Cooperative Credit Associations Act (S.C. 1991, c. 48)

Marginal note:Conversion privileges

• 77 (1) An association may issue conversion privileges, options or rights to acquire securities of the association, and shall set out the conditions thereof

  • (a) in the documents that evidence the conversion privileges, options or rights; or

  • (b) in the securities to which the conversion privileges, options or rights are attached.

• Marginal note:Transferable rights

  (2) Conversion privileges, options and rights to acquire securities of an association may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.

• Marginal note:Reserved shares

  (3) Where an association has granted privileges to convert any securities issued by the association into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the association shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

Marginal note:Holding of own shares

78 Except as provided in sections 79 to 81, or unless permitted by the regulations, an association shall not

• (a) hold membership shares or shares of the association; or

• (b) permit any of its subsidiaries to hold membership shares greater than the minimum number of membership shares of the association prescribed by a by-law made under subsection 67(1) or any shares of the association.

Marginal note:Purchase and redemption of membership shares and shares

• 79 (1) Subject to subsection (2) and to its by-laws, an association may,

  • (a) with the consent of the Superintendent, purchase, for the purpose of cancellation, any membership shares or shares issued by it, or redeem any redeemable shares issued by it at a price not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or, in the case of shares, according to the conditions attaching to the shares; and

  • (b) purchase in any calendar year, for the purpose of cancellation, not more than one per cent of the membership shares outstanding at the beginning of the year, at a price not exceeding the redemption price of the membership shares calculated according to a formula stated in its by-laws.

• Marginal note:Restrictions on purchase and redemption

  (2) An association shall not make any payment to purchase or redeem any membership shares or shares issued by it if there are reasonable grounds for believing that the association is, or the payment would cause the association to be, in contravention of any regulation referred to in subsection 409(1) or (2) or any direction made pursuant to subsection 409(3).

• Marginal note:Donations

  (3) An association may accept any membership share or share of the association surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 82.

Marginal note:Holding as personal representative

• 80 (1) An association may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, membership shares and shares of the association, but only where the association or the subsidiary does not have a beneficial interest in the shares.

• Marginal note:Security interest

  (2) Subject to section 51, an association may, and may permit its subsidiaries to, hold membership shares and shares of the association by way of a security interest where the security interest is nominal or immaterial when measured by criteria established by the association that have been approved in writing by the Superintendent.

• Marginal note:Saving

  (3) Nothing in subsection (2) precludes the former-Act association or any of its subsidiaries from holding any security interest held immediately prior to the coming into force of this Part.

Marginal note:Exception — conditions before acquisition

• 80.1 (1) An association may permit any of its subsidiaries to acquire shares of the association through the issuance of those shares by the association to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.

• Marginal note:Conditions after acquisition

  (2) After a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.

• Marginal note:Non-compliance with conditions

  (3) If an association permits any of its subsidiaries to acquire shares of the association under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 17 and subsection 75(2), the association must comply with the prescribed requirements.

Marginal note:Cancellation of membership shares and shares

• 81 (1) Subject to subsection (2), where an association purchases membership shares, or shares of the association or fractions thereof, or redeems or otherwise acquires membership shares or shares of the association, the association shall cancel those membership shares or shares.

• Marginal note:Sale of shares

  (2) Where an association or any of its subsidiaries, through the realization of security, acquires any membership shares or shares of the association, the association may, or may cause its subsidiary to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the membership shares or shares.

Marginal note:Reduction of capital

• 82 (1) The stated capital of an association may be reduced by special resolution.

• Marginal note:Limitation

  (2) An association shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the association is, or the reduction would cause the association to be, in contravention of any regulation referred to in subsection 409(1) or (2) or any direction made pursuant to subsection 409(3).

• Marginal note:Contents of special resolution

  (3) A special resolution to reduce the stated capital of an association shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

• Marginal note:Approval by Superintendent

  (4) A special resolution to reduce the stated capital of an association has no effect until it is approved in writing by the Superintendent.

• Marginal note:Exception

  (4.1) Subsection (4) does not apply if

  • (a) the reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 292(4); and

  • (b) there is to be no return of capital to members or shareholders as a result of the reduction.

• Marginal note:Conditions for approval

  (5) No approval to reduce the stated capital of an association may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.

• Marginal note:Statements to be submitted

  (6) In addition to evidence of the passing of a special resolution to reduce the stated capital of an association and of the publication thereof, statements showing

  • (a) the number of the association’s membership shares and shares issued and outstanding,

  • (b) the results of the voting by members of the association or by class of shares,

  • (c) the association’s assets and liabilities, and

  • (d) the reason why the association seeks the reduction of capital

  shall be submitted to the Superintendent at the time of the application for approval of the special resolution.

Marginal note:Recovery by action

• 83 (1) Where any money or property was paid or distributed to a member, shareholder or other person as a consequence of a reduction of capital made contrary to section 82, a creditor of the association may apply to a court for an order compelling the member, shareholder or other person to pay the money or deliver the property to the association.

• Marginal note:Shares held by personal representative

  (2) No person holding membership shares or shares in the capacity of a personal representative and registered on the records of the association as a member or shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.

• Marginal note:Limitation

  (3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.

• Marginal note:Remedy preserved

  (4) This section does not affect any liability that arises under section 211.

Marginal note:Adjustment of stated capital account

• 84 (1) On a purchase, redemption or other acquisition by an association of membership shares, or shares, or fractions thereof issued by it, other than membership shares or shares acquired pursuant to section 80 or acquired through the realization of security and sold pursuant to subsection 81(2), the association shall deduct from the stated capital account maintained for the membership shares, or for the class or series of shares, so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the membership shares or the shares of that class or series by the number of membership shares or shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of membership shares or shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.

• Marginal note:Idem

  (2) An association shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 82.

• Marginal note:Shares converted to another class

  (3) On a conversion of outstanding shares of an association into shares of another class or series, or on a change of outstanding shares of the association into shares of another class or series, the association shall

  • (a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and

  • (b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.

• Marginal note:Stated capital of convertible shares

  (4) For the purposes of subsection (3) and subject to the association’s by-laws, where an association issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.

• Marginal note:Conversion or change of shares

  (5) Shares issued by an association and converted into shares of another class or series, or changed under subsection 221(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.

Marginal note:Addition to stated capital account

85 On a conversion of any debt obligation of an association into membership shares, or into shares of a class or series of shares, the association shall

• (a) deduct from the liabilities of the association the nominal value of the debt obligation being converted; and

• (b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the membership shares or for the class or series of shares into which the debt obligation has been converted.

Marginal note:Declaration of dividend

• 86 (1) The directors of an association may declare and an association may pay a dividend by issuing fully paid membership shares or options or rights to acquire membership shares to members or fully paid shares or options or rights to acquire fully paid shares to members or shareholders and, subject to subsection (4), the directors of an association may declare and an association may pay a dividend in money or property, and if a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

• Marginal note:Notice to Superintendent

  (2) The directors of an association shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.

• Marginal note:Dividend

  (3) If membership shares or shares of an association are issued in payment of a dividend, the association shall record in the stated capital account maintained or to be maintained for the membership shares or shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.

• Marginal note:When dividend not to be declared

  (4) The directors of an association shall not declare and an association shall not pay a dividend if there are reasonable grounds for believing that the association is, or the payment would cause the association to be, in contravention of any regulation referred to in subsection 409(1) or (2) or any direction made pursuant to subsection 409(3).

• (5) [Repealed, 2007, c. 6, s. 149]

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

• 87 (1) An association shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.

• Marginal note:References to subordinated indebtedness

  (2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by an association refer to the subordinated indebtedness otherwise than as subordinated indebtedness.

• Marginal note:Deemed not to be a deposit

  (3) Subordinated indebtedness issued by an association is deemed not to be a deposit.

• Marginal note:Other currencies

  (4) When issuing subordinated indebtedness, an association may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.

Security Certificates and Transfers

Marginal note:Definitions

88 In this section and sections 89 to 142,

adverse claim

adverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security; (opposition)

bona fide purchaser

bona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)

clearing agency

clearing agency means a person designated as a recognized clearing agency by the Superintendent; (agence de compensation et de dépôt)

delivery

delivery means voluntary transfer of possession; (livraison ou remise)

fungible

fungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)

genuine

genuine means free of forgery or counterfeit; (authentique)

good faith

good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)

over-issue

over-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue; (émission excédentaire)

purchaser

purchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)

securities broker

securities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer; (courtier)

security

security or security certificate means an instrument issued by an association that is

• (a) in bearer, order or registered form,

• (b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,

• (c) one of a class or series or by its terms divisible into a class or series of instruments, and

• (d) evidence of a share, participation or other interest in or obligation of an association,

but does not include an instrument evidencing a deposit or a membership share; (valeur mobilière, titre ou certificat de valeur mobilière)

trust indenture

trust indenture has the meaning given that expression by section 278; (acte de fiducie)

unauthorized

unauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery; (non autorisé)

uncertificated security

uncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered or recorded in records maintained for that purpose by or on behalf of an association; (valeur mobilière sans certificat)

valid

valid means issued in accordance with the applicable law or validated under section 104. (valide)