days after the offeror sends a notice under subsection (2), the offeror must pay or transfer to the offeree cooperative the amount that the offeror would have had to pay to dissenting offerees if all the dissenting offerees had elected to accept the take‑over bid under subsection (4)(b)(i).

(7) The offeree cooperative is deemed to hold in trust for the dissenting offerees the amounts it receives under subsection (6), and the offeree cooperative must deposit the amounts in a separate account in a corporation any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board or by any other similar entity created by the law of a province, and must place anything received in lieu of money in the custody of such a corporation.

(8) Within 30 days after the offeror sends a notice under subsection (2), the offeree cooperative must

(a) if the payments required by subsection (6) have been made and the money or things have been deposited as required by subsection (7), issue to the offeror a share certificate in respect of the shares that were held by dissenting offerees,

(b) if the payments required by subsection (6) have been made and the money or things have been deposited as required by subsection (7), give to each dissenting offeree who elects to accept the take‑over bid terms under subsection (4)(b)(i) and who sends share certificates as required by subsection (4)(a) the money or thing to which the offeree is entitled, disregarding fractional shares, which may be paid for in money, and

(c) if the payments required by subsection (6) have been made and the money or things have been deposited as required by subsection (7), send to each dissenting offeree who has not sent share certificates as required by subsection (4)(a) a notice stating that

(i) the dissenting offeree’s shares have been cancelled,

(ii) the offeree cooperative or some designated person holds in trust for the dissenting offeree the money or other consideration to which that offeree is entitled as payment for or in exchange for the shares, and

(iii) the offeree cooperative will, subject to subsections (9) to (17), send that money or thing to that offeree without delay after receiving the share certificates.

(9) If a dissenting offeree has elected to demand payment of the fair value of the shares under subsection (4)(b)(ii), the offeror may, within 20 days after it has paid the money or transferred the things under subsection (6), apply to the Court to fix the fair value of the shares of that dissenting offeree.

(10) If an offeror fails to apply to the Court under subsection (9), a dissenting offeree may apply to the Court for the same purpose within a further period of 20 days.

(11) If no application is made to the Court under subsection (10) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take‑over bid.

(12) A dissenting offeree is not required to give security for costs in an application made under subsection (9) or (10).

(13) On an application under subsection (9) or (10),

(a) all dissenting offerees who made an election under subsection (4)(b)(ii) whose shares have not been acquired by the offeror must be joined as parties and are bound by the decision of the Court, and

(b) the offeror must notify each affected dissenting offeree of the date, time, place and consequences of the application and of the right to appear and be heard in person or by counsel.

(14) On an application to the Court under subsection (9) or (10), the Court may determine whether any other person is a dissenting offeree who should be joined as a party, and the Court must then fix a fair value for the shares of all dissenting offerees.

(15) The Court may in its discretion appoint one or more appraisers to assist the Court in fixing a fair value for the shares of a dissenting offeree.

(16) The final order of the Court must be made against the offeror in favour of each dissenting offeree for the amount for shares as fixed by the Court.

(17) In connection with proceedings under this section, the Court may make any order it thinks fit, including an order to

(a) fix the amount of money or things that are required to be held in trust under subsection (7),

(b) order that the money or things be held in trust by a person other than the offeree cooperative,

(c) allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the offeree sends or delivers the share certificates under subsection (4) until the date of payment, and

(d) order that any money payable to an investment shareholder who cannot be found be paid to the Minister of Finance, in which case section 328 applies.

(18) If a cooperative makes an offer to its investment shareholders to repurchase all of the shares of any class of its shares, the offer is deemed to be a take‑over bid and the cooperative must

(a) comply with this section, except subsections (3) and (6), and

(b) in accordance with subsection (7), within 20 days after it sends an offeror’s notice under subsection (2), deposit the amount the cooperative would have had to pay to dissenting offerees if all the dissenting offerees had elected to accept the take‑over bid under subsection (4)(b)(i).

(19) If, pursuant to an offer under subsection (18), the cooperative is prohibited by section 129

(a) from depositing or placing the consideration for the shares pursuant to subsection (7), or

(b) from paying the amount for the shares fixed by the Court pursuant to subsection (14),

the cooperative

(d) is entitled to use for its own benefit any money or consideration deposited or placed under subsection (7),

and the dissenting offerees are reinstated to the full rights of investment shareholders.

Distributing cooperative

157(1) If an investment shareholder holding shares of a distributing cooperative does not receive a notice under this Part, the investment shareholder may, within 90 days after the date of the end of the take‑over bid or, if the investment shareholder did not receive an offer pursuant to the take‑over bid, within 90 days after learning of the take‑over bid, require the offeror to acquire those investment shares.

(2) If an investment shareholder requires the offeror to acquire shares under subsection (1), the offeror must acquire the shares on the same terms under which the offeror acquired or will acquire the shares of the offerees who accepted the take‑over bid.

Part 9
Security Certificates, Registers
and Transfers

Division 1
Interpretation and Application

Interpretation

158(1) In this Part,

(a) “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;

(b) “bearer” means the person who is in possession of a security that is payable to bearer or endorsed in blank;

(c) “broker” means a person who is engaged in whole or in part in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer;

(d) “delivery” means voluntary transfer of possession;

(e) “fiduciary” means a trustee, guardian, committee, curator, tutor, executor, administrator, representative of a deceased person, or any other person acting in a fiduciary capacity;

(f) “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;

(g) “genuine” means free of forgery or counterfeiting;

(h) “good faith”, with respect to a transaction, means honesty in fact in the conduct of the transaction;

(i) “good faith purchaser”, with respect to 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 for value in good faith and without notice of any adverse claim who takes delivery of the security;

(j) “holder” means a person who is in possession of a security that is issued or endorsed to the person or to bearer or in blank;

(k) “issuer” includes a cooperative that

(i) is required by this Act to maintain a securities register, or

(ii) directly or indirectly creates fractional interests in its rights or property and issues securities as evidence of the fractional interests;

(l) “overissue” means the issue of securities in excess of any maximum number of securities that the issuer is authorized by its articles or a trust indenture to issue;

(m) “purchaser” means a person who obtains an interest in a security by sale, mortgage, hypothec, pledge, issue, reissue, gift or any other voluntary transaction;

(n) “security” or “security certificate” means a document issued by a cooperative that is

(i) in bearer, order or registered form,

(ii) 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,

(iii) one of a class or series or by its terms divisible into a class or series of documents, and

(iv) evidence of an investment share, participation or other interest in or obligation of a cooperative, but does not include

(A) a membership share or a document evidencing a membership share, or

(B) a member loan or a document evidencing a member loan;

(o) “transfer” includes transmission by operation of law;

(p) “trust indenture” means a trust indenture as defined in section 247(d);

(q) “valid” means issued in accordance with the applicable law and the articles of the issuer, or validated under section 177.

(2) Except when a transfer is restricted and noted on a security in accordance with section 164(2), a security is a negotiable instrument.

(3) A security is in registered form if it

(a) specifies a person who is 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 in registered form.

(4) 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 to a person to whom it is assigned.

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

(6) A guarantor for an issuer is deemed to be an issuer to the extent of the guarantee, whether or not the obligation is noted on the security.

Application

159 This Part governs the transfer or transmission of a security.

Division 2
Security Certificates

Security certificate

160(1) Unless required by the bylaws of a cooperative, no security certificate need be issued.

(2) Every security holder is entitled, at the security holder’s option, to obtain from the cooperative

(a) a security certificate that complies with this Act, or

(b) a non‑transferable written acknowledgment of the security holder’s right to obtain a security certificate.

(3) Subsection (2) does not apply to a debt obligation or a certificate evidencing such a debt obligation.

Fee

161 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.

Joint owners

162 If securities are held jointly by more than one person,

(a) a cooperative is not required to issue more than one security certificate in respect of those securities, and

(b) delivery of a security certificate to one of the joint owners is sufficient delivery to them all.

Signatures

163(1) A security certificate must be signed manually by at least one of the following individuals, or a facsimile of the signature must be reproduced on the certificate:

(a) a director or officer;

(b) an individual on behalf of a director, transfer agent or branch transfer agent of the cooperative;

(2) 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.

Contents of certificate

164(1) The following information must be stated on the face of each security certificate issued by a cooperative:

(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 Alberta” or words to that effect;

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

(2) No restriction, charge or endorsement described in subsection (3) is effective against a transferee of a security issued by a cooperative or by a corporation before it is continued under this Act who has no actual knowledge of the restriction, charge or endorsement unless it or a reference to it is noted conspicuously on the security certificate.

(3) The restrictions, charges and endorsements referred to in subsection (2) are

(a) a restriction on transfer other than a constraint under section 114,

(b) a charge in favour of the cooperative,

(d) an endorsement under section 277(9).

(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 must not restrict the transfer or ownership of its investment shares of any class or series except by way of a constraint under section 114.

Contents of certificate for investment share

165(1) Every share certificate for an investment share of a cooperative that is authorized to issue shares of more than one class or series must clearly state

(a) the rights, privileges, restrictions and conditions attached to the investment shares of each class and series that exist when the share certificate is issued, or

(b) that the class or series of investment shares that it represents has rights, privileges, restrictions or conditions attached to it and that the cooperative will provide an investment shareholder, on demand and without charge, with a full copy of the text of

(i) any rights, privileges, restrictions and conditions attached to each class or series of investment shares authorized to be issued that have been fixed by the directors, and

(ii) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series.

(2) If a share certificate for an investment share contains the statement referred to in subsection (1)(b), the cooperative must provide the investment shareholder, on demand and without charge, with a copy of

(a) the rights, privileges, restrictions and conditions attached to each class or series of investment shares authorized to be issued, and

(b) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series of investment shares in the same class.

Fractional shares

166(1) A cooperative may issue a certificate for a fractional investment share or may instead issue a scrip certificate in bearer form that entitles the holder to receive a certificate for a full investment share in exchange for scrip certificates equalling a full investment share.

(2) The directors may attach conditions to scrip certificates issued by the cooperative, including conditions that

(a) the scrip certificates become null or void if not exchanged for a full investment share before a specified date, and

(b) any investment shares for which the scrip certificates are exchangeable may, despite any pre‑emptive right, be issued by the cooperative to any person and the proceeds distributed rateably to the holders of the scrip certificates.

(3) A holder of a fractional investment share is not entitled to exercise voting rights or to receive a dividend in respect of the investment share unless

(a) the fractional share results from a consolidation of investment shares, or

(b) the articles of the cooperative provide otherwise.

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

Division 3
Registers

Securities register

167(1) A cooperative that issues securities must maintain a securities register in which it records the securities issued by it in registered form, showing with respect to each class or series

(a) the names, in alphabetical order, and the latest known address of each person who holds or previously held the security,

(b) the number of securities held by each security holder, and

(2) A cooperative must keep the information entered in the securities register referred to in subsection (1) for the period of time prescribed in the regulations.

(3) The securities register must be maintained at the cooperative’s registered office or at any other place in Canada designated by the directors.

(4) A cooperative may maintain additional branch securities registers in other places designated by the directors.

(5) A branch securities register must contain particulars only of securities issued or transferred at the branch.

(6) The information referred to in subsection (5) must also be recorded in the register referred to in subsection (3).

(7) A cooperative or its agent or a trustee as defined in section 247(e) is not required to produce

(a) a cancelled security certificate in registered form, an instrument

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