Second Session,

46th General Assembly

58 Elizabeth II,

BILL 11

AN ACT RESPECTING CREDIT UNIONS

Received

and Read the First Time ...................................................................

Second

Reading ..............................................................................................

Committee ......................................................................................................

Third

Reading .................................................................................................

Royal

Assent ...................................................................................................

HONOURABLE

KEVIN O'BRIEN

Minister of

Government Services

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTE

This Bill would revise and

consolidate the law respecting credit unions.

A BILL

AN ACT RESPECTING CREDIT UNIONS

Analysis

Short title

Definitions

Part prevails

Prohibition

PART

INCORPORATION OF CREDIT UNIONS

Incorporation

Articles

By-laws

Application for incorporation

Certificate of incorporation

Business commencement requirements

Name

Prohibited names

Pre-incorporation contract

PART

CAPACITY AND POWERS

Capacity

Jurisdiction outside province

Business of credit unions

Coercive tied selling

Subsidiaries and trade

Restrictions

No contravention notice

Reliance

PART

III

REGISTERED OFFICE AND RECORDS

Registered office

Branch office

Records

Examination of records

Form of records

PART

CAPITALIZATION AND OPERATING STANDARDS

Member shares

Shares other than members' equity shares

Dividend or patronage refund

Purchase of surplus shares

Exception

Liability limited

Remedy

Unclaimed balances

Member right to withdraw deposits

Trust funds

Partial payment on death

Loans

Lien

Liquid assets

Investments

Doubtful loans

Equity

Borrowing

Matching

Insurance required

Sound business and financial practices

PART

MEMBERSHIP

Membership

Bond of association

Membership termination

Remedy preserved

By-laws

Members bound

Place of meetings

Calling meetings

Record date

Notice of meetings

Waiver of notice

Member notice

Quorum

Voting

Corporate representation

Voting by proxy

Joint membership

Executors and administrators

Ballot

Requisition by members to call meeting

Meeting called by superintendent

PART

DIRECTORS AND OFFICERS

Directors

Qualifications

Terms of office

Ceasing to hold office

Removal of directors

Reasons

Vacancy

Notice of change of directors

Meetings

Appointing committees

Establishing committees

Validity of acts

Resolution

Liability

Duty to report

Designation of officers

Remuneration and expenses

Duty of care

Dissent

Indemnification

PART

VII

RETURNS AND FINANCIAL DISCLOSURE

Fiscal year

Annual returns

Annual financial statements

Conditions re: financial statements

Request for documents

Auditors

Auditor removal

Vacancy

Auditor appointed by guarantee

corporation

Duty to attend meetings

Examinations by auditor

Superintendent or guarantee

corporation may enlarge scope

Right to demand information

Auditor's report

Audit committee

Duty of auditor

Additional requirements

Access to papers

Qualified privilege

No liability

PART

VIII

FUNDAMENTAL CHANGES

Amendment of articles

Articles to superintendent

Certificate of amendment

Effect of certificate

Restated articles

Amalgamation

Amalgamation agreement

Approval of agreement

Articles of amalgamation

Compulsory amalgamation

Certificate and effect of amalgamation

Extraordinary sale, lease or exchange

Approval of guarantee

corporation

Dissent

Reorganization under a court order

PART

DISSOLUTION AND LIQUIDATION

Mandatory dissolution

Voluntary dissolution by members

Voluntary liquidation and dissolution

Articles of dissolution and certificate

Custody of records

Effect of dissolution

Unclaimed property

Effect of Bankruptcy and Insolvency Act

( Canada )

PART

CREDIT UNION DEPOSIT GUARANTEE CORPORATION

Application

Continuation

Duties

Capacity

Powers

Board

Officers

Vacancy

Office ceases

Management

Quorum

By-laws

Guaranteed deposit insurance

Prohibition

Deposit guarantee fund

Determination of levy

Manner of collection

Loans to guarantee corporation

Records

Fiscal year

Audit

Application

Payment of levy

Report to minister

PART

REMEDIES, OFFENCES AND PENALTIES

Definitions

Derivative action

Powers of court

Application to court

Application

Rectification of register

Compliance application

Application for direction

Appeal

Review and examination

Examination powers

Voluntary compliance

Compliance order

Offence

General offence

Compliance order following offence

Maintenance of action

PART

XII

COMPLIANCE AND SUPERVISION

Supervision of credit union

Supervisor

Length of supervision

Powers of supervisor

Report

Accounting

PART

XIII

GENERAL

Notice

Service of notice

Waiver of notice or delivery

Certificates

Signatures

Copies

Verification

Statement of intent

Alter notice or document

Corrected certificate

Examination of documents

Records

Superintendent

Register of credit unions

Regulations

Fees and forms

PART

XIV

TRANSITIONAL, REPEAL AND CONSEQUENTIAL AMENDMENTS

Transitional

Amending instruments

RSNL1990 cC-37.1 and CNLR

800/96 Rep.

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

Short title

1. This

Act may be cited as the Credit Union Act,

2009 .

Definitions

2. In this Act

(a) " articles "

means

(

i) the original or

restated articles of incorporation, amendment, amalgamation, continuance,

reorganization and dissolution of a credit union, and

(ii) a statute or other

constating instrument evidencing the corporate existence of a credit union

continued as a credit union under this Act;

(b) " associate

member" means a person other than a member who has rights as set out in

the by-laws and the regulations but that person shall not have a vote at a

meeting of a credit union or become a director of a credit union;

(c) " bond of

association" means a characteristic common to all members of a credit

union;

(d) " court "

means the Trial Division of the Supreme Court of Newfoundland and Labrador ;

(e) " credit

union" means a corporation incorporated or continued as a credit union

under this Act and includes a caisse populaire;

(f) " deposit "

means money placed in an account in a credit union or a financial central;

(g) " director "

in relation to a credit union means a person occupying in the credit union, the

position of director by whatever name that person is called and

"directors" and "board of directors" includes a single

director;

(h) " equity "

means in relation to a credit union,

(

i) the value of the consideration paid for

membership shares and other shares issued by the credit union that are not

redeemable within one year or another period as approved by the superintendent,

(ii) the book value of

surplus shares issued by the credit union,

(iii) the retained earnings

of the credit union, and

(iv) other capital items

approved by the superintendent,

unless the credit union has an accumulated

deficit, in which case it means the amounts determined under subparagraphs (i),

(ii) and (iv) minus the accumulated deficit;

(i) " guarantee

corporation" means the Credit Union Deposit Guarantee Corporation

continued under

section 133 ;

(j) " member "

means a person who is a shareholder of a

credit union and who, in accordance with the credit union's by-laws, qualifies

for membership in that credit union;

(k) " minister " means the minister appointed under the Executive Council Act to administer this

Act;

(l) " ordinary

resolution" means a resolution passed by a majority of the votes cast by

the members who voted in respect of that resolution;

(m) "patronage refund" means an amount

that under this Act is allocated among and credited or paid by a credit union

to its members, based on the business done by each of them with the credit

union;

(n) " security "

means a share or a debt obligation or a certificate evidencing a share or a

debt obligation;

(o) "security interest" means an

interest in or charge upon property of a credit union or the guarantee

corporation taken by a creditor to secure payment of a debt or performance of

an obligation of a credit union or the guarantee corporation and includes a

certificate evidencing a share or debt obligation;

(p) " sound business and

financial practices" means a set of stated business principles as set out

by the guarantee corporation against which the credit unions' boards of

directors and the credit unions' management personnel can measure their

performance;

(q) "special resolution" means a

resolution passed by a majority of not less than 2/3 of the votes cast by the

persons who voted in respect of that resolution or signed by all the persons

entitled to vote on that resolution;

(r) " subsidiary "

means a corporation in which a credit union has a majority of the voting

shares;

(s) " superintendent "

means the Superintendent of Credit Unions appointed under

section 191 ; and

(t) " supervisor "

means the guarantee corporation or a person appointed by the guarantee

corporation under

section 174 to supervise a credit union.

Part prevails

3. Where

a provision of

Part X is inconsistent with another provision of this Act, the provision

of that Part prevails.

Prohibition

4. A

person not incorporated as a credit union under this Act or under or continued

under the Credit Union Act in force

immediately before the commencement of this Act, shall not carry on the business

of a credit union in the province.

PART I

INCORPORATION OF CREDIT UNIONS

Incorporation

(1) Twenty or more persons who are 19 years of age or older and are bondable may

incorporate as a credit union.

(2) The incorporators shall apply for

incorporation as a credit union by sending to the superintendent

(

a) the proposed articles

of incorporation in a form acceptable to the superintendent;

(

b) the proposed by-laws that

are required by the Act and the Regulations; and

(

c) other information

that the superintendent may require.

Articles

(1) Articles

of incorporation of a credit union shall set out,

(

a) the name of the

credit union;

(

b) the place in the

province where the registered office is to be situated;

(

c) the name, residence

address and principal occupation of each first director;

(

d) a statement of the

proposed bond of association of the credit union;

(

e) the classes and maximum number of shares that

the credit union is authorized to issue other than membership shares, and where

there will be 2 or more classes of shares the rights, privileges, restrictions

and conditions attaching to each class of shares;

(

f) where the right to

transfer shares of the credit union is to be restricted, a statement that the

right to transfer shares is restricted and the nature of the restrictions; and

(

g) restrictions on the

business that the credit union may carry on,

and shall provide for other matters which under this Act are required

to be dealt with in the articles.

(2) The articles may set out provisions permitted

by this Act to be set out in the by-laws of the credit union.

By-laws

7 .

(1) A credit union shall establish by-laws which provide for

those matters required by the regulations and the by-laws shall be approved by ordinary

resolution of the members in attendance at a duly convened meeting of the

credit union.

(2) The by-laws of a credit union may provide for

matters in addition to those matters required by the regulations if the by-laws

are not inconsistent with this Act.

Application for

incorporation

(1) The

guarantee corporation may approve an application for incorporation as a credit

union

(

a) where the guarantee

corporation is satisfied that

(

i) the proposed articles

of incorporation and by-laws are in compliance with this Act,

(ii) the applicants are

qualified to establish and the proposed directors are qualified to establish

and operate the proposed credit union, and

(iii) sections 6 and 7 have

been complied with; and

(

b) unless the guarantee

corporation considers the application is contrary to the public interest.

(2) The superintendent shall if the guarantee

corporation approves the application under subsection (1), file the articles of

incorporation and by-laws submitted under subsection 5

(2) and shall issue a certificate of incorporation in accordance with

section 182 .

(3) The superintendent shall give notice of the

issuing of a certificate of incorporation in the Gazette .

Certificate of

incorporation

(1) A

credit union comes into existence on the date shown in the certificate of

incorporation.

(2) A certificate of incorporation shall be

considered to be proof

(

a) that the provisions of this Act in relation to

incorporation of a credit union and all requirements precedent and incidental

to incorporation have been complied with; and

(

b) that the credit union

has been incorporated under this Act on the date shown in the certificate of

incorporation.

Business commencement

requirements

(1) A

credit union incorporated under this Part shall not commence business in the

province until the guarantee corporation has given approval for that

commencement.

(2) The guarantee corporation shall not approve

the commencement of business of a credit union unless that credit union has

complied with the requirements that are prescribed by regulation for the

commencement of business.

(3) Subsection (1) shall not prohibit business

activities that are necessary to enable the credit union to meet the

requirements of subsection (2).

(4) All

deposits and share subscriptions taken in support of an application for

incorporation of a credit union or before a credit union is approved to

commence business shall be held in trust in the manner required by the

guarantee corporation.

Name

(1) A

credit union shall include the words "credit union" or the words

"caisse populaire" in its name and the word "Limited" or

"Limitee" or the abbreviation "Ltd." or "Ltee" as

the last word of that credit union's name.

(2) A credit union shall clearly identify itself

and set out its name in legible characters in all contracts, invoices,

negotiable instruments, seals, orders, advertising and other representations to

the public.

(3) A credit union may carry on business by a name

other than its full name, provided that the words "credit union" or

"caisse populaire" are included in that name.

(4) A person or association of persons shall not

(

a) use the words

"credit union" or "caisse populaire" or a derivative or

abbreviation of those words as part of its name; or

(

b) conduct business in

the province in a manner that might lead to the belief that that person or

association of persons is carrying on business as a credit union,

unless that person or association of

persons is incorporated under this Act or incorporated or continued under the Credit Union Act in force immediately

before the commencement of this Act.

(5) Subsection (4) does not apply to the guarantee

corporation.

(6) Notwithstanding subsection (1), a credit union

continued under the Credit Union Act in

force immediately before the commencement of this Act and operating under the

title or name of "Co-operative Credit Society" may be continued under

this Act in that name.

Prohibited names

(1) A

credit union shall not carry on business under a name

(

a) that is identical

to the name of an existing or a dissolved credit union except as may be

prescribed by regulation;

(

b) that, in the opinion of the superintendent,

government of a province or territory of Canada or a department, branch, bureau,

service, agency or activity of that government, without the consent in writing

of the appropriate authority;

(

c) that includes the word "loan",

"trust", "mutual", "insurance" or

"securities"; or

(

d) which in the opinion

of the superintendent is contrary to public policy.

(2) A credit union shall not carry on business

under a name that is similar to the name of another business, association or

corporation if the use of that name by the credit union would, in the opinion

of the superintendent, be likely to confuse or mislead, unless the business,

association or corporation consents in writing to its name being given in whole

or in part to the credit union and, if required by the superintendent, the

business, association or corporation undertakes to dissolve or to change its

name within 6 months after the incorporation of the credit union.

(3) Where a credit union is granted a name subject

to an undertaking given under subsection (2) and the undertaking is not carried

out within the specified time, the superintendent may direct the credit union

to which the name is granted to change its name to a name that complies with

this Act.

(4) Where a credit union

(

a) comes into existence

or is continued with a name; or

(

b) upon an application

to change its name, is granted a name,

that violates this section, the superintendent may direct the credit

union to change its name.

(5) Where a credit union is directed under

subsections (3) or (4) to change its name and fails within 60 days after the

service of that directive to change its name to a name that complies with this

Act, the superintendent may revoke the name of the credit union and assign to

it a name or number and, until changed in accordance with

section 109, the name

or number of the credit union is the name or number assigned.

(6) Where a credit union has had its name revoked

and a name or number assigned to it under subsection (5), the superintendent

shall issue a certificate of amendment showing the new name of the credit union

and shall give notice of the change of name in the Gazette .

Pre-incorporation

contract

(1) Except

as provided in this section, a person who enters into a contract in the name of

or purportedly on behalf of a credit union before it comes into existence is

personally bound by the contract and is entitled to the benefits of it.

(2) A credit union may, within a reasonable time

after it comes into existence, by an action or conduct signifying its intention

to be bound by it, adopt an oral or written contract made before it came into

existence in its name or on its behalf, and on that adoption

(

a) the credit union is bound by the contract and

is entitled to the benefits of it as if the credit union 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 credit union ceases, except as provided in subsection (3),

to be bound by or entitled to the benefits of the contract.

(3) Except as provided in subsection (4), whether

or not an oral or written contract made before the coming into existence of a

credit union is adopted by the credit union, a party to the contract may apply,

within a reasonable time after the date of incorporation of the credit union,

to the court for an order fixing obligations under the contract as joint or

joint and individual or apportioning liability between or among the credit

union and a person who purported to act in the name of or on behalf of the

credit union and a judge of the court may make an order that he or she

considers appropriate.

(4) Where expressly provided in the oral or

written contract, a person who purported to act in the name of or on behalf of

the credit union before it came into existence is not bound by the contract or

entitled to the benefits of it.

PART II

CAPACITY AND POWERS

Capacity

14. A

credit union has the capacity and, subject to this Act, the rights, powers and

privileges of a natural person.

Jurisdiction outside

province

(1) A

credit union may, with the approval of the guarantee corporation, carry on its

business, conduct its affairs and exercise its powers in a jurisdiction outside

the province to the extent that the laws of that jurisdiction permit.

(2) A credit union may enter into joint services

with other credit unions to provide services to its members who reside in the

province and to its members that move and reside outside the province.

Business of

credit unions

(1) A

credit union may carry on the business of a credit union as permitted by the

Act and, unless otherwise restricted may ,

(

a) receive deposits from

and operate chequing services for its members;

(

b) make loans to its

members;

(

c) sell life insurance

products through its branches either through an affiliate, by contractual

arrangement or in the capacity of a licensed agent or broker as defined in the Insurance Adjusters, Agents and Brokers Act ,

including but not limited to

(

i) life insurance,

(ii) disability insurance,

(iii) annuities ,

( iv ) segregated funds,

(

v) critical illness

insurance, and

(vi) long term care

insurance; and

(

d) provide other

financial services including wealth management, mutual funds, financial

planning and taxation services.

(2) A credit union shall not carry on a business

other than that pertaining to the business of credit unions and a credit union

shall not

(

a) engage in the trading

of real estate;

(

b) except as authorized

under another Act of the province, execute the office of executor,

administrator, guardian of a minor's estate or of a mentally disabled person or

provide services of a fiduciary nature commonly provided by a trust company;

(

c) issue securities on

behalf of another person or otherwise carry on the business of a securities

dealer;

(

d) carry on the business

of an insurance company; and

(

e) carry on the business

of a property and casualty agent, broker or adjustment company.

(3) Notwithstanding

subsections (1) and (2), a credit union may, in the manner prescribed by

regulation, enter into an arrangement for services.

Coercive tied selling

(1) A

credit union shall not engage in coercive tied selling that imposes undue

pressure on, or coerces a person to obtain a product or service from a particular

person, including the credit union and its affiliates, as a condition for

obtaining another product or service from the credit union.

(2) Nothing in subsection (1) precludes a credit

union

(

a) from requiring

insurance to be placed by a member for the security of a credit union; or

(

b) from entering into those group plans of

insurance as may be prescribed by regulation with an insurance agency or company

for the security of a credit union or for the benefit of its members.

Subsidiaries and

trade

(1) A

credit union may establish a subsidiary corporation as prescribed by

regulation.

(2) Except as provided under this Act, a credit

union shall not, directly or indirectly, through a subsidiary or otherwise,

deal in goods, wares and merchandise or engage in a trade or other business.

Restrictions

(1) A

credit union shall not carry on a business or exercise a power if it is

restricted by its articles, by-laws or this Act or the regulations from carrying

on that business or exercising that power and shall not exercise its powers in

a manner contrary to its articles, by-laws or this Act.

(2) An act of a credit union against good faith

third party purchasers, including a transfer of property to or by a credit union,

is not invalid by reason only that the act or transfer is contrary to its articles,

by-laws or this Act.

No contravention

notice

20. A

person is not affected by and shall not be considered to have notice or

knowledge of the contents of a document concerning a credit union by reason

only that the document has been filed with the superintendent or is available

for inspection at an office of the credit union.

Reliance

21. A

credit union or a guarantor of an obligation of the credit union may not assert

against a person dealing with the credit union or with a person who has

acquired rights from the credit union that

(

a) this Act, the

regulations, articles or by-laws of the credit union have not been complied

with;

(

b) the persons named as

directors in the most recent notice sent to the superintendent under this Act

are not the directors of the credit union;

(

c) the place named in

the most recent notice sent to the superintendent under this Act is not the

registered office of the credit union;

(

d) a person held out by the credit union as a director,

officer or agent of the credit union has not been appointed or does not have

authority to exercise the powers or perform the duties that are customary in

the business of the credit union or usual for that director, officer or agent;

(

e) a document issued by

a director, officer or agent of the credit union with actual or usual authority

to issue the document is not valid or genuine; and

(

f) financial assistance

to members or directors or a sale, lease or exchange of all or substantially

all of the property of the credit union was not authorized,

except where the person has or, by virtue of that person's position with

or relationship to the credit union ought to have, knowledge of that fact.

PART III

REGISTERED OFFICE AND RECORDS

Registered office

(1) A

credit union shall at all times have a registered office in the place within

the province specified in its articles.

(2) A notice of registered office shall be sent to

the superintendent together with the articles that designate the place of the

registered office of the credit union.

(3) The directors of a credit union may change the

address of the registered office within the place specified in the articles.

(4) A credit union shall file a notice of a change

of registered office with the superintendent, within 15 days after a change of

address of its registered office.

Branch office

23. A

credit union may establish or relocate a branch office of the credit union as

prescribed by regulation.

Records

24. A

credit union shall prepare and maintain, at its registered office or at another

place in the province designated by the directors, records containing

(

a) copies of the

articles and the by-laws and all amendments to them;

(

b) the executed minutes

of membership meetings and resolutions of members;

(

c) a register of directors, officers and

committee members setting out the names, residence addresses and principal occupations

of all persons who are or have been directors, officers or committee members of

the credit union with the dates on which each became or ceased to be a

director, officer or committee member;

(

d) a members' register setting out the names and

the latest known addresses of its members and the number and issue price of the

membership shares held by each member; and

(

e) the accounting

records and the executive minutes of meetings and resolutions of the directors

and a committee appointed by the directors.

Examination of

records

(1) The

members of a credit union, their agents and legal representatives may examine

the records referred to in paragraphs 24 (a),

(

b) and (

c) during the normal business hours of the credit union and may take

extracts from them without charge.

(2) The members of the credit union, their agents

and legal representatives may examine the members' register referred to in paragraph

24 (

d) during the normal business hours of the

credit union and may , on payment of a reasonable fee,

receive from the credit union a copy of the members' register.

(3) A request made under subsection (1) shall have

attached an affidavit of the applicant that

(

a) states the name and address of the applicant;

(

b) is made by a director or officer of the

corporation if the applicant is a corporation; and

(

c) states that the register shall not be used by

a person except for the purpose relating to the affairs of the credit union.

(4) A person who uses a register for a purpose not

related to the affairs of the credit union commits an offence.

(5) A credit union shall make the members'

register available at a meeting of members for examination by the members.

(6) The directors of a credit union or the

authorized representative of the board of directors may examine the records of

the credit union at all reasonable times without charge.

(7) The guarantee corporation or a person

authorized by the guarantee corporation may examine the records of a credit

union at all reasonable times without charge.

Form of records

(1) All

registers and other records required by this Act to be prepared and maintained

may be in a bound or loose-leaf form or in a photographic film form, or may be

entered or recorded by a system of mechanical or electronic data processing or

other information storage device that is capable of reproducing the required

information in intelligible written form within a reasonable time.

(2) A credit union and its agents shall take

reasonable precautions to

(

a) prevent loss or destruction of;

(

b) prevent falsification of entries in; and

(

c) facilitate detection and correction of

inaccuracies in,

the registers and other records required

by this Act to be prepared and maintained.

PART IV

CAPITALIZATION AND OPERATING STANDARDS

Member shares

(1) Member

equity shares of a credit union shall have an issue price fixed by the articles

and that price shall not be less than $5 a share.

(2) A member of a credit union shall purchase and

hold not fewer than the number of fully paid member equity shares that is prescribed

by regulation.

(3) Notwithstanding subsection (2), the by-laws of

a credit union may permit or require that members hold more than the number of

member equity shares that are prescribed by regulation.

Shares other than

members' equity shares

(1) In

addition to member equity shares, the articles of a credit union may provide

for the issuing of surplus shares and other shares with the approval of the

superintendent.

(2) Where the articles provide for the issuing of

classes of shares in addition to member equity shares, there shall be set out

in the articles

(

a) the maximum number of shares in each class

other than surplus shares that the credit union is entitled to issue;

(

b) the total consideration to be paid for each

class of shares other than surplus shares; and

(

c) the rights, privileges, restrictions and conditions,

including dividends, attaching to the shares of each class.

(3) The superintendent shall not approve the

issuing of a class of shares other than member equity shares or surplus shares

if, in the opinion of the superintendent, issuing those shares would

(

a) not be consistent with the purpose of a credit

union generally;

(

b) not be in the financial interest of the credit

union; or

(

c) increase the risk that the credit union would

make a claim against the guarantee corporation.

(4) Member equity shares shall rank behind all

other classes of shares issued by the credit union and holders of member equity

shares shall not, upon the winding-up or liquidation of a credit union, be entitled

to reconsider, in whole or in part, their member equity shares until the

amounts outstanding on all other classes of shares have been paid in full.

Dividend or patronage

refund

29. A

credit union that has met the capital requirement prescribed in the regulations

may, with the approval of the members of the credit union, issue a dividend or

patronage refund as long as the dividend or patronage refund does not reduce

capital below that prescribed in the regulations.

Purchase of

surplus shares

30. A

credit union may in its by-laws provide that the whole of a patronage refund or

dividend on shares to be paid or credited to a member, or a part of the

patronage refund or dividends on shares that may be specified in the by-laws of

the credit union, may be applied to purchase on behalf of the member, surplus

shares of the credit union, up to the number that may be specified in the

by-laws.

Exception

(1) Nothing

section 29 affects the payment of a dividend

on shares other than member equity or surplus shares if the dividend is

required to be paid in accordance with the terms of a share certificate.

(2) A payment authorized under subsection

(1) shall be disclosed in the notes of the financial statements of the credit

union.

Liability limited

32. A

member is not responsible for

an act, default or liability of the credit union

or for an engagement, claim, payment, loss, injury, transaction, matter or

thing relating to or connected with the credit union.

Remedy

33. This

Act shall not curtail, abridge or defeat a remedy for the recovery

(

a) from the borrower of money loaned by a credit

union in violation of this Act; and

(

b) from the member of a credit union of an amount

withdrawn in excess of the amount contained in a member's deposit account.

Unclaimed balances

34. Where

a deposit account contains less than an amount prescribed by regulation and

business has not been transacted in connection with the account over a period

prescribed by regulation, the credit union may deal with the account in

accordance with the regulations.

Member right to

withdraw deposits

(1) A

member may withdraw an amount contained in his or her deposit account together

with accrued interest

(

a) during the normal business hours of the credit

union at the credit union; or

(

b) through electronic withdrawal that may be provided

by the credit union.

(2) Notwithstanding subsection (1), a credit union

may require in writing, not more than 90 days' notice in writing of a member's

intention to withdraw an amount contained in the member's deposit account.

(3) Subsections (1) and (2) do not apply in

relation to deposits placed with a credit union for a stated term or an amount

contained in a deposit account on which a bill of exchange payable on demand

may be drawn.

Trust funds

(1) Except

where the credit union is the trustee, a credit union is not bound to see to

the execution of a trust, whether express, implied or constructive, to which a

share or deposit is subject, and where an account is subject to a trust of

which the credit union has notice, the cheque, bill of exchange, withdrawal

slip, or receipt of the person

(

a) in whose name the account stands; or

(

b) who is, according to the document creating the

trust, entitled to deal with the trust,

is, notwithstanding this kind of trust,

sufficient authorization to and a valid and binding discharge of the credit

union and the credit union is not bound to see to the application of money paid

in relation to that cheque, bill of exchange, withdrawal slip or receipt.

(2) Unless the instrument of trust permits, an

amount contained in a deposit account held by a trustee in trust for a named

beneficiary or otherwise may not be charged to secure a loan or obligation.

Partial payment

on death

37. Where

a member of a credit union dies and there is no executor of a will of the deceased

member or administrator of the estate of the deceased member, the credit union

may on the receipt of an affidavit or other proof of death and proof of claim

that may be required by the credit union, pay an amount prescribed by

regulation out of a deposit account of the deceased member to the person who

appears to be entitled to the amount of the deceased member's interest and

payment made under this

section releases the credit union from further

liability in relation to the money paid.

Loans

38. Subject to those terms, conditions, restrictions

or limitations that may be established by the guarantee corporation, a credit

union shall establish, in accordance with the regulations, loan policies in relation

to the lending activities of the credit union.

Lien

(1) Notwithstanding

another provision of this Act, a credit union has a lien on the deposits and

shares of a member or other person to whose credit the deposits and shares

stand in the records of the credit union, and interest on them, for indebtedness

due or accruing due to it by the member or other person or for an obligation in

relation to the indebtedness and the deposits and shares may not be withdrawn

or redeemed unless the credit union consents.

(2) A credit union may apply the deposits and

shares on which it has a lien, and interest on them, to an obligation in

relation to the indebtedness which is in default without notice to any person.

(3) For the purposes of subsection (2), an

indebtedness shall be considered to be in default where

(

a) an amount of the principal or interest is not

paid on the date on which it becomes due and payable; or

(

b) there has been a failure to observe or perform

an obligation with respect to the indebtedness.

Liquid assets

(1) A

credit union shall maintain liquidity in accordance with the regulations.

(2) A credit union may make investments for the

purpose of meeting the requirements in relation to liquidity only in accordance

with the regulations.

Investments

41. A

credit union may make investments in addition to those referred to in

subsection 40(2) only in accordance with the regulations.

Doubtful loans

42. A

credit union shall maintain an allowance for doubtful loans in accordance with

the regulations.

Equity

43. A

credit union shall maintain equity in accordance with the regulations.

Borrowing

44. A

credit union shall not borrow money in excess of the amount prescribed by

regulation.

Matching

45. A

credit union shall match the term and return of its investments and loans with

the term and return of its members' deposits in the credit union in accordance

with the regulations.

Insurance

required

46. A

credit union shall maintain those types and minimum levels of insurance that may

be required by the guarantee corporation or as may be prescribed by regulation.

Sound business

and financial practices

47. A

credit union shall comply with sound business and financial practices that are set

out by the guarantee corporation.

PART V

MEMBERSHIP

Membership

(1) The

membership of a credit union consists of those members defined in accordance

with this Act and the articles and by-laws of the credit union.

(2) Subject to the by-laws of the credit union and

laws of general application, the directors of a credit union may refuse to

accept an application for membership if they are satisfied that it is not in

the interest of the credit union to accept the application.

(3) A person under 19 years of age may be accepted

as a member of a credit union and shares may be held and money may be received

by the credit union in that person's name or in the name of a trustee for that

person if the trustee is a member or is eligible to be a member of the credit

union.

(4) A credit union may, where provided in its

articles and by-laws and in accordance with the regulations, provide associate

membership in that credit union.

(5) A credit union shall not be a member or an

associate member of another credit union.

Bond of

association

(1) The

articles of a credit union may provide that membership in the credit union

shall be limited to groups having a bond of association.

(2) Notwithstanding subsection (1), a member of

the credit union who leaves a group having a bond of association may retain membership

in the credit union and all the rights and privileges of a member where the

by-laws of the credit union so provide.

Membership termination

50. Membership

in a credit union may be terminated, withdrawn or refused in accordance with

the by-laws of the credit union.

Remedy preserved

51. The

termination of or withdrawal from membership in a credit union does not release

a person from a liability to the credit union.

By-laws

(1) Subject

to the articles of a credit union, the members of a credit union may at an

annual general meeting or special meeting called for that purpose by special

resolution of the members enact, amend or repeal by-laws in relation to those

matters authorized or required by this Act to be dealt with in the by-laws of

the credit union.

(2) Notwithstanding subsection (1), a by-law and

an amendment or a repeal of a by-law is not effective until it is approved by

the superintendent.

(3) A proposed by-law or amendment or repeal of a

by-law may be sent to the superintendent for approval before its adoption by

the members of the credit union.

(4) Where a by-law, amendment or repeal of a

by-law is approved by the superintendent before its adoption by the members of

a credit union,

(

a) the by-law, amendment or repeal of the by-law

shall be adopted by the members of the credit union within 30 days after

receipt of the approval of the superintendent; and

(

b) a certified copy of the adopted by-law or the

amendment or repeal of the by-law shall be filed with the superintendent within

30 days after its adoption by the members of the credit union or a later time

that may be authorized by the superintendent.

(5) Where a credit union fails to comply with

subsection (4), the by-law, amendment or repeal is void.

Members bound

53. The

articles and by-laws of a credit union bind the credit union and its members.

Place of meetings

54. Meetings

of the members of a credit union shall be held at the place within the province

provided in the by-laws or, in the absence of a provision, at the place within

the province that the directors determine.

Calling meetings

55. The

directors of a credit union

(

a) shall call an annual meeting of members to be

held within 4 months, or another time that is approved by the superintendent, after

the end of the fiscal year of the credit union

(

i) to consider the annual report of the

directors, the financial statements of the credit union and the auditor's report,

(ii) to appoint the auditor,

(iii) to elect directors, and

(iv) to deal with other matters that may properly

come before the meeting; and

(

b) may call a special meeting of members.

Record date

56. The

record date for determining the members entitled to receive notice of a meeting

of members and entitled to vote at that meeting shall be at the close of

business 30 days preceding the day on which the notice is given.

Notice of

meetings

(1) Notice

of the time and place of a meeting of members shall be given not less than 14

days and not more than 30 days before the meeting to each member entitled to

vote at the meeting.

(2) Where a meeting of members is adjourned by one

or more adjournments for more than 7 days, notice of the adjourned meeting

shall be given as for an original meeting.

(3) All business transacted

(

a) at a special meeting of members; or

(

b) at an annual meeting of members, except

consideration of the annual report of the directors, the financial statements

of the credit union, the auditor's report, election of directors, appointment

of the auditor and other business authorized by the by-laws to be transacted at

an annual meeting,

shall be considered to be special

business.

(4) Notice of a special meeting of members shall

state

(

a) the nature of that business in sufficient

detail to permit the member receiving the notice to form a reasoned judgment on

it; and

(

b) the text of a special resolution to be

submitted to the meeting or, if the full text is too lengthy for convenient

inclusion in the notice, a

summary of the text.

Waiver of notice

(1) A

member or another person entitled to attend a meeting of members may waive

notice of the meeting, and attendance of the member or other person at the

meeting is a waiver of notice of the meeting, except where that person attends

for the express purpose of objecting to the transaction of business on the

ground that the meeting was not lawfully called.

(2) An objection made under subsection (1) shall

be made at the commencement of the meeting.

Member notice

(1) A

member entitled to vote at a meeting of members may

(

a) submit to the credit union notice of a matter

that the member proposes to raise at the meeting, afterwards referred to as a

"proposal"; and

(

b) discuss at the meeting a matter in respect of

which the member would have been entitled to submit a proposal.

(2) A credit union shall set out a proposal in the

notice of the meeting at which the proposal is to be presented.

(3) Where requested by a member submitting a

proposal, the credit union shall include in the notice of meeting or attach to

it a statement by the member of not more than 200 words in support of the

proposal, and the name and address of the member.

(4) A proposal may include nominations for the

election of directors if the election of those nominated as directors would

conform with the provisions of this Act, the articles and the by-laws of the

credit union.

(5) A credit union is not required to comply with

subsections (2) and (3) where

(

a) the proposal is not submitted to the credit

union at least 30 days before the anniversary date of the previous annual

meeting of members;

(

b) the directors of the credit union reasonably

believe that the proposal is submitted by the member primarily for the purpose

of enforcing a personal claim or redressing a personal grievance against the

credit union or its directors, officers or members or for a purpose that is not

related in a significant way to the business or affairs of the credit union;

(

c) the credit union, at the member's request,

included a proposal in a notice of meeting of members held within 2 years preceding

the receipt of that request and the member failed to present the proposal at

that meeting;

(

d) substantially the same proposal was submitted

to the members in a notice of a meeting of members held within 2 years

preceding the receipt of the member's request, and the proposal was defeated;

(

e) the directors of the credit union reasonably

believe that the rights conferred by this

section are being abused to secure

publicity.

(6) A credit union or person acting on its behalf

shall not incur liability by reason only of circulating a proposal or statement

in compliance with this section.

(7) Where a credit union refuses to include a

proposal in a notice of meeting, the credit union shall, within 10 days after

receiving the proposal, notify the member submitting the proposal of its

intention to omit the proposal from the notice of meeting and send to the

member a statement of the reasons for the refusal.

(8) On the application of a member claiming to be

aggrieved by a refusal under subsection (7), the court may restrain the holding

of the meeting to which the proposal is sought to be presented and make another

or further order it thinks appropriate.

(9) The credit union or a person claiming to be

aggrieved by a proposal may apply to the court for an order permitting the

credit union to omit the proposal from the notice of meeting, and the court, where

it is satisfied that subsection (5) applies, may make an order that it thinks

appropriate.

(10) An applicant under subsection (8) or (9) shall

give the superintendent notice of the application and the superintendent is

entitled to appear and be heard in person or by counsel.

Quorum

(1) A

quorum at a meeting of members shall be as set out in the by-laws of the credit

union.

(2) Where a quorum is not present at the opening

of, or during, a meeting of members, the members present shall adjourn the

meeting to a fixed time and place.

Voting

(1) A

member of a credit union who is 19 years of age or over may vote at a meeting

of members.

(2) A member of a credit union has only one vote

on a question that may be voted on at a meeting of members.

Corporate representation

(1) Where

a corporation or association of persons is a member of a credit union, the

credit union shall recognize a natural person authorized by a resolution of the

directors or governing body of the corporation or association of persons to

represent it at meetings of members of the credit union.

(2) Notwithstanding

section 63 , a natural person authorized under subsection

(1) may exercise, on behalf of the corporation or association that person

represents, all the powers the corporation or association could exercise if it

were a natural person.

Voting by proxy

63. A

member shall not vote by proxy at a meeting of members of a credit union.

Joint membership

64. A

credit union may in its by-laws provide that 2 or more persons may jointly hold

a membership in a credit union but that membership is entitled to only one

vote.

Executors and

administrators

65. An

executor or administrator holding a membership in a credit union in the

capacity of executor or administrator shall represent that membership at

meetings of the credit union and may vote as a member.

Ballot

66. A

credit union may in its by-laws establish procedures to permit members to vote

by mail ballot or by other means.

Requisition by

members to call meeting

(1) The

directors shall call a special meeting of the members on receipt of a written

request specifying the purpose of the meeting from the lesser of 10% of the

members or 500 members of the total credit union membership having a right to

vote at the meeting.

(2) The request referred to in subsection (1), may

consist of several documents in the same form, each signed by one or more

members and shall state the business to be transacted at the meeting and shall

be sent to the registered office of the credit union.

(3) On receiving the request referred to in

subsection (1), the directors shall call a meeting of members to transact the

business stated in the request, unless the business of the meeting as stated in

the request includes a matter described in paragraphs 59(5)(

b) to (e).

(4) Where the directors do not, within 30 days

after receiving the request referred to in subsection (1), call a meeting, a

member who signed the request may call the meeting.

(5) A meeting called, held and conducted in

accordance with this

section is for all purposes a properly called, held and

conducted meeting of members of the credit union.

(6) Unless the members otherwise resolve at a

meeting called under subsection (4), the credit union shall reimburse the

members for the expenses reasonably incurred by them in requesting, calling and

holding the meeting.

(7) A member calling a meeting under subsection

(4) shall give the superintendent notice of the application and the superintendent

is entitled to appear and be heard in person or by counsel.

Meeting called by

superintendent

(1) Where

it is impractical to call a meeting of members of a credit union in the manner

in which meetings of members may be called or to conduct the meeting in the

manner required by this Act and the by-laws, or for another reason the

superintendent thinks appropriate, the superintendent may order a meeting to be

called, held and conducted in a manner that he or she directs.

(2) The superintendent may order that the quorum

required by this Act or the by-laws be varied or dispensed with at a meeting

called, held and conducted in accordance with this section.

(3) A meeting called, held and conducted in

accordance with this

section is for all purposes a properly called, held and

conducted meeting of members of the credit union.

PART VI

DIRECTORS AND OFFICERS

Directors

(1) A

credit union shall in its by-laws establish a fixed number of directors, which

number shall not be fewer than 5.

(2) The directors of a credit union shall

(

a) exercise the powers of the credit union

directly or indirectly through the employees and agents of the credit union;

and

(

b) direct the management of the business and

affairs of the credit union.

Qualifications

70. A

person who is a citizen of Canada, 19 years of age or older, a member of the

credit union and who satisfies the requirements set out in the by-laws of the

credit union may be a director, unless he or she

(

a) is an undischarged bankrupt person;

(

b) is an employee of a credit union or the

guarantee corporation;

(

c) is not bondable;

(

d) is an auditor, or a member of the auditor's

firm, of that credit union;

(

e) is a parent, child, grandchild, spouse,

brother or sister or in-law of an employee of the credit union, not necessarily

living in the same residence of that employee;

(

f) is the solicitor of that credit union;

(

g) is a representative of a bargaining agent for

the employees of that credit union; or

(

h) is a public employee whose official duties are

concerned with the affairs of credit unions.

Terms of office

(1) A

director named in the articles holds office from the issue of the certificate

of incorporation until the first meeting of members.

(2) The members of a credit union shall, by

ordinary resolution at the first meeting of the members and at each succeeding

annual meeting of the members at which an election of directors is required,

elect directors to hold office for a term established in the by-laws and that

term shall not exceed 3 years.

(3) Notwithstanding the provisions of subsection

(2), the by-laws of a credit union may provide the manner in which members of a

credit union elect directors for a district at a district meeting.

(4) It is not necessary that all directors elected

at a meeting of members hold office for the same term.

(5) Notwithstanding anything contained in this

section, if directors are not elected at a meeting of the members, the

incumbent directors continue in office until their successors are elected.

Ceasing to hold

office

(1) A

director of a credit union ceases to hold office when he or she

(

a) dies or resigns;

(

b) is removed from office in accordance with

section

73 ; or

(

c) is disqualified under

section 70 .

(2) A resignation of a director becomes effective

at the time a written resignation is received by the credit union, or at the

time specified in the resignation, whichever is later.

Removal of directors

(1) The

members of a credit union may by ordinary resolution at a special meeting called

under

section 67 remove a director from office.

(2) A vacancy created by the removal of a director

from office may be filled at the meeting of the members at which the director

is removed or, if not so filled, may be filled under

section 75 .

(3) Where a vacancy is not filled under subsection

(2) the superintendent may appoint a director to fill that vacancy.

Reasons

(1) A

director who

(

a) resigns;

(

b) receives a notice or otherwise learns of a

meeting of members called for the purpose of removing the director from office;

(

c) receives a notice or otherwise learns of a

meeting of directors or members at which another person is to be appointed or

elected to fill the office of director instead of that person whether because

of that person's resignation or removal or because that person's term of office

has expired or is about to expire,

is entitled to submit to the credit union

a written statement giving the reasons for the resignation or for opposing an

action or resolution proposed for the purposes described in paragraphs (

b) and

(c).

(2) Where a director resigns under paragraph

(1)(a), he or she may request that the credit union send to members of the

credit union and the superintendent, a copy of the statement referred to in

subsection (1) and where a request is made, the credit union shall immediately

comply with that request.

(3) Where a director receives a notice under

paragraphs (1)(

b) or (c), the credit union shall immediately send a copy of the

statement referred to in subsection (1) to members of that credit union and to

the superintendent.

(4) A credit union or person acting on its behalf

shall not incur liability by reason only of circulating a statement in

compliance with subsections (2) or (3).

Vacancy

(1) A

quorum of directors may fill a vacancy among the directors, except a vacancy

resulting from an increase in the number of directors or from the members'

failure to elect the required number of directors.

(2) Where the members fail to elect the required

number of directors at a meeting, the directors elected at that meeting may

exercise all the powers of the directors where the number of directors so

elected constitutes a quorum.

(3) Where there is a failure to elect the required

number of directors at a meeting of members, the directors then in office shall

immediately call a meeting of members to fill the vacancy and, if they fail to

call a meeting or if there are no directors then in office, the meeting may be

called by a member.

(4) Notwithstanding subsection (1), the articles

or by-laws may provide that a vacancy among the directors shall be filled only

by a vote of the members.

(5) Where a vacancy among the directors is filled

in accordance with subsection (1), the appointment shall be ratified at the

next meeting of members.

Notice of change

of directors

(1) Within

30 days after a change of directors occurs, a credit union shall send to the

superintendent a notice setting out the change and the superintendent shall

file the notice.

(2) An interested person or the superintendent may

apply to the court for an order requiring a credit union to comply with

subsection (1), and on the application the court may so order and make any

further order it thinks appropriate.

(3) A director named in the articles or in a

notice sent by the credit union to the superintendent under subsection (1) is

presumed for the purposes of this Act to be a director of the credit union.

Meetings

(1) Unless

the articles or by-laws otherwise provide, the directors of a credit union may

meet at a place and on notice that the directors may determine.

(2) Unless the articles or by-laws otherwise

provide, a majority of the required number of directors constitutes a quorum at

a meeting of directors and, notwithstanding a vacancy among the directors, a quorum

of directors may exercise all the powers of the directors.

(3) Unless the by-laws otherwise provide, a notice

of a meeting of directors need not specify a matter that is to be dealt with at

the meeting except where that matter

(

a) is a question or matter requiring the approval

of the members;

(

b) is respecting the filling of a vacancy among

the directors;

(

c) is respecting the issuing or redemption of

shares of the credit union other than membership shares; or

(

d) requires the approval of financial statements

referred to in subsection 91 (1).

(4) A director may waive a notice of a meeting of

directors and attendance of a director at a meeting of directors is a waiver of

notice of the meeting, except where a director attends a meeting for the express

purpose of objecting to the transaction of business on the grounds that the

meeting was not lawfully called, provided that the objection is made at the

start of the meeting.

(5) Notice of an adjourned meeting of directors is

not required to be given if the time and place of the adjourned meeting is

announced at the original meeting.

(6) Subject to the by-laws, a director may

participate in a meeting of directors or a committee appointed by the directors

under subsection 78(1) and

section 79 by means of telephone or other communication

facilities that permit all persons participating in the meeting to hear each

other, and a director participating in the meeting by those means shall be considered

for the purposes of this Act to be present at that meeting.

Appointing committees

(1) The

directors of a credit union may appoint committees and may delegate to those

committees the powers of the directors.

(2) The members of a committee appointed by the

directors shall be members of the credit union and the chairperson of the committee

shall be a director of the credit union.

(3) A committee appointed by the directors shall

keep minutes of its proceedings and shall submit to the directors at each

meeting of directors the minutes of the committee's proceedings during the

period since the last meeting of the directors.

(4) Notwithstanding subsection (1), a committee

appointed by the directors shall not

(

a) submit to the members a question or matter

requiring approval of the members;

(

b) fill a vacancy among the directors;

(

c) issue or redeem shares, except in the manner

and on the terms authorized by the directors;

(

d) approve a financial statement referred to in

subsection 91 (1); or

(

e) approve or amend policies that are set by the

board.

Establishing committees

79. The directors of a credit union shall establish

those committees which the minister may prescribe by regulation and those

committees shall perform the duties and have the powers provided for in the

regulations.

Validity of acts

80. An

act of a director or an officer is valid notwithstanding an irregularity in the

election or appointment of, or a defect in the qualifications of, the director

or officer.

Resolution

(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 appointed by the

directors

(

a) satisfies all requirements of this Act

relating to meetings of directors or committees appointed by the directors;

(

b) is valid as if it had been passed at a meeting

of directors or a committee appointed by the directors; and

(

c) is effective from the date specified in the

resolution, which shall not be before the date on which the first director

signed the resolution.

(2) A copy of every resolution referred to in

subsection (1) shall be kept with the minutes of the proceedings of the

directors or of a committee appointed by the directors.

Liability

(1) Directors

of a credit union who vote for or consent to a resolution authorizing a payment

that is contrary to

section 29 or the payment of an indemnity that is contrary

section 88 are jointly and individually liable to restore to the credit union

an amount so paid and not otherwise recovered by the credit union.

(2) Where a loan is made by a credit union to a

member in violation of this Act, the person receiving the loan and all

directors, officers and members of committees of the credit union who, with

knowledge of the violation, made or approved the loan are jointly and individually

liable to the credit union for the unpaid balance of the loan, with interest.

(3) A director, an officer or a member of a

committee who satisfies a judgment made as a result of an application to the

court and under this

section is entitled to contribution from all other persons

who by virtue of this Act are also liable.

(4) A director, an officer or a member of a

committee who is liable under subsection (1) or (2) may apply to the court for

an order compelling a member or other recipient to pay money or deliver property

to the director, officer or member of a committee that was improperly paid or

distributed to the member or other recipient.

(5) An action to enforce a liability imposed by

subsection (1) or (2) shall be commenced within 2 years from the date of having

received written notification of the complaint.

Duty to report

83. A

director of a credit union who becomes aware that the credit union is unable to

make a lawful payment it is required to make shall, within 7 days after

becoming aware of it, give written notice of the matter to the guarantee

corporation.

Designation of

officers

(1) The

directors may elect or appoint officers of the credit union, specify their

duties and delegate to them powers to manage the business and affairs of the

credit union, except powers to

(

a) submit to the members a question or matter

requiring the approval of the members;

(

b) fill a vacancy among the directors;

(

c) issue or redeem shares, except in the manner

and on the terms authorized by the directors;

(

d) approve financial statements referred to in

subsection 91 (1); or

(

e) approve or amend policies that are set by the

board.

(2) A director may become an officer of the credit

union and a member of a committee but an officer cannot be a member of the

audit committee.

(3) Two or more offices of the credit union may be

held by the same person.

(4) Subsections (1) to (3) are subject to the

articles and by-laws of the credit union.

Remuneration and

expenses

85. The

directors of a credit union may be paid remuneration and reimbursed for those

reasonable expenses incurred in the performance of their duties, as set out in the

by-laws of the credit union.

Duty of care

(1) A

director and officer of a credit union, in exercising the powers and

discharging the duties of a director or an officer, shall

(

a) act honestly and in good faith with a view to

the best interests of the credit union; and

(

b) exercise the care, diligence and skill that a

reasonably prudent person would exercise in comparable circumstances.

(2) A provision in a contract, the articles, the

by-laws or a resolution shall not relieve a director or an officer from the

duty to act in accordance with this Act.

(3) This

section is in addition to and not a

derogation from another enactment or rule of law relating to the duty or

liability of directors or officers of a credit union.

Dissent

(1) A

director who is present at a meeting of directors shall be considered to have

consented to a resolution passed or action taken at the meeting, unless the

director

(

a) requests that his or her dissent be recorded

in the minutes of the meeting;

(

b) sends a written dissent to the secretary of

the meeting before the meeting is adjourned; or

(

c) sends a dissent by certified mail to the

registered office of the credit union within one business day after the meeting

is adjourned.

(2) A director who votes for or consents to a

resolution is not entitled to dissent under subsection (1).

(3) A director who was not present at a meeting at

which a resolution was passed or an action was taken shall be considered to

have consented to a resolution passed or action taken, unless within 7 days

after becoming aware of the resolution the director

(

a) causes his or her dissent to be placed with

the minutes of the meeting; or

(

b) sends a dissent by certified mail to the

registered office of the credit union.

(4) A director who relies in good faith on

(

a) financial statements of the credit union

represented by an officer or the auditor of the credit union to reflect fairly

the financial position of the credit union; or

(

b) the report of a lawyer, accountant, engineer,

appraiser or another person whose profession lends credibility to a statement

made by him or her

is not liable under

section 82 .

Indemnification

(1) Except

in relation to an action

(

a) by or on behalf of the credit union or

corporation to procure a judgment in its favour; or

(

b) by or on behalf of the superintendent or the

guarantee corporation, in which cases the approval of the court shall first be

obtained,

a credit union may indemnify a director or

an officer of the credit union or a person who acts or acted at the credit

union's request as a director or an officer of a corporation of which the

credit union is or was a member, shareholder or creditor, and his or her heirs

and legal representatives, against all costs, charges and expenses, including

an amount paid to settle an action or satisfy a judgment, reasonably incurred

by him or her in relation to a civil, criminal or administrative action or

proceeding to which he or she is made a party by reason of being or having been

a director or an officer of the credit union or corporation, if the director or

officer

(

c) acted honestly and in good faith with a view

to the best interest of the credit union; and

(

d) in the case of a criminal or administrative

action or proceeding that is enforced by a monetary penalty, had reasonable

grounds for believing the conduct was lawful.

(2) A person referred to in subsection (1) is

entitled to indemnity from the credit union in relation to all costs, charges

and expenses reasonably incurred in connection with the defence of civil,

criminal or administrative action or proceeding to which that person is made a

party by reason of being or having been a director or an officer of a credit

union or corporation if the person seeking indemnity

(

a) was substantially successful on the merits in

defence of the action or proceeding; and

(

b) fulfils the conditions set out in paragraphs

(1)(

c) and (d).

(3) A credit union may purchase and maintain

insurance for the benefit of a person referred to in subsection (1) against

liability incurred by that person

(

a) as a director or an officer of the credit

union, except where the liability relates to the failure of that person to act

honestly and in good faith with a view to the best interests of the credit

union; and

(

b) as a director or an officer of another

corporation where he or she acts or acted in that capacity at the credit

union's request except where the liability relates to the failure to act

honestly and in good faith with a view to the best interests of the corporation.

(4) A credit union or a person referred to in

subsection (1) may apply to the court for an order approving an indemnity under

this

section and the court may so order and make a further order it thinks appropriate.

(5) An applicant under subsection (4) shall give

the guarantee corporation notice of the application and the guarantee

corporation is entitled to appear, to be represented and be heard in person or

by counsel.

(6) On an application under subsection (4), the

court may order notice to be given to a person and that person is entitled to

appear to be represented and be heard in person or by counsel.

PART VII

RETURNS AND FINANCIAL DISCLOSURE

Fiscal year

89. The

fiscal year of a credit union ends on December 31 of each year.

Annual returns

(1) A

credit union shall, within 4 months after the end of each fiscal year, or a later

time that may be approved by the superintendent, complete and file a return

with the guarantee corporation showing, as of the end of the preceding fiscal

year,

(

a) the name of the credit union;

(

b) the address of the registered office of the

credit union;

(

c) the date when the latest annual meeting of the

members of the credit union was held;

(

d) the names, residence addresses and principal

occupations of the directors of the credit union;

(

e) the names and addresses of officers of the

credit union and the most senior employee of the credit union; and

(

f) other information in relation to the credit

union that may be required by this Act or the guarantee corporation.

(2) The return shall be on a form provided by the

superintendent and shall be signed and the contents of it shall be certified to

be true by a director or an officer of the credit union.

(3) In addition to the return required under

subsection (1), the superintendent may require a credit union to file, within a

time that he or she specifies, an additional return containing other

information that the superintendent may require.

(4) The minister may set a filing fee payable by a

credit union to the guarantee corporation upon the filing of a return under

this section, and the minister may set additional fees for late filing.

(5) A credit union shall provide to the guarantee

corporation, periodic financial reports on or before the dates that are

prescribed by regulations.

Annual financial

statements

(1) The

directors of a credit union shall place before the members at every annual

meeting

(

a) financial statements in relation to the

preceding fiscal year;

(

b) the report of the auditor; and

(

c) other information in relation to the financial

position of the credit union and the results of its operations that may be required

by this Act or the regulations, the articles or by-laws of the credit union.

(2) The financial statements required under

subsection (1) shall, except as otherwise required by this Act or the guarantee

corporation, be prepared in accordance with Canadian generally accepted accounting

principles.

(3) At each annual meeting of members of a credit

union the directors shall disclose

(

a) the aggregate amount of remuneration paid to

all directors;

(

b) the aggregate amount paid to all directors as

reimbursement for expenses incurred on credit union business;

(

c) the details of loans made to directors or

officers and to persons with whom directors or officers have a material interest,

which do not conform to the credit union's ordinary lending practices for

members who are not directors or officers; and

(

d) other information that may be required to be

disclosed by the regulations.

(4) A credit union shall, before each annual

meeting of members, send a copy of the documents referred to in subsection (1) to

the guarantee corporation.

(5) A credit union shall, upon request, provide to

the guarantee corporation information which the guarantee corporation may

reasonably require to enable it to discharge its responsibilities under this

Act.

Conditions re:

financial statements

92. A

credit union shall not issue, publish or circulate copies of financial

statements referred to in subsection 91

(1) unless the financial statements are

(

a) approved by the directors and the approval is

evidenced by the signatures of 2 or more of the directors on the statements;

and

(

b) accompanied by the report of the auditor of

the credit union.

Request for documents

93. A

credit union shall, on request of a member, provide to the member a copy of the

approved financial statements and other documents referred to in subsection 91 (1).

Auditors

(1) At

the annual meeting of a credit union the members of that credit union shall

appoint an auditor who is licensed under the Public Accountancy Act.

(2) A person is not disqualified from being an

auditor of a credit union by reason only of the person's membership in the

credit union.

Auditor removal

(1) The

members of a credit union may at an annual meeting or a special meeting remove

from office an auditor appointed by them.

(2) A vacancy created by the removal of an auditor

may be filled at the meeting at which the auditor is removed.

(3) Notice of a meeting called for the purpose of

removing an auditor from office shall be given to the guarantee corporation and

the guarantee corporation is entitled to be represented and heard at that

meeting.

Vacancy

(1) The

directors shall immediately fill a vacancy in the office of auditor.

(2) An auditor appointed by the directors to fill

a vacancy under subsection (1) holds office until the next annual meeting.

Auditor appointed

by guarantee corporation

(1) If

a credit union does not have an auditor, the guarantee corporation may appoint

and fix the remuneration of an auditor and the auditor so appointed holds

office until an auditor is appointed in accordance with

section 96 .

(2) The guarantee corporation may appoint an

auditor to do a new audit on a credit union if the guarantee corporation

determines that it is necessary and the guarantee corporation may use that

report as the audited financial statement of that credit union.

(3) The remuneration of an auditor appointed under

subsections (1) and (2) shall be paid by the credit union.

Duty to attend

meetings

(1) The

auditor of a credit union shall attend those meetings as requested by the board

or the audit committee referred to in

section 103, of the credit union.

(2) The auditor shall be given not less than 10

days notice of a meeting the auditor is required to attend under this section.

(3) The costs of an auditor attending meetings

under this

section shall be paid by the credit union.

(4) An auditor or former auditor of a credit union

who fails without reasonable cause to comply with subsection (1) commits an

offence.

Examinations by

auditor

(1) The

auditor of a credit union shall make those examinations that he or she considers

necessary to enable him or her to report on the financial statements referred

to in subsection 91 (1) and on other financial

statements required by this Act, or the articles or by-laws of the credit union

to be placed before the members of a credit union.

(2) The auditor's examination referred to in

subsection (1) shall, except as otherwise required by this Act, or the guarantee

corporation, be conducted in accordance with Canadian generally accepted auditing

standards.

Superintendent or

guarantee corporation may enlarge scope

(1) The

superintendent or the guarantee corporation may enlarge or extend the scope of

the audit or direct that another or a particular examination be made or

procedure be established in a particular case where it is believed that the

public interest or the interest of the members requires.

(2) The credit union shall pay the costs and

expenses incurred in connection with a report or audit required under

subsection (1).

Right to demand

information

(1) On

the demand of the auditor of a credit union, the present or former directors,

officers, committee members, employees or agents of the credit union shall

furnish

(

a) information and explanations; and

(

b) access to records, documents, books, accounts

and vouchers of the credit union,

that are, in the opinion of the auditor,

necessary to enable the auditor to make the examination and report required

under

section 99 and that the directors,

officers, committee members, employees or agents are reasonably able to furnish.

(2) On the demand of the auditor of a credit

union, the directors of a credit union shall obtain from the present or former

directors, officers, employees and agents of a subsidiary of the credit union

and furnish to the auditor information or explanations that the present or former

directors, officers, employees and agents of the subsidiary are reasonably able

to furnish and that, in the opinion of the auditor, are necessary to enable the

auditor to make the examination and report required under subsection 99 (1).

(3) A person who, in good faith, makes an oral or

written communication under this

section is not liable in a civil action

arising from that communication.

Auditor's report

(1) The

auditor of a credit union shall make a report in writing

(

a) on the financial statements referred to in

subsection 91 (1) to the members of the credit

union not fewer than 10 days before the date of the annual meeting of the

members; and

(

b) on those other financial statements that may

be required by this Act or the articles or by-laws of the credit union to be

placed before the members on or before the date that the statement is

distributed.

(2) In a report required under subsection(1), the

auditor shall state whether, in the auditor's opinion, the financial statements

referred to in the report present fairly the financial position of the credit

union at the end of the fiscal year or other period to which it relates and the

results of the operation of the credit union and changes in its financial position

for that fiscal year or other period and whether

(

a) the auditor has obtained the information and

explanations required;

(

b) the examination has been made in accordance

with Canadian generally accepted auditing standards; and

(

d) reliance has been placed on the reports of

other auditors.

Audit committee

(1) A

credit union shall have an audit committee composed of not less than 3 members

of the credit union, none of whom are officers of the credit union.

(2) An audit committee shall meet at least

annually with the auditor to review the financial performance of the credit

union and perform those other functions that may be prescribed by the regulations.

(3) The auditor of a credit union or a member of

the audit committee may call a meeting of the committee.

(4) A director or an officer of a credit union

shall upon becoming aware of an error or misstatement in a financial statement

that the auditor or a former auditor has reported upon notify the audit committee

and the auditor.

(5) An auditor or former auditor of a credit union

who is notified or becomes aware of an error or misstatement in a financial

statement that the auditor has reported upon shall, where in the auditor's

opinion the error or misstatement is material, inform each director accordingly.

(6) Where, under subsection (5), the auditor or

former auditor informs the directors of an error or misstatement in a financial

statement, the directors shall

(

a) prepare and issue a revised financial

statement; and

(

b) otherwise inform the members and the guarantee

corporation.

(7) A director and an officer of a credit union

who knowingly fails to comply with subsection (4) or (6) is guilty of an

offence.

Duty of auditor

(1) It

is the duty of the auditor of a credit union to report in writing to the

directors of a credit union transactions or conditions that affect, or could

affect, the well-being of the credit union and that, in the opinion of the

auditor, are not satisfactory and require rectification and the auditor shall,

as occasion requires, make a report to the directors where

(

a) a change occurs in the circumstances of the

credit union that might materially and adversely affect the financial position

of the credit union or its ability to carry on or transact business as a going

concern;

(

b) there has been a violation of this Act;

(

c) there has been a violation of the Criminal Code ;

(

d) the credit union has entered into a

transaction that, in the opinion of the auditor, is not within the powers of

the credit union; or

(

e) the credit union has adopted or implemented a

business or financial practice and procedure that, in the opinion of the

auditor, may contribute to material losses by the credit union.

(2) An auditor who makes a report under subsection

(1) shall send that report in writing to the manager, audit committee and directors

of the credit union and the report shall be presented to the next meeting of

directors after the receipt of the report, and it shall be incorporated into

the minutes of that meeting and the auditor shall, at the time of sending the

report, provide a copy of the report to the guarantee corporation.

(3) An auditor is not required to make a report

under this

section unless the auditor becomes aware of the circumstances

described in subsection (1) in the ordinary course of the auditor's duties.

(4) Where as a result of an audit an auditor

prepares a management letter highlighting weaknesses and deficiencies in the

financial affairs of the credit union and other matters which may affect the

well being of the credit union, he or she shall provide a copy to the guarantee

corporation.

Additional requirements

(1) The

guarantee corporation may require that the auditor of a credit union report to

the guarantee corporation on the extent of the auditor's procedures in the

examination of the financial statements of the credit union and may require

that the auditor enlarge or extend the scope of that examination or direct that

another particular procedure be performed.

(2) The guarantee corporation may require that the

auditor of a credit union make a particular examination relating to the

adequacy of the procedures adopted by the credit union for the safety of its

creditors and members, or another examination that, in the opinion of the guarantee

corporation, the public interest may require.

(3) A requirement of the guarantee corporation

under subsections (1) and (2) shall be provided in writing to the auditor.

(4) The auditor of a credit union shall comply

with requirements of the guarantee corporation under subsection (1) or (2) and

shall make a written report to the guarantee corporation in relation to the

requirements immediately after complying with them.

(5) Costs or expenses incurred in relation to the

requirements of the guarantee corporation under subsection (1) or (2) shall be

borne by the credit union.

Access to papers

106. On

the request of the guarantee corporation, the auditor shall make available to

the guarantee corporation the working papers of the auditor used in conducting

an audit or preparing a report under this Act.

Qualified

privilege

107. An

oral or written statement or report made under this Act by the auditor of a

credit union has qualified privilege.

No liability

(1) An

auditor or former auditor of a credit union who in good faith makes an oral or

written statement or report under this Act shall not be liable in a civil

action arising from the statement or report.

(2) Subsection (1) does not relieve an auditor or

former auditor from liability in connection with a report referred to in

paragraph 91 (1)(

b) or subsection 99 (1).

PART VIII

FUNDAMENTAL CHANGES

Amendment of

articles

(1) Subject

to the approval of the superintendent under

section 111 ,

the articles of a credit union may be amended by special resolution of the

members.

(2) Notwithstanding subsection (1), the articles

of a credit union containing a clerical error may be amended by resolution of

the directors or by ordinary resolution of the members to correct the error.

Articles to

superintendent

110. Where

the articles of a credit union are amended under

section 109 those articles of amendment shall, within 6

months of the date of the resolution of the members authorizing the amendment,

be sent to the superintendent for filing and the superintendent shall refuse to

accept amended articles that are not filed within those 6 months.

Certificate

of amendment

111. On

receipt of articles of amendment, the superintendent may, if satisfied that the

amendment is advisable, file the articles and issue a certificate of amendment

in accordance with

section 182 .

Effect of

certificate

(1) An

amendment becomes effective on the date shown in the certificate of amendment

and the articles are amended accordingly.

(2) An amendment to the articles of a credit union

shall not affect an existing cause of action, claim or liability to prosecution

in favour of or against the credit union or its directors, committee members, officers

or employees, or a civil, criminal or administrative action or proceeding to

which the credit union or its directors, committee members, officers or

employees is a party.

Restated articles

(1) The

credit union may, and shall when directed by the superintendent, restate the

articles of incorporation as amended.

(2) Restated articles of incorporation in the required

form shall be sent to the superintendent.

(3) On receipt of restated articles of

incorporation, the superintendent shall issue a restated certificate of

incorporation in accordance with

section 182 .

(4) Restated articles of incorporation are

effective on the date shown in the restated certificate of incorporation and

supersede the original articles of incorporation and all amendments to them.

Amalgamation

(1) Two

or more credit unions may amalgamate and continue as one credit union.

(2) A credit union that is under supervision under

Part XII shall not amalgamate without the written consent of the guarantee

corporation.

Amalgamation

agreement

115. Credit

unions proposing to amalgamate shall enter into an agreement with each other

setting out the terms and means of effecting the amalgamation and, in

particular, setting out

(

a) the provisions required to be included in

articles of incorporation under

section 6 ;

(

b) the address of the registered office of the

amalgamated credit union;

(

c) the name and address of each proposed director

of the amalgamated credit union;

(

d) the name, residence address and principal

occupation of each proposed director of the amalgamated credit union;

(

e) the manner in which the shares of each

amalgamating credit union are to be converted into shares of the amalgamated

credit union;

(

f) if shares of an amalgamating credit union are

not to be converted into shares of the amalgamated credit union, the amount of

money that the holders of those shares are to receive in addition to or instead

of shares of the amalgamated credit union;

(

g) the proposed by-laws of the amalgamated credit

union; and

(

h) details of arrangements necessary to perfect

the amalgamation and to provide for the subsequent management and operation of

the amalgamated credit union.

Approval of agreement

(1) The

directors of each amalgamating credit union shall submit the amalgamation

agreement for approval at a meeting of the members of the amalgamating credit

unions.

(2) A notice of a meeting of members shall be sent

in accordance with

section 57 to each member of

each amalgamating credit union and shall include or be accompanied by a copy or

summary of the amalgamation agreement and shall state that a member is entitled

to dissent in accordance with

section 122 .

(3) An amalgamation agreement is adopted when the

members of each amalgamating credit union have approved the amalgamation by a

special resolution.

(4) An amalgamation agreement may provide that

before the issue of a certificate of amalgamation the agreement may be

terminated by the board of directors of any of the amalgamating credit unions.

Articles of amalgamation

(1) Subject

to subsection 116 (4), after an amalgamation has

been adopted under subsection 116 (3), articles

of amalgamation shall be sent to the superintendent.

(2) The articles of amalgamation shall have

attached to them an affidavit made under oath or affirmation of a director or an

officer of each amalgamating credit union that establishes to the satisfaction

of the superintendent that

(

a) there are reasonable grounds for believing

that

(

i) each amalgamating credit union is and the

amalgamated credit union will be able to pay its liabilities as they become

due, and

(ii) the realizable value of the assets of the

amalgamated credit union upon completion of the amalgamation will not be less

than the aggregate of its liabilities and its equity other than retained

earnings; and

(

b) there are reasonable grounds for believing

that

(

i) a creditor or member of the amalgamating

credit unions will not be prejudiced by the amalgamation, or

(ii) adequate notice has been given to all known

creditors of the amalgamating credit unions with a claim against the credit

union in an amount that exceeds $1,000 and at least 60% of those creditors consent

to the amalgamation.

(3) A credit union may be exempt from the

requirements of paragraph (2)(

a) if the guarantee corporation consents to an exemption.

(4) For the purpose of subparagraph (2)(b)(ii),

adequate notice is given if

(

a) a notice is given in the Gazette and once in a newspaper published or distributed in a

place where each amalgamating credit union has its registered office; and

(

b) each notice states that the credit union

proposes to amalgamate with one or more specified other credit unions in accordance

with this Act providing at least 60% of creditors with amounts exceeding $1,000

consent to the amalgamation within 30 days after the date of the notice.

Compulsory amalgamation

118. Where

a credit union that is under supervision under

Part XII is ordered by its

supervisor to amalgamate in accordance with

section 176 (1)(i),

the provisions of

section 116 and subsection 117 (2) do not apply to the credit union which is

ordered to amalgamate.

Certificate and

effect of amalgamation

(1) On

receipt of articles of amalgamation, the superintendent may, where satisfied

that the amalgamation is advisable, file the articles and issue a certificate

of amalgamation in accordance with

section 182 .

(2) On the date shown in the certificate of

amalgamation

(

a) the amalgamation of the amalgamating credit

unions and their continuance as one credit union becomes effective;

(

b) the property of each amalgamating credit union

continues to be the property of the amalgamated credit union;

(

c) the amalgamated credit union continues to be

liable for the obligations of each amalgamating credit union;

(

d) an existing cause of action, claim or

liability to prosecution remains unaffected;

(

e) a civil, criminal or administrative action or

proceeding pending by or against either of the amalgamating credit unions may

be continued by or against the amalgamated credit union;

(

f) a conviction against, or ruling, order or

judgment in favour of or against an amalgamating credit union may be enforced

by or against the amalgamated credit union;

(

g) the articles of amalgamation shall be

considered to be the articles of incorporation of the amalgamated credit union

and the certificate of amalgamation shall be considered to be the certificate

of incorporation of the amalgamated credit union;

(

h) on the filing of a copy of the certificate of

amalgamation, certified as a true copy by the superintendent, in a land titles

registry or other recording office, all the lands, charges on land, estates,

real, personal or mixed real and personal property, effects, rights, credits,

judgments, assignments and rights enforceable by legal action of every

description belonging to the amalgamating credit unions are transferred and

vested in the amalgamated credit union without further act, conveyance or other

deed; and

(

i) the members of the amalgamating credit unions

become members of the amalgamated credit union and the shares held in the

amalgamating credit unions become shares in the amalgamated credit union

subject to the terms of the amalgamation agreement.

Extraordinary

sale, lease or exchange

(1) A

sale, lease or exchange of all or substantially all of the property of a credit

union requires the approval of the members in accordance with this section.

(2) A notice of a meeting of members called under

subsection (1) shall be sent in accordance with

section 57 to each member and

shall

(

a) include or be accompanied by a copy or

summary

of the agreement of sale, lease or exchange; and

(

b) state that a member is entitled to dissent in

accordance with

section 122 .

(3) At the meeting held in accordance with a

notice referred to in subsection (2), the members may by special resolution

approve the sale, lease or exchange and may fix or authorize the directors to

fix a term or condition of it.

(4) A sale, lease or exchange referred to in

subsection (1) is adopted when the members have approved the sale, lease or

exchange.

(5) The directors of a credit union may, if

authorized by the members approving a proposed sale, lease or exchange, and

subject to the rights of third parties, abandon the sale, lease or exchange

without further approval of the members.

Approval of guarantee

corporation

(1) The

credit union shall, before the completion of a sale, lease or exchange referred

to in

section 120 , obtain the approval of the guarantee

corporation.

(2) An

approval shall not be granted under subsection (1) unless the guarantee

corporation has received an affidavit made under oath or affirmation of a

director or officer from the credit union proposing to sell, lease or exchange

its property establishing, to the satisfaction of the guarantee corporation,

that there are reasonable grounds for believing that

(

a) the

sale, lease or exchange of the property will not increase the likelihood of a

claim upon the guarantee corporation;

(

b) creditors,

including shareholders of the credit union who are not members, will not be

prejudiced by the sale, lease or exchange of the property; and

(

c) the

sale, lease or exchange of the property has been consented to by not less than

60% of creditors of the credit union with amounts exceeding $1,000.

(3) For the purpose of subsection (2), adequate

notice is given if

(

a) a notice is published once in the Gazette and once in a newspaper

published or distributed in the place where the credit union has its registered

office; and

(

b) each notice states that the credit union

proposes to sell, lease or exchange all, or substantially all of its property

under

section 120 providing at least 60% of the

creditors with amounts exceeding $1,000 consent to the sale, lease or exchange

within 30 days from the date of the notice.

Dissent

(1) A

member of a credit union may dissent if the credit union resolves to

(

a) change its name;

(

b) amalgamate with another credit union under

section 116 ;

(

c) sell, lease or exchange all or substantially

all of its property under

section 120 ; and

(

d) add, change or remove a provision that is set

out in the articles.

(2) A dissenting member shall send to the credit

union, at or before a meeting of members at which a resolution referred to in

subsection (1) is to be voted on, a written objection to the resolution but,

where the dissenting member fails to send the written objection as required,

the dissenting member does not lose the right to dissent if the credit union

failed to give the dissenting member notice of the purpose of the meeting or of

the right to dissent.

(3) The credit union shall, within 10 days after

the members adopt the resolution,

(

a) send to each member who has filed an objection

under section (2), a notice that the resolution has been adopted, but notice is

not required to be sent to a member who withdraws an objection; and

(

b) send to the guarantee corporation a copy of

the resolution and copies of written objections received by the credit union

under subsection (2).

(4) A resolution in respect of which written

objection has been sent to the credit union under subsection (2) shall not be

effective until approved by the guarantee corporation.

(5) The guarantee corporation may require as a

condition of approval under subsection (4) that a part or all of the indebtedness

or other liability of the credit union to the dissenting member be paid or

satisfied on those terms that the guarantee corporation may stipulate.

Reorganization under a court order

(1) In

this section, "reorganization" means the reorganization of a credit

union in accordance with a court order made under

(

a) section 159 ;

(

b) the Bankruptcy

and Insolvency Act ( Canada ), approving a proposal; or

(

c) any other Act of the Legislature that affects

the rights of the credit union, its members or creditors.

(2) Where a credit union is subject to a

reorganization, its articles may be amended by the order to effect a change

that might lawfully have been made by an amendment under

section 109 .

(3) Where a reorganization is made, the court may

also

(

a) authorize the issue of debt obligations of the

credit union and fix the terms of them; and

(

b) appoint directors in place of or in addition

to all of the directors then in office.

(4) After a reorganization has been made, articles

of reorganization shall be sent to the superintendent.

(5) On receipt of articles of reorganization, the

superintendent shall file the articles and issue a certificate of amendment in

accordance with

section 182 .

(6) A reorganization becomes effective on the date

shown in the certificate of amendment and the articles of incorporation are

amended accordingly.

PART IX

DISSOLUTION AND LIQUIDATION

Mandatory dissolution

124. A

credit union that does not have property and liabilities shall be dissolved by

special resolution of the members.

Voluntary dissolution

by members

(1) A credit union that has property or

liabilities or both may be dissolved by special resolution of the members where

(

a) by the special resolution the members

authorize the directors to cause the credit union to distribute any property

and discharge liabilities; and

(

b) the credit union has, under

section 120 , sold its property, distributed residual property

and discharged all of its liabilities.

(2) A credit union which is being dissolved under

this

section shall prepare articles of dissolution in accordance with

section 127 and that

section applies in relation to the

dissolution.

Voluntary liquidation

and dissolution

(1) The directors, or a member in accordance with

section 59 ,

may propose the voluntary liquidation and dissolution of a credit union.

(2) Notice of a meeting of members at which

voluntary liquidation and dissolution is to be proposed shall set out the terms

of the liquidation and dissolution.

(3) A credit union may be liquidated and dissolved

by special resolution of the members.

(4) A statement of intent to dissolve in the required

form shall be sent to the guarantee corporation.

(5) On receipt of a statement of intent to

dissolve, the superintendent, if satisfied that the credit union shall be able

to discharge all of its obligations and liabilities before dissolution, shall

issue a certificate of intent to dissolve in accordance with

section 182 .

(6) Where a certificate of intent to dissolve is

issued, the credit union shall cease to carry on business except to the extent

necessary for the liquidation, but its legal existence continues until the

superintendent issues a certificate of dissolution.

(7) After a certificate of intent to dissolve is

issued, the credit union shall

(

a) immediately give notice of the dissolution to

be sent to each known creditor of the credit union;

(

b) immediately give notice in the Gazette and once in a newspaper

published or distributed in the place where the credit union has its registered

office and take reasonable steps to give notice of the dissolution in every

jurisdiction where the credit union carries on business;

(

c) proceed to collect its property, to dispose of

properties that are not to be distributed in kind to its members, to discharge

all its obligations and to do all other acts required to liquidate its

business; and

(

d) after giving the notice required under

paragraphs (

a) and (

b) and adequately providing for the payment or discharge of

all its obligations, distribute its remaining property, either in money or in

kind, in accordance with the provisions of the special resolution authorizing

the dissolution.

(8) After the issue of a certificate of intent to

dissolve and before a certificate of dissolution is issued, a certificate of

intent to dissolve may be revoked by sending to the superintendent a statement

of revocation of intent to dissolve in the required form, if the revocation is

approved in the same manner as the resolution under subsection (3).

(9) On receipt of a statement of revocation of

intent to dissolve, the superintendent shall issue a certificate of revocation

of intent to dissolve in accordance with

section 182 .

(10) On the date shown in the certificate of

revocation of intent to dissolve, the revocation is effective and the credit

union may continue to carry on its business.

(11) Where a certificate of intent to dissolve has

not been revoked and the credit union has complied with subsection (7), the

credit union shall prepare articles of dissolution.

Articles of

dissolution and certificate

(1) Articles

of dissolution shall be sent to the superintendent.

(2) On receipt of articles of dissolution, the

superintendent shall issue a certificate of dissolution in accordance with

section

182 .

(3) The credit union ceases to exist on the date

shown in the certificate of dissolution.

Custody of

records

128. The

guarantee corporation shall retain the documents and records of a dissolved

credit union for 6 years immediately following the effective date of the credit

union dissolution.

Effect of

dissolution

(1) In

this section, "member" includes the heirs and legal representatives

of a member.

(2) Notwithstanding the dissolution of a credit

union under this Act,

(

a) a civil, criminal or administrative action or

proceeding commenced by or against the credit union before its dissolution may

be continued as if the credit union had not been dissolved;

(

b) a civil, criminal or administrative action or

proceeding may be brought against the credit union within 2 years after its

dissolution as if the credit union had not been dissolved; and

(

c) a property that would have been available to

satisfy a judgment or order if the credit union had not been dissolved remains

available for that purpose.

(3) Service of a document on a credit union after

its dissolution may be effected by serving the document on a person named as a

director in the most recent notice sent to the superintendent under this Act.

(4) Notwithstanding the dissolution of a credit

union, a member to whom property has been distributed is liable to a person

claiming under subsection (2) to the extent of the amount received by that member

on the distribution, and an action to enforce that liability may be brought within

2 years after the date of the dissolution of the credit union.

(5) A court may order an action referred to in

subsection (4) be brought against the persons who were members, subject to

those conditions that the court thinks appropriate and, if the plaintiff's

claim is established, the court may refer the proceedings to an officer of the

court who may

(

a) add as a party to the proceedings each person

found by the plaintiff who was a member or shareholder;

(

b) determine, subject to subsection (4), the

amount that each person who was a member or shareholder shall contribute

towards satisfaction of the plaintiff's claim; and

(

c) direct payment of the amounts so determined.

Unclaimed

property

(1) Upon

the dissolution of a credit union, the portion of the property distributable to

a creditor, shareholder or member who cannot be found shall be converted into

money and paid to the guarantee corporation.

(2) A payment under subsection (1) is considered

to be in satisfaction of the debt to or claim of the creditor, shareholder or

member.

(3) Where it is established that a person is

entitled to money paid to the guarantee corporation under this Act, the

guarantee corporation shall pay the amount of that money to that person.

(4) Where after the dissolution of a credit union

it is established that a person is entitled to receive a document for

registration in the registry of deeds or other registry executed by that credit

union, the guarantee corporation shall execute the documents on behalf of the

dissolved credit union.

(5) A document executed by the guarantee

corporation under subsection (4) shall be accepted for registration in the

registry of deeds or other registry, if the guarantee corporation has placed an

explanation for its actions upon the document and has otherwise complied with

the requirements of the registry of deeds or other registry.

(6) Subject to this

section and

section 129 , property of a credit union that has not been

disposed of at the date of its dissolution vests in the guarantee corporation.

(7) The costs of liquidation shall be paid out of

the property of the credit union.

Effect of Bankruptcy

and Insolvency Act ( Canada )

(1) This

Part does not apply to a credit union that is bankrupt within the meaning of

the Bankruptcy and Insolvency Act ( Canada ).

(2) Proceedings taken under this Part to dissolve

or to liquidate and dissolve a credit union shall be stayed if a credit union

becomes subject to or takes a proceeding under the Bankruptcy and Insolvency Act ( Canada ).

PART X

CREDIT UNION DEPOSIT GUARANTEE CORPORATION

Application

132. This

Part applies to the Credit Union Deposit Guarantee Corporation.

Continuation

133. The

Credit Union Deposit Guarantee Corporation existing under the Credit Union Act in force immediately

before the commencement of this Act is continued subject to the provisions of

this Act, and the members of the board of the guarantee corporation continue in

office until their successors are appointed.

Duties

134. The

duties of the guarantee corporation are

(

a) to provide, for the benefit of persons having

deposits with credit unions in the province, deposit insurance against loss of

part or all of those deposits by making payments to the depositors to the

extent and in the manner authorized by this Act;

(

b) in those circumstances that the guarantee

corporation considers appropriate, to provide assistance to credit unions for

the purpose of stabilization or for the orderly liquidation of a credit union;

(

c) to protect deposits in credit unions against

impairment arising from financial losses and insolvency by

(

i) promoting the development and implementation

of sound business practices and sound financial policies and procedures by

credit unions, and

(ii) establishing and implementing loss prevention

programs and other controls;

(

d) to act as supervisor of a credit union; and

(

e) to do those other things that may be required

or authorized by this Act or the regulations.

Capacity

135. The

guarantee corporation has the capacity, rights, powers and privileges of a

natural person.

Powers

136. The

guarantee corporation may

(

a) determine the amounts of money to be levied

and collected from credit unions for the purpose of

section 147 , 148 and 154 ;

(

b) borrow money on the credit of the guarantee

corporation or on bills of exchange or promissory notes drawn, made, accepted

or endorsed by or on behalf of the guarantee corporation and pledge as security

assets of the guarantee corporation;

(

c) enter into an agreement or arrangement with a

person relating to

(

i) the stabilization of credit unions,

(ii) the merger, amalgamation and winding up of a

credit union,

(iii) financial assistance that it considers

necessary to meet the requirements of its operations, and

(iv) other matters that it considers appropriate

for the attainment of its purposes;

(

d) apply to the minister for loans or guarantees

of loans to assist it in carrying out its purpose;

(

e) make or cause to be made those examinations

and inquiries in relation to credit unions and those actuarial or similar

studies that the guarantee corporation considers appropriate;

(

f) guarantee loans made by third parties to

credit unions and take security for those guarantees;

(

g) make investments in relation to the deposit guarantee

fund or have those investments made;

(

h) assume or purchase the liabilities or assets

of credit unions on their liquidation or dissolution;

(

i) establish terms, conditions, restrictions and

limitations in relation to the lending activities of credit unions and the loan

policies to be established by credit unions;

(

j) set out sound business and financial practices

for credit unions;

(

k) issue directives in relation to sound business

practices and sound financial policies and procedures to be followed by credit

unions including directives in relation to those matters referred to in

paragraph (i);

(

l) make available to credit unions assistance

including financial assistance for the purpose of stabilization on terms and

conditions that it considers appropriate;

(

m) assume the costs of the winding up of credit

unions where the assets of a credit union are insufficient to cover the costs;

(

n) engage employees, enter into agreements or

arrangements and incur those costs and expenses that are required to carry out

the purposes of the guarantee corporation;

(

o) arrange compulsory insurance programs for

credit unions or insurance coverage on behalf of those credit unions;

(

p) require credit unions to make reports and

specify the contents, frequency and form of those reports;

(

q) maintain a long term unclaimed balance account

in accordance with this Act;

(

r) administer the regulations under this Act as

delegated by the minister; and

(

s) do those other things that may be necessary or

incidental to the attainment of its purposes.

Board

(1) The affairs of the guarantee

corporation shall be administered by a board of directors of not more than 7

members who shall be appointed by the minister in accordance with the

regulations.

(2) A

person who is a citizen of Canada and is at least 19 years of age may

be appointed as a director of the guarantee corporation.

(3) Notwithstanding

subsection (2), an employee, a committee member or a director of a credit union

trade association or of a credit union shall not be appointed as a director of

the guarantee corporation.

Officers

(1) The chairperson, vice-chairperson and

the secretary-treasurer of the board of directors of the guarantee corporation

shall be appointed in accordance with the regulations.

(2) The

board of directors of the guarantee corporation may appoint those other

officers and committees that it considers necessary to fulfil the purposes of

the guarantee corporation under this Act.

(3) Notwithstanding

paragraph 143 (2)(b), employees required to exercise

the powers and duties of the guarantee corporation shall be considered to be

employees of the government of the province, shall be employed in the manner

required by law and the board of directors of the guarantee corporation may

determine the duties of those employees.

Vacancy

139. Where

a vacancy occurs in the board of directors

of the guarantee corporation, the minister shall fill the vacancy in

accordance with

section 137 .

Office ceases

140. A

member of the board of directors of a

guarantee corporation ceases to hold office upon

(

a) death or resignation;

(

b) becoming disqualified from holding the office;

(

c) being removed from office by the minister.

Management

141. The

board of directors of the guarantee corporation shall

(

a) exercise the powers of the guarantee

corporation directly, or indirectly through its employees and agents; and

(

b) direct the management of the business and

affairs of the guarantee corporation.

Quorum

(1) A

majority of the members of the board of directors of the guarantee corporation

constitutes a quorum.

(2) The agreement of the majority of the members

of the board of directors of the guarantee corporation present at a meeting of

that board shall be necessary for a decision to be valid.

(3) The chairperson may vote as a director at a

meeting of the board of directors of the guarantee corporation and where there

is an equality of votes, he or she shall have another vote.

By-laws

(1) The

board of directors of the guarantee corporation, in order to regulate the

business and affairs of the guarantee corporation, may enact by-laws and amend

or repeal them.

(2) The guarantee corporation may make by-laws

(

a) respecting the administration, management and

control of the property and affairs of the guarantee corporation;

(

b) respecting the functions, duties and

remuneration of the officers, agents and employees of the guarantee

corporation;

(

c) respecting the appointment or disposition of

special committees created by the guarantee corporation;

(

d) respecting the appointment of an auditor;

(

e) respecting the time and place for the holding

of meetings of the directors and the procedure at those meetings;

(

f) respecting the manner in which a credit union

may represent that it is a contributor to the deposit guarantee fund;

(

g) authorizing and controlling the use by credit

unions of marks, signs, advertisements or other devices indicating that

deposits with credit unions are insured by the guarantee corporation;

(

h) defining the word "deposit" for the

purpose of deposit insurance;

(

i) adopting a seal for the guarantee corporation;

(

j) setting standards of sound business and financial

practices for credit unions; and

(

k) respecting the conduct in all other

particulars of the affairs of the guarantee corporation.

Guaranteed

deposit insurance

(1) The

guarantee corporation shall insure deposits placed with a credit union to an

amount determined in accordance with the regulations.

(2) Where the guarantee corporation is obligated

to make a payment in accordance with paragraph 146 (

a) in relation to a deposit insured by it, the guarantee corporation as soon as

possible after the obligation arises shall, in relation to that deposit, make the

payment, or have that payment made to the person who appears entitled to it by

the records of the credit union with whom the deposit was made by paying, or

having paid, to that person an amount in money equal to so much of the person's

outstanding claim against the credit union that is insured by the guarantee

corporation.

(3) Payment under this

section by or on behalf of

the guarantee corporation in relation to a deposit insured by deposit insurance

discharges the guarantee corporation from all liability in relation to that

deposit.

(4) Where the guarantee corporation makes a

payment, or has a payment to be made, under this

section in relation to a

deposit with a credit union, the guarantee corporation is subrogated to the

extent of the payment made to all the rights and interests of the depositor as

against that credit union.

(5) The guarantee corporation may deduct from a payment

under subsection (2) the amount the credit union is entitled to deduct from the

deposit under a lien, right of set off or specific charge effectively as if the

credit union itself were repaying the deposit in full.

(6) The deduction of an amount by the guarantee

corporation under subsection (2) in respect of a lien, right of set off or

specific charge discharges the liability of the member to the credit union to

the extent of the amount deducted.

(7) Where a member entitled to a guaranteed

deposit cannot be located, the guarantee corporation shall pay the amount

guaranteed into its long-term unclaimed balances account.

Prohibition

(1) A

credit union shall not advertise or hold out by a written or oral

representation that its deposits are insured by the guarantee corporation

otherwise than by those marks, signs, advertisements or other devices that are

authorized by the by-laws of the guarantee corporation and used in the manner

and on the occasions specified by the by-laws.

(2) A credit union that violates subsection (1) is

guilty of an offence.

Deposit guarantee

fund

146. The

guarantee corporation shall establish and maintain a deposit guarantee fund

which may be used for the following purposes:

(

a) on the liquidation of a credit union, to pay

out claims of depositors in accordance with

section 144 ;