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Canada Cooperatives Act (S.C. 1998, c. 1)

Act current to 2022-11-16 and last amended on 2022-08-31. Previous Versions

PART 10Insider Trading (continued)

Marginal note:Prohibition of short sale

  •  (1) No insider shall knowingly sell, directly or indirectly, a security of a distributing cooperative or any of its affiliates if the insider selling the security does not own or has not fully paid for the security to be sold.

  • Marginal note:Calls and puts

    (2) No insider shall knowingly, directly or indirectly, buy a put or sell a call in respect of a security of the cooperative or any of its affiliates.

  • Marginal note:Exception

    (3) Despite subsection (1), an insider may sell a security that the insider does not own if the insider owns another security convertible into the security sold or an option or right to acquire the security sold and, no later than ten days after the sale, the insider

    • (a) exercises the conversion privilege, option or right and delivers the security so acquired to the purchaser; or

    • (b) transfers the convertible security, option or right to the purchaser.

  • 1998, c. 1, s. 172
  • 2001, c. 14, s. 192

Marginal note:Definition of insider

  •  (1) In this section, insider, with respect to a cooperative, means

    • (a) the cooperative;

    • (b) an affiliate of the cooperative;

    • (c) a director or an officer of the cooperative or of any persons described in paragraphs (b), (e) or (g);

    • (d) a member who controls more than ten per cent of the voting rights that may be exercised to elect or appoint a director of the cooperative;

    • (e) a person who beneficially owns, directly or indirectly, shares of the cooperative or who exercises control or direction over shares of the cooperative, or a combination of any such ownership, control and direction, carrying more than the prescribed percentage of the voting rights attached to all of the outstanding shares of the cooperative other than shares held by the person as underwriter while those shares are in the course of a distribution to the public;

    • (f) a person, other than a person described in paragraph (g), employed or retained by the cooperative or by a person described in paragraph (g);

    • (g) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the cooperative;

    • (h) a person who received, while they were a person described in any of paragraphs (a) to (g) material confidential information concerning the cooperative;

    • (i) a person who receives material confidential information from a person described in this subsection or in subsection (2) or (2.1), including from a person described in this paragraph, and who knows or who ought reasonably to have known that the person giving the information is a person described in this subsection or in subsection (2) or (2.1), including a person described in this paragraph; and

    • (j) a prescribed person.

  • Marginal note:Deemed insiders

    (2) For the purposes of this section, a person who proposes to make a take-over bid (as defined in the regulations) for securities of a cooperative, or to enter into a business combination with a cooperative, is an insider of the cooperative with respect to material confidential information obtained from the cooperative and is an insider of the cooperative for the purposes of subsection (6).

  • Marginal note:Deemed insiders

    (2.1) An insider of a person referred to in subsection (2), and an affiliate or associate of such a person, is an insider of the cooperative referred to in that subsection. Paragraphs (1)(b) to (j) apply in determining whether a person is such an insider except that references to “cooperative” in those paragraphs are to be read as references to “person described in subsection (2)”.

  • Marginal note:Expanded definition of “security”

    (3) For the purposes of this section, the following are deemed to be a security of the cooperative:

    • (a) a put, call or option or other right or obligation to purchase or sell a security of the cooperative; and

    • (b) a security of another entity whose market price varies materially with the market price of the securities of the cooperative.

  • Marginal note:Insider trading — compensation to persons

    (4) An insider who purchases or sells a security of the cooperative with knowledge of confidential information that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the cooperative is liable to compensate the seller of the security or the purchaser of the security, as the case may be, for any damages suffered by the seller or purchaser as a result of the purchase or sale, unless the insider establishes that

    • (a) the insider reasonably believed that the information had been generally disclosed;

    • (b) the information was known, or ought reasonably to have been known, by the seller or purchaser; or

    • (c) the purchase or sale of the security took place in the prescribed circumstances.

  • Marginal note:Insider trading — compensation to cooperative

    (5) The insider is accountable to the cooperative for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (4) unless the insider establishes the circumstances in paragraph 4(a).

  • Marginal note:Tipping — compensation to persons

    (6) An insider who discloses to another person confidential information with respect to the cooperative that has not been generally disclosed and that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the cooperative is liable to compensate for damages any person who subsequently sells securities of the cooperative to, or purchases securities of the cooperative from, any person that received the information, unless the insider establishes

    • (a) that the insider reasonably believed that the information had been generally disclosed;

    • (b) that the information was known, or ought reasonably to have been known, to the person who alleges to have suffered the damages;

    • (c) that the disclosure of the information was necessary in the course of the business of the insider, except if the insider is a person described in subsection (2) or (2.1); or

    • (d) if the insider is a person described in subsection (2) or (2.1), that the disclosure of the information was necessary to effect the take-over bid or the business combination, as the case may be.

  • Marginal note:Tipping — compensation to cooperative

    (7) The insider is accountable to the cooperative for any benefit or advantage received or receivable by the insider as a result of a disclosure of the information as described in subsection (6) unless the insider establishes the circumstances in paragraph (6)(a), (c) or (d).

  • Marginal note:Measure of damages

    (8) The court may assess damages under subsection (4) or (6) in accordance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in a situation involving a security of a distributing cooperative, the court must consider the following:

    • (a) if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security over the twenty trading days immediately following general disclosure of the information; and

    • (b) if the plaintiff is a seller, the average market price of the security over the twenty trading days immediately following general disclosure of the information, less the price that the plaintiff received for the security.

  • Marginal note:Liability

    (9) If more than one insider is liable under subsection (4) or (6) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.

  • Marginal note:Limitation

    (10) An action to enforce a right created by subsections (4) to (7) may be commenced only within two years after discovery of the facts that gave rise to the cause of action.

  • 1998, c. 1, s. 173
  • 2001, c. 14, s. 193

PART 11Compulsory Acquisition

Marginal note:Definitions

 The definitions in this section apply in this Part.

dissenting offeree

dissenting offeree means a holder of a share of a class for which a take-over bid is made who does not accept the take-over bid, and includes a subsequent holder of that share who acquires it from the first-mentioned holder. (pollicité dissident)

offer

offer includes an invitation to make an offer. (pollicitation)

offeree

offeree means a person to whom a take-over bid is made. (pollicité)

offeree cooperative

offeree cooperative means a distributing cooperative whose shares are the object of a take-over bid. (coopérative pollicitée)

offeror

offeror means a person, other than an agent or mandatary, who makes a take-over bid, and includes two or more persons who, directly or indirectly,

  • (a) make take-over bids jointly or in concert; or

  • (b) intend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made. (pollicitant)

share

share means an investment share, with or without voting rights, and includes

  • (a) a security currently convertible into such a share; and

  • (b) currently exercisable options and rights to acquire such a share or such a convertible security. (part)

take-over bid

take-over bid means an offer made by an offeror to shareholders of a distributing cooperative at approximately the same time to acquire all of the shares of a class of issued shares and includes an offer made by a distributing cooperative to repurchase all of the shares of a class of its shares. (offre d’achat)

  • 1998, c. 1, s. 174
  • 2001, c. 14, s. 194

Marginal note:Right to acquire

  •  (1) If within one hundred and twenty days after the date of a take-over bid the bid is accepted by the holders of not less than ninety per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with this section, to acquire the shares held by the dissenting offerees.

  • Marginal note:Notice

    (2) An offeror may acquire shares held by a dissenting offeree by sending, by confirmed delivery service within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, a notice to each dissenting offeree stating that

    • (a) the offerees holding not less than ninety per cent of the shares to which the bid relates accepted the take-over bid;

    • (b) the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;

    • (c) a dissenting offeree is required to elect

      • (i) to transfer their shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take-over bid, or

      • (ii) to demand payment of the fair value of their shares in accordance with subsections (10) to (19) by notifying the offeror within twenty days after the offeree receives the notice;

    • (d) a dissenting offeree who does not notify the offeror in accordance with subparagraph (c)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid; and

    • (e) a dissenting offeree must send the shares to which the take-over bid relates to the offeree cooperative within twenty days after the offeree receives the offeror’s notice.

  • Marginal note:Notice of adverse claim

    (3) Concurrently with sending the notice under subsection (2), the offeror must send to the offeree cooperative a notice of adverse claim in accordance with section 240 with respect to each share held by a dissenting offeree.

  • Marginal note:Share certificate

    (4) A dissenting offeree to whom a notice is sent under subsection (2) must, within twenty days after receiving the notice,

    • (a) send the share certificates of the class of shares to which the take-over bid relates to the offeree cooperative; and

    • (b) elect

      • (i) to transfer the shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take-over bid, or

      • (ii) to demand payment of the fair value of the shares in accordance with subsections (10) to (19) by notifying the offeror.

  • Marginal note:Deemed election

    (5) A dissenting offeree who does not notify the offeror in accordance with subparagraph (4)(b)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.

  • Marginal note:Payment

    (6) Within twenty days after the offeror sends a notice under subsection (2), the offeror must pay or transfer to the offeree cooperative the amount that the offeror would have had to pay to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (4)(b)(i).

  • Marginal note:Amounts

    (7) The offeree cooperative is deemed to hold in trust for the dissenting shareholders the amounts it receives under subsection (6), and the offeree cooperative must deposit the amounts in a separate account in a body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board or by any other similar entity created by the law of another province, and must place any thing received in lieu of money in the custody of such a body corporate.

  • Marginal note:When cooperative is offeror

    (8) A cooperative that is an offeror making a take-over bid to repurchase all of the shares of a class of its shares is deemed to hold in trust for the dissenting shareholders the amounts that it would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (4)(b)(i), and the cooperative must deposit the amounts in a separate account in a body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board or by any other similar entity created by the law of another province, and must place any thing received in lieu of money in the custody of such a body corporate.

  • Marginal note:Duty of offeree cooperative

    (9) Within thirty days after the offeror sends a notice under subsection (2), the offeree cooperative must

    • (a) if the payments required by subsection (6) are made and the money or things are deposited as required by subsection (7), issue to the offeror a share certificate in respect of the shares that were held by dissenting offerees;

    • (b) give to each dissenting offeree who elects to accept the take-over bid terms under subparagraph (4)(b)(i) and who sends share certificates as required by paragraph (4)(a) the money or thing to which the offeree is entitled, disregarding fractional shares, which may be paid for in money; and

    • (c) if the payments required by subsection (6) are made and the money or things are deposited as required by subsection (7) or (8), send to each dissenting shareholder who has not sent share certificates as required by paragraph (4)(a) a notice stating that

      • (i) the dissenting shareholder’s shares have been cancelled,

      • (ii) the offeree cooperative or some designated person holds in trust for the dissenting shareholder the money or other things to which that shareholder is entitled as payment for or in exchange for the shares, and

      • (iii) the offeree cooperative will, subject to subsections (10) to (19), send that money or thing to that shareholder without delay after receiving the shares.

  • Marginal note:Application to court

    (10) If a dissenting offeree has elected to demand payment of the fair value of the shares under subparagraph (4)(b)(ii), the offeror may, within twenty days after it has paid the money or transferred the things under subsection (6), apply to a court to fix the fair value of the shares of that dissenting offeree.

  • Marginal note:Application to court

    (11) If an offeror fails to apply to a court under subsection (10), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.

  • Marginal note:Status of dissenter if no court application

    (12) If no application is made to a court under subsection (11) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.

  • Marginal note:Venue

    (13) An application under subsection (10) or (11) must be made to a court having jurisdiction in the place where the cooperative has its registered office or in the province where the dissenting offeree resides if the cooperative carries on business in that province.

  • Marginal note:No security for costs

    (14) A dissenting offeree is not required to give security for costs in an application made under subsection (10) or (11).

  • Marginal note:Parties

    (15) On an application under subsection (10) or (11),

    • (a) all dissenting offerees referred to in paragraph (4)(b) whose shares have not been acquired by the offeror must be joined as parties and are bound by the decision of the court; and

    • (b) the offeror must notify each affected dissenting offeree of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel.

  • Marginal note:Powers of court

    (16) On an application to a court under subsection (10) or (11), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court must then fix a fair value for the shares of all dissenting offerees.

  • Marginal note:Appraisers

    (17) A court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the shares of a dissenting offeree.

  • Marginal note:Final order

    (18) The final order of the court must be made against the offeror in favour of each dissenting offeree and for the amount for shares as fixed by the court.

  • Marginal note:Additional powers

    (19) In connection with proceedings under this section, a court may make any order it thinks fit, including an order to

    • (a) fix the amount of money or things that are required to be held in trust under subsections (7) and (8);

    • (b) order that the money or thing be held in trust by a person other than the offeree cooperative;

    • (c) allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the offeree sends or delivers the share certificates under subsection (4) until the date of payment; and

    • (d) order that any money payable to a shareholder who cannot be found be paid to the Receiver General, in which case subsection 327(3) applies.

  • 1998, c. 1, s. 175
  • 2001, c. 14, s. 195(E)
 
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