247. (1) Subject to section 248, the directors must place before the members at every annual meeting of members

(a) comparative financial statements as may be prescribed relating separately to

(i) the period that began on the date the cooperative came into existence and ended not more than six months before the annual meeting or, if the cooperative has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting, and

(ii) the immediately preceding financial year;

(b) the report of the auditor, if any; and

(c) any further information respecting the financial position of the cooperative and the results of its operations required by the articles, the by-laws or a unanimous agreement.

(2) If shareholders have a right to have an annual meeting under subsection 133(1), the directors must place the documents described in subsection (1) before the shareholders at every annual meeting of shareholders.

(3) Despite paragraph (1)(a) and subsection (2), the financial statements referred to in subparagraph (1)(a)(ii) may be omitted if the reason for the omission is set out in the financial statements, or in a note to those statements, to be placed before the members at an annual meeting of members and, in a case to which subsection (2) applies, the shareholders at an annual meeting of shareholders.

248. The Director may, on application of a cooperative, authorize the cooperative to omit from its financial statements any prescribed item, and the Director may, if the Director reasonably believes that disclosure of any information to be contained in the statements would be detrimental to the cooperative, permit the omission on any reasonable conditions that the Director thinks fit.

249. (1) A cooperative must keep at its registered office a copy of the financial statements of each of its subsidiaries and of each entity the accounts of which are consolidated in its financial statements.

(2) The members and shareholders of a cooperative and their personal representatives may on request examine the statements referred to in subsection (1) during the usual business hours of the cooperative and may take extracts from them free of charge.

(3) A cooperative may, not later than fifteen days after a request to examine under subsection (2), apply to a court for an order barring the right of any person to so examine, and the court may, if it is satisfied that the examination would be detrimental to the cooperative or a subsidiary, bar the right and make any further order it thinks fit.

(4) A cooperative must give the person requesting to examine under subsection (2) notice of an application under subsection (3), and the person may appear and be heard in person or by counsel.

1998, c. 1, s. 249; 2001, c. 14, s. 200.

250. (1) The directors must approve the financial statements referred to in section 247 and the approval is evidenced by the manual signature of one or more directors, or a facsimile of the signatures reproduced on the statements.

(2) A cooperative may not issue, publish or circulate copies of the financial statements referred to in section 247 unless they are

(a) approved and signed in accordance with subsection (1); and

(b) accompanied by the report of the auditor of the cooperative, if any.

251. A cooperative shall send a copy of the documents referred to in section 247 to each member and shareholder, except to a member or shareholder who has informed the cooperative in writing that they do not want a copy of the documents,

(a) not less than twenty-one days before each annual meeting of members;

(b) not less than twenty-one days before each annual meeting of shareholders, if subsection 247(2) applies; or

(c) not later than a resolution in lieu of an annual meeting is signed under section 66.

252. (1) A distributing cooperative, any of the issued securities of which remain outstanding and are held by more than one person, must send a copy of the documents referred to in section 247 to the Director

(a) not less than twenty-one days before each annual meeting of members or, without delay after a resolution referred to in paragraph 251(c) is signed; and

(b) in any event within fifteen months after the last preceding annual meeting of shareholders was held or the resolution referred to in paragraph 251(c) was signed, but no later than six months after the end of the cooperative’s preceding financial year.

(2) A subsidiary cooperative is not required to comply with this section if its financial statements are consolidated or combined with those of its holding cooperative entity and the statements of its holding cooperative entity are sent to the Director in compliance with this section.

1998, c. 1, s. 252; 2001, c. 14, s. 201.

253. (1) Subject to subsection (5), a person is disqualified from being an auditor of a cooperative if the person is not independent of the cooperative, of any of its affiliates or of the directors or officers of the cooperative or its affiliates.

(2) For the purposes of this section,

(a) independence is a question of fact; and

(b) a person is deemed not to be independent if the person, or another person with whom the person is in business,

(i) is a director, officer or employee of the cooperative or any of its affiliates, is in business with the cooperative or any of its affiliates, or is in business with a director, officer or employee of the cooperative or any of its affiliates,

(ii) beneficially owns or controls, directly or indirectly, a material interest in the securities of the cooperative or any of its affiliates, or

(iii) has been a receiver, receiver-manager, liquidator or trustee in bankruptcy of the cooperative or any of its affiliates within two years of the proposed appointment of the person as auditor of the cooperative.

(3) An auditor who becomes disqualified under this section must, subject to subsection (5), resign without delay after becoming aware of the disqualification.

(4) Any interested person may apply to a court for an order declaring an auditor to be disqualified under this section and the office of auditor to be vacant.

(5) Any interested person may apply to a court for an order exempting an auditor from disqualification under this section and the court may, if it is satisfied that an exemption would not unfairly prejudice the members or shareholders, make an exemption order on any terms that it thinks fit. The order may have retrospective effect.

254. (1) Subject to section 255, the members must, by ordinary resolution, at the first annual meeting of members and at each subsequent annual meeting, appoint an auditor to hold office until the close of the next annual meeting.

(2) An auditor appointed under section 82 is eligible for appointment under subsection (1).

(3) Despite subsection (1), if an auditor is not appointed at a meeting of members, the incumbent auditor continues in office until a successor is appointed.

(4) The remuneration of an auditor may be fixed by ordinary resolution of the members or, if not so fixed, may be fixed by the directors.

255. (1) A cooperative that is not a distributing cooperative may resolve not to appoint an auditor by

(a) special resolution of the members; and

(b) special resolution of all shareholders, including those who do not otherwise have the right to vote.

(2) A resolution under subsection (1) is valid only until the next annual meeting of members.

1998, c. 1, s. 255; 2001, c. 14, s. 202.

256. (1) An auditor of a cooperative ceases to hold office when the auditor dies, resigns or is removed under section 257.

(2) A resignation of an auditor becomes effective on the date on which a written resignation is sent to the cooperative, or on the date specified in the resignation, whichever is later.

257. (1) The members may by ordinary resolution at a special meeting remove the auditor from office, unless the auditor was appointed by a court under section 259.

(2) A vacancy created by the removal of an auditor may be filled at the meeting at which the auditor is removed or, if not so filled, may be filled under section 258.

258. (1) Subject to subsection (3), the directors must fill a vacancy in the office of auditor without delay after it occurs.

(2) If there is not a quorum of directors, the directors then in office must, not later than twenty-one days after a vacancy in the office of auditor occurs, call a special meeting of members to fill the vacancy and, if they fail to call a meeting or if there are no directors, the meeting may be called by any member.

(3) The by-laws of a cooperative may provide that a vacancy in the office of auditor may only be filled by vote of the members.

(4) An auditor appointed to fill a vacancy holds office for the unexpired term of their predecessor.

259. (1) If a cooperative does not have an auditor, the court may, on the application of a member or shareholder, appoint and fix the remuneration of an auditor who holds office until an auditor is appointed by the members.

(2) Subsection (1) does not apply if a resolution made under section 255 not to appoint an auditor is in effect.

260. (1) The auditor of a cooperative is entitled to receive notice of every meeting of the cooperative and, at the expense of the cooperative, to attend and be heard at the meetings on matters relating to the auditor’s duties.

(2) If a director or member of a cooperative, whether or not the member is entitled to vote at the meeting, or a shareholder that is entitled to vote at that meeting of shareholders, gives written notice not less than ten days before a meeting of the cooperative to the auditor or a former auditor of the cooperative, the auditor or former auditor shall attend the meeting at the expense of the cooperative and answer questions relating to the auditor’s duties.

(3) A director, member or shareholder who sends a notice referred to in subsection (2) must send a copy of the notice to the cooperative at the same time.

(4) An auditor is entitled to submit to the cooperative a written statement giving the reasons for the auditor’s resignation or the reasons why the auditor opposes a proposed action or resolution set out in any of paragraphs (a) to (d), in any of the following situations:

(a) the auditor resigns;

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

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

(d) the auditor receives a notice or otherwise learns of a meeting at which a resolution referred to in section 255 is to be proposed.

(5) In the case of a proposed replacement of an auditor, whether through removal or at the end of the auditor’s term, the following rules apply with respect to other statements:

(a) the cooperative must make a statement on the reasons for the proposed replacement; and

(b) the proposed replacement auditor may make a statement in which he or she comments on the reasons referred to in paragraph (a).

(6) The cooperative must send a copy of the statements referred to in subsections (4) and (5) without delay to every person who is entitled to receive notice of a meeting referred to subsection (1) and to the Director.

(7) No person may accept appointment or consent to be appointed as auditor of a cooperative if the person is replacing an auditor who has resigned or been removed or whose term of office has expired or is about to expire until the person has requested and received from that auditor a written statement of the circumstances and the reasons why, in that auditor’s opinion, the auditor is to be replaced.

(8) Despite subsection (7), a person otherwise qualified may accept appointment or consent to be appointed as auditor of a cooperative if, no later than fifteen days after making the request referred to in that subsection, the person does not receive a reply.

(9) Unless subsection (8) applies, an appointment as auditor of a cooperative of a person who has not complied with subsection (7) is null or void.

1998, c. 1, s. 260; 2001, c. 14, s. 203(F).

261. (1) An auditor of a cooperative must make any examination that is in the auditor’s opinion necessary to enable the auditor to report in the manner that may be prescribed on the financial statements required by this Act to be placed before the members or shareholders, except any financial statements or parts of statements that relate to the period referred to in subparagraph 247(1)(a)(ii).

(2) Despite section 262, an auditor of a cooperative may reasonably rely on the report of an auditor of an entity the accounts of which are included in whole or in part in the financial statements of the cooperative.

(3) Subsection (2) applies whether or not the financial statements of the cooperative reported on by the auditor are in consolidated form.

262. (1) On the demand of an auditor of a cooperative, the present or former directors, officers, employees or agents or mandataries of the cooperative must provide any information and explanations, and access to any documents of the cooperative or any of its subsidiaries that are, in the opinion of the auditor, necessary to enable the auditor to make the examination and report required under section 261 and that they are reasonably able to provide.

(2) On the demand of the auditor of a cooperative, the directors must obtain from the present or former directors, officers, employees and agents or mandataries of any subsidiary of the cooperative the information and explanations that the present or former directors, officers, employees and agents or mandataries are reasonably able to provide and that are, in the auditor’s opinion, necessary to enable the auditor to make the examination and report required under section 261 and provide them to the auditor.

(3) A person who in good faith makes an oral or written communication under subsection (1) or (2) is not liable in any civil action arising from having made the communication.

263. (1) Subject to subsection (2), a distributing cooperative must, and any other cooperative may, have an audit committee composed of not fewer than three directors, a majority of whom are not full-time officers or employees of the cooperative or any of its affiliates.

(2) The Director may, on application of a cooperative, authorize the cooperative to dispense with an audit committee and the Director may, if satisfied that the members and shareholders will not be prejudiced, permit the cooperative to dispense with an audit committee on any reasonable conditions that the Director thinks fit.

(3) An audit committee must review the financial statements of the cooperative before they are approved under section 250.

(4) The auditor of a cooperative is entitled to receive notice of every meeting of the audit committee and, at the expense of the cooperative, to attend and be heard at the meeting. If requested to do so by a member of the audit committee, the auditor must attend every meeting of the committee held during the auditor’s term of office.

(5) The auditor of a cooperative or a member of the audit committee may call a meeting of the committee.

264. (1) A director or officer of a cooperative shall, without delay, notify the auditor and the audit committee, if any, of any error or misstatement of which the director or officer becomes aware in a financial statement that the auditor or a former auditor has reported on.

(2) If the auditor or former auditor of a cooperative is notified or becomes aware of an error or misstatement in a financial statement on which the auditor or former auditor has reported, and if in their opinion the error or misstatement is material, the auditor or former auditor must inform each director accordingly.

(3) When under subsection (2) the auditor or former auditor informs the directors of an error or misstatement in a financial statement, the directors shall

(a) prepare and issue revised financial statements; or

(b) otherwise inform the members and shareholders and, if the cooperative is one that is required to comply with section 252, inform the Director of the error or misstatement in the same manner as it informs the members.

265. Any oral or written statement or report made under this Act by the auditor or former auditor of a cooperative has qualified privilege.

266. The definitions in this section apply in this Part.

“event of default” means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other money payable under the trust indenture become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period for giving the notice has elapsed.

“guarantor” means a person that has guaranteed an obligation of an issuer under a trust indenture.

“issuer” means a cooperative that has issued, is about to issue or is in the process of issuing debt obligations.

“trustee” means a person appointed as trustee under the terms of a trust indenture to which a cooperative is a party, and includes a successor trustee.

“trust indenture” means a deed, indenture or other document, including a supplement or amendment to such a document, made by a cooperative under which the cooperative issues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations issued under it.

267. (1) This Part applies to a trust indenture if the debt obligations issued or to be issued under it are part of a distribution to the public.

(2) The Director may, in writing, exempt a trust indenture from the application of this Part if, in the Director’s opinion, the trust indenture and the debt obligations under it are subject to a law of another jurisdiction that is substantially equivalent to the provisions of this Act relating to trust indentures.

1998, c. 1, s. 267; 2001, c. 14, s. 204(F).

268. (1) No person may be appointed as trustee if there is a material conflict of interests between the person’s role as trustee and any other role of the person.

(2) A trustee must, no later than ninety days after the trustee becomes aware that a material conflict of interests exists,

(a) eliminate the conflict of interests; or

(b) resign from office.

269. A trust indenture, any debt obligations issued under it and the security interest effected by them are valid even if there is a material conflict of interests of the trustee.

270. If a trustee is appointed in contravention of subsection 268(1) or if a trustee contravenes subsection 268(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on any terms that it thinks fit.

271. A trustee, or at least one of the trustees if more than one is appointed, must be a trust company incorporated under the laws of Canada or a province and authorized to carry on business as a trustee.

272. (1) A holder of debt obligations issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, no later than fifteen days after the delivery to the trustee of the statutory declaration, a list setting out the following information, as shown on the records maintained by the trustee on the day the statutory declaration is delivered to the trustee:

(a) the names and addresses of the registered holders of the outstanding debt obligations;

(b) the principal amount of outstanding debt obligations of each such holder; and

(c) the total principal amount of debt obligations outstanding.

(2) On the demand of a trustee, the issuer must provide the trustee with the information required to enable the trustee to comply with subsection (1).

(3) If the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection may be made by a director or an officer of the entity or a person acting in a similar capacity.

(4) The statutory declaration must state

(a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, its address for service; and

(b) that the list will not be used except as permitted by subsection (5).

(5) No person shall use a list obtained under this section except in connection with

(a) an effort to influence the voting of the holders of debt obligations;

(b) an offer to acquire debt obligations; or

(c) any other matter relating to the debt obligations or the affairs of the issuer or guarantor of them.

273. (1) An issuer or a guarantor of a debt obligation issued or to be issued under a trust indenture must provide the trustee with evidence of compliance with the conditions in the trust indenture before undertaking

(a) the issue, certification and delivery of debt obligations under the trust indenture;

(b) the release, or release and substitution, of property subject to a security interest constituted by the trust indenture; or

(c) the satisfaction and discharge of the trust indenture.

(2) On the demand of a trustee, the issuer or guarantor must provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.

(3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):

(a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;

(b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and

(c) an opinion or report of the auditors of the issuer or guarantor, or any other accountant that the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors or accountants.

(4) The evidence of compliance described in subsection (3) must include a statement by the person giving the evidence

(a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);

(b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and

(c) declaring that the person has made any examination or investigation that the person believes necessary to enable the statements to be made or the opinions contained or expressed in the statement to be given.

274. (1) On request of a trustee, the issuer or guarantor must provide the trustee with evidence in any form that the trustee requires of compliance with any condition relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

(2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor must provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars of the failure.

275. A trustee must, no later than thirty days after the trustee becomes aware of the occurrence of an event of default, give to the holders of debt obligations issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs the issuer and guarantor in writing.

276. (1) In exercising powers and discharging duties, the trustee must

(a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and

(b) exercise the care, diligence and skill of a reasonably prudent trustee.

(2) Despite subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

277. No term of a trust indenture or of an agreement between a trustee and the holders of debt obligations issued under the indenture or agreement or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by this Part.

278. (1) Subject to the rights of secured creditors, a receiver of any property of a cooperative may

(a) receive the income from the property and pay the liabilities connected with it; and

(b) realize the security interest of those on whose behalf the receiver is appointed.

(2) Despite subsection (1) but subject to any order that the court may make under section 282, a receiver who is not appointed manager of the cooperative may not carry on the business of the cooperative.

279. Despite section 278, if a receiver of a cooperative is also appointed manager of the cooperative, the receiver may carry on any business of the cooperative to protect the security interest of those on whose behalf he or she was appointed.

280. If a receiver or receiver-manager is appointed by a court or pursuant to an instrument, no director shall exercise the directors’ powers that the receiver or receiver-manager is authorized to exercise until the receiver or receiver-manager is discharged.

281. (1) A receiver or receiver-manager appointed by a court must act in accordance with any directions of the court.

(2) A receiver or receiver-manager appointed pursuant to an instrument must act in accordance with the instrument and any direction that the court may make under section 282.

(3) A receiver or receiver-manager must

(a) act honestly and in good faith; and

(b) deal with any property of the cooperative in their possession or control in a commercially reasonable manner.

282. A court may, on the application of a receiver or receiver-manager appointed by a court or pursuant to a document, or any other interested person, make any order giving directions on any matter relating to the duties of the receiver or receiver-manager appointed by it or pursuant to a document that it considers appropriate, including an order

(a) appointing, replacing or discharging a receiver or receiver-manager and approving the accounts of the receiver or receiver-manager;

(b) determining the notice to be given to any person or dispensing with notice to any person;

(c) fixing the remuneration of the receiver or receiver-manager;

(d) requiring the receiver or receiver-manager, or a person by or on behalf of whom the receiver or receiver-manager was appointed, to make good any default in connection with the receiver’s or receiver-manager’s custody or management of the property and business of the cooperative, or relieving a receiver or receiver-manager, or a person by or on behalf of whom a receiver or receiver-manager was appointed, from any default on any terms that the court considers appropriate;

(e) confirming any act of the receiver or receiver-manager; and

(f) giving directions on any other matter relating to the duties of the receiver or receiver-manager.

283. A receiver or receiver-manager must

(a) take the property of the cooperative into custody and control in accordance with the court order or instrument pursuant to which the receiver or receiver-manager is appointed;

(b) open and maintain a bank account as receiver or receiver-manager of the cooperative for the money of the cooperative coming under their control;

(c) keep detailed accounts of all transactions carried out as receiver or receiver-manager;

(d) keep accounts of the administration as receiver or receiver-manager and cause them to be made available during usual business hours for inspection by the directors;

(e) prepare, at least once in every six month period after the day of appointment, financial statements of the administration, as far as is feasible, in the form required by section 247;

(f) on completion of their duties, render a final account of the administration in the form that the receiver or receiver-manager has adopted for preparation of interim accounts under paragraph (e); and

(g) if section 252 would otherwise apply, file with the Director a copy of any financial statement mentioned in paragraph (e) and any final account mentioned in paragraph (f) not later than fifteen days after it is prepared or rendered.