PART 18

INVESTIGATIONS

Investigation

329. (1) Any interested person may apply, without notice or on any notice that the court may require, to a court having jurisdiction in the place where the cooperative has its registered office for an order directing an investigation to be made of the cooperative and any of its affiliates.

Grounds

(2) The court may order an investigation to be made of the cooperative and any of its affiliates if, on an application under subsection (1), it appears to the court that the application is neither frivolous nor vexatious and that

    (a) the cooperative is not organized, operated or carrying on business on a cooperative basis;

    (b) the business or the affairs of the cooperative are not being carried out or conducted in accordance with

      (i) the restrictions contained in its articles,

      (ii) its by-laws,

      (iii) a unanimous agreement, or

      (iv) this Act;

    (c) the business of the cooperative or any of its affiliates is or has been carried on with intent to defraud a person;

    (d) the business or affairs of the cooperative or any of its affiliates are or have been carried on or conducted, or the powers of the directors are or have been exercised, in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, a member or a security holder;

    (e) the cooperative or any of its affiliates was formed for a fraudulent or unlawful purpose or is to be dissolved for a fraudulent or unlawful purpose; or

    (f) persons concerned with the formation, business or affairs of the cooperative or any of its affiliates have, in connection with the formation, business or affairs of the cooperative, acted fraudulently or dishonestly.

No security for costs

(3) An applicant under this section is not required to give security for costs.

Powers of court

330. (1) In connection with an investigation under this Part, the court may make any order it thinks fit, including an order

    (a) to investigate;

    (b) appointing an inspector, who may be the Director, and fixing their remuneration, or replacing an inspector;

    (c) determining the notice to be given to any interested person, or dispensing with notice to any person;

    (d) authorizing an inspector to enter any premises in which the court is satisfied there might be relevant information and to examine any thing and make copies of any document found on the premises;

    (e) requiring any person to produce documents to an inspector;

    (f) authorizing an inspector to conduct a hearing, administer oaths and examine any person on oath, and setting out rules for the conduct of hearings;

    (g) requiring any person to attend a hearing conducted by an inspector and to give evidence on oath;

    (h) giving directions to an inspector or any other interested person on any matter arising in the investigation;

    (i) requiring an inspector to make an interim or final report to the court;

    (j) determining whether a report of an inspector should be published and, if so, ordering its publication in whole or in part or that copies of it be sent to any person the court designates;

    (k) requiring an inspector to discontinue the investigation;

    (l) if the cooperative is incorporated with membership capital, requiring the cooperative to be continued under the Canada Business Corporations Act, or if it is incorporated without membership capital, requiring it to be dissolved;

    (m) determining any matter that relates to the relationship between a member and the cooperative; and

    (n) requiring the cooperative to pay the costs of the investigation.

Copy of report

(2) An inspector must send the Director a copy of every report made by the inspector under this Part.

Powers of inspector

331. (1) An inspector appointed under this Part has the powers set out in the order appointing the inspector.

Exchange of information

(2) In addition to the powers set out in the order appointing an inspector, the inspector may provide information to, or exchange information and otherwise cooperate with, any public official in Canada or elsewhere who

    (a) is authorized to exercise investigatory powers; and

    (b) is investigating, in respect of the cooperative, any allegation of improper conduct that is the same as or similar to the conduct described in subsection 329(2).

Court order

(3) An inspector must, on the request of an interested person, produce a copy of any order made under subsection 330(1).

Hearing in private

332. (1) Any interested person may apply to the court for an order that a hearing under this Part be heard in private and for directions on any matter arising in the investigation.

Right to counsel

(2) A person whose conduct is being investigated or who is being examined at a hearing conducted under this Part has the right to be represented by counsel.

Incriminating statements

333. No person is excused from attending and giving evidence and producing documents to an inspector under this Part by reason only that the evidence tends to incriminate the person or subject the person to a proceeding or penalty, but no such evidence may be used or is receivable against the person in any later proceeding instituted under an Act of Parliament, other than a prosecution for perjury in giving the evidence or a prosecution under section 132 or 136 of the Criminal Code in respect of the evidence.

Absolute privilege - defamation

334. Any oral or written statement or report made by an inspector or other person in an investigation under this Part has absolute privilege.

Membership shares included

335. (1) For the purposes of this section, a security includes a membership share or an interest in one.

Information respecting ownership and control

(2) If the Director is satisfied that, for the purposes of Part 9 or 10 or for the purposes of enforcing any regulation made under section 130, there is reason to inquire into the ownership or control of a security of a cooperative or any of its affiliates, the Director may require any person that the Director reasonably believes has or has had an interest in the security or acts or has acted on behalf of a person with such an interest to report to the Director or to any designated person,

    (a) information that the person has or can reasonably be expected to obtain as to present and past interests in the security; and

    (b) the names and addresses of the persons so interested and of any person who acts or has acted in relation to the security on behalf of the persons so interested.

Deemed interest in securities

(3) For the purposes of subsection (2), a person is deemed to hold an interest in a security if

    (a) in the case of a membership share, the person is or is entitled to be entered in the records of the cooperative as the owner of the membership share; and

    (b) in the case of an investment share,

      (i) the person has a right to vote or to acquire or dispose of the investment share or an interest in it,

      (ii) the person's consent is necessary for the exercise of the rights or privileges of any other person interested in the investment share, or

      (iii) any other person interested in the investment share can be required or is accustomed to exercise rights or privileges attached to it in accordance with that person's instructions.

Publication

(4) The Director must publish, in a publication generally available to the public, the particulars of information obtained under this section if the particulars

    (a) are required by this Act or the regulations to be disclosed; and

    (b) have not previously been so disclosed.

Solicitor-
client privilege

336. Nothing in this Part may be construed as affecting the privilege that exists in respect of lawyers and notaries and their clients.

Inquiries

337. The Director may make inquiries of any person relating to compliance with this Act.

PART 19

REMEDIES, OFFENCES AND PUNISHMENT

Definitions

338. The definitions in this section apply in this Part.

``action''
« action »

``action'' means an action taken under this Act.

``complainant ''
« plaignant »

``complainant'' means

      (a) a member or former member;

      (b) a registered holder or beneficial owner, or a former registered holder or beneficial owner, of a security of a cooperative or any of its affiliates;

      (c) a director or an officer, or a former director or officer, of a cooperative or any of its affiliates;

      (d) a creditor of a cooperative; or

      (e) any other person who, in the opinion of the court, is a proper person to make an application under this Part.

Commence-
ment of derivative action

339. (1) Subject to subsection (2), a complainant may apply to the court for leave to bring an action in the name and on behalf of a cooperative or any of its subsidiaries, or to intervene in an action to which the cooperative or any of its subsidiaries is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the cooperative or subsidiary.

Condition precedent

(2) No person may bring an action and no person may intervene in an action brought under subsection (1) unless the court is satisfied that

    (a) if the directors of the cooperative or its subsidiary do not bring, diligently prosecute, defend or discontinue the action, the complainant has given reasonable notice to the directors of the cooperative or its subsidiary of the complainant's intention to apply to the court under subsection (1);

    (b) the complainant is acting in good faith; and

    (c) it appears to be in the interests of the cooperative or its subsidiary to bring, prosecute, defend or discontinue the action.

Powers of court

(3) In an action brought or intervened in under this section, the court may make any order it considers appropriate, including an order

    (a) authorizing the complainant or any other person to control the conduct of the action;

    (b) giving directions for the conduct of the action;

    (c) directing that an amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to a former or present member or to a former or present security holder of the cooperative or its subsidiary instead of to the cooperative or its subsidiary; or

    (d) requiring the cooperative or its subsidiary to pay reasonable costs incurred by the complainant in connection with the action.

Application to court re oppression

340. (1) A complainant may apply to the court for an order, including an alternate order, under this section.

Grounds

(2) If the court receives an application under subsection (1) and is satisfied that an act or omission of a cooperative effects a result, that the business or affairs of the cooperative are or have been carried on or conducted in a manner, or that the powers of the director are or have been exercised in a manner, that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of a member or other security holder, creditor, director or officer of the cooperative, the court may order the rectification of the matters complained of.

Types of order

(3) For the purpose of subsection (2), the court may make any order that it considers appropriate, including an order

    (a) restraining the conduct complained of;

    (b) appointing a receiver or receiver-manager;

    (c) requiring the cooperative to amend an agreement with members generally or with a member;

    (d) regulating the affairs of the cooperative by amending its articles or by-laws or creating or amending a unanimous agreement;

    (e) directing an issue or exchange of securities;

    (f) directing changes in the directors;

    (g) determining whether a person is or is qualified to be a member;

    (h) determining any matter in regard to the relations between the cooperative and a member;

    (i) subject to subsection (6), directing the cooperative or any other person to purchase securities of a security holder;

    (j) subject to subsection (6), directing the cooperative or any other person to pay to a security holder any part of the money paid by the security holder for securities;

    (k) subject to subsection (6), directing the cooperative to redeem membership shares, repay member loans or to pay to a member any other amount standing to the member's credit in the records of the cooperative;

    (l) varying or setting aside a transaction or contract to which the cooperative is a party and compensating the cooperative or any other party to the transaction or contract;

    (m) directing the production and delivery within a specified time of financial statements of the cooperative;

    (n) directing an accounting;

    (o) compensating an aggrieved person;

    (p) directing rectification of the registers or other records of the cooperative under section 342;