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2011 Legislative Session: 4th Session, 39th Parliament

FIRST READING

The following electronic version is for informational purposes only.

The printed version remains the official version.

HONOURABLE KEVIN FALCON

MINISTER OF FINANCE AND DEPUTY PREMIER

BILL 17 – 2011

FINANCE STATUTES AMENDMENT ACT, 2011

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Business Corporations Act

SECTION 1: [Business Corporations Act,

section 1] amends, adds and replaces

definitions

in order to accommodate full applications of the Business Corporations Act to

insurance companies and trust companies.

Section 1 of the Business Corporations Act, S.B.C. 2002, c. 57, is amended

(

a) by adding the following

definitions:

"commission" has the same meaning as in the Financial Institutions Act ;

"financial institution" means

(

a) an insurance company, or

(

b) a trust company;

"insurance company" has the same meaning as in the Financial Institutions Act ;

"pre-existing insurance company" has the same meaning as in the Financial Institutions Act ;

"pre-existing trust company" has the same meaning as in the Financial Institutions Act ;

"superintendent" has the same meaning as in the Financial Institutions Act ;

"trust company" has the same meaning as in the Financial Institutions Act ; ,

(

b) by repealing the

definitions of "company" , "insolvent" and "pre-existing company" and substituting the following:

"company" means

(

a) a corporation, recognized as a company under this Act or a former Companies Act , that has not, since the corporation's most recent recognition or restoration as a company, ceased to be a company, or

(

b) a pre-existing trust company or a pre-existing insurance company;

"insolvent" , except in

section 313,

(

a) in relation to a company other than a financial institution, means unable to pay the company's debts as they become due in the ordinary course of its business, or

(

b) in relation to a financial institution, includes unable to pay the company's debts as they become due in the ordinary course of its business;

"pre-existing company" means

(

a) a company that was recognized as a company under a former Companies Act , or

(

b) a pre-existing trust company or a pre-existing insurance company; , and

(

c) in the definition of "pre-existing reporting company" by striking out " the Company Act , 1996, but does " and substituting " the Company Act , 1996, and includes each financial institution in existence at the time of the coming into force of

section 64 of the Finance Statutes Amendment Act, 2011 , but does ".

SECTION 2: [Business Corporations Act,

section 3] provides when the Business Corporations

Act concept of recognition applies to insurance companies and trust companies

incorporated before the coming into force of this Act.

Section 3 is amended by adding the following subsection:

(3) A pre-existing trust company or pre-existing insurance company is, for the purposes of this Act, deemed to have been recognized under a former Companies Act when the company became a trust company or an insurance company.

SECTION 3: [Business Corporations Act,

section 4] allows the Lieutenant Governor in

Council to prescribe certain special Act corporations to which will apply the

Business Corporations Act provisions specified in this provision, and removes

a reference to the Company Act continuing to apply to special Act corporations.

Section 4 is amended

(

a) in subsection (1) by striking out " and any other " and substituting " , a prescribed special Act corporation and a ", and

(

b) by repealing subsection (3).

SECTION 4: [Business Corporations Act,

section 29] allows the superintendent to notify

the registrar of the superintendent's disapproval of the name of a trust company

or an insurance company so that the registrar can require the company to

change its name.

Section 29 (1) is amended by striking out " a captive insurance company, " and substituting " a trust company, an insurance company or a corporation that is registered as a captive insurance company under the Insurance (Captive Company) Act , ".

SECTION 5: [Business Corporations Act,

section 42] requires a financial institution to

keep at its records office orders made by the superintendent or the commission

unless an order otherwise provides.

Section 42 (1) (

c) is amended by adding the following subparagraph:

(

v) in the case of a financial institution, each order made by the superintendent or the commission unless the superintendent or the commission in that order or in another order, orders that that order need not be kept at the records office; .

SECTION 6: [Business Corporations Act,

section 44] applies to financial institutions this

provision respecting maintenance of corporate records.

Section 44 is amended by adding the following subsection:

(5) This

section applies, in the case of a financial institution, to any record the financial institution is required to keep under the Financial Institutions Act .

SECTION 7: [Business Corporations Act,

section 46] applies to financial institutions this

provision respecting inspection of corporate records.

Section 46 (4) is amended by adding " , a financial institution " after " public company ".

SECTION 8: [Business Corporations Act,

section 124] provides that before a court orders

that an individual who has been convicted of an offence may become a director

of a financial institution, the superintendent must be given notice of that

application.

Section 124 is amended by adding the following subsection:

(4) An order must not be made under subsection (2) (d) (

i) in relation to a financial institution unless notice of the application for the order is given to the superintendent, who may appear as a party to the application.

SECTION 9: [Business Corporations Act,

section 194] applies to financial institutions this

provision respecting registers of members and registers of debentureholders.

Section 194 (4) is amended by adding " , or, in the case of a pre-existing trust company or a pre-existing insurance company, a former Companies Act as it applied for the purposes of the Financial Institutions Act , " after " former Companies Act ".

SECTION 10: [Business Corporations Act,

section 210] applies to financial institutions this

provision respecting changes of auditors.

Section 210 is amended by adding the following subsection:

(6) This

section applies to a financial institution whether or not that financial institution is a public company.

SECTION 11: [Business Corporations Act,

section 223] applies to financial institutions

Division 5 of

Part 7 of the Business Corporations Act respecting audit committees.

Section 223 is amended by striking out " public company. " and substituting " public company or a financial institution, whether or not that financial institution is a public company. "

SECTION 12: [Business Corporations Act,

section 324] applies to financial institutions this

provision respecting court ordered liquidations and dissolutions.

Section 324 (1) is amended by adding " that is a financial institution by the commission, or made in respect of a company, including a company that is a financial institution, " after " in respect of a company ".

SECTION 13: [Business Corporations Act,

section 407] applies the filing provisions of the

Business Corporations Act to other enactments.

Section 407 is amended by striking out " by this Act, " and substituting " by this Act or any other enactment, ".

SECTION 14: [Business Corporations Act,

section 419] allows the registrar to issue records

relating to any register maintained by the registrar and provides that if the registrar

issues a certified copy of any record filed with the registrar, that copy is

admissible in evidence to the same extent as the original record.

Section 419 is amended

(

a) in subsection (1) by striking out " corporate register. " and substituting " corporate register or any other register kept by the registrar. ", and

(

b) in subsection (2) by striking out " registrar under this Act, " and substituting " registrar, ".

SECTION 15: [Business Corporations Act,

section 433] provides that the Lieutenant Governor

in Council may prescribe provisions of the Statutory Reporting Company

Provisions so that those prescribed provisions do not apply to pre-existing

trust companies and pre-existing insurance companies.

Section 433 is amended

(

a) in subsection (2) (

a) by adding " , subject to subsection (3), " after " takes effect ", and

(

b) by adding the following subsection:

(3) The Lieutenant Governor in Council may prescribe provisions of the Statutory Reporting Company Provisions that do not apply to one or more of a pre-existing trust company, a pre-existing insurance company, a class of pre-existing trust companies and a class of pre-existing insurance companies.

SECTION 16: [Business Corporations Act,

section 438] provides that for pre-existing trust

companies and pre-existing insurance companies to which this provision

applies, their articles need only be amended under this provision to include

those of the Statutory Reporting Company Provisions that apply to them.

Section 438 (3) (

d) is amended by striking out " Statutory Reporting Company Provisions. " and substituting " Statutory Reporting Company Provisions or, in the case of a pre-existing trust company or a pre-existing insurance company, the provisions of the Statutory Reporting Company Provisions that apply to the company. "

SECTION 17: [Business Corporations Act,

section 442.1] provides that the Lieutenant Governor

in Council may prescribe provisions of the Pre-existing Company Provisions

so that those prescribed provisions do not apply to pre-existing trust

companies and pre-existing insurance companies.

Section 442.1 is amended

(

a) in subsection (2) by striking out " The Pre-existing " and substituting " Subject to subsection (2.2), the Pre-existing ", and

(

b) by adding the following subsection:

(2.2) The Lieutenant Governor in Council may prescribe provisions of the Pre-existing Company Provisions that do not apply to one or more of a pre-existing trust company, a pre-existing insurance company, a class of pre-existing trust companies and a class of pre-existing insurance companies.

Credit Union Incorporation Act

SECTION 18: [Credit Union Incorporation Act,

Part 1 heading] amends the heading to

Part

1 to reflect amendments made by this Bill to

section 1 of the Act.

18 The heading to

Part 1 of the Credit Union Incorporation Act, R.S.B.C. 1996, c. 82, is repealed and the following substituted:

Part 1 –

Interpretation .

SECTION 19: [Credit Union Incorporation Act,

section 1] amends, adds, repeals and

replaces

definitions in order to remove references to the Company Act and to

harmonize the

definitions with the importation into the Act of the provisions

of the Company Act that, before this Bill, applied to the Act by reference.

Section 1 (1) is amended

(

a) by striking out " Act and the Company Act as it applies for the purpose of this ",

(

b) by adding the following

definitions:

"auditor" includes a partnership of auditors;

"charter" includes

an Act, statute, ordinance, letters patent, certificate, declaration or other instrument or provision of law by or under which a corporation has been incorporated, amalgamated or continued, and also the corporation's memorandum, articles, constitution, rules, regulations or bylaws, agreement or deed of settlement;

"class meeting" means a meeting of members or auxiliary members who hold equity shares of a particular class;

"corporation" means a company within the meaning of the Business Corporations Act , a body corporate, a body politic and corporate, an incorporated association or a society, however and wherever incorporated, but does not include a municipality or a corporation sole;

"debt obligation" means a bond, debenture, note or other similar obligation, whether secured or unsecured, of a corporation;

"director" includes every person, by whatever name designated, who performs functions of a director;

"document" means a written instrument, including a notice, order, certificate, register, letter, report, return, account, summons or legal process;

"financial statements" includes any notes to the financial statements;

"general meeting" means a general meeting of members;

"insolvent" includes the inability of a credit union to pay its debts as they become due in the usual course of the credit union's business;

"mortgage" includes a secured debt obligation;

"ordinary resolution" means a resolution passed by the members of a credit union in general meeting by a simple majority of the votes cast by members;

"printed" includes lithographed or reproduced by any mechanical, electrostatic or photostatic means;

"proxy" means a completed and executed form of proxy by which a member or auxiliary member has appointed a person as the nominee of the member or auxiliary member to attend and act for the member or auxiliary member and on behalf of the member or auxiliary member;

"registrar" , except in

section 61.2, has the same meaning as in the Business Corporations Act ;

"series meeting" means a meeting of members or auxiliary members who hold equity shares, other than membership shares, of a particular series;

"special rights or restrictions" includes special rights and restrictions, whether preferred, deferred or otherwise, and whether in regard to redemption or return of capital, conversion into or exchange for the same or any other number of any other kind, class or series of shares, dividend, voting, nomination or appointment of directors or other control, or otherwise, and for the purposes of this definition the words "special rights" and the word "restrictions" , when used in this Act, whether together or separately, have a corresponding meaning; ,

(

c) by repealing the definition of " Company Act " , and

(

d) by repealing subsections (2) to (4).

SECTION 20: [Credit Union Incorporation Act, sections 2 to 2.2 and 3 to 5] repeals and

replaces provisions that applied Company Act provisions to the Act and adds

to the Act comparable provisions to some of those Company Act provisions.

20 Sections 2 to 5 are repealed and the following substituted:

Credit union relationships

2.1

(1) In this section, "voting share" means a share of a class of shares of a corporation that carries the right to vote under all circumstances on a resolution electing directors, and includes a share of a class of shares of a corporation that carries the right to vote on such a resolution because of the occurrence of a contingency that has occurred and is continuing.

(2) For the purposes of this Act, one corporation is affiliated with another corporation if

(

a) one of them is a subsidiary of the other,

(

b) both of them are subsidiaries of the same corporation, or

(

c) each of them is controlled by the same person.

(3) For the purposes of this Act,

(

a) an affiliate of a credit union is deemed to be affiliated with all corporations with which the credit union is affiliated, and

(

b) a credit union is deemed to be affiliated with all corporations with which an affiliate of the credit union is affiliated.

(4) A reference to "subsidiary" in this Act must be read as including a corporation other than a central credit union or a corporation designated by regulation, if the corporation is controlled, within the meaning of subsection (5), by

(

a) a credit union and one or more other credit unions, or

(

b) a credit union and one or more other credit unions, and one or more other corporations if each of the other corporations is controlled by one or more credit unions,

and "holding credit union" has the corresponding meaning.

(5) For the purpose of subsection (4), a corporation is controlled by a group described in subsection (4) (

a) or a group described in subsection (4) (b), as the case may be,

(

a) if

(

i) more than 50% of the voting shares in the corporation are held, other than by way of security only, by or for the benefit of that group, and

(ii) the votes carried by those voting shares are sufficient, if exercised, to elect a majority of the directors of the corporation, or

(

b) if

(

i) the charter of the corporation provides that the majority, or

(ii) the corporation is party to an agreement or arrangement under which the majority

of the corporation's directors must be nominees of that group.

Notice by mail

2.2

(1) If a notice, statement or report is sent by post, service or delivery of it is deemed to be effected by properly addressing, prepaying and mailing the notice, statement or report, and the service or delivery is deemed to have been effected on the 5th day, Saturdays and holidays excepted, following the date of mailing, unless the rules of a credit union provide for a longer period of time.

(2) If, on 3 consecutive occasions, the records sent by a credit union to a member or auxiliary member in accordance with subsection (1) are returned, the credit union is not required to send any further records to the member or auxiliary member until the member or auxiliary member informs the credit union in writing of the member's or auxiliary member's new address.

SECTION 21: [Credit Union Incorporation Act,

section 6] imports into the Act a requirement

from the Company Act to sign the constitution, which requirement had

been applied to the Act by provisions repealed by this Bill.

Section 6 (2) is amended by striking out " and " at the end of paragraph (c), by adding " , and " at the end of paragraph (

d) and by adding the following paragraph:

(

e) be signed by every subscriber.

SECTION 22: [Credit Union Incorporation Act,

section 7] imports into the Act a requirement

from the Company Act to sign the rules, which requirement had been

applied to the Act by provisions repealed by this Bill.

Section 7 (2) is amended by striking out " and " at the end of paragraph (a), by adding " , and " at the end of paragraph (

b) and by adding the following paragraph:

(

c) signed by every subscriber.

SECTION 23: [Credit Union Incorporation Act,

section 8] harmonizes language within the

Act respecting filing.

Section 8 is amended by striking out " register the constitution " and substituting " file the constitution ".

SECTION 24: [Credit Union Incorporation Act,

section 8.1] imports into the Act a provision

from the Company Act respecting the effect of incorporation, which provision

had been applied to the Act by provisions repealed by this Bill.

24 The following

section is added:

Effect of incorporation

8.1 The subscribers, together with other persons who become members of the credit union, are, on and from the date of incorporation mentioned in the certificate of incorporation, a credit union with the name contained in the constitution, capable immediately of exercising the functions of an incorporated credit union with the powers and with the liability on the part of the members provided in this Act.

SECTION 25: [Credit Union Incorporation Act,

section 9] harmonizes language within the

Act respecting filing and allows publication of various records to be in a prescribed

manner.

Section 9 is amended

(

a) by striking out " registration under

section 8 " and substituting " filing the constitution, common bond of membership and rules under

section 8, ", and

(

b) in paragraph (

b) by striking out " in the Gazette. " and substituting " in the Gazette or in any other prescribed manner. "

SECTION 26: [Credit Union Incorporation Act,

section 9.1] imports into the Act a provision

from the Company Act respecting the effect of the constitution and rules,

which provision had been applied to the Act by provisions repealed by this

Bill.

26 The following

section is added:

Effect of constitution and rules

9.1 A credit union and its members and auxiliary members are bound by the credit union's constitution and rules and by any alterations made to those records under this Act, to the same extent as if those records

(

a) had been signed and sealed by the credit union and by each member and auxiliary member, and

(

b) contained covenants on the part of each member and auxiliary member and the successors and personal or other legal representatives of each member and auxiliary member to observe the constitution and rules.

SECTION 27: [Credit Union Incorporation Act,

section 11] changes the references to subscriber

to references to applicant, and harmonizes language within the Act

respecting filing.

Section 11 is amended

(

a) in subsection (1) by striking out " In this section, "subscribers" means the persons " and substituting " In this section, "applicants" means the subscribers ",

(

b) in subsection (2) by striking out " register the constitution " and substituting " file the constitution ",

(

c) in subsection (3) by striking out " subscribers " wherever it appears and substituting " applicants ", and

(

d) in subsection (5) by striking out " a subscriber " and substituting " an applicant ".

SECTION 28: [Credit Union Incorporation Act, sections 12 to 12.2] modernizes the language

of the provision respecting capacity to parallel the language used in the

Business Corporations Act , harmonizes language within the Act respecting filing,

expressly applies to credit unions the Business Corporations Act provision

on restricted businesses and powers, and imports into the Act a provision from

the Company Act respecting the court's ability to constrain non-compliance,

which provision had been applied to the Act by provisions repealed by this

Bill.

Section 12 is repealed and the following substituted:

Capacity and powers of credit unions

12 A credit union has the capacity and the rights, powers and privileges of an individual of full capacity.

Restricted businesses and powers

12.1

(1) A credit union must not

(

a) carry on any business or exercise any power that the credit union is restricted by the credit union's constitution from carrying on or exercising, or

(

b) exercise any of its powers in a manner inconsistent with those restrictions in the credit union's constitution.

(2) No act of a credit union, including a transfer of property, rights or interests to or by the credit union, is invalid merely because the act contravenes subsection (1).

Application to restrain

12.2 If a credit union contravenes or is about to contravene

section 12.1 (1), the Supreme Court may, on application by a member, an auxiliary member, a receiver, a receiver manager, a liquidator or a trustee in bankruptcy of the credit union,

(

a) restrain the credit union from doing

an act or transferring or receiving property,

(

b) make an order requiring compensation to be paid to the credit union or to any other party to a contract, and

(

c) if it appears that a contract has not been substantially performed by a party to the contract, make the order the court considers necessary.

SECTION 29: [Credit Union Incorporation Act,

section 13.1] imports into the Act a provision

from the Company Act respecting the inability of a credit union to carry

on business without members, which provision had been applied to the Act by

provisions repealed by this Bill.

29 The following

section is added:

Credit union without a member

13.1 A credit union must not carry on business without a member but, if at any time the credit union carries on business without a member for more than 6 months, every director and officer of the credit union during the time that the credit union so carries on business is jointly and severally liable for the payment of the whole of the debts of the credit union contracted during that time.

SECTION 30: [Credit Union Incorporation Act,

section 14] requires that a credit union's

name be reserved under

section 14.1 as enacted by this Bill.

Section 14 (2) is amended by adding " must be reserved under

section 14.1 and " after " credit union ".

SECTION 31: [Credit Union Incorporation Act, sections 14.1 and 14.2] adopts for credit

unions the corporate name reservation process of the Business Corporations

Act .

31 The following sections are added:

Reservation of name

14.1

(1) A person wishing to reserve a name for the purposes of this Act must apply to the registrar.

(2) After receiving an application to reserve a name under subsection (1), the registrar may reserve the name for a period of 56 days from the date of reservation or any longer period that the registrar considers appropriate.

(3) After receiving a request for the extension of a reservation of a name, the registrar may, if that request is received before the expiry of that reservation, extend that reservation for the period that the registrar considers appropriate.

(4) The registrar must not reserve a name for the purposes of this Act unless the name complies with the prescribed requirements and with the other requirements set out in this Act.

(5) A name of which the registrar for good and valid reasons disapproves contravenes the requirements set out in this Act.

Name to be displayed

14.2

(1) A credit union must display its name in legible characters

(

a) at every office or place at which the credit union carries on business, in a conspicuous position,

(

b) in all notices and other official publications,

(

c) on all the credit union's contracts, business letters and orders for goods, and on all the credit union's invoices, statements of accounts, receipts and letters of credit, and

(

d) on all bills of exchange, promissory notes, endorsements, cheques and orders for money signed by the credit union or on the credit union's behalf.

(2) If a credit union has a common seal, the credit union must have its name engraved in legible characters on the common seal.

(3) If an officer or director of a credit union, or a person on the credit union's behalf, knowingly permits the credit union not to display or use the credit union's name as required by subsection (1) (a), (

b) or (

c) or by subsection (2), the officer, director or person, as the case may be, is personally liable to indemnify a purchaser or supplier of goods or services or a holder of any security of the credit union who suffers loss or damage as a result of being misled by that failure to display or use the name.

(4) If an officer or director of a credit union, or a person on the credit union's behalf, issues or authorizes the issue of any instrument referred to in subsection (1) (

d) that does not display the name of the credit union, the officer, director or person, as the case may be, is personally liable to the holder of the instrument for the amount of the instrument, unless the instrument is duly paid by the credit union.

SECTION 32: [Credit Union Incorporation Act,

section 15] repeals a provision requiring

consent in relation to a Company Act procedure.

Section 15 is repealed.

SECTION 33: [Credit Union Incorporation Act, sections 16 and 20] clarifies that each

shareholder has, in a class vote in respect of an asset transfer agreement or an

amalgamation agreement, one vote for each equity share of that class held by

that shareholder.

33 Sections 16 (5) and 20 (5) are amended by striking out everything after " subsection (4) (b) (ii), " and substituting " each holder of equity shares in the class of equity shares in relation to which the vote is being held has one vote in respect of each equity share of that class of equity shares held by that holder. "

SECTION 34: [Credit Union Incorporation Act, sections 16 and 20] harmonizes language

within the Act respecting filing.

34 Sections 16 (8) (

a) and 20 (7) (

a) are amended by striking out " register " and substituting " file ".

SECTION 35: [Credit Union Incorporation Act, sections 16 and 20] allows publication of

various records to be in a prescribed manner and harmonizes language within

the Act respecting notice.

35 Sections 16 (8) (

c) and 20 (7) (

c) are amended by striking out " a notice " and substituting " or in any other prescribed manner notice ".

SECTION 36: [Credit Union Incorporation Act, Division 3 of

Part 2] repeals a Division rendered

unnecessary by the enactment by this Bill of

Part 2.1 of the Act.

36 Division 3 of

Part 2 is repealed.

SECTION 37: [Credit Union Incorporation Act, Parts 2.1 to 2.4] imports into the Act the

dissolution, governance, audit and charter alteration provisions that were contained

in the Company Act , before the application of the Company Act was

removed by this Bill, or their Business Corporations Act equivalents.

37 The following Parts are added:

Part 2.1 – Winding Up

Division 1 – Voluntary Winding Up

Voluntary winding up requires special resolution

25.1 Subject to sections 25.2 and 25.3, a credit union may be wound up voluntarily if the credit union so resolves by special resolution.

Solvency of credit union for voluntary winding up

25.2

(1) If it is proposed to wind up a credit union voluntarily, the majority of the directors, before calling the general meeting at which the special resolution for the winding up of the credit union is to be proposed, must make an affidavit declaring that

(

a) they have made a full inquiry into the affairs of the credit union, and

(

b) they are of the opinion that the credit union will be able to pay its debts in full within the period, not exceeding 12 months from the commencement of the winding up, specified in the affidavit.

(2) An affidavit referred to in subsection (1) must

(

a) be made within 5 weeks before the date on which the members pass the special resolution for the voluntary winding up of the credit union, and

(

b) contain a statement of the assets and liabilities of the credit union as at the latest practicable date.

(3) A copy of the affidavit must be

(

a) filed with the registrar before the meeting, and

(

b) presented to the meeting at which the special resolution for the voluntary winding up of the credit union is to be proposed.

(4) If a credit union is wound up in accordance with a special resolution passed within 5 weeks after the making of the affidavit, but the credit union's debts are not paid or provided for in full within the period stated in the affidavit, it is presumed, until the contrary is shown, that the person swearing the affidavit did not have reasonable grounds for his or her opinion.

Notice must be given to commission

25.3 A special resolution under

section 25.1 has no effect unless 30 days' notice in writing of the credit union's intention to pass the resolution has been given to the commission.

Commencement of voluntary winding up

26.1 A voluntary winding up commences when the special resolution to wind up is passed.

Appointment of liquidator

26.2

(1) If a credit union passes a special resolution to wind up voluntarily under

section 25.1, the credit union must promptly deliver written notice of the special resolution to the commission.

(2) On receiving notice under subsection (1), the commission must appoint one or more liquidators, who may be the commission's own employee or employees, for the purpose of winding up the affairs and distributing the assets of the credit union.

Remuneration of liquidator

26.3 The remuneration of a liquidator in a voluntary winding up of a credit union must be set by the commission.

Division 2 – Winding Up by Court Order

Winding up by court order

27.1

(1) A credit union may be wound up by an order of the Supreme Court on the application of

(

a) the credit union,

(

b) a member or an auxiliary member,

(

c) a beneficial owner of an equity share in the credit union,

(

d) a director, creditor, trustee for debentureholders or receiver manager of the credit union,

(

e) the commission, or

(

f) any other person who, in the discretion of the Supreme Court, is a proper person to make an application.

(2) Before hearing an application by a creditor to wind up a credit union by court order, the Supreme Court may require the creditor to give security for the costs of the application.

(3) The Supreme Court may order that the credit union be wound up

(

a) if the court thinks it just and equitable to do so, or

(

b) when an event occurs on the occurrence of which the constitution or rules provide that the credit union is to be dissolved.

(4) The commission is party to any proceedings in which an application is made to the Supreme Court under this section.

Commencement of winding up by court order

27.2 A winding up by court order commences on the date of the order.

Court must appoint liquidator

27.3 If the Supreme Court makes an order that a credit union be wound up, the court, by the same or a subsequent order, must appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the credit union.

Remuneration of liquidator

28.1 The remuneration of a liquidator in a winding up by court order must be set by the Supreme Court.

Division 3 – Winding Up by Commission

Winding up directed by commission

28.2 If, under

section 277 (

g) of the Financial Institutions Act , the commission orders that a credit union that is subject to the commission's supervision be wound up, then

(

a) sections 25.1, 25.2, 26.1 and 31.3 of this Act do not apply,

(

b) the winding up commences at the time of the order that the credit union be wound up,

(

c) the commission must promptly appoint one or more liquidators, who may be the commission's own employee or employees, for the purpose of winding up the affairs and distributing the assets of the credit union,

(

d) the commission must promptly file with the registrar a copy of the order and notify the registrar of the appointment under paragraph (

c) of one or more liquidators, and

(

e) the commission must promptly publish in the Gazette or in any other prescribed manner notice of its order that the credit union be wound up.

Remuneration of liquidator

28.3 The remuneration of a liquidator in a winding up of a credit union ordered under

section 277 (

g) of the Financial Institutions Act must be set by the commission.

Winding up on direction of commission

29.1

(1) If the commission believes on reasonable grounds that it is contrary to the public interest that a credit union that has not been issued a business authorization continue in business, the commission may order that the credit union be wound up.

(2) Without limiting subsection (1), if a credit union

(

a) has fewer than 25 members,

(

b) has contravened

section 13,

(

c) has not applied for a business authorization within one year or the further period ordered by the commission under

section 61 (2) of the Financial Institutions Act after the date of its incorporation, or

(

d) is refused a business authorization,

the commission may order that the credit union be wound up.

(3) If the commission makes an order under this section, the references in sections 27.2, 27.3, 28.1, 31.1 (2), 31.3 (1) (

b) and (3), 32.3 (1), 33.2 (3), 34.2 and 38.1 (3) to the Supreme Court or a court order must be read for the purposes of the winding up ordered by the commission as references to the commission or to an order of the commission.

(4) On the winding up of a credit union under this section, the registrar must publish in the Gazette or in any other prescribed manner notice that the credit union is being wound up and the date of the winding up order.

(5) The cost of the publication under subsection (4) must be paid by the credit union to the government and is recoverable by the government from the credit union as a simple contract debt.

Division 4 – Effect of Winding Up

Effect of resolution or order for winding up

29.2 If a credit union is being wound up,

(

a) the credit union, from the commencement of the winding up, must cease to carry on the credit union's business, except so far as is required, in the opinion of the liquidator, for the credit union's beneficial winding up, but the corporate status and corporate powers and capacity of the credit union continue until the credit union is dissolved,

(

b) on the appointment of the liquidator, the powers of the directors cease, except so far as the liquidator approves their continuance, and

(

c) any transfer of shares made after the commencement of the winding up, except a transfer made to or with the approval of the liquidator, is void.

Examination of credit union winding up

29.3 The commission may at any time examine the records of a credit union that is being wound up.

Powers of Supreme Court

30.1 If a credit union is being wound up, the Supreme Court may,

(

a) on application by a member, an auxiliary member or director of the credit union, order a general meeting, class meeting or meeting of the creditors of the credit union to be held and conducted in the manner the court considers appropriate,

(

b) on application by any of the persons mentioned in

section 27.1 (1), make an order for the audit or the inspection of the accounts, books and papers of, or in possession of, the liquidator that the court considers appropriate,

(

c) on application by the liquidator, set a time within which creditors are to prove their debts or claims or be excluded from the benefit of any distribution to be made by the liquidator,

(

d) in a voluntary winding up, appoint a liquidator on application by a member or an auxiliary member if

(

i) there is no liquidator acting, and

(ii) it is impractical or impossible to hold a general meeting of the credit union for the purpose of filling the vacancy,

(

e) on cause shown by any of the persons mentioned in

section 27.1 (1), remove a liquidator and fill any vacancy in the office of the liquidator,

(

i) resigned,

(ii) been removed from office, or

(iii) in the liquidator's opinion, fully wound up the affairs of the credit union,

(

g) on application by any of the persons mentioned in

section 27.1 (1), confirm, reverse or modify any act or decision of a liquidator and make any order the court considers appropriate,

(

h) if a liquidator does not faithfully perform the liquidator's duties, inquire into the matter and take the action the court considers appropriate,

(

i) on application by any of the persons mentioned in

section 27.1 (1),

(

i) examine into the conduct of any person who has taken

part in the formation or promotion of the credit union or any person who is a past or present director, officer, receiver, receiver manager, liquidator, member or auxiliary member of the credit union if it appears that that person

(

A) has misapplied, retained or become liable or accountable for any money or property in relation to the credit union, or

(

B) has become liable or accountable for any breach of trust in relation to the credit union, and

(ii) compel the person referred to in subparagraph (

i) to repay or to restore the money or property, or any part of the money or property, with interest at the rate the court considers appropriate, or to contribute the sum to the assets of the credit union by way of compensation in respect of the misapplication, retainer or breach of trust as the court considers appropriate,

and this provision applies even if the conduct complained of is conduct for which the person may be liable to prosecution,

(

k) on application by the liquidator, give directions in relation to any matter arising under the winding up.

Additional powers of Supreme Court

30.2 The Supreme Court's powers under

section 30.1 in respect of the winding up of credit unions include the power to extend any time limited by this Act for the filing or publishing of notices, accounts, reports or documents or for the holding of any meeting.

Duty to assist liquidator

30.3 A person who is a present or former director, receiver manager, officer, employee, banker, auditor, member, auxiliary member or agent of, or is a present or former receiver of property of, a credit union that is being wound up or of any affiliate of it must,

(

a) on inquiry by the liquidator, fully and truly inform the liquidator, to the best of the person's knowledge and belief, of all the property of the credit union, and how, to whom, for what consideration and when the credit union disposed of any part of the property, except any part disposed of in the ordinary course of business of the credit union,

(

b) on request of the liquidator, deliver to the liquidator, or as the liquidator directs, all the property of the credit union in the custody or under the control of the person, and

(

c) on request of the liquidator, deliver to the liquidator, or as the liquidator directs, every record, including every document, instrument and accounting record, in the custody or under the control of the person and belonging to the credit union.

Division 5 – Liquidators

Qualification of liquidator

31.1

(1) A person not qualified to become or act as a receiver or receiver manager under

section 64 of the Personal Property Security Act is not qualified to become or act as a liquidator, except that, with the consent in writing of all the members and auxiliary members of a credit union, a person referred to in

section 64 (2) (

e) of the Personal Property Security Act is qualified to become or act as a liquidator of the credit union.

(2) A person who has been appointed as a liquidator in a winding up by court order and who is not, or who ceases to be, qualified to act as a liquidator must promptly bring the disqualification to the attention of the Supreme Court and the person on whose application the liquidator was appointed.

Validity of acts of liquidator

31.2

An act of a liquidator is valid, despite any defect in the liquidator's appointment or qualifications.

Filing and publication of notice of appointment

31.3

(1) A liquidator must, within 10 days after his or her appointment as liquidator, file with the registrar

(

a) a notice of the appointment in the form established by the registrar, and

(

b) if not already filed,

(

i) if the winding up is a voluntary winding up, a certified copy of the special resolution to so wind up, or

(ii) if the winding up is by court order, a certified copy of the order.

(2) A liquidator must, within 7 days after changing his or her address, file with the registrar notice of the new address.

(3) At the commencement of the winding up, the liquidator must publish in the Gazette notice that the credit union has resolved to wind up voluntarily or that the Supreme Court has made an order that the credit union be wound up by court order, as the case may be.

Meeting of creditors

32.1

(1) A liquidator must, within 14 days after his or her appointment as liquidator,

(

a) mail to every person who appears to the liquidator to be a creditor of the credit union a notice that a meeting of the creditors of the credit union will be held on a date, being not less than 21 days and not more than 28 days after the appointment, at an hour and at a place in British Columbia specified in the notice, and

(

b) advertise notice of the meeting

(

i) in the Gazette, and

(ii) in a local newspaper circulating in the district where the registered office is located or where the principal place of business of the credit union in British Columbia was located.

(2) The liquidator must present to the meeting of creditors referred to in subsection (1) a full statement of the position of the affairs of the credit union, including a list of the creditors of the credit union and the estimated amount of their claims, and the creditors are at liberty to discuss any matter arising out of the statement.

Creditor must commence action on claim

32.2 If the liquidator of a credit union gives notice in writing by registered letter to a creditor of the credit union that the debt or claim of the creditor is disputed or rejected, the creditor may commence an action in respect of the debt or claim within 3 months after the notice is given, and, in default of the commencement of the action within that time, the debt or claim of the creditor is forever barred.

Custody of property

32.3

(1) The liquidator of a credit union, subject to any restrictions or directions imposed or given by the Supreme Court, must

(

a) take into the liquidator's custody or under the liquidator's control all the property and things in action to which the credit union is or appears to be entitled, and all the credit union's records, documents and instruments,

(

b) use, subject to this Act, the liquidator's own discretion in realizing the assets of the credit union and distributing them among the creditors, members and auxiliary members,

(

c) keep proper accounting records,

(

d) keep proper minutes of proceedings at meetings and of other matters relating to the winding up,

(

e) cause to be stated on every invoice, order for goods and business letter

(

i) issued by the liquidator or on the liquidator's behalf, and

(ii) on or in which the name of the credit union appears

that the credit union is in liquidation, and

(

f) describe himself or herself as the liquidator of the credit union.

(2) If a winding up continues for more than one year, the liquidator must

(

a) call a general meeting of the credit union at the end of the first year and at the end of each succeeding year after the commencement of the winding up, or as soon as may be convenient,

(

b) present to the general meeting an account of the liquidator's acts and dealings and of the conduct of the winding up during the preceding year, and

(

c) file with the registrar, within 7 days after the date on which the meeting is held, a verified

summary of the liquidator's receipts and payments during that year.

(3) A liquidator must comply with

Part 2.2 in respect of the records, documents and instruments of the credit union.

Liquidator to notify commission of offence

33.1 If it appears to the liquidator of a credit union that any past or present director, officer, employee, receiver, receiver manager, auditor, liquidator, member or auxiliary member of the credit union has been guilty of any offence in relation to the credit union, the liquidator must notify the commission.

Powers of liquidator

33.2

(1) Subject to this section, a liquidator, so far as may be necessary for the beneficial winding up of the affairs and distribution of the assets of a credit union, has the powers of the directors and officers, and may exercise the powers of the credit union that are not required by this Act to be exercised by the credit union in general meeting.

(2) In a voluntary winding up, the credit union, by ordinary resolution, may direct that the liquidator not do certain specified things without

(

a) the approval of a general meeting of the credit union,

(

b) the written consent of certain specified members or specified auxiliary members, or

(

c) the written consent of a certain specified number of members or auxiliary members.

(3) In any winding up, the Supreme Court may impose, either generally or with respect to certain matters, restrictions on the exercise of the powers of a liquidator.

(4) Until required for distribution, cash balances held by the liquidator of a credit union may be invested as follows:

(

a) in an interest bearing account with any savings institution;

(

b) as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee,

and any dividends or interest received from the investments form part of the assets of the credit union.

(5) If several liquidators are appointed, every power given to a liquidator may be exercised

(

a) by the one or more of them that may be determined at the time of their appointment or subsequently, or

(

b) in the absence of any determination, by any 2 or more liquidators.

Resignation and removal of liquidator

33.3

(1) A liquidator appointed in a voluntary winding up of a credit union or a winding up of a credit union ordered under

section 277 (

g) of the Financial Institutions Act may resign from that office.

(2) If, in the opinion of the commission,

(

a) a voluntary winding up of a credit union, or

(

b) a winding up of a credit union ordered under

section 277 (

g) of the Financial Institutions Act

is being carried on in an unsafe or unauthorized manner or is being unduly delayed, the commission, by notice addressed to the liquidator, may remove the liquidator from office.

(3) If a vacancy occurs by death, resignation or otherwise in the office of liquidator in

(

a) a voluntary winding up of a credit union, or

(

b) a winding up of a credit union ordered under

section 277 (

g) of the Financial Institutions Act ,

the commission must appoint a liquidator to fill the vacancy.

Liquidator ceasing to act must file notice

34.1 A liquidator who resigns, is removed from office or for any other reason ceases to act, must, within 7 days after the resignation, removal or cessation, file with the registrar a notice in the form established by the registrar.

Filling vacancy in office of liquidator

34.2 If a vacancy in the office of the liquidator occurs by death, resignation or otherwise in a winding up by court order, the Supreme Court may fill the vacancy on application of any person mentioned in

section 27.1 (1).

Division 6 – Disposing of Assets of Credit Union

Liquidator's powers of disposition

34.3 In consideration of financial assistance by the deposit insurance corporation to the credit union, a liquidator of a credit union may transfer and assign all or any assets of the credit union to the deposit insurance corporation.

Sale of credit union for shares or debentures

35.1

(1) If a credit union is being wound up and it is proposed to transfer or sell the whole or part of the credit union's business or property to a corporation, the liquidator of the credit union being wound up may, with the approval of a special resolution of that credit union that confers on the liquidator either a general authority or an authority in respect of any particular arrangement, in compensation or

part compensation for the transfer or sale,

(

a) receive shares, debentures or other similar interests in the corporation for distribution among the members or auxiliary members of the credit union being wound up, or

(

b) enter into any other arrangement by which the members or auxiliary members of the credit union being wound up may, instead of or in addition to receiving cash, shares, debentures or other similar interests, participate in the profits of or receive any other benefit from the corporation.

(2) No special resolution referred to in subsection (1) is invalid for the purposes of this

section merely because the resolution is passed before or concurrently with a resolution for winding up the credit union or for appointing the credit union's liquidator.

(3) Despite subsections (1) and (2), a liquidator of a credit union must not sell all or substantially all of the assets of the credit union to another credit union except in compliance with

section 16.

Satisfaction of liabilities on winding up

35.2 If a credit union is being wound up, any property of the credit union remaining after satisfaction of all liabilities of the credit union, including the costs of winding up and dissolution, is surplus property and must be dealt with in accordance with sections 35.3 and 36.1.

Distribution of surplus if credit union has not issued equity shares

35.3 If the credit union being wound up has not issued any equity shares, the liquidator must apply the surplus property as follows:

(

a) by declaring and paying a dividend, at a reasonable rate determined by the liquidator, on the non-equity shares in respect of the period from the beginning of the credit union's current fiscal year to the date of commencement of the winding up;

(

b) after payment of the dividend under paragraph (a), by paying or delivering the balance to the deposit insurance corporation.

Distribution of surplus if credit union has issued equity shares

36.1 If the credit union being wound up has issued equity shares, the liquidator must convert into money any surplus property that is not money, and then must apply the money as follows:

(

a) by declaring and paying a dividend, at a reasonable rate determined by the liquidator, on the non-equity shares in respect of the period from the beginning of the credit union's current fiscal year to the date of commencement of the winding up;

(

b) after payment of the dividend under paragraph (a), by distributing the balance to the equity shareholders according to their rights and interests in the credit union.

Members' or auxiliary members' indebtedness to credit union

36.2 The liquidator of a credit union may apply the amount of a dividend under

section 35.3 (

a) or of a dividend or distribution under

section 36.1 in satisfaction of indebtedness owed to the credit union by the member or auxiliary member to whom the amount is due, and then the credit union must pay any balance to the member or auxiliary member.

Unclaimed or undistributed assets

36.3

(1) In this section, "administrator" has the same meaning as in the Unclaimed Property Act .

(1.1) If a liquidator has or controls any unclaimed or undistributed assets or money of a credit union that is being wound up and the assets or money have remained unclaimed or undistributed for more than 6 months after the date on which any dividend, or other distribution of assets or money, declared by the liquidator became payable or distributable, the liquidator must publish in one or more newspapers selected by the liquidator a statement of

(

a) the assets or money unclaimed or undistributed,

(

b) the procedure required to claim the assets or money, and

(

c) the date, not sooner than 60 days after or later than 120 days after the publication, on which date the liquidator will deliver or pay

(

i) to the deposit insurance corporation any part of the assets or money apparently due to, but unclaimed by, members of the credit union, or

(ii) to the administrator any part of the assets or money apparently due to, but unclaimed by, auxiliary members or creditors of the credit union or other non-members of the credit union.

(2) On the date published under subsection (1.1) (c), the liquidator must deliver or pay

(

a) to the deposit insurance corporation any part of the assets or money apparently due to, but unclaimed by, members of the credit union, or

(

b) to the administrator any part of the assets or money apparently due to, but unclaimed by, auxiliary members or creditors of the credit union or other non-members of the credit union,

together with a statement showing, to the extent known to the liquidator, the full names and last known addresses of the persons appearing to be entitled to the assets or money and the amount to which each appears to be entitled.

(3) The receipt of the deposit insurance corporation for the assets or money referred to in subsection (2) (

a) or of the administrator for the assets or money referred to in subsection (2) (

b) is an effective discharge to the liquidator for them.

(4) The administrator, in respect of assets paid or delivered to the administrator under this section, may realize any assets, and any money received or realized under this

section is deemed to be unclaimed money deposits under the Unclaimed Property Act .

(5) If

(

a) the deposit insurance corporation, under subsection (2) (a), has received assets or money unclaimed by members of a credit union,

(

b) application is made to the deposit insurance corporation by or on behalf of a former member of the credit union, and

(

c) the deposit insurance corporation is satisfied that the former member was entitled to but did not receive

(

i) a dividend declared under

section 35.3 (

a) or 36.1 (

a) on non-equity shares in the credit union, or

(ii) a share of a distribution made under

section 36.1 (b),

the deposit insurance corporation must pay to that former member the amount of the dividend or share of the distribution, together with accrued interest at a reasonable rate determined by the deposit insurance corporation.

Division 7 – Completion of Winding Up

Final meeting and dissolution

37.1

(1) As soon as the affairs of a credit union are fully wound up, the liquidator must

(

a) prepare an account of the winding up showing how the winding up was conducted and how the property of the credit union was disposed of, and

(

b) call a final general meeting of the credit union for the purpose of presenting the account and giving any explanation of the account.

(2) The final general meeting referred to in subsection (1) must be called by publishing notice of the meeting in the Gazette not less than 14 days before the meeting, specifying the date, time, place and object of the meeting, and no other notice is necessary.

(3) The liquidator, not more than 7 days after the final general meeting, must file with the registrar a copy of the account and a return in the form established by the registrar.

Dissolution on completion of winding up

38.1

(1) The registrar, on receiving the copy of the account and the return referred to in

section 37.1, must file them.

(2) Three months after the filing referred to in subsection (1), the credit union is dissolved.

(3) On application by the liquidator or by any person mentioned in

section 27.1 (1), the Supreme Court may make an order deferring the date on which the dissolution of the credit union is to take effect for the time the court considers appropriate.

(4) No order made under this

section is effective unless a certified copy of the order is filed with the registrar before the credit union is dissolved under subsection (2).

Notice on dissolution

39.1 In addition to fulfilling the requirements of

section 37.1, the liquidator of a credit union,

(

a) not more than 14 days after the date of the final general meeting required under

section 37.1 (1), must publish in one or more newspapers selected by the liquidator a notice that the affairs of the credit union have been wound up, and

(

b) must file with the commission a copy of the account showing how the winding up has been conducted and how the property of the credit union has been disposed of, together with a copy of the newspaper notice.

Disposal of books and papers of credit union

39.2 If a credit union has been dissolved, the liquidator is responsible for the care and custody of the credit union's records, including documents, instruments and accounting records, for 2 years after the date of dissolution, but not longer.

Discharge by court order

39.3 An order of the Supreme Court releasing a liquidator discharges the liquidator from all liability in respect of any act done or default made by the liquidator in the administration of the affairs of the credit union or otherwise in relation to the liquidator's conduct in that capacity, but that order may be revoked on proof that it was obtained by fraud or by suppression or concealment of any material fact.

Part 2.2 – Offices and Records

Division 1 – Credit Union Offices

Registered and records offices

39.4

(1) A credit union must, at all times, maintain a registered office and, for the purposes of

section 39.42, a records office, both in British Columbia and both at the locations set out in

(

a) the notice referred to in

section 8 (d), or

(

b) if a notice of change of address has been filed with the registrar, the latest filed notice of change of address.

(2) The registered office and the records office may be located at the same place.

Change of registered or records office

39.41

(1) The directors of a credit union may change the location of the credit union's registered office or records office in British Columbia by

(

a) passing a resolution authorizing the change, and

(

b) filing with the registrar 2 copies of a notice of change of address in the form established by the registrar.

(2) No change in the location of the registered office or records office is effective until subsection (1) has been complied with.

(3) When subsection (1) has been complied with, the registrar must forward to the previous registered office or records office one copy of the notice of change of address bearing evidence that the notice of change of address has been filed with the registrar.

(4) If the registered office or records office is located at the place of business of a credit union's agent or solicitor and that agent or solicitor moves the agent's or solicitor's place of business to another location, the agent or solicitor must file with the registrar a notice of change of address, in the form established by the registrar, for each credit union having a registered office or records office at the agent's or solicitor's place of business, and subsections (1) to (3) do not apply.

(5) A change in the location of the registered office or records office under subsection (4) is not effective until that subsection has been complied with.

Division 2 – Records

Records office documents

39.42 A credit union must keep at its records office the following records:

(

a) the credit union's certificate of incorporation;

(

b) a copy of the credit union's constitution including every amendment of it;

(

c) a copy of the credit union's rules including every amendment of them;

(

d) the credit union's register of directors;

(

e) the minutes of every general meeting and class meeting of the credit union;

(

f) the minutes of every meeting of the credit union's directors;

(

g) a copy of every document filed by the credit union with the registrar;

(

h) a copy of every certificate issued to the credit union by the registrar;

(

i) a copy of every order of the superintendent or the commission relating to the credit union unless the superintendent or the commission, in that order or in another order, orders that that order need not be kept at the records office;

(

j) a copy of every order of the registrar relating to the credit union;

(

k) a copy of every other document and instrument approved in the preceding 10 years by the directors;

(

l) a copy of every mortgage created or assumed by the credit union, whether or not required to be registered;

(

m) a copy of all audited financial statements of the credit union and its subsidiaries, whether or not consolidated with the financial statements of the credit union, including the auditor's reports;

(

n) if the credit union is an amalgamated credit union,

(

i) every record, document or instrument described in paragraphs (

a) to (

d) and (

g) to (j),

(ii) every record, document or instrument described in paragraphs (f), (

k) and (l), and

(iii) every record, document or instrument described in paragraphs (

e) and (

m) of each of the amalgamating credit unions;

(

o) if a receiver or receiver manager is appointed under an instrument filed in the office of the registrar, the name and address of the receiver or receiver manager, the date of the appointment of the receiver or receiver manager and the date the receiver or receiver manager ceases to act or completes the duties of that office.

Examination of records

39.43

(1) A director of a credit union may examine and take extracts, without charge, from the credit union's records, documents and instruments referred to in

section 39.42, and a former director may examine and take extracts, without charge, from the credit union's records, documents and instruments referred to in

section 39.42 that relate to the time when he or she was a director.

(2) A member, auxiliary member or debentureholder of a credit union may examine and take extracts, without charge, from the credit union's records, documents and instruments referred to in

section 39.42, except those referred to in paragraphs (f), (k), (

l) and (n) (ii).

(3) A person may examine and take extracts from the credit union's records, documents and instruments referred to in

section 39.42, except those referred to in paragraphs (f), (k), (

l) and (n) (ii), on payment of $0.50 or a lesser sum the credit union prescribes, for each record, document or instrument examined.

(4) The records, documents or instruments may be examined during normal business hours, but, in the case of examination by any person other than a director, the credit union may, by ordinary resolution, impose reasonable restrictions, provided that not less than 2 consecutive normal business hours in each day, Saturday and holidays excepted, are allowed for examination.

Copies

39.44 A person entitled to examine a record, document or instrument of the credit union under

section 39.43 is entitled to require the credit union to furnish the person with a copy on payment of a reasonable charge not exceeding the sum of $0.50 for every page copied.

Copy of constitution and rules for member

39.45 A member or auxiliary member of a credit union is entitled on request and without charge to a copy of the constitution and rules.

Form of records

39.46

(1) Records and registers that are required by this Act or the Financial Institutions Act to be prepared and maintained by or on behalf of a credit union may be in a bound or looseleaf form, or entered or recorded by any system of mechanical or electronic data processing, or by any other information storage device from which the credit union is capable of reproducing, in a reasonable time, any required information in intelligible form.

(2) Minutes that are required by this Act or the Financial Institutions Act to be kept by a credit union must be kept in a bound or looseleaf book.

(3) A credit union and its agents must take adequate precautions with respect to the records and registers required by this Act or the Financial Institutions Act to be prepared and maintained so as to

(

a) avoid loss, mutilation or destruction,

(

b) avoid falsification of entries, and

(

c) provide simple, reliable and prompt access.

Division 3 – Accounting Records

Accounting records required

39.47

(1) A credit union must keep proper accounting records in respect of all financial and other transactions of the credit union, and, without limiting the generality of the foregoing, must keep records of

(

a) every sum of money received and disbursed by the credit union and the matters in respect of which the receipt and disbursement take place,

(

b) every sale and purchase by the credit union,

(

c) every asset and liability of the credit union, and

(

d) every other transaction affecting the financial position of the credit union.

(2) Without limiting

section 133 of the Financial Institutions Act , the accounting records of a credit union must be kept at a place determined by the directors, but the registrar may order that the accounting records be kept in British Columbia.

(3) The accounting records of a credit union must be open to the inspection of any director during the normal business hours of the credit union.

(4) Subject to the rules or an ordinary resolution, the directors may determine to what extent, at which times and places and under what conditions the accounting records of the credit union must be open to the inspection of members or auxiliary members.

Division 4 – Financial Statements

Financial statements for members

39.48

(1) A credit union, not less than 10 days before the date of its annual general meeting, must send a copy of the financial statements referred to in

section 74.1 and the auditor's report on the financial statements to the auditor and each member and auxiliary member

(

a) by prepaid post to the latest address shown for the recipient on the register of members and auxiliary members, or

(

b) if the intended recipient has provided an email address for the purposes of receiving such records, by email to that address.

(2) A credit union, on demand by a debentureholder of the credit union, must furnish the debentureholder with a copy of the credit union's latest financial statements and a copy of the auditor's report on the financial statements.

Approval for publication

39.49

(1) Financial statements, or interim financial statements, issued, published or circulated by a credit union must be first approved by the directors, and the approval evidenced by the signatures of 2 directors.

(2) Financial statements issued, published or circulated by a credit union

(

a) that are to be presented to an annual general meeting must have attached the auditor's report required under

Part 2.3,

(

b) must have attached every auditor's report made in respect of the financial statements, and

(

c) must not, unless the financial statements have been audited and an auditor's report has been made, purport to be audited financial statements.

Part 2.3 – Audits

Division 1 – Appointment of Auditor

Auditor

39.5

(1) The directors of a credit union may appoint the first auditor of the credit union to hold office until the close of the first annual general meeting.

(2) The credit union, at each annual general meeting, must appoint an auditor to hold office until the close of the next annual general meeting, and if, at that meeting, an appointment is not made, the auditor in office continues as auditor until a successor is appointed.

(3) The directors may fill any casual vacancy in the office of auditor.

(4) If for any reason no auditor is appointed, on the application of a member, auxiliary member, debentureholder or creditor of the credit union, the Supreme Court may appoint an auditor to hold office until the close of the next annual general meeting and set the remuneration to be paid by the credit union for the auditor's services.

(5) The credit union must promptly give notice in writing to an auditor of the auditor's appointment.

Qualifications

39.51 The auditor of a credit union must be

(

a) a person who is a member, or a partnership whose partners are members, in good standing of the Canadian Institute of Chartered Accountants, or the Certified General Accountants Association of British Columbia, or

(

b) a person who is certified under

section 222 of the Business Corporations Act by the Auditor Certification Board continued under

section 221 of that Act.

Persons not qualified as auditors

39.52

(1) A person must not be the auditor of a credit union if the person is not independent of the credit union, its affiliates and its directors and officers.

(2) For the purposes of this section, independence is a question of fact, but

(

a) a person is not independent who is a director, officer or employee of the credit union or of an affiliate of the credit union, or who is a partner, employer or employee of that director, officer or employee, or who is a member of the immediate family of that director or officer,

(

b) a person is not independent if the person, a member of the person's immediate family, the person's partner, or a member of the immediate family of the person's partner, beneficially owns or controls, directly or indirectly, any interest in an equity share or a debt obligation of the credit union or of any of the credit union's affiliates, and

(

c) a person is not independent who is appointed a trustee of the estate of the credit union under the Bankruptcy and Insolvency Act (Canada) or who is a partner, employer or employee of, or a member of the immediate family of, that trustee.

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

(

a) the immediate family of the person referred to includes

(

i) his or her spouse, parent and child, and

(ii) any relative of the person, or his or her spouse, who resides with the person, and

(

b) a partner of the person referred to means any person with whom the person carries on in partnership the profession of public accounting.

(4) An auditor, within 90 days after becoming aware that the auditor's appointment as auditor contravenes this section, must either

(

a) eliminate the circumstances that cause the auditor to be in contravention, or

(

b) resign as auditor.

Remuneration

39.53 The remuneration of the auditor of a credit union must be set by ordinary resolution or, if the credit union so resolves, by the directors, but the remuneration of an auditor appointed before the first annual general meeting or to fill any casual vacancy may be set by the directors.

Removal of auditor

39.54

(1) A credit union may, by ordinary resolution passed at a general meeting duly called for the purpose, remove an auditor before the expiration of the auditor's term of office, and must by ordinary resolution at that meeting appoint another auditor in the auditor's stead for the remainder of the auditor's term.

(2) A credit union, before calling a general meeting for the purpose specified in subsection (1), but not less than 14 days before the mailing of the notice of the meeting, must give to the auditor

(

a) written notice of the intention to call the meeting, specifying the date on which the notice of the meeting is proposed to be mailed, and

(

b) a copy of all material proposed to be sent to members in connection with the meeting.

(3) An auditor has the right to make to the credit union, not less than 3 days before the mailing of the notice of the meeting, representations in writing respecting the auditor's proposed removal as auditor, and the credit union, at the credit union's expense, must forward with the notice of the meeting a copy of those representations to each member.

Notice of proposed change

39.55

(1) The directors of a credit union must not propose, at an annual general meeting, the appointment of an auditor other than the incumbent auditor unless notice of that proposed appointment is contained in the notice of the meeting.

(2) If the notice of the meeting contains the notice referred to in subsection (1),

(

a) the credit union must, not less than 14 days before the mailing of the notice of the meeting, give to the incumbent auditor written notice of the intention of the directors not to recommend the auditor's reappointment at the annual general meeting, specifying in the written notice the date on which the notice of the meeting is proposed to be mailed, and

(

b) the incumbent auditor has the right to make to the credit union, not less than 3 days before the mailing of the notice of the meeting, representations in writing respecting the proposal not to reappoint the incumbent as auditor, and the credit union, at the credit union's expense, must forward with the notice of the meeting a copy of those representations to each member.

Division 2 – Audit Committee

Appointment and procedures

39.56

(1) The directors of a credit union must elect at their first meeting following each annual general meeting a committee, to be known as the audit committee, composed of not fewer than 3 directors, of which a majority of the members must not be officers or employees of the credit union or of an affiliate of the credit union, to hold office until the next annual general meeting.

(2) The members of the audit committee must elect a chair from among themselves and, subject to

section 103 of the Financial Institutions Act , may determine the committee's procedure.

(3) In addition to the requirements of subsection (5), the audit committee of a credit union must review

(

a) returns of the credit union that are to be filed with the superintendent under

section 127 (1) of the Financial Institutions Act ,

(

b) reports that have been made by the auditor under

section 123 of the Financial Institutions Act , and

(

c) prescribed reports, transactions or matters.

(4) If, under this Act or the Financial Institutions Act , financial statements or a return requires the approval of the directors, that approval must not be given until

(

a) the audit committee has reviewed and reported on those financial statements or that return, and

(

b) the directors have received the report.

(5) Before financial statements that are to be submitted to an annual general meeting are considered by the directors, the financial statements must be submitted to the audit committee for review with the auditor, and, after that, the report of the audit committee on the financial statements must be submitted to the directors.

(6) The auditor must be given notice of, and has the right to appear before and to be heard at, every meeting of the audit committee, and must appear before the audit committee when requested to do so by the committee.

(7) On the written request of the auditor, of a member of the audit committee or of any director, the chair of the audit committee must convene a meeting of the audit committee to consider any matters the auditor, member or director, as the case may be, believes should be brought to the attention of the directors or members.

Division 3 – Duties and Rights of Auditors

Annual audit

39.57

(1) The auditor must make an examination that will enable the auditor to report to the members as required under subsection (2).

(2) The auditor must make a report to the members on the financial statements, other than the part that relates to the period referred to in

section 74.1 (a) (ii), that are to be placed before the credit union at any annual general meeting during the auditor's term of office, and must state in the report whether, in the auditor's opinion,

(

a) the financial statements present fairly the financial position of the credit union and the results of its operations for the period under review, and

(

b) the financial statements are in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding period.

(3) If the financial statements contain a statement of changes in net assets or a statement of source and application of funds, the auditor must state in the auditor's report whether, in the auditor's opinion, the statement of changes in net assets or the statement of source and application of funds presents fairly that information.

Negative audit report

39.58 If the report of the auditor under

section 39.57 does not contain the unqualified opinion required by it, the auditor must state the reasons in the report.

Audited statements of subsidiaries

39.59 Whether or not the assets and liabilities and income and expense of any one or more subsidiaries of a holding credit union are included in the financial statements of the holding credit union, the report of the auditor of the holding credit union required by this Part may refer to the reports of the auditors of one or more of the subsidiaries, but the reference does not derogate from the duty of the auditor of the holding credit union to comply with

section 39.57 (1).

Auditor's attendance

39.6 A member of a credit union may, whether or not entitled to vote at a meeting of the credit union, by notice in writing to the credit union given not less than 5 days before a meeting at which the financial statements of the credit union are to be considered or the auditor is to be appointed or removed, require the attendance of the auditor at the meeting at the expense of the credit union and, in that event, the auditor must attend the meeting.

Procedure

39.61

(1) At any general meeting, the auditor, if present, must answer inquiries directed to the auditor concerning the financial statements of the credit union and the opinion on the financial statements stated in the auditor's report.

(2) At the request of any member attending the annual general meeting, the report of the auditor must be read to the meeting.

Amendment of financial statements and report

39.62

(1) If facts come to the attention of the officers or directors of a credit union

(

a) that could reasonably have been determined before the date of the last annual general meeting, and

(

b) that, if known before the date of the last annual general meeting, would have required a material adjustment to the financial statements presented to the meeting,

the officers or directors must communicate the facts to the auditor who reported to the members under this Part and the directors must promptly amend the financial statements and deliver the financial statements to the auditor and to the superintendent.

(2) Whether through communication described in subsection (1) or by any other means, if facts described in subsection (1) (

a) and (

b) come to the attention of the auditor and the auditor considers it necessary to amend the report in respect of the financial statements presented to the last annual general meeting, the auditor must

(

a) inform the superintendent in writing, and

(

b) amend the report so that it complies with this Part.

(3) If the auditor amends the report under subsection (2), the directors must send to the members a copy of the amended report and a statement explaining the effect of the amendment on the financial position and results of the operations of the credit union

(

a) by prepaid post to the latest address shown for the recipient on the register of members and auxiliary members, or

(

b) if the intended recipient has provided an email address for the purposes of receiving such records, by email to that address.

Access to information

39.63

(1) On the demand of an auditor of a credit union, a person who is or has been a director, officer, employee or agent of a credit union or a credit union's subsidiary must, to the best of the person's ability to do so,

(

a) furnish all information and explanations to the auditor, and

(

b) allow the auditor access to, and furnish to the auditor copies of, records, documents, books, accounts and vouchers of the credit union and of the credit union's subsidiaries, if any,

as the auditor considers necessary for the purpose of any examination or report that the auditor is permitted or required to make under this Act or the Financial Institutions Act .

(2) A person who in good faith makes any communication under this

section is not liable in a civil action only because of making the communication.

Information as to foreign subsidiaries

39.64 If a subsidiary referred to in

section 39.63 is a corporation to which this Act does not apply, the holding credit union must make available to the auditor of the holding credit union the records, documents, instruments, accounts and vouchers of that subsidiary and must require the directors, officers and employees of that subsidiary to make available to the auditor of the holding credit union the information and explanations referred to in

section 39.63.

Right to attend general meetings

39.65 The auditor of a credit union is entitled to attend any general meeting of the credit union and to receive every notice and other communication relating to the meeting that a member or auxiliary member is entitled to receive, and is entitled to be heard at any general meeting that the auditor attends on any part of the business of the meeting that concerns the auditor in that capacity, or that concerns the financial statements of the credit union.

Qualified privilege

39.66 An oral or written statement or report made under this Act by the auditor or former auditor of a credit union has qualified privilege.

Part 2.4 – Alteration of Constitution and Rules

Definition

39.7 In this Part, "alter" includes create, add to, vary and delete.

Commission's consent

39.71 The registrar must not accept for filing

(

a) a resolution, referred to in

section 39.72 (2), to alter the constitution of a credit union, or

(

b) a resolution, referred to in

section 39.74 (1), to alter the rules of a credit union

without first receiving the consent of the commission.

Powers to alter constitution

39.72

(1) If there is an express provision in this Act permitting a credit union to alter the credit union's constitution, the constitution may be altered in the cases and to the extent permitted by that provision, so long as the altered constitution complies with this Act.

(2) A credit union that wishes to alter its constitution as permitted by subsection (1) must file a certified copy of the resolution altering the constitution, together with a copy of the constitution as amended by the alteration.

(3) A resolution to alter the constitution of a credit union takes effect

(

a) if every other requirement of this Act relating to the proposed alteration is complied with, on the date that a certified copy has been accepted for filing by the registrar, or

(

b) on the date specified in the resolution,

whichever is later.

Copies to include alterations

39.73 If the constitution of a credit union is altered, every copy of the constitution issued on or after the date the alteration takes effect must contain the alteration.

Powers to alter rules

39.74

(1) Subject to this Act and a credit union's constitution, the credit union may, if the rules as altered would, at the time of the filing, comply with this Act, alter the credit union's rules by filing with the registrar a certified copy of a special resolution altering the rules.

(2) A resolution to alter the rules of a credit union takes effect

(

a) if every other requirement of this Act relating to the proposed alteration is complied with, on the date that a certified copy has been accepted for filing by the registrar, or

(

b) on the date specified in the resolution,

whichever is later.

(3) An alteration made in compliance with subsections (1) and (2) is as valid as if originally contained in the rules.

Copies to include alterations

39.75 If the rules of a credit union are altered, every copy of the rules issued on or after the date the alteration takes effect must contain the alteration.

Altering restrictions

39.76 A credit union may, by special resolution, alter its constitution by altering any restriction on the business carried on or to be carried on by the credit union, or on its powers.

Procedure and effect

39.77

(1) A credit union, by special resolution, may alter its constitution by changing the credit union's name to a name approved by the superintendent.

(2) On the registrar accepting for filing a certified copy of the resolution referred to in subsection (1), the registrar must issue a certificate showing the change of name and the date the change of name is effective and must publish in the Gazette or in any other prescribed manner notice of change of name.

(3) No change of the name of a credit union affects any of the credit union's rights or obligations, or renders defective any legal proceedings by or against it, and any legal proceedings that may have been continued or commenced against the credit union under its former name may be continued or commenced against the credit union under its new name.

SECTION 38: [Credit Union Incorporation Act, sections 55.1 to 55.5] imports into the Act

share provisions that were contained in the Company Act , before the application

of the Company Act was removed by this Bill, or their Business Corporations

Act equivalents.

38 The following sections are added:

Kinds of shares

55.1

(1) The authorized capital of a credit union consists of shares with par value, or shares without par value, or both kinds of shares.

(2) The authorized capital must be described in the constitution, which must state the aggregate number of shares that the credit union may issue and,

(

a) if the shares are of one kind only, the par value of each share or a statement that the shares are without par value, or

(

b) if the shares are of both kinds, the number of shares of each kind, the par value of each share having par value and a statement that the other kind of shares are without par value.

(3) If shares in a credit union are of both kinds of shares, the shares with par value must be a class or classes of shares distinct from the shares without par value.

(4) Every share without par value must be equal to every other share without par value, subject to special rights or restrictions attached to any such share under the constitution or rules or under this Act.

(5) The par value of shares must be expressed in Canadian currency.

(6) A share in a credit union is personal estate.

Price or consideration for shares

55.2

(1) Subject to

section 55.5, no equity shares with par value may be allotted or issued except at a price or for a consideration at least equal to the product of the number of equity shares allotted or issued multiplied by their par value.

(2) No equity shares without par value may be allotted or issued at a price or for a consideration less than,

(

a) if the constitution or rules authorize the directors to determine the price or consideration, the price or consideration determined by the directors, or

(

b) if there is no provision in the constitution or rules as mentioned in paragraph (a), the price or consideration determined by special resolution,

and the capital of the credit union is, with respect to those shares, an amount equal to at least the aggregate amount of the price or consideration paid to the credit union on or for those equity shares that are issued, together with amounts that may be added to that capital by ordinary resolution.

(3) Even if the price or consideration for an equity share may be other than cash, the price or consideration for an equity share may, at the time when the equity share is allotted, be expressed in terms of money and so recorded in the proceedings of the directors of the credit union.

Shares to be fully paid

55.3

(1) No equity share may be issued until it is fully paid.

(2) An equity share is not fully paid until the credit union has received the full consideration for the equity share in cash, property or services.

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

(

a) a document evidencing indebtedness of the allottee does not constitute property,

(

b) services are past services actually performed for the credit union,

(

c) the value of property or services is an amount set by resolution of the directors that is, in all circumstances of the transaction, no greater than fair market value, and

(

d) the full consideration received for an equity share issued by way of dividend is the amount declared by the directors to be the amount of the dividend.

Liability of directors

55.4 Every director is jointly and severally liable to compensate the credit union and any equity shareholder for any loss, damage and costs sustained by the credit union or the equity shareholder by reason of the allotment or issue of an equity share in contravention of

section 55.2 or 55.3.

Commissions and discounts

55.5

(1) A credit union, if authorized by its constitution or rules, may pay a commission or allow a discount to a person in consideration of the person subscribing or agreeing to subscribe, or procuring or agreeing to procure subscriptions, whether absolutely or conditionally, for the credit union's shares, but the commission and discount in the aggregate must not exceed 25% of the subscription price.

(2) Subject to subsection (1), a credit union must not apply any of its equity shares or capital money, either directly or indirectly, in payment of a commission, discount or allowance to a person in consideration of the person subscribing or agreeing to subscribe, or procuring or agreeing to procure subscriptions, whether absolutely or conditionally, for equity shares in the credit union.

SECTION 39: [Credit Union Incorporation Act,

section 58] clarifies that each shareholder

has, in a class vote in respect of any rights or special rights of shares, one vote

for each equity share of that class held by that shareholder.

Section 58 (2) is amended by striking out " has one vote in respect of each share held by that holder. " and substituting " of equity shares in the class of equity shares in relation to which the vote is being held has one vote in respect of each equity share of that class of equity shares held by that holder. "

SECTION 40: [Credit Union Incorporation Act,

section 59] clarifies that the provision

relates to equity shares.

Section 59 (1) (

b) and (

c) and (4) (

c) is amended by adding " equity " before " shares " wherever it appears.

SECTION 41: [Credit Union Incorporation Act, sections 61.1 to 61.7] imports into the Act

share certificate provisions that were contained in the Company Act , before the

application of the Company Act was removed by this Bill, or their Business

Corporations Act equivalents.

41 The following sections are added:

Certificate as evidence of title

61.1 A share certificate issued by the credit union and signed as required by

section 61.2 evidencing equity shares held by an equity shareholder is proof in the absence of evidence to the contrary of the title of the equity shareholder to the shares.

Signature on certificate

61.2 A share certificate of a credit union must be signed manually by at least one officer or director of the credit union, or by or on behalf of a registrar, branch registrar, transfer agent or branch transfer agent of the credit union, and any additional signatures may be printed or otherwise mechanically reproduced and, in that event, a certificate so signed is as valid as if signed manually.

Lost or destroyed certificates

61.3

Section 92 of the Securities Transfer Act applies to lost or destroyed certificates.

Liability of equity shareholders

61.4

(1) The liability of an equity shareholder for an equity share held by the equity shareholder is limited,

(

a) in the case of an equity share with par value, to the amount unpaid on the equity share, and

(

b) in the case of an equity share without par value, to the amount unpaid on the equity share of the price or consideration for which that equity share was issued by the credit union,

but an equity shareholder is not personally liable for more than the amount actually agreed to be paid for an equity share held by the equity shareholder.

(2) Money payable by an equity shareholder to the credit union under the constitution or rules is a debt due from the equity shareholder to the credit union of the nature of a specialty debt.

(3) No equity shareholder of a credit union is personally liable for the debts, obligations or acts of the credit union.

Powers of personal representative

61.5

(1) Despite the constitution or rules of a credit union, the personal or other legal representative or trustee in bankruptcy of an equity shareholder, although not registered as a member or auxiliary member, has the rights, privileges and obligations that attach to the equity shares held by the equity shareholder if the appropriate evidence of appointment or incumbency within the meaning of

section 87 of the Securities Transfer Act is provided to the credit union.

(2) Subsection (1) of this

section does not apply on the death of an equity shareholder for equity shares registered in the equity shareholder's name and the name of another person in joint tenancy.

Documents for transmission

61.6 If a person applies to a credit union or the credit union's transfer agent to effect a transmission of shares or other securities, the person must produce the following:

(

a) a declaration of transmission made by a personal or other legal representative or trustee in bankruptcy stating the particulars of the transmission;

(

b) the share certificate or security registered in the name of the deceased or bankrupt, and any assurances referred to in

section 87 of the Securities Transfer Act that are required by the credit union;

(

c) in the case of a death,

(

i) the original or a court certified copy of the grant of probate or grant of administration, or

(ii) the original or a court certified or authenticated copy of the grant of representation, will, order or other instrument or other evidence of the death under which title to the shares or securities is claimed to vest;

(

d) in the case of bankruptcy, a copy of the court order or of the assignment in bankruptcy and a copy of the instrument appointing the trustee in bankruptcy;

(

e) in any other case,

(

i) if the person making the declaration of transmission referred to in paragraph (

a) was appointed by a court, appropriate evidence of appointment or incumbency within the meaning of paragraph (

a) of the definition of "appropriate evidence of appointment or incumbency" in

section 87 (3) of the Securities Transfer Act , and

(ii) if that person was not appointed by a court, appropriate evidence of appointment or incumbency within the meaning of paragraph (

b) of the definition of "appropriate evidence of appointment or incumbency" in

section 87 (3) of the Securities Transfer Act .

Effect of documents provided

61.7 If a personal or other legal representative, or a trustee in bankruptcy, of an equity shareholder of a credit union applies to the credit union or the credit union's transfer agent under

section 61.6 to become or to designate another person to become a registered member or auxiliary member of the credit union, provision to the credit union or transfer agent of the records required under that

section for the application is, despite the constitution or rules, sufficient authority to enable the credit union or transfer agent to register the applicant or the person designated by the applicant, as the case may be, as a registered member or auxiliary member of the credit union.

SECTION 42: [Credit Union Incorporation Act,

section 64] expressly disapplies the Securities

Transfer Act to membership shares, provides that all membership shares

are transferable and provides that a transfer of a membership share is effective

only on registration.

Section 64 is amended

(

a) by adding the following subsection:

(1.1) The Securities Transfer Act does not apply to the transfer of membership shares of a credit union. ,

(

b) in subsection (2) by striking out " in respect of a membership share, an equity share " and substituting " a membership share ", and

(

c) in subsection (3) by striking out " equity shares " and substituting " membership shares ".

SECTION 43: [Credit Union Incorporation Act, sections 74.1 and 75.1] imports into the Act

Company Act financial reporting requirements and minute-taking requirements.

43 The following sections are added:

Information for annual general meeting

74.1 The directors of a credit union must place before each annual general meeting

(

a) financial statements prepared under

section 129 of the Financial Institutions Act relating to

(

i) the period that began on the date of incorporation and ended as of the close of the credit union's first financial year or, if the credit union has completed a financial year, the latest completed financial year, as the case may be, the financial statements to be made up to a date not more than 6 months before the annual general meeting before which the financial statements are placed, and

(ii) the period, if any, that is the financial year next preceding the latest completed financial year,

(

b) the report of the auditor,

(

c) the report of the directors to the members, and

(

d) any further information respecting the credit union that the rules require or that the Lieutenant Governor in Council may prescribe.

Minutes

75.1

(1) A credit union must cause minutes of all proceedings at general meetings, class meetings and meetings of its directors and of committees of its directors to be kept.

(2) The minutes referred to in subsection (1), if purported to be signed by the chair of the meeting at which the proceedings were taken or by the chair of the next succeeding meeting, are evidence of the proceedings.

(3) If minutes of a meeting have been entered and signed in accordance with this section,

(

a) the meeting is deemed to have been duly held and convened,

(

b) all proceedings at the meeting are deemed to have been duly taken, and

(

c) all elections and appointments of directors, officers or liquidators made at the meeting are deemed to be valid

until the contrary is proved.

SECTION 44: [Credit Union Incorporation Act,

section 78] harmonizes the language of

section

78 of the Act with the language of

section 2.2 of the Act as enacted by this

Bill.

Section 78 (5) is amended by striking out " delivery, it is deemed " and substituting " delivery of it is deemed ".

SECTION 45: [Credit Union Incorporation Act,

section 80] deems all references in constitutions

or rules of credit unions to extraordinary resolutions to be references to

special resolutions.

Section 80 is amended

(

a) by renumbering the

section as

section 80 (1), and

(

b) by adding the following subsection:

(2) A reference in the constitution or rules of a credit union to an extraordinary resolution is deemed to be a reference to a special resolution.

SECTION 46: [Credit Union Incorporation Act, sections 82.1 to 82.3] imports into the Act

contract, document and insider provisions that were contained in the Company

Act , before the application of the Company Act was removed by this Bill, or

their Business Corporations Act equivalents.

46 The following sections are added to

Part 4:

Form and effect of contracts

82.1

(1) A contract that, if made between individuals, would by law be required to be in writing and under seal, may be made for a credit union in writing under seal and, in the same manner, may be varied or discharged.

(2) A contract that, if made between individuals, would by law be required to be in writing and signed by the parties to be charged, may be made for the credit union in writing signed by a person acting under the credit union's authority, express or implied, and, in the same manner, may be varied or discharged.

(3) A contract that, if made between individuals, would by law be valid although made orally and not reduced to writing, may be made in the same manner for the credit union by a person acting under the credit union's authority, express or implied, and, in the same manner, may be varied or discharged.

(4) A contract made according to this

section is effectual in law, and binds the credit union, the credit union's successors and all other parties to the contract.

(5) A bill of exchange or promissory note is deemed to have been made, accepted or endorsed on behalf of a credit union if made, accepted or endorsed in the name of, or by, or on behalf of, or on account of, the credit union by a person acting under the credit union's authority.

Authentication of documents

82.2 A document that requires authentication or certification by a credit union may be authenticated or certified by a director or officer of the credit union, or by the solicitor for the credit union, and need not be under the credit union's common seal.

Liability of insiders

82.3

(1) In this section:

"associate" , if used to indicate a relationship with a person, means

(

a) a corporation of which that person beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to all shares of the corporation for the time being outstanding carrying voting rights that are at that time capable of being exercised,

(

b) a partner of that person,

(

c) a trust or estate in which that person has a substantial beneficial interest or for which that person serves as trustee or in a similar capacity,

(

d) a spouse, son or daughter of that person, or

(

e) a relative of that person or of that person's spouse, other than a relative referred to in paragraph (d), who has the same home as that person;

"insider of a credit union" means

(

a) any director or senior officer of the credit union or his or her associate, or

(

b) the credit union itself,

and every director or senior officer of a credit union that is itself an insider of a credit union is an insider of the credit union.

(2) An insider or affiliate of an insider of a credit union who, in connection with a transaction relating to any share of the credit union or any debt obligation of the credit union, makes use of any specific confidential information for the benefit or advantage of the insider or affiliate or of any associate or affiliate of the insider or affiliate, that, if generally known, might reasonably be expected to affect materially the value of the share or the debt obligation, is

(

a) liable to compensate any person for any direct loss suffered by the person as a result of the transaction, unless the information was known or ought reasonably to have been known to the person at the time of the transaction, and

(

b) accountable to the corporation for any direct benefit or advantage received or receivable by the insider or affiliate, as the case may be, as a result of the transaction.

SECTION 47: [Credit Union Incorporation Act, sections 82.4 to 82.7] imports into the Act

debenture provisions that were contained in the Company Act , before the

application of the Company Act was removed by this Bill, or their Business

Corporations Act equivalents.

47 The following

Part is added:

Part 4.1 – Debentures

Interpretation

82.4

(1) In this Part, "debenture" does not include

(

a) an assignment of book accounts within the meaning of the Book Accounts Assignment Act , R.S.B.C. 1979, c. 32,

(

b) a mortgage of land only, or

(

c) an instrument charging personal property only and required to be registered under the Chattel Mortgage Act , R.S.B.C. 1979, c. 48.

(2) This Part does not apply in respect of a mortgage or debenture issued by a credit union before June 25, 1975, but, despite any limitation as to time, a credit union may register a mortgage or debenture issued by the credit union before then, and, on registration, this Part does apply in respect of the mortgage or debenture.

Enforcement of contract to take debentures

82.5 A contract with the credit union to take up and pay for a debenture of the credit union may be enforced by an order for specific performance.

Validity of perpetual debenture

82.6 Despite any rule of equity to the contrary, no condition contained in a debenture, or in a deed for securing a debenture, is invalid merely because the debenture is made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.

Issue of redeemed debenture

82.7

(1) If a credit union redeems a debenture that was previously issued as one of a series,

(

a) unless an express or implied provision to the contrary is contained in the debenture, the rules or a contract entered into by the credit union, or

(

b) unless the credit union has, by a resolution of the members, manifested the credit union's intention that the debenture be cancelled,

the credit union has, and is deemed always to have had, power to reissue the debenture, either by reissuing the same debenture or by issuing another debenture in its place, and

(

c) if the debenture so states, or

(

d) if the debenture was first issued before January 1, 1977,

on the reissue the person entitled to the debenture has, and is deemed always to have had, the same priority as if the debenture had never been redeemed.

(2) If a credit union redeems a debenture and has the power to reissue the debenture, particulars of that debenture must be included in the balance sheet of the credit union.

(3) If a credit union has issued or deposited a debenture created by the credit union to secure advances on current account or otherwise, the debenture is not deemed to have been redeemed merely because any of the advances are repaid, or that the account of the credit union ceases to be in debit, while the debenture remains issued or deposited.

(4) The reissue of a debenture or the issue of another debenture in its place under this

section is deemed not to be the issue of a new debenture for the purpose of a provision limiting the amount or number of debentures to be issued.

SECTION 48: [Credit Union Incorporation Act,

Part 5, Division 1 heading] adds a Division

heading for ease of reading.

48 The following heading is added to

Part 5 before

section 83:

Division 1 – Directors .

SECTION 49: [Credit Union Incorporation Act,

section 83] changes a reference to a Company

Act provision to a reference to a comparable Credit Union Incorporation

Act provision.

Section 83 is amended

(

a) in subsection (1) by striking out " registration " and substituting " the filing ", and

(

b) in subsection (6) by striking out "

section 125 (2) of the Company Act " and substituting "

section 84.22 (2) ".

SECTION 50: [Credit Union Incorporation Act, sections 84.1 to 84.26] imports into the Act

director provisions that were contained in the Company Act , before the application

of the Company Act was removed by this Bill, or their Business Corporations

Act equivalents.

50 The following sections are added to Division 1 of

Part 5:

Conditions of election or appointment of director

84.1

(1) No election or appointment of a person as a director is valid unless

(

a) the person consented in writing to act as a director before the election or appointment, or

(

b) the person, if elected or appointed at a meeting, was present and did not refuse at the meeting to act as a director.

(2) A consent in writing given under subsection (1) (

a) is only effective until the next following annual election or appointment of directors unless the consent states it is effective until

(

a) revoked, or

(

b) a date or time stated in the consent.

Credit union to file returns as to directors

84.11 A credit union, within 14 days after the appointment or election of a director, must file with the registrar a notice, in a form established by the registrar, of the appointment or election, but no filing is necessary for a director who ceases to be a director and is re-elected or reappointed on the same day.

Persons disqualified as directors

84.12

(1) No person is qualified to become or to act as a director of a credit union who is

(

a) under the age of 19 years,

(

b) found to be incapable of managing the person's own affairs by reason of mental infirmity,

(

c) a corporation,

(

d) an undischarged bankrupt,

(

e) unless the Supreme Court orders otherwise, convicted in or out of British Columbia of an offence

(

i) in connection with the promotion, formation or management of a corporation, or

(ii) involving fraud

unless 5 years have elapsed since the expiration of the period fixed for suspension of the passing of sentence without sentencing or since a fine was imposed, or the term of imprisonment and probation imposed, if any, was concluded, whichever is the latest, but the disability imposed by this paragraph ceases on a pardon being granted under the Criminal Records Act (Canada), or

(

f) a person whose registration in any capacity has been cancelled under

(

i) the Securities Act by either the British Columbia Securities Commission or the executive director appointed under

section 8 of that Act, or

(ii) the Mortgage Brokers Act by the Commercial Appeals Commission, the Financial Services Tribunal or the registrar under that Act,

unless the person or body that cancelled the registration otherwise orders at the time of cancellation, or unless 5 years have elapsed since the cancellation of the registration.

(2) An order must not be made under subsection (1) (

e) and (

f) unless notice of the application for the order is given to the registrar and superintendent, who may appear as a party to the application.

Share qualification

84.13

(1) Without limiting

section 83 (3), a director who is by the rules of a credit union required to hold a specified share qualification, in this

section called the "share qualification", and who is not already qualified, must obtain the share qualification within

(a) 2 months after the director's election or appointment, or

(

b) the time set by the rules,

whichever first occurs.

(2) The office of director is vacated if the director

(

a) does not, within the time provided in subsection (1), obtain the share qualification, or

(

b) at any time after the expiration of the time provided in subsection (1), ceases to hold the share qualification,

and a person vacating office under this

section is incapable of being a director of the credit union until the person obtains the share qualification.

Register of directors

84.14 A credit union must keep a register of its directors and enter in the register

(

a) the full names and resident addresses of the directors,

(

b) the date on which each director was elected or appointed,

(

c) the date on which each former director ceased to hold office as a director, and

(

d) the name of any office in the credit union held by a director and the date of appointment to the office and the date on which the director ceases to hold office.

Powers and functions of directors

84.15

(1) Subject to this Act and the constitution and rules of the credit union, the directors must manage or supervise the management of the affairs and business of the credit union.

(2) No limitation or restriction on the powers or functions of the directors is effective against a person who does not have knowledge of the limitation or restriction.

No exculpation

84.16 The provisions of a contract, the constitution or rules, or the circumstances of a director's appointment do not relieve the director from the duty to act in accordance with this Act and the Financial Institutions Act , and the regulations under both Acts, or from any liability that by virtue of any rule of law would otherwise attach to the director in respect of any negligence, default, breach of duty or breach of trust of which the director may be guilty in relation to the credit union.

Director to disclose interest

84.17

(1) A director of a credit union who, in any way, directly or indirectly, is interested in a proposed contract or transaction with the credit union must disclose the nature and extent of the director's interest at a meeting of the directors.

(2) The disclosure required by subsection (1) must be made

(

a) at the meeting at which a proposed contract or transaction is first considered,

(

b) if the director was not, at the time of the meeting referred to in paragraph (a), interested in a proposed contract or transaction, at the first meeting after the director becomes interested, or

(

c) at the first meeting after the relevant facts come to the director's knowledge.

(3) For the purpose of this section, a general notice in writing given by a director of a credit union to the other directors of the credit union to the effect that the director is a member, auxiliary member, director or officer of a specified corporation, or that the director is a partner in, or owner of, a specified firm, and that the director has an interest in a specified corporation or firm, is a sufficient disclosure of interest to comply with this section.

(4) A director of a credit union is not deemed to be interested or to have been interested at any time in a proposed contract or transaction merely because

(

a) if the proposed contract or transaction relates to a loan to the credit union, the director or a specified corporation or specified firm in which the director has an interest has guaranteed or joined in guaranteeing the repayment of the loan or any part of the loan,

(

b) if the proposed contract or transaction has been or will be made with or for the benefit of an affiliated corporation, the director is a director or officer of that corporation,

(

c) the proposed contract or transaction relates to an indemnity under

section 102 of the Financial Institutions Act or to insurance under that section, or

(

d) the proposed contract or transaction relates to the remuneration of a director in that capacity.

Director liable to account

84.18

(1) A director referred to in

section 84.17 (1) must account to the credit union for any profit made as a consequence of the credit union entering into or performing the proposed contract or transaction, unless

(

a) he or she discloses his or her interest as required by

section 84.17,

(

b) after his or her disclosure the proposed contract or transaction is approved by the directors, and

(

c) he or she abstains from voting on the approval of the proposed contract or transaction,

or unless

(

d) the contract or transaction was reasonable and fair to the credit union at the time it was entered into, and

(

e) after full disclosure of the nature and extent of his or her interest, the contract or transaction is approved by special resolution.

(2) Unless the rules otherwise provide, a director referred to in

section 84.17 (1) must not be counted in the quorum at a meeting of the directors at which the proposed contract or transaction is approved.

Validity

84.19 The circumstance that a director is, in any way, directly or indirectly, interested in a proposed contract or transaction, or a contract or transaction, with the credit union does not make the contract or transaction invalid, but, if the matters referred to in

section 84.18 (1) (

a) to (

c) or

section 84.18 (1) (

d) and (

e) have not occurred, the Supreme Court, on the application of the credit union or any interested person, may enjoin the credit union from entering into the proposed contract or transaction, or set aside the contract or transaction, or make any other order that the court considers appropriate.

Disclosure of conflict of office or property

84.2

(1) A director of a credit union who holds any office, or possesses any property, whereby, whether directly or indirectly, a duty or interest might be created in conflict with the director's duty or interest as a director of the credit union, must declare at a meeting of the directors of the credit union the fact, and the nature and extent of the conflict.

(2) The declaration must be made by a director referred to in subsection (1) at the first meeting of the directors held

(

a) after he or she becomes a director, or

(

b) if he or she is already a director, after he or she began to hold the office or possess the property.

Validity of acts of director

84.21

An act of a director and officer is valid, despite any defect that may afterwards be discovered in the director's or officer's appointment, election or qualification.

Resolution of directors in writing

84.22

(1) A resolution of the directors or of any committee of the directors may not be passed without a meeting, except as permitted by subsection (3).

(2) If the rules provide for it, a meeting of directors or of a committee of directors may be held by

(

a) telephone, or

(

b) other communications facilities

that permit all participants in the meeting to hear each other, and a director who participates in the meeting by those means must be counted as present at the meeting.

(3) Unless the rules provide otherwise, a resolution of the directors or of any committee of the directors may be passed without a meeting if all the directors, or the members of the committee, as the case may be, consent to the resolution in writing and the consent is filed with the minutes of proceedings of the directors or the committee.

Directors' liability

84.23

(1) Directors of a credit union who vote for, or consent to, a resolution authorizing

(

a) a commission or discount contrary to

section 55.5, or

(

b) an act contravening

section 12.1 in respect of which the credit union has paid compensation to any person

are jointly and severally liable to the credit union to make good any loss or damage suffered by the credit union as a result.

(2) The liability imposed by subsection (1) is in addition to and not in derogation of any liability imposed on a director by any other Act, regulation or rule of law.

(3) For the purposes of this section, a director of a credit union who is present at a meeting of directors, or of a committee of directors, is deemed to have consented to a resolution referred to in subsection (1) passed at the meeting unless

(

a) the director's dissent is entered in the minutes of the meeting,

(

b) the director's written dissent is delivered to the secretary of the meeting before the meeting's adjournment, or

(

c) the director's written dissent is delivered or sent by registered mail to the registered office of the credit union immediately after the adjournment of the meeting.

(4) A director who votes for a resolution referred to in subsection (1) is not entitled to dissent under subsection (3).

(5) A dire