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

Marginal note:Inquiry into adverse claim

241 (1) Unless an issuer is deemed to have notice of an adverse claim from a document that is obtained under section 239 or has received notice of an adverse claim under subsection 240(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,

• (a) an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and the issuer may then assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;

• (b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

• (c) an issuer is deemed not to have notice of the contents of a court record or a registered document even if the record or document is in the issuer’s possession and the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.

Marginal note:Duration of notice of adverse claim

242 A written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.

Marginal note:Limitation on issuer’s liability

• 243 (1) Except as provided otherwise in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security if

  • (a) the necessary endorsements were on or with the security; and

  • (b) the issuer had no duty to inquire into adverse claims or had discharged that duty.

• Marginal note:Duty of issuer on default

  (2) If an issuer has registered a transfer of a security to a person not entitled to it, the issuer must on demand deliver a like security to the owner unless

  • (a) the issuer is not liable by virtue of subsection (1);

  • (b) the owner is precluded by subsection 244(1) from asserting a claim; or

  • (c) the delivery would result in an overissue to which section 196 applies.

Marginal note:Lost or stolen security

• 244 (1) The owner of a security who fails to notify the issuer of an adverse claim, in writing, within a reasonable time after the owner knows of a loss, apparent destruction or wrongful taking of the security is precluded from asserting against the issuer a claim to a new security if the issuer has registered a transfer of the security.

• Marginal note:Duty to issue new security

  (2) If the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the owner

  • (a) so requests before the issuer has notice that the security has been acquired by a good faith purchaser;

  • (b) provides the issuer with a sufficient indemnity bond; and

  • (c) satisfies any other reasonable requirements imposed by the issuer.

• Marginal note:Duty to register transfer

  (3) If, after the issue of a new security under subsection (2), a good faith purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in an overissue to which section 196 applies.

• Marginal note:Right of issuer to recover

  (4) In addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a good faith purchaser.

Marginal note:Duty

245 An authenticating trustee, transfer agent or other agent or mandatary of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

• (a) a duty to the issuer to exercise good faith and reasonable diligence; and

• (b) the same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.

Marginal note:Notice to agent or mandatary

246 Notice to an authenticating trustee, transfer agent or other agent or mandatary of an issuer is notice to the issuer in respect of the functions performed by the agent or mandatary.

PART 13Financial Disclosure

Marginal note:Annual financial statements to members

• 247 (1) The directors must place before the members at every annual meeting of members

  • (a) prescribed comparative financial statements that conform to any prescribed requirements and relate separately to

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

    • (ii) the immediately preceding financial year;

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

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

• Marginal note:Annual financial statements to shareholders

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

• Marginal note:Exception

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

Marginal note:Application for exemption

248 On the application of a cooperative, the Director may exempt the cooperative, on any terms that the Director thinks fit, from any requirement set out in section 247 or any of sections 249 to 252, if the Director reasonably believes that the detriment that may be caused to the cooperative by the requirement outweighs its benefit to the members and shareholders or, in the case of a distributing cooperative, to the public.

Marginal note:Consolidated statements

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

• Marginal note:Examination

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

• Marginal note:Barring examination

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

• Marginal note:Notice

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

Marginal note:Approval of financial statements

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

• Marginal note:Condition precedent

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

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

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

Marginal note:Copies to shareholders

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

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

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

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

Marginal note:Copies to Director

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

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

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

• Marginal note:Subsidiary cooperative

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

Marginal note:Qualifications of auditor

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

• Marginal note:Independence

  (2) For the purposes of this section,

  • (a) independence is a question of fact; and

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

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

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

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

• Marginal note:Duty to resign

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

• Marginal note:Disqualification order

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

• Marginal note:Exemption order

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