Bill 2 — First Session, 25Th Legislature, 50 Elizabeth Ii the Legislative Assembly of Alberta Bill 2 Cooperatives Act (Legislature 25, Session 1)

L25 S1 95

Alberta — Bills

2001 BILL 2 First Session, 25th Legislature, 50 Elizabeth II THE LEGISLATIVE ASSEMBLY OF ALBERTA BILL 2 COOPERATIVES ACT MR. MAGNUS First Reading ................. Second Reading ............ Committee of the Whole Third Reading ............... Royal Assent.................. Title: 2001 (25th, 1st) Bill 2, Cooperatives Act

Bill 2 Mr. Magnus BILL 2 2001 COOPERATIVES ACT (Assented to ,2001) Table of Contents

Interpretation 1 Cooperative principles 2

Part 1 Incorporating a Cooperative Division 1 Application to Incorporate Who may incorporate a cooperative 3 How to apply for incorporation 4 Contents of articles of incorporation 5 Capital structure 6 Conditions for incorporation and Director’s decision 7 Division 2 By-laws and Amendments to By-laws Adoption of by-laws 8 Contents of by-laws 9 Making or amending by-laws 10 Proposal for by-law 11 Effective date of by-law 12 Binding effect of articles and by-laws 13 Copies of articles, by-laws and unanimous agreements 14 Pre-incorporation contracts 15 Division 3 Cooperative Names and Control Over Names Names of cpoperatives 16 Use of other names 17 Reservation of name 18 Prohibited names 19 1

Change of name Improper use of protected names 21 Division 4 Legal Capacity and Powers of Cooperatives Legal capacity 22 Restriction on powers 23 Knowledge of articles and by-laws 24 Reliance on cooperative’s records 25 No personal liability of members and shareholders 26 Division 5 Registered Office, Records and Corporate Seal Registered office 27 Record keeping 28 Form of records 29 Lists of members and shareholders 30 Corporate seal 31

Part 2 Membership in Cooperatives Division 1 Becoming a Member By-laws govern membership 32 Application for membership 33 Right to vote 34 Members under 18 years of age 35 Division 2 Cessation of Membership Withdrawal of membership 36 Redemption of membership shares and loans 37 Termination of membership by directors 38 Right of appeal 39 Appeal to members 40 Redemption of member interests 41 Termination does not release debts 42 Reserve fund for missing members 43 Limitation on by-law 44 Termination of inactive membership 45 Non-profit housing cooperatives 46 2

Division 3 Readmission and Transfer of Memberships Readmission to membership 47 Member interest 48

Part 3 Meetings Regulations 49

Part 4 Directors and Officers of Cooperatives Division 1 Number, Qualifications and Functions of Directors Number of directors 50 Member/non-member directors 51 Disqualification of director 52 Functions of directors 53 Duties of directors 54 First directors 55 Organizational meeting 56 Division 2 Rules for Election of Directors Rules for election of directors 57 Court review of election 58 Division 3 Terms and Vacancies Terms of office for directors 59 Vacancy on the board of directors 60 Board of directors vacant 61 Unexpired term of director’s office 62 Right to attend meetings 63 Continuation in office 64 Division 4 Resignation and Termination of Directors Ceasing to hold office 65 Removal of directors 66 Resignation statement 67 Notice of change 68 3

Division 5 Meetings and Quorum of Directors Place of directors meetings 69 Contents of notice 70 Waiver of notice 71 When notice not required 72 Quorum 73 How a quorum is constituted 74 Electronic meeting 75 Validity of acts 76 Resolution in place of directors meeting 77 Division 6 Liability of Directors General liability 78 Directors’ liability for wages 79 Division 7 Disclosure of Interests What must be disclosed 80 When disclosure must be made 81 Disclosure of interest by officers 82 Access to disclosures 83 Modification of procedural requirements 84 Voting on contracts and transactions when there is a conflict 85 Continuing disclosure 86 Effect of disclosure 87 Court order to set aside transaction 88 Appointment of managing director or committee 89 Deemed consent of directors 90 Defence for directors 91 Remuneration 92 Division 8 Officers of a Cooperative Types of offices and functions 93 Division 9 Indemnification of Directors and Officers Nature of indemnification 94 Application to Court to approve indemnity 95 4

Division 10 Unanimous Agreements Restricting powers of directors 96 Rights of members 97 Provisions for meetings in unanimous agreements 98 Financial information when no annual meeting required 99

Part 5 Capital Structure Division 1 Membership Capital Loan capital 100 Membership shares 101 Issuance to members 102 Division 2 Certificates Issue of membership certificates 103 Authorized capital 104 Fixed or determined value 105 Distribution on dissolution 106 Charge on membership shares for amounts 107 Division 3 Investment Shares Investment shares 108 No-par-value shares 109 Shares in series 110 Pre-emptive right 111 Commissions 112 Charge on investment shares 113 Division 4 Constraints Constraints on shares 114 Election of directors by investment shareholders 115 Amendment of articles 116 Division 5 Corporate Finance Power to issue investment shares 117 Payment for investment shares 118 Borrowing 119 Stated capital account 120 Other additions to stated capital account 121 5

Surplus accounts 122 197Shares not assessable 1 Options and rights 124 Reserves 125 Holding own shares 126 Exception for holding own shares 127 Redemption of membership shares 128 Acquisition of investment shares 129 Alternative investment share acquisition 130 Limitation on acquisition or redemption 131 Cancellation or redemption of shares 132 Reduction of stated capital 133 Adjustment of stated capital account 134 Form of dividend 135 Limitation on paying dividends 136 Patronage returns 137 Investment of patronage return 138 Loans from patronage returns 139 Division 6 Loans and Guarantees Financial assistance 140 When no disclosure required 141 Enforcement of contract to buy shares 142 Debt obligations 143

Part 6 Proxies

Interpretation 144 Appointing proxy holder 145 Mandatory solicitation 146 Soliciting proxies 147 Exemption order 148 Attendance at meeting 149 Duty of intermediary 150 Restraining order 151

Part 7 Insider Trading

Interpretation 152 Prohibition of short sale 153 Specified insider 154 6

Part 8 Compulsory Acquisition

Definitions 155 Right to acquire 156 Distributing cooperative 157

Part 9 Security Certificates, Registers and Transfers Division 1

Interpretation and Application

Interpretation 158 Application 159 Division 2 Security Certificates Security certificate 160 Fee 161 Joint owners 162 Signatures 163 Contents of certificate 164 Contents of certificate for investment share 165 Fractional shares 166 Division 3 Registers Securities register 167 Agent 168 Registration 169 Dealing with registered holders 170 Evidence of ownership 171 Proof of ownership 172 Joint holders 173 Duties of cooperative 174 Minors 175 Deceased owner 176 Overissue 177 Exemptions 178 Division 4 Proceedings Rules of action 179 7

Division 5 Delivery Delivery of securities 180 Division 6 General Incorporation by reference 181 Validity of security 182 Defence 183 Defences 184 Deemed notice 185 Unauthorized signature 186 Completion of form 187 Enforceability 188 Fraud 189 Guarantees 190 Acquisition of rights 191 Limited interests 192 Deemed notice of adverse claim 193 No duty to inquire 194 Deemed notice 195 Staleness 196 Guarantee 197 Contents of guarantee 198 Guarantee of intermediary 199 Guarantee of broker 200 Right to compel endorsement 201 Appropriate person 202 Endorsement 203 Immunity of endorser 204 Partial endorsement 205 Effect of failure by fiduciary to comply 206 Effect of endorsement without delivery 207 Endorsement in bearer form 208 Effect of unauthorized endorsement 209 Warranties of guarantor of signature 210 Presumption of delivery 211 Presumption of ownership 212 Delivery of security 213 Right to reclaim possession 214 Right to requisites for registration 215 Seizure of security 216 Not liable if good faith delivery 217 Duty to register transfer 218 Assurance of endorsement 219 Notice from additional documentation 220 Limited duty of inquiry 221 Inquiry into adverse claim 222 Duration of notice of adverse claim 223 Limitation on issuer’s liability 224 8

Lost or stolen security 225 Duty 226 Notice to agent 227

Part 10 Financial Disclosure Annual financial statements to members 228 Exemption for distributing cooperative 229 Consolidated statements 230 Approval of financial statements 231 Copies to investment shareholders 232 Copies of financial statements re distributing cooperatives 233 Qualifications of auditor 234 Appointment of auditor 235 Dispensing with auditor 236 Ceasing to hold office 237 Removal of auditor 238 Filling vacancy 239 Court-appointed auditor 240 Right to attend meeting 241 Examination 242 Right to information 243 Audit committee 244 Notice of error 245 Qualified privilege 246

Part 11 Trust Indentures Division 1

Interpretation and Application

Definitions 247 Application of

Part 248 Division 2 General Conflict of interests 249 Validity despite conflict 250 Removal of trustee 251 Qualification of trustee 252 List of security holders 253 Compliance with trust indentures 254 Trustee may require evidence 255 Notice of default 256 Duty 257 No exculpation 258 9

Part 12 Fundamental Changes Definition of “common share” 259 Continuance 260 Continuance - other jurisdictions 261 Restriction from continuance in other jurisdiction 262 Shareholders’ right to vote 263 Amendment of articles 264 Proposal to amend 265 Delivery of articles 266 Certificate of amendment 267 Effect of certificate 268 Restated articles 269 Amalgamation 270 Amalgamation agreement 271 Approval 272 Short-form amalgamation 273 Sending of articles 274 Effect of certificate 275 Extraordinary disposition 276 Right to dissent 277 Reorganization 278 Definition of “arrangement” 279 Certificate of arrangement 280

Part 13 Investigations and Inspections Division 1 Inspections Identification of inspectors 281 Inspection 282 Order compelling assistance in inspections 283 Director’s decision and official director 284 Effect of appointment of official director 285 Application for directions 286 Court restraining or compliance order 287 Director not compellable 288 Division 2 Court-ordered Investigations Court-ordered investigation 289 Conditions for Court order 290 Powers of the Court 291 Court-appointed inspector’s powers and duties 292 Additional powers of Court-appointed inspector 293 Application for hearing in private 294 Compellable witnesses 295 Protection of witnesses 296 10

Absolute privilege 297 Solicitor-client privilege 298

Part 14 Winding-up, Liquidation and Dissolution of Cooperatives Division 1 Receivers and Receiver-managers Appointment of a receiver or receiver-manager 299 Duties of receivers and receiver-managers 300 Obligations of receivers and receiver-managers 301 Court directions 302 Duties of receivers and receiver-managers 303 Division 2 Liquidation and Dissolution Application of

Part 304 Proceedings stayed if cooperative insolvent 305 Dissolution of cooperatives 306 If membership too low 307 Proposing liquidation and dissolution 308 Liquidation and dissolution 309 Supervision by Court 310 Revocation of intention to dissolve 311 Dissolution by Director 312 Court-ordered dissolution for non-compliance 313 Court-ordered dissolution for questionable activities 314 Application for supervision 315 Application to Court 316 Powers of Court 317 Effect of order 318 Cessation of business and powers 319 Who may be appointed liquidator 320 Duties of liquidator 321 Powers of liquidator 322 Costs of liquidator 323 Right to distribution in money 324 Powers of Court 325 Custody of records 326 Heirs and representatives 327 Unknown claimants 328 Revival 329 Vesting in the Crown 330 11

Part 15 Administrative Matters and Regulations Division 1 Director’s Appointment and Delegation Appointment of Director and inspectors/delegation 331 Division 2 Document Filing, Appeals Copies of documents 332 Annual return 333 Notice of refusal by Director 334 Appeal from Director’s decision 335 Appeal from Commission refusal 336 Filing statements 337 Electronic filing 338 Certificate of Director is proof 339 When notices or documents need not be sent 340 Proof required by Director 341 Certificate of compliance 342 Alteration of documents 343 Records maintained by Director 344 Public access to records 345 Division 3 Notices and Service of Documents Notices to members, shareholders and directors 346 Notice to a cooperative, Commission, Executive Director 347 Waiver of notice 348 Division 4 Certificates, Declarations and Copies Certificate of cooperative 349 Declaration of directors 350 Division 5 Regulations Regulations 351 Ministerial regulations 352 12

Part 16 Remedies, Offences and Penalties Division 1 Court Intervention

Definitions 353 Application to Court by originating notice 354 Commencing derivative legal proceedings 355 Powers of the Court 356 Oppressive or prejudicial actions 357 Evidence of member or shareholder approval not decisive 358 Application to Court to rectify records 359 Appeal of Court orders 360 Division 2 Offences and Penalties Offences 361 Director’s liability 362 Court order to comply with Act 363 Alternative resolution of disputes 364

Part 17 Extra-provincial Cooperatives

Definitions 365 Carrying on business in Alberta 366 Application of

Part 367 Division 1 Registration of Extra-provincial Cooperatives Requirement to register 368 Application for registration 369 Alternative method of registration 370 Names of extra-provincial cooperatives 371 Registration by pseudonym 372 Certificate of registration 373 Cancellation of registration 374 New certificate of registration 375 Division 2 Information Use of extra-provincial cooperative’s name 376 Attorney for service of an extra-provincial cooperative 377 Changes in charter, head office, directors 378 Filing instrument of amalgamation 379 Notices and returns respecting liquidation 380 Annual and other returns 381 Certificate of compliance 382 13

Division 3 Legal Capacity, Disabilities and Penalties Applicable to Extra-provincial Cooperatives Validity of acts 383 Capacity to commence and maintain legal proceedings 384

Part 18 Specific Cooperatives Division 1 Housing Cooperatives

Definitions 385 Application of

Part 386 Name 387 Articles of non-profit housing cooperatives 388 Special limitations on non-profit housing cooperatives 389 Amending articles 390 Non-member unit 391 Non-profit continuing housing cooperatives 392 Non-application of other Acts 393 Right to occupy 394 Termination of membership 395 Termination procedure 396 Appeal procedure 397 No right of appeal 398 Compensation and arrears 399 Writ of possession 400 Application for writ of possession 401 Non-profit home ownership cooperatives 402 Withdrawal from membership 403 Termination of membership 404 Amalgamation 405 Division 2 Employment Cooperatives Definition of “employment cooperative” 406 Requirements of articles 407 Non-member employees 408 Permanent employees 409 By-laws 410 Time for appeal 411 Laid-off or terminated member 412 Name 413 Directors 414 Reorganization 415 Dissolution 416 14

Division 3 Multi-stakeholder Cooperatives

Definitions 417 Membership 418 Articles of cooperative 419 Passing of resolutions 420 Directors 421 Division 4 New Generation Cooperatives

Definitions 422 Names of new generation cooperatives 423 Membership share 424 Redemption of membership shares and repayment of loans 425 Transfer of member interest 426 Capital structure: investment shares 427 Patronage returns 428 By-laws 429 Regulations 430

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

Definitions 431 Continuation under former Act 432 Prohibition 433 Continuing association as a cooperative 434 Certificate of continuance 435 Effect of the certificate of continuance 436 Effect of continuation 437 Contracts 438 Director of Co-operative Activities 439 By-laws 440 Shares with nominal or par value 441 Names 442 Appointment of directors and officers continued 443 Auditor 444 Non-member units 445 Regulations 446 Consequential Amendments Consequential amendments 447 - 473 Repeals Repeal 474 15

Coming into Force Coming into force 475 HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows:

Interpretation1(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); (c) “articles” means the articles of incorporation of a cooperative and amendments to them; (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 16

trustee, administrator, executor or liquidator of a succession or in a similar capacity; (vi) a spouse 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 of a relative of the person; (

C) a relative of the person’s spouse; (

D) the spouse 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 by-laws; (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; (1) “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; 17

(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; 18

(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 19

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; (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; (11) “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; 20

(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; (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, 21

or (

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. Cooperative principles2(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 22

accept the responsibilities of and abide by the terms 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 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 (l)(

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. 23

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 dependent adult under the Dependent Adults 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). 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; (

c) a notice of the names and addresses of directors 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; 24

(

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; (

c) the name and residential address of each of the incorporators; (

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 25

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; (1) 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 (

C) to acquire investment shares of a financial intermediary as defined in the regulations, or (iii) the issue, transfer or ownership of investment shares of any class or series to assist the cooperative or any 26

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 by-laws of the cooperative and if they do, any reference in this Act to the by-laws 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 27

(

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; (

c) if applicable, the cooperative will comply with

Part 18.

(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 By-laws and Amendments to By-laws Adoption of by-laws 8 The directors must hold a meeting of members within 180 days of the issuance of the certificate of incorporation to make by-laws for the cooperative. Contents of by-laws 9(1) The Minister may make regulations governing the subject-matter that must be included in the by-laws of a cooperative.

(2) The by-laws 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, 28

(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; (

c) anything that this Act or the regulations provide for the making of a by-law; (

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

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

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

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

a) is not submitted to the members, or (

b) is not confirmed under subsection (3), with or without amendments, the by-law or amendment is repealed as of the date of the meeting of members at which it was not confirmed. Proposal for by-law 11 A member may make a proposal in accordance with the regulations to make, amend or repeal a by-law. 29

Effective date of by-law 12 A by-law or an amendment to a by-law comes into force on the day on which the by-law or amendment is made, or on any later date specified in the by-law or amendment or in the resolution adopting either of them. Binding effect of articles and by-laws 13(1) The articles and by-laws of a cooperative bind it and its members to the same extent as if the articles and by-laws (

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 by-laws.

(2) A corporation must file a by-law or an amendment to a by-law with the Director within 60 days of the date the by-law or amendment comes into force. Copies of articles, by-laws 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, by-laws 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, by-laws 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, 30

(

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 31

(

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”, “cooperative”, “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. 32

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 “cooperative” 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 33

(

c) a cooperative under the Canada Cooperatives Act (Canada). Division 4 Legal Capacity and Powers of Cooperatives Legal capacity22(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 by-laws.

(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 by-law 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 by-laws 24(1) A member of a cooperative is deemed to have knowledge of the contents of the articles and by-laws 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 34

(

a) the cooperative’s articles, by-laws 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; (

c) the place named in the most recent notice of registered office filed with the Director is not the registered office; (

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. 35

(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 by-laws, including any amendments, and a copy of any unanimous agreement; (

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

c) copies of all notices of who is a director and notices of change of directors; (

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 (l)(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 36

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 (l)(

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 by-laws 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 (l)(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 (

c) to facilitate the detection and correction of inaccuracies in them. 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 by-laws, request that the cooperative provide them with a list of members or investment shareholders.

(2) A request for the list must be accompanied by 37

(

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 by-laws.

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

(4) Unless the by-laws 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. Corporate seal31(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 By-laws govern membership 32 Membership in a cooperative is governed by its by-laws unless this Act or the articles provide otherwise. Application for membership33(1) No person may become a member of a cooperative unless (

a) the person applies for membership in accordance with the by-laws, (

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

c) the person complies with the membership provisions of the by-laws. 38

(2) The directors may delegate any of the powers vested by subsection (l)(

b) to one or more members or officers of the cooperative.

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

(4) Subject to the by-laws, 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 vote34(1) Subject to subsection (2) and the delegate system of voting provided for in the by-laws of a cooperative, a member has one vote on all matters to be decided by the members.

(2) If the by-laws 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 by-law 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 by-laws, 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 by-laws 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 by-laws by giving written notice to the cooperative.

(2) Unless the by-laws provide otherwise, the withdrawal is effective on the later of (

a) the date stated in the notice, and 39

(

b) the date on which the cooperative receives the notice. Redemption of membership shares and loans 37(1) Unless the by-laws 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 40

(

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 by-laws, 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 by-laws, after the member receives the notice. Right of appeal 39(1) Within 30 days, or a longer or shorter period specified in the by-laws, 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; 41

(

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 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 (

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. 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, 42

the cooperative must transfer all amounts owing to the former member to a reserve fund, but despite

section 41(l)(

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 by-law 44 No by-law 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. 43

(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 by-laws, 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 by-laws 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; (

c) when a readmission is to be considered to be an application for membership instead of a readmission to membership. 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 by-laws 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 by-laws, 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. 44

(5) If a personal representative of a deceased holder of a member interest is entitled, pursuant to the articles and by-laws 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 Regulations49 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; 45

(

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 by-laws 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; (1) 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 by-laws or a unanimous agreement; 46

(

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; 47

(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 in lieu 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 by-laws.

(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. 48

Disqualifi cation 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; (

c) is an individual who (

i) is a dependent adult as defined in the Dependent Adults Act or is the subject of a certificate of incapacity under that 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 by-laws 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. Functions of directors53 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 by-laws. Duties of directors54(1) Every director and officer must, in exercising the powers and performing the duties of office, 49

(

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 by-laws and any unanimous agreement.

(3) Subject to

section 97, no provision in a contract, the articles, the by-laws, 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 directors55(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 by-laws and any unanimous agreement. Organizational meeting56(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; (

c) appoint officers; 50

(

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 by-laws 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. 51

(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 election58(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; 52

(

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 directors59 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 by-laws 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. 53

(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. 54

Unexpired term of director’s office 62 Unless the by-laws 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 by-laws 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, (

c) is removed from office, or (

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 by-laws, 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, 55

(

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 by-laws provide otherwise, the directors may meet anywhere.

(2) Unless the by-laws 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 notice70 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). 56

Waiver of notice71 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. Quorum73 Unless the articles, the by-laws 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 by-laws, 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. 57

Validity of acts76

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; 58

(

c) a payment of a dividend, a patronage return or interest 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; (

c) order any person to repay to the cooperative the amount of a member loan that was repaid; (

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 59

(

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. 60

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 (

c) has a material interest in a party to the contract or transaction.

(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; 61

(

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. 62

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 (

c) because there has been a change in the nature of the director’s or officer’s interest in the entity. 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 63

(

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, (

c) approve a financial statement of the cooperative, (

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, 64

(

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. 65

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. Remuneration92 Unless the articles, the by-laws 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 by-laws and any unanimous agreement, the directors may (

a) designate the offices of the cooperative; (

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

c) appoint any individual 18 years of age or older, including a director, to be an officer; (

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 indemnification94(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 (

c) as an individual in a similar capacity for the cooperative or other entity, 66

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 (

c) is fairly and reasonably entitled to indemnity.

(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 67

(

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 the Director, at the same time as the annual return referred to in 68

Rights of members97 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(l)(a), (

b) the report of the auditor, and (

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

PART 5 CAPITAL STRUCTURE Division 1 Membership Capital Loan capital100 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. 69

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 by-laws.

(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 by-laws 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. 70

(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, (

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 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 71

(

a) any declared and unpaid dividends, (

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

c) the amount to be paid on the redemption of membership shares.

(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 (

c) to charitable organizations or cooperative entities. 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 by-laws, 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 shares108(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: 72

(

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 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. 73

No-par-value shares109(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 (l)(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. 74

(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 (

c) pursuant to the exercise of conversion privileges, options

Document details

Collection	Alberta — Bills
Citation	L25 S1 95
Type	bill
Volume / chapter	L25 S1 95
Language	en
Format	json
Source	PROVINCIAL
Identifier	a0348a540b94baec4a97399162dfb064c0e26e93

Source file is stored in the law ingest library (json).