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

Application

Marginal note:Application

• 267 (1) This Part applies to a trust indenture if the debt obligations issued or to be issued under it are part of a distribution to the public.

• Marginal note:Exemptions

  (2) The Director may, in writing, exempt a trust indenture from the application of this Part if, in the Director’s opinion, the trust indenture and the debt obligations under it are subject to a law of another jurisdiction that is substantially equivalent to the provisions of this Act relating to trust indentures.

General

Marginal note:Conflict of interests

• 268 (1) No person may be appointed as trustee if there is a material conflict of interests between the person’s role as trustee and any other role of the person.

• Marginal note:Eliminating conflict of interests

  (2) A trustee must, no later than ninety days after the trustee becomes aware that a material conflict of interests exists,

  • (a) eliminate the conflict of interests; or

  • (b) resign from office.

Marginal note:Validity despite conflict

269 A trust indenture, any debt obligations issued under it and the security interest effected by them are valid even if there is a material conflict of interests of the trustee.

Marginal note:Removal of trustee

270 If a trustee is appointed in contravention of subsection 268(1) or if a trustee contravenes subsection 268(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on any terms that it thinks fit.

Marginal note:Trustee application

271 A trustee, or at least one of the trustees if more than one is appointed, must be a trust company incorporated under the laws of Canada or a province and authorized to carry on business as a trustee.

Marginal note:List of security holders

• 272 (1) A holder of debt obligations issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, no later than fifteen days after the delivery to the trustee of the statutory declaration, a list setting out the following information, as shown on the records maintained by the trustee on the day the statutory declaration is delivered to the trustee:

  • (a) the names and addresses of the registered holders of the outstanding debt obligations;

  • (b) the principal amount of outstanding debt obligations of each such holder; and

  • (c) the total principal amount of debt obligations outstanding.

• Marginal note:Duty of issuer

  (2) On the demand of a trustee, the issuer must provide the trustee with the information required to enable the trustee to comply with subsection (1).

• Marginal note:When applicant is entity

  (3) If the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection may be made by a director or an officer of the entity or a person acting in a similar capacity.

• Marginal note:Contents of statutory declaration

  (4) The statutory declaration must state

  • (a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, its address for service; and

  • (b) that the list will not be used except as permitted by subsection (5).

• Marginal note:Use of list

  (5) No person shall use a list obtained under this section except in connection with

  • (a) an effort to influence the voting of the holders of debt obligations;

  • (b) an offer to acquire debt obligations; or

  • (c) any other matter relating to the debt obligations or the affairs of the issuer or guarantor of them.

Marginal note:Compliance with trust indentures

• 273 (1) An issuer or a guarantor of a debt obligation issued or to be issued under a trust indenture must provide the trustee with evidence of compliance with the conditions in the trust indenture before undertaking

  • (a) the issue, certification and delivery of debt obligations under the trust indenture;

  • (b) the release, or release and substitution, of property subject to a security interest constituted by the trust indenture; or

  • (c) the satisfaction and discharge of the trust indenture.

• Marginal note:Compliance by issuer or guarantor

  (2) On the demand of a trustee, the issuer or guarantor must provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.

• Marginal note:Evidence of compliance

  (3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):

  • (a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;

  • (b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and

  • (c) an opinion or report of the auditors of the issuer or guarantor, or any other accountant that the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors or accountants.

• Marginal note:Further evidence of compliance

  (4) The evidence of compliance described in subsection (3) must include a statement by the person giving the evidence

  • (a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);

  • (b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and

  • (c) declaring that the person has made any examination or investigation that the person believes necessary to enable the statements to be made or the opinions contained or expressed in the statement to be given.

Marginal note:Trustee may require evidence

• 274 (1) On request of a trustee, the issuer or guarantor must provide the trustee with evidence in any form that the trustee requires of compliance with any condition relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

• Marginal note:Certificate of compliance

  (2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor must provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars of the failure.

Marginal note:Notice of default

275 A trustee must, no later than thirty days after the trustee becomes aware of the occurrence of an event of default, give to the holders of debt obligations issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs the issuer and guarantor in writing.

Marginal note:Duty

• 276 (1) In exercising powers and discharging duties, the trustee must

  • (a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and

  • (b) exercise the care, diligence and skill of a reasonably prudent trustee.

• Marginal note:Reliance on statements

  (2) Despite subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

Marginal note:No exculpation

277 No term of a trust indenture or of an agreement between a trustee and the holders of debt obligations issued under the indenture or agreement or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by this Part.

PART 15Receivers, Receiver-managers and Sequestrators

Marginal note:Functions of receiver or sequestrator

278 A receiver or sequestrator of any property of a cooperative may, subject to the rights of secured creditors, receive the income from the property and pay the liabilities connected with the property and realize the security interest of those on behalf of whom the receiver or sequestrator is appointed, but, except to the extent permitted by a court, the receiver or sequestrator may not carry on the business of the cooperative.

Marginal note:Functions of receiver-manager

279 A receiver-manager of a cooperative may carry on any business of the cooperative to protect the security interest of those on behalf of whom the receiver-manager is appointed.

Marginal note:Directors’ powers cease

280 If a receiver, receiver-manager or sequestrator is appointed by a court or under an instrument or act, no director shall exercise the directors’ powers that the receiver, receiver-manager or sequestrator is authorized to exercise until the receiver, receiver-manager or sequestrator is discharged.

Marginal note:Appointment by court

• 281 (1) A receiver, receiver-manager or sequestrator appointed by a court must act in accordance with any directions of the court.

• Marginal note:Appointment under instrument or act

  (2) A receiver, receiver-manager or sequestrator appointed under an instrument or act must act in accordance with the instrument or act and any direction that the court may make under section 282.

• Marginal note:Duty

  (3) A receiver, receiver-manager or sequestrator must

  • (a) act honestly and in good faith; and

  • (b) deal with any property of the cooperative in their possession or control in a commercially reasonable manner.

Marginal note:Directions given by court

282 A court may, on the application of a receiver, receiver-manager or sequestrator appointed by a court or under an instrument or act, or any other interested person, make any order giving directions on any matter relating to the duties of the receiver, receiver-manager or sequestrator that it considers appropriate, including an order

• (a) appointing, replacing or discharging a receiver, receiver-manager or sequestrator and approving their accounts;

• (b) determining the notice to be given to any person or dispensing with notice to any person;

• (c) fixing the remuneration of the receiver, receiver-manager or sequestrator;

• (d) requiring the receiver, receiver-manager or sequestrator, or a person by or on behalf of whom they were appointed, to make good any default in connection with their custody or management of the property and business of the cooperative, or relieving them, or a person by or on behalf of whom they were appointed, from any default on any terms that the court considers appropriate;

• (e) confirming any act of the receiver, receiver-manager or sequestrator; and

• (f) giving directions on any other matter relating to the duties of the receiver, receiver-manager or sequestrator.