PART 7Directors and Officers (continued)
Conflict of Interests (continued)
Marginal note:Court order
107 If a director or officer of a cooperative fails to disclose an interest in a material contract or transaction in accordance with section 103, or otherwise fails to comply with sections 103 to 106.1, a court may, on the application of the cooperative or a member or shareholder, set aside the contract or transaction on any terms that it thinks fit or order that the director or officer account to the cooperative, its members or its shareholders for any profit realized from the contract or transaction.
- 1998, c. 1, s. 107
- 2001, c. 14, s. 170
108 Subject to the articles, the by-laws and any unanimous agreement, the directors may
(a) designate the offices of the cooperative;
(b) specify the powers and duties of each office;
(c) appoint any individual of full capacity, including a director, to be an officer;
(d) appoint one individual to hold more than one office; and
(e) delegate to the officers the power to manage the business and affairs of the cooperative, except a power referred to in subsection 109(3).
Marginal note:Appointment of managing director or committee
109 (1) The directors may appoint from among themselves a managing director or any committee they consider necessary.
(2) The managing director must be resident in Canada.
(3) The directors may delegate to a managing director or a committee composed of at least three directors any powers of the directors, except the power to
(a) fill a vacancy among the directors or in the office of the auditor, or appoint additional directors;
(b) declare dividends on shares, interest on member loans or patronage returns;
(c) approve a financial statement of the cooperative;
(d) submit to the persons who are entitled to vote on them questions or matters required to be approved at a meeting of the cooperative;
(e) make decisions that by this Act, the articles or a unanimous agreement are required to be made by a vote of greater than a majority of the directors;
(f) redeem or otherwise acquire shares issued by the cooperative;
(g) pay a commission referred to in section 128, except as authorized by the directors;
(h) approve a management proxy circular referred to in Part 9;
(i) issue securities, except in the manner and on the terms authorized by the directors; or
(j) issue investment shares of a series under section 126 except as authorized by the directors.
(4) A committee referred to in subsection (1) may exercise the powers that have been delegated to it subject to any restrictions imposed by the directors.
Marginal note:Membership on committee
(5) A director who is appointed to a committee may remain on the committee until the appointment is revoked or the person ceases to be a director.
(6) A committee appointed under this section must
(a) fix its quorum at not less than a majority of its members;
(b) keep minutes of its proceedings; and
(c) report, at each meeting of the directors, on the proceedings of the committee since the last meeting of the directors.
- 1998, c. 1, s. 109
- 2001, c. 14, s. 171
Marginal note:Deemed assent
110 (1) A director who is present at a meeting of directors is deemed to have consented to any resolution made or action taken at the meeting unless
(a) the director requests that a dissent be entered in the minutes of the meeting or the dissent is so entered;
(b) the director sends a written dissent to the secretary of the meeting before it is adjourned; or
(c) the director sends a written dissent by confirmed delivery service or delivers it personally, to the registered office of the cooperative immediately after the meeting is adjourned.
Marginal note:Loss of right to dissent
(2) A director who votes for or expressly consents to a resolution or action taken at a meeting is not entitled to later dissent.
Marginal note:Deemed assent of absent director
(3) A director who is not present at a meeting of directors is deemed to have consented to any resolution made or action taken at the meeting unless the director, within seven days after becoming aware of the resolution or action,
(a) causes a dissent to be entered in the minutes of the meeting; or
(b) sends a written dissent by confirmed delivery service or delivers it personally, to the registered office of the cooperative.
Marginal note:Due diligence
111 A director is not liable under this Part if the director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on
(a) financial statements of the cooperative represented to the director by an officer of the cooperative or in a written report of the auditor of the cooperative fairly to reflect the financial condition of the cooperative; or
(b) a report of a person whose profession lends credibility to a statement made by the professional person.
- 1998, c. 1, s. 111
- 2001, c. 14, s. 172
112 Unless the articles, the by-laws or a unanimous agreement provides otherwise, the directors may fix the remuneration of the directors, officers and employees of the cooperative.
113 (1) A cooperative may indemnify an individual who is or was a director or officer of the cooperative, or who acts or acted at the cooperative’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a claim, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved by reason of their association with the cooperative or entity.
Marginal note:Advance of costs
(2) A cooperative may advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1). The individual must repay the moneys if the individual did not fulfil the conditions of subsection (3), unless the members and shareholders decide, by separate resolutions, that the individual need not repay the moneys.
(3) A cooperative may not indemnify an individual under subsection (1) unless the individual
(a) acted honestly and in good faith with a view to the best interests of the cooperative, or, as the case may be, to the best interests of the entity for which the individual acted as director or officer or in a similar capacity at the cooperative’s request; and
(b) in the case of a criminal or administrative proceeding, had reasonable grounds for believing that the individual’s conduct was lawful.
Marginal note:Derivative action
(4) A cooperative may not indemnify an individual under subsection (1) or advance costs under subsection (2) in respect of an action by or on behalf of the cooperative or entity unless a court so orders.
Marginal note:Right to indemnity
(5) An individual referred to in subsection (1) is entitled to indemnity from the cooperative for the costs, charges and expenses referred to in that subsection if the individual
(a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and
(b) fulfils the conditions in subsection (3).
(6) A cooperative may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual by reason of being or having been a director or officer of the cooperative, having been a director or officer of another entity or having acted in a similar capacity, if the individual acts or acted in that capacity at the cooperative’s request.
- 1998, c. 1, s. 113
- 2001, c. 14, s. 173
Marginal note:Application to court
114 (1) A court may, on application of a cooperative or an individual referred to in subsection 113(3), approve an indemnity under section 113 and make any further order that it sees fit.
(2) On an application under subsection (1), the court may order notice to be given to any interested person and the person is entitled to appear and be heard in person or by counsel.
Marginal note:Restricting powers of directors
115 (1) A provision in the articles of the cooperative or in a unanimous agreement that restricts, in whole or in part, the powers of the directors to manage, or supervise the management of, the business and affairs of the cooperative or vests, in whole or in part, but only in members and subject to subsection 76(1), those powers, is valid.
Marginal note:Deemed unanimous agreement
(2) For the purpose of subsection (1), a unanimous agreement to which another person is also a party is deemed to be a unanimous agreement.
Marginal note:Investment shareholders
(3) A purchaser or transferee of an investment share that is subject to a unanimous agreement is deemed to be party to the unanimous agreement.
Marginal note:When no notice given
(4) If notice is not given to the purchaser or transferee of the existence of a unanimous agreement, in the manner referred to in subsection 183(2) or otherwise, the purchaser or transferee may, no later than thirty days after they become aware of its existence, rescind the transaction by which they acquired the investment shares.
Marginal note:Rights of members
(5) To the extent that a provision in the articles of the cooperative, or in a unanimous agreement, restricts the powers of the directors to manage, or supervise the management of, the business and affairs of the cooperative, members who are given that power to manage or supervise the management of the business and affairs of the cooperative have all the rights, powers, duties and liabilities of directors, whether they arise under this Act or otherwise, including any defences available to the directors, and the directors are relieved of their rights, powers, duties and liabilities, including their liabilities under section 102, to the same extent.
Marginal note:Discretion of shareholders
(6) Nothing in this section prevents members from fettering their discretion when exercising the powers of directors under a unanimous agreement.
(7) and (8) [Repealed, 2001, c. 14, s. 174]
- 1998, c. 1, s. 115
- 2001, c. 14, s. 174
PART 8Capital Structure
Marginal note:Loan capital
116 The capital of a cooperative without membership shares may be in the form of member loans and those loans may be in the amounts, payable at the times, and with or without interest, that the articles of the cooperative provide.
Marginal note:Membership shares
117 A cooperative with membership shares must have one class of membership shares, designated as such in the articles.
Marginal note:Issuance to members
118 (1) Membership shares may be issued only to members, each of whom must hold the minimum number of membership shares prescribed by the by-laws.
Marginal note:Equal rights
(2) Subject to Parts 20 and 21, the membership shares of a cooperative confer on their holders equal rights, including equal rights to
(a) receive dividends declared on membership shares; and
(b) subject to the articles, receive the remaining property of the cooperative on dissolution.
Marginal note:Membership shares
(3) The articles may not include any preference, right, condition, restriction, limitation or prohibition on membership shares, except as provided for by this Act.
Marginal note:Transfer requires approval
(4) A transfer of membership shares is valid only if it complies with section 46 and any restrictions set out in the by-laws.
Marginal note:No right to vote
(5) The right to vote attaches to membership in accordance with section 37 and not to a membership share.
(6) Subject to sections 146 and 149, membership shares may be redeemed by the cooperative.
Marginal note:Issue of certificates
119 (1) The by-laws of a cooperative may provide that no membership share certificates or certificates in respect of member loans need be issued. If the by-laws provide that no such certificates need be issued, the cooperative must, on the request of a member, issue a statement of the number of membership shares held by, or the amount of any member loan of, the member.
(2) The face of each certificate that the cooperative issues in respect of membership shares or member loans after the coming into force of this section must contain
(a) the name of the cooperative;
(b) a statement that the cooperative is subject to this Act;
(c) the name of the person to whom it is issued;
(d) a statement that the certificate represents membership shares in, or member loans to, the cooperative, and the number of the membership shares or the amount of the member loan;
(e) a statement that the certificate is not transferable without the approval of the directors; and
(f) a statement that there is a charge, lien or hypothec on the membership shares or member loans represented by the certificate in favour of the cooperative for any indebtedness of the member to the cooperative.
Marginal note:Certificate of membership
(3) Each member is entitled to a certificate of membership.
- 1998, c. 1, s. 119
- 2011, c. 21, s. 78
Marginal note:Authorized capital
120 (1) The membership shares of a cooperative may be issued with or without a par value.
Marginal note:Par-value membership shares
(2) If the membership shares of a cooperative are with a par value, the articles must specify that fact and specify their par value and any limit on their number.
Marginal note:No-par-value membership shares
(3) If the membership shares of a cooperative are without a par value, the articles must specify that fact and specify any limit on their number.
Marginal note:Fixed or determined value
121 If any no-par-value membership shares of a cooperative are to be issued and are to be redeemed at a fixed or determined value, the articles must set out those facts and state the fixed price or formula to be used to determine the value.
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