116. 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, that the articles of the cooperative provide.

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

118. (1) Membership shares may be issued only to members, each of whom must hold the minimum number of membership shares prescribed by the by-laws.

(2) Subject to Parts 20 and 21, the membership shares of a cooperative confer on their holders equal rights, including equal rights to

(a) receive dividends declared on membership shares; and

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

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

(4) A transfer of membership shares is valid only if it complies with section 46 and any restrictions set out in the by-laws.

(5) The right to vote attaches to membership in accordance with section 37 and not to a membership share.

(6) Subject to sections 146 and 149, membership shares may be redeemed by the cooperative.

119. (1) The by-laws of a cooperative may provide that no membership share certificates or certificates in respect of member loans need be issued. If the by-laws provide that no such certificates need be issued, the cooperative must, on the request of a member, issue a statement of the number of membership shares held by, or the amount of any member loan of, the member.

(2) The face of each certificate that the cooperative issues in respect of membership shares or member loans 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;

(c) the name of the person to whom it is issued;

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

(e) a statement that the certificate is not transferable without the approval of the directors; and

(f) a statement that there is a charge on the membership shares or member loans represented by the certificate in favour of the cooperative for any indebtedness of the member to the cooperative.

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

120. (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 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 a par value, the articles must specify that fact and specify any limit on their number.

121. 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 formula to be used to determine the value.

122. Subject to Parts 20 and 21, the articles of a cooperative may provide that, on dissolution of the cooperative and after the payment of all debts and liabilities — including any declared and unpaid dividends, the amount to be paid to the holders of any investment shares and the amount to be paid on the redemption of membership shares — the value of the remaining property of the cooperative is to be distributed or disposed of 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

(c) to charitable organizations or cooperative entities.

123. (1) A cooperative has a charge on a membership share or any amount standing to the credit of a member or the personal 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 by-laws; or

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

1998, c. 1, s. 123; 2001, c. 14, s. 175.

124. (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;

(c) the number of classes of investment shares; and

(d) the preferences, rights, conditions, restrictions, limitations and prohibitions attaching to the investment shares and, if there is to be more than one class, the designation of each class and the special preferences, rights, conditions, restrictions, limitations and prohibitions attaching to each class.

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

(3) The articles may provide that

(a) an investment share confers on its holder 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 shareholders, any class of shareholders or the holders of a series of investment shares, may elect a fixed number or a percentage of the directors.

(4) Despite subsections (2) and (3), neither the articles nor a unanimous agreement may provide that the shareholders have the right to elect more than twenty per cent of the directors.

(5) If shareholders are entitled to vote in accordance with subsection (3) or otherwise in accordance with this Act, each investment share entitles the holder to one vote.

(6) Despite section 37, a member who holds an investment share may exercise any voting right that holders of investment shares have.

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

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

126. (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 do either or both of the following:

(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) No investment share may be issued until the members have authorized the principle of the issuance of investment shares.

(3) 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.

(4) No rights, privileges, restrictions or conditions attached 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.

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

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

(7) The articles of the cooperative are amended accordingly on the date shown in the certificate of amendment.

1998, c. 1, s. 126; 2001, c. 14, s. 176.

127. (1) If the articles so provide, no investment shares of any class may be issued unless the investment shares are first offered to the shareholders of that class. The shareholders of that class have a pre-emptive right to acquire the offered investment shares in proportion to their holdings of the investment shares of that class, at the price at which and on the terms on which those investment shares are to be offered to others.

(2) Even if the articles provide the pre-emptive right referred to in subsection (1), shareholders have no pre-emptive right to acquire investment shares that are to be issued

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

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

(c) pursuant to the exercise of conversion privileges, options or rights previously granted by the cooperative.

128. 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.

129. (1) Subject to subsection 183(2), the articles may provide that the cooperative has a charge on an investment share registered in the name of a shareholder or the personal representative of a shareholder for a debt of the shareholder to the cooperative, including an amount unpaid as of the date a body corporate was continued under this Act, in respect of an investment share issued by it.

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

1998, c. 1, s. 129; 2001, c. 14, s. 177.

130. (1) Subject to subsection 290(3), a distributing cooperative that has issued investment shares that remain outstanding and are held by more than one person may, by special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to constrain

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

(b) 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

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

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

(iii) to acquire investment shares of a financial intermediary as defined in the regulations;

(c) 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 to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control;

(d) the issue, transfer or ownership of any investment share to assist the cooperative to comply with any prescribed law; or

(e) the issue, transfer or ownership of any investment share to enable the cooperative to be a registered labour sponsored venture capital corporation under Part X.3 of the Income Tax Act.

(2) Paragraph (1)(c) does not permit a constraint on the issue, transfer or ownership of investment shares of any class or series of which any investment shares are outstanding unless the investment shares of that class or series are already subject to a constraint permitted under that paragraph.

(3) If the ownership by a person of investment shares 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 that equals or exceeds a specified level referred to in paragraph (1)(c), the cooperative may, under that paragraph, limit the number of investment shares of the cooperative that may be owned, or prohibit the ownership of investment shares, by that person.

(4) A cooperative referred to in subsection (1) may, by a special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to change or remove any constraint on the issue, transfer or ownership of its investment shares.

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

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

(a) the disclosure required of the constraints 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;

(c) the limitations on voting rights of any investment shares held contrary to 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.

(7) An issue or a transfer of an investment share or an act of a cooperative is valid despite any failure to comply with this section or the regulations.

1998, c. 1, s. 130; 2001, c. 14, s. 178.

131. (1) A cooperative that has constraints on the issue, transfer or ownership of any class of investment shares may, in accordance with any regulations, sell any of the investment shares that are owned, or that the directors determine may be owned, contrary to those constraints, as if it owned the investment shares, for the purposes of

(a) attaining or maintaining the level of Canadian ownership or control specified in its articles or required by law to carry on a business or qualify for a benefit; or

(b) complying with any prescribed law.

(2) The directors must select the investment shares to be sold under subsection (1) in good faith and in a manner that does not unfairly prejudice or disregard the interests of the holders of the investment shares in the constrained class as a whole.

(3) A person who owned an investment share that was sold under this section is divested of all interests in the investment share and is entitled to receive only the net proceeds of the sale and any net income on the proceeds.

(4) Sections 192, 193 and 194 apply to the person referred to in subsection (3) as if the proceeds were a security and the person were a registered owner of the security.

1998, c. 1, s. 131; 2001, c. 14, s. 179.

132. (1) The proceeds of a sale under section 131 are trust moneys in the hands of the cooperative for the benefit of the person who is entitled to receive them.

(2) Trust moneys under this section

(a) may be commingled with other such trust moneys; and

(b) must be invested as may be prescribed.

(3) Reasonable costs of administration of trust moneys referred to in subsection (1) may be deducted from the trust moneys and any income earned on them.

(4) Subject to this section, a cooperative may transfer any trust moneys referred to in subsection (1), and the administration of them, to a trust company in Canada registered as one under the laws of Canada or a province, and the cooperative is discharged of all further liability in respect of the trust moneys.

(5) A receipt signed by a person entitled under subsection 131(3) to receive the proceeds of a sale that constitute trust moneys under subsection (1) constitutes a complete discharge of the cooperative and of any trust company to which trust moneys are transferred under subsection (4), in respect of the trust moneys and income earned on them paid to the person.

(6) Trust moneys described in subsection (1), together with any income earned on them, less any taxes and costs of administration, that has not been claimed by a person entitled under subsection 131(3) to receive the proceeds of a sale that constitute the trust moneys for a period of ten years after the date of the sale vests in Her Majesty in right of Canada.

(7) Sections 3 to 5 of the Escheats Act apply in respect of a trust fund that vests in Her Majesty in right of Canada under subsection (6).

133. (1) If the holders of a class or series of investment shares of a cooperative have, under section 124, a right to elect or appoint one or more directors, or have a right to elect or appoint 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 or appointing the director or directors:

(a) a special meeting of the holders of the class or series of investment shares, to be called within six 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 holders for every subsequent year.

(2) If the articles so provide, directors who are to be elected by holders of investment shares 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 holders of investment shares, and not a minimum and maximum number of directors;

(b) each shareholder who is entitled to vote at an election of directors by holders of investment shares has the right to cast a number of votes equal to the number of votes attached to the investment shares held by that shareholder multiplied by the number of directors to be elected, and the 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 shareholders must be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single resolution;

(d) if a shareholder has voted for more than one candidate without specifying the distribution of votes among the candidates, the shareholder is deemed to have distributed their votes equally among the candidates for whom the 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 their election of the holders of investment shares entitled to elect that director;

(g) a director may only be removed from office if the number of votes cast 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 only be decreased 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.

134. (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 paragraphs (a), (b) and (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 investment shares of the 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 change prejudicially rights to accrued dividends or rights to cumulative dividends,

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

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

(iv) add, remove or change prejudicially 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 shares having rights or privileges equal or superior to the investment shares of the class;

(e) create a new class of investment shares equal or superior to the investment shares of the class;

(f) make any class of investment shares having rights or privileges inferior to the investment shares of the class equal or superior to the investment shares of the 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 a holder 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 paragraph 130(1)(c) but otherwise equal to the class or series first mentioned.

(3) For the purpose of paragraph (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 paragraph 130(1)(c), that is otherwise equal to an existing class of shares is deemed not to be equal or superior to the existing class of shares.

(4) The holders of a series of investment shares of a class are entitled to vote separately as a series under subsection (1) only if the series is affected by an amendment in a manner different from 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 shareholders of each class.

135. Subject to this Act, the articles, the by-laws 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.

136. (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 fair equivalent of the money that the cooperative would have received if the investment share had been issued for money, but neither a promissory note nor a promise to pay made by a person to whom the investment shares are issued or a person not dealing at arm’s length with that person 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 fair equivalent of the money that the cooperative would have received if the membership share had been issued for money.

137. Unless the articles, the by-laws or a unanimous agreement provide otherwise, the directors may, subject to subsection 126(2), without the authorization of the members or shareholders,

(a) borrow money;

(b) give debt obligations;

(c) give guarantees;

(d) create security interests in its property; and

(e) despite paragraph 108(e) and subsection 109(3), delegate any power referred to in any of paragraphs (a) to (d).

1998, c. 1, s. 137; 2001, c. 14, s. 180.

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

(2) A cooperative must add to the appropriate stated capital account the full amount of any money, or the value or any thing or service, that it receives for shares it issues.

(3) Despite subsection (2), a cooperative may, subject to subsection (4), add to the stated capital accounts maintained for the 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 shares

(a) in exchange for

(i) property of a person who immediately before the exchange did not deal with the cooperative at arm’s length within the meaning of that expression in the Income Tax Act,

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

(iii) property of a person who, immediately before the exchange, dealt with the cooperative at arm’s length within the meaning of that expression in the Income Tax Act, if the person, the cooperative and all the holders of shares in the class or series of shares so issued consent to the exchange; or

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

(4) On the issue of a share, a cooperative may not add to a stated capital account in respect of the share it issues an amount greater than the amount of the money, or the value of the thing or service, it received for the 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 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 shareholders, the class of shareholders or the holders of the series of investment shares that is affected by the special resolution, if

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

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

(6) For greater certainty, if a cooperative issues membership shares with a par value, the cooperative is deemed, for the purposes of subsection 147(2), sections 151 and 154 and paragraph 299(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.

1998, c. 1, s. 138; 2001, c. 14, s. 181.

139. (1) When a body corporate is continued under this Act, it may add to a stated capital account any money, or the value of any thing or service, received by it for a share it issued.

(2) When a body corporate is continued under this Act, subsection 138(2) does not apply to the money, or the value of things or services, received by it before it was so continued unless the share in respect of which the money, thing or service received is issued after the body corporate is continued.

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

(4) For the purposes of subsection 147(2), sections 151 and 154 and paragraph 299(2)(d), when a cooperative is continued under this Act, its stated capital account is deemed to include the amount that would have been included if the cooperative had been incorporated under this Act.

(5) When a cooperative is continued under this Act, subsection 138(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 in this Act.

1998, c. 1, s. 139; 2001, c. 14, s. 182.

140. Subject to subsection 138(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.

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

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

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

(3) The conditions of the conversion privileges, options or rights must be set out in

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

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

(4) 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.

143. 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.

144. (1) Subject to sections 145 to 149, a cooperative may not

(a) hold any shares in itself or in its holding body corporate; or

(b) permit any of its subsidiaries to hold shares in the cooperative, other than the minimum number of membership shares required by the by-laws of the cooperative to qualify for membership in it.

(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 five years after the date on which

(a) it became a subsidiary; or

(b) the cooperative was continued under this Act.

145. (1) A cooperative may, and may permit its subsidiaries to, hold, in the capacity of a legal representative, shares in itself or in its holding body corporate only if the cooperative, holding body corporate or subsidiary does not have a beneficial interest in the shares.

(2) A cooperative may hold shares in itself or its holding body corporate 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.

146. Subject to section 149, 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 value.

147. (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 may not make a payment to acquire investment shares if there are reasonable grounds to believe that

(a) the cooperative is, or would after the payment 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 149, a cooperative may at any time redeem any of its investment shares that are redeemable, in accordance with any price or formula that may be set out in its articles or, if the articles do not so provide, at fair market value.

1998, c. 1, s. 147; 2001, c. 14, s. 183(F).

148. Despite section 146 and subsection 147(2), but subject to section 149 and to its articles, a cooperative may acquire shares issued by it

(a) to satisfy the claim of members or shareholders who dissent under section 302;

(b) to comply with an order under section 340;

(c) to settle or compromise a debt or claim asserted by the cooperative;

(d) to eliminate fractional shares; or

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

149. A cooperative may not make a payment to acquire or redeem a share under section 146 or 148 if there are reasonable grounds to believe that

(a) the cooperative is, or would after the payment 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

(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.

150. 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.

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

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

(a) the cooperative is, or would after the payment 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 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 from which the reduction will be deducted.

(5) A creditor of a cooperative may apply to a court for an order compelling a person

(a) to pay to the cooperative an amount equal to any liability of the person that was extinguished or reduced contrary to this section; or

(b) to pay or deliver to the cooperative any money or property that was paid or distributed to the person as a consequence of a reduction of stated capital made contrary to this section.

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

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

(2) A cooperative must adjust its stated capital account in accordance with any special resolution made under subsection 151(1).

(3) On a conversion of investment shares of a cooperative into investment shares of another class or series or a change under section 289, a reorganization under section 303 or the redemption or exchange of investment shares under an order made under section 340, the cooperative must

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

(b) add the result obtained under paragraph (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 shares.

(4) For the purposes of subsection (3) and subject to its articles, if a cooperative issues two 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 a share of the other class, the amount of stated capital attributable to a 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 shares in itself as permitted by section 145 is deemed not to have redeemed or acquired them.

(6) Investment shares issued by a cooperative and converted into shares of another class or series or changed under section 289, or subject to a reorganization under section 303 or the redemption or exchange of investment shares under an order made under section 340, become shares of the other class or series of shares.

(7) If the articles limit the number of authorized shares of a class of investment shares of a cooperative and issued shares of that class or of a series of shares of that class have become, under subsection (6), issued investment shares of another class or series, the number of unissued 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.

153. (1) A cooperative may pay a dividend by issuing fully paid shares of the cooperative and, subject to section 154, 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.

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

(a) the cooperative is, or would after the payment 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.

155. (1) A cooperative may allocate among and credit or pay to the members, as a patronage return, all or a part of the surplus arising from the operations of the cooperative 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 (2) at a rate set by the directors.

(2) 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.

(3) The by-laws 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.

(4) If a cooperative allocates among and credits or pays to persons referred to in subsection (3) a share of any surplus, the directors must calculate the business done by the non-member patrons in the manner described in subsection (2).

156. (1) A cooperative may, by by-law, provide 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 for the member of membership or investment shares in the cooperative.

(2) The by-law 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, in the case of membership shares with a par value, at a price in excess of their par value, and in the case of membership shares with no par value or investment shares,

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

(b) in any other case, in excess of the fair 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.

157. A cooperative may, by by-law, 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 provided in the by-laws.

158. If a cooperative is unable to pay its liabilities as they become due, no member need, under section 157, lend a patronage return to the cooperative, and no member need purchase shares under section 156.