1998, c. 1

[Assented to March 31, 1998]

An Act respecting cooperatives

WHEREAS cooperatives in Canada carry on business in accordance with internationally recognized cooperative principles;

WHEREAS cooperatives work for the social and economic development of their communities through policies approved by their members;

WHEREAS the Government of Canada has determined that it is desirable to modernize the law governing those cooperatives;

NOW, THEREFORE, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1. This Act may be cited as the Canada Cooperatives Act.

2. (1) The definitions in this subsection apply in this Act.

“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 bodies corporate.

“affiliate” means an affiliated body corporate within the meaning of subsection (2).

“articles” means the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of continuance, articles of reorganization, articles of arrangement, articles of dissolution, articles of revival and articles of correction, and includes any amendments to any of them.

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

(a) a body corporate of which the person beneficially owns or controls, directly or indirectly, shares or securities currently convertible into shares carrying more than ten per cent 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;

(b) a cooperative entity of which the person beneficially owns more than ten per cent of the voting rights that can be cast at a meeting of the cooperative entity;

(c) an unincorporated entity of which the person beneficially owns more than ten per cent of the ownership interests;

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

(e) 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;

(f) a spouse of the person or an individual who is cohabiting with the person in a conjugal relationship, having so cohabited for a period of at least one year;

(g) a child of the person or of the spouse or individual referred to in paragraph (f); and

(h) a relative of the person or of the spouse or individual referred to in paragraph (f), if that relative has the same residence as the person.

“auditor” includes a firm of accountants.

“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.

“beneficial ownership” includes

(a) in Quebec, the rights of a beneficiary of a trust that owns property, and ownership of property through one or more administrators of the property of others, mandataries or other legal representatives; and

(b) in the rest of Canada, ownership of property through one or more trustees, legal representatives, agents or other intermediaries.

“body corporate” includes a cooperative, a cooperative entity, a company or any other body corporate wherever or however incorporated.

“call” means an option transferable by delivery, to demand delivery of a specified 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.

“cooperative” means a body corporate that is incorporated under this Act and not discontinued under this Act.

“cooperative entity” means a body corporate that, by the law under which it is organized and operated, must be organized and operated on — and is organized and operated on — cooperative principles.

“court” means the court of first instance of superior jurisdiction of a province.

“debt obligation” means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured.

“delegate” means an individual who is appointed or elected to represent a member at a meeting of members.

“Director” means the Director appointed under section 371.

“director” means an individual occupying the position of director, by whatever name called, of a cooperative, and “board of directors” or “directors” refers to the directors as a body.

“distributing cooperative” means, subject to subsections 4(4) and (5), a distributing cooperative as defined in the regulations.

“entity” means a body corporate, a trust, a partnership, a fund or an unincorporated organization.

“federation” means a cooperative whose membership is composed substantially of other cooperative entities, federations or leagues of cooperative entities.

“firm of accountants” means a partnership whose partners and accountant employees are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting.

“former Act cooperative” means a cooperative that was incorporated under the Canada Cooperative Associations Act.

“holder” means

(a) 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;

(b) in respect of the ownership of a membership share, the person referred to in section 5; and

(c) in respect of the ownership of an investment share, the person referred to in section 6.

“incorporated”, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, includes a body corporate that is continued by or under any such Act.

“incorporator” means a person who signs articles of incorporation.

“individual” means a natural person.

“issuer”, in respect of a security, means the entity that issues the security.

“investment share” means a share in the capital of a cooperative that is not a membership share.

“meeting of a cooperative” means

(a) a meeting of members of a cooperative, or of a class of members of a cooperative, or

(b) a meeting of the holders of investment shares of a cooperative, or a class or series of investment shares,

as the context permits.

“member” means a member of a cooperative, but does not include an auxiliary member.

“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, for the purpose of Parts 8, 16, 17, 18.1 and 19 and subsection 163(2), a member loan is deemed to be a membership share issued at par value.

“membership share” means a share described in section 118.

“Minister” means the member of the Queen’s Privy Council for Canada that is designated by the Governor in Council as the Minister for the purposes of this Act.

“officer” includes the chairperson of the board of directors, a vice-chairperson 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 by-law 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.

“ordinary resolution” means a resolution passed by a majority — or any greater number set out in the articles or a unanimous agreement — of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution.

“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.

“person” means an individual or an entity, and includes a personal representative.

“personal representative” means a person who stands in place of and represents another person including, but not limited to, a trustee, an executor, an administrator, a receiver, an agent, a liquidator of a succession, a guardian, a tutor, a curator, a mandatary or an attorney.

“prescribed” means prescribed by regulation.

“proxy” means a completed and executed form of proxy by means of which a shareholder appoints a proxyholder to attend and act on the shareholder’s behalf at a meeting of the shareholders.

“put” means an option transferable by delivery, to deliver a specified number or amount of securities at a fixed price within a specified time.

“redeemable”, with respect to an investment share issued by a cooperative, means that the share is one

(a) that the cooperative may acquire or redeem on the demand of the cooperative; or

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

“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 section 173 and Parts 18.1 and 19, includes a membership share.

“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.

“send” includes deliver.

“series”, in respect of investment shares, means a division of a class of those shares.

“share” means a membership share or an investment share.

“shareholder” means a person described in section 6.

“special resolution” means a resolution passed by not less than two thirds — or any greater number set out in the articles or a unanimous agreement — of the votes cast by or on behalf of the persons who are entitled to vote in respect of the resolution.

“unanimous agreement” means an agreement in writing among all members and all shareholders, if any, that contains a provision referred to in subsection 115(1).

(2) For the purposes of this Act,

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

(b) if two bodies corporate are affiliated with the same body corporate at the same time, they are deemed to be affiliated with each other.

(3) For the purposes of this Act, the word “minor” has the same meaning as in the applicable provincial law and, in the absence of any such law, has the same meaning as the word “child” in the United Nations Convention on the Rights of the Child, adopted in the United Nations General Assembly on November 20, 1989.

1998, c. 1, s. 2; 2000, c. 12, s. 28; 2001, c. 14, s. 137.

3. (1) The purposes of this Act are

(a) to set out the law applicable to the business endeavours of persons who have associated themselves in a democratic manner to carry on a common purpose; and

(b) to advance the cause of uniformity of cooperative business law in Canada.

(2) No cooperative may be incorporated under this Act unless

(a) it will carry on its undertaking in two or more provinces; and

(b) it will have a fixed place of business in more than one province.

(3) This Act applies to cooperatives incorporated under this Act that have not been discontinued.

(4) No provision of the Canada Business Corporations Act, the Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970, or the Winding-up and Restructuring Act applies to a cooperative.

(5) No cooperative may carry on the business of

(a) a bank;

(b) a company to which the Insurance Companies Act applies;

(c) a company to which the Trust and Loan Companies Act applies; or

(d) an association to which the Cooperative Credit Associations Act applies.

(6) No cooperative may carry on business as a degree-granting educational institution unless expressly authorized to do so by a federal or provincial agent that by law has the power to confer degree-granting authority on an educational institution.

4. (1) For the purposes of this Act,

(a) a person controls a body corporate if securities of the body corporate to which are attached more than fifty per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate; and

(b) a person controls a cooperative entity if the person has the right to exercise more than fifty per cent of the votes that may be cast at an annual meeting or to appoint or elect a majority of the directors.

(2) A body corporate is the holding body corporate of another if that other body corporate is its subsidiary.

(3) A body corporate is a subsidiary of another body corporate if

(a) it is controlled by

(i) that other body corporate,

(ii) that other body corporate and one or more bodies corporate each of which is controlled by that other body corporate, or

(iii) two or more bodies corporate each of which is controlled by that other body corporate; or

(b) it is a subsidiary of a body corporate that is a subsidiary of that other body corporate.

(4) On the application of a cooperative, the Director may determine that the cooperative is not or was not a distributing cooperative if the Director is satisfied that the determination would not be prejudicial to the public interest.

(5) The Director may determine that a class of cooperatives are not or were not distributing cooperatives if the Director is satisfied that the determination would not be prejudicial to the public interest.

(6) [Repealed, 2001, c. 14, s. 138]

1998, c. 1, s. 4; 2001, c. 14, s. 138.

5. A member is a 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 or like record of the cooperative as the owner of the membership share.

6. A person is a 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 or like record of the cooperative as the owner of the investment share.

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

(a) membership in the cooperative is open, in a non-discriminatory manner, to persons who can use the services of the cooperative and who are willing and able to accept the responsibilities of membership;

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

(c) no member or delegate may vote by proxy;

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

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

(f) to the extent feasible, members provide the capital required by the cooperative, with the return paid on member capital not to exceed the maximum percentage specified in the articles;

(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 membership shares and investment shares,

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

(v) as a distribution among its members as a patronage return; and

(h) it educates its members, officers, employees and the public on the principles and techniques of cooperative enterprise.

(2) Paragraph (1)(a) is subject to any restrictions on the classes of persons to which membership may be available that may reasonably relate to any business restriction set out in the articles of the cooperative and to the reasonable commercial ability of the cooperative to provide services to prospective members, as long as the restrictions are consistent with applicable laws with respect to human rights.

(3) Despite paragraph (1)(b),

(a) the articles of a federation may provide that the members or delegates of the federation have more than one vote;

(b) if, before the coming into force of this subsection, the articles of association or charter by-laws of a former Act cooperative provide that a member or delegate of the former Act cooperative has more than one vote, the articles filed under subsection 379(2) may contain the same provisions with respect to voting rights of members or delegates;

(c) any provision referred to in paragraph (b) is deemed to be contained in the articles of the cooperative until it complies with subsection 379(2); and

(d) the articles of a cooperative may provide that subject to the conditions stated in the articles, a cooperative entity may have more than one vote in a cooperative.