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Bill C-91

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First Reading

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Form of dividend	153. (1) A cooperative may pay a dividend by issuing fully paid shares of the cooperative and, subject to section 154, a cooperative may pay a dividend in money or property, except that membership shares may only be issued to members.
Stated capital account	(2) If shares of a cooperative are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money must be added to the stated capital account.
Limitation on paying dividends	154. A cooperative may not declare or pay a dividend if there are reasonable grounds to believe that
	(a) the cooperative is, or would after the payment be, unable to pay its liabilities as they become due; or
	(b) the realizable value of the cooperative's assets after payment of the dividend would be less than the total of its liabilities and the stated capital of all its issued shares.
Patronage returns	155. (1) A cooperative may allocate among and credit or pay to the members, as a patronage return, all or a part of the surplus arising from the operations of the cooperative in a financial year in proportion to the business done by the members with or through the cooperative in that financial year, calculated in the manner described in subsection (2) at a rate set by the directors.
Calculation of patronage	(2) For the purpose of subsection (1), the directors may calculate the amount of the business done by each member with or through a cooperative in a financial year by taking into account
	(a) the quantity, quality, kind and value of things bought, sold, handled, marketed or dealt in by the cooperative;
	(b) the services rendered
	(i) by the cooperative on behalf of or to the member, and
	(ii) by the member on behalf of or to the cooperative; and
	(c) differences that are, in the opinion of the directors, appropriate for different classes, grades or qualities of things and services.
Non-member patronage allocation	(3) The by-laws may provide that a cooperative may allocate among and credit or pay to persons who use the services of the cooperative but who are not members a share of any surplus at a rate that is equal to or less than the rate at which the surplus is distributed to members.
Calculation of non-member patronage	(4) If a cooperative allocates among and credits or pays to persons referred to in subsection (3) a share of any surplus, the directors must calculate the business done by the non-member patrons in the manner described in subsection (2).
Investment of patronage return	156. (1) A cooperative may, by by-law, provide that the whole, or any part that the directors may determine, of the patronage return of each member in respect of each financial year be applied to the purchase for the member of membership or investment shares in the cooperative.
Contents of by-law	(2) The by-law must provide for the giving of notice to each member of the number of shares purchased or to be purchased for the member, the manner of issuance or transfer of shares, the payment for the shares out of the patronage returns of members and, if applicable, the issuance and forwarding of certificates to members representing shares so issued or transferred.
Price of shares	(3) No member is required under this section to purchase membership shares, in the case of membership shares with a par value, at a price in excess of their par value, and in the case of membership shares with no par value or investment shares,
	(a) if the articles provide for a fixed price or a price determined in accordance with a formula, in excess of that price; and
	(b) in any other case, in excess of the fair value of the membership shares or the fair market value of the investment shares.
Stated capital account	(4) If shares of a cooperative are issued in payment of a patronage return, the amount of the patronage return, stated as an amount of money, must be added to the stated capital account.
Loans from patronage returns	157. A cooperative may, by by-law, require its members to lend to it the whole, or any part that the directors may determine, of the patronage returns to which they may become entitled in each financial year, on the terms and at the rate of interest that the directors determine, so long as the rate of interest does not exceed the rate that is provided in the by-laws.
Insolvent cooperative	158. If a cooperative is unable to pay its liabilities as they become due, no member need, under section 157, lend a patronage return to the cooperative, and no member need purchase shares under section 156.
	Marketing
Marketing plans	159. (1) Subject to subsection (3), this section applies to a cooperative and its members if the members are required by a marketing plan established under an Act of Parliament or of the legislature of a province to sell or deliver things or render services to or through a producer board or a marketing commission or agency.
Patronage returns	(2) For the purposes of allocating, crediting and paying patronage returns among or to members and of making payments to members as part of the price or proceeds of their things or services, the members referred to in subsection (1) are deemed to have sold and delivered the things or to have rendered the services to the cooperative.
Conditions	(3) The by-laws of a cooperative may provide that this section does not apply to a member until any conditions with respect to the delivery of things or rendering of services set out in the by-laws are fulfilled.
	Loans and Guarantees
Prohibited loans and guarantees	160. (1) Subject to subsection (2) and any additional restrictions set out in the articles, a cooperative or any of its affiliates may not, directly or indirectly, give financial assistance by means of a loan, guarantee or otherwise
	(a) to any member, shareholder, director, officer or employee of the cooperative or of an affiliate or to an associate of any such person for any purpose, or
	(b) to any person for the purpose of or in connection with a purchase of a share issued or to be issued by a cooperative or affiliate,
	if there are reasonable grounds for believing that
	(c) the cooperative is or, after giving the financial assistance, would be unable to pay its liabilities as they become due, or
	(d) the realizable value of the cooperative's assets, excluding the amount of any financial assistance in the form of a loan and in the form of assets pledged or encumbered to secure a guarantee, after giving the financial assistance, would be less than the aggregate of the cooperative's liabilities and stated capital of all classes.
Permitted loans and guarantees	(2) A cooperative may give financial assistance by means of a loan, guarantee or otherwise
	(a) to any person in the ordinary course of business if the lending of money is part of the ordinary business of the cooperative;
	(b) to any person on account of expenditures incurred or to be incurred on behalf of the cooperative;
	(c) to a subsidiary of the cooperative;
	(d) to employees of the cooperative or of any of its affiliates
	(i) to enable or assist them to purchase or erect living accommodation for their own occupation, or
	(ii) in accordance with a plan for the purchase of shares of the cooperative or any of its affiliates to be held by a trustee; and
	(e) to members, or members of members, if the financial assistance is available to all members on similar terms.
Enforceabi- lity	(3) A contract made by a cooperative in contravention of this section may be enforced by the cooperative or by a lender for value in good faith without notice of the contravention.
Enforcement of contract to buy shares	161. (1) A cooperative must fulfil its obligations under a contract to buy shares of the cooperative, except if the cooperative can prove that enforcement of the contract would put it in breach of subsection 147(2) or section 149.
Right of claimant	(2) Until the cooperative has fulfilled all its obligations under a contract referred to in subsection (1), the other party retains the status of claimant entitled to be paid as soon as the cooperative is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors and to the rights of any class of shareholders whose rights were in priority to the rights given to the class of investment shares being purchased, but in priority to the rights of members and other shareholders.
Debt obligations	162. (1) Debt obligations issued by a cooperative are not redeemed by reason only that the indebtedness evidenced by the debt obligation is repaid.
Cancellation, etc.	(2) Debt obligations issued by a cooperative and purchased, redeemed or otherwise acquired may be cancelled or may secure any obligation of the cooperative then existing or later incurred.
	PART 9
	PROXIES
Interpreta- tion	163. (1) The definitions in this subsection apply in this Part.
``form of proxy'' « formulaire de procuration »	``form of proxy'' means a written or printed form that, on completion and execution by or on behalf of a shareholder, becomes a proxy.
``intermediary '' « intermé- diaire »	``intermediary'' means a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction and includes
	(a) a securities depositary;
	(b) a financial institution;
	(c) in respect of a clearing agency, a securities dealer, trust company, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominees hold securities of an issuer;
	(d) a trustee or administrator of a self-administered retirement savings plan, retirement income fund, education savings plan or other similar self-administered savings or investment plan registered under the Income Tax Act;
	(e) a nominee of a person referred to in any of paragraphs (a) to (d); and
	(f) a person who carries out functions similar to those carried out by individuals or entities referred to in any of paragraphs (a) to (d) and that holds a security registered in its name, or in the name of its nominee, on behalf of another person who is not the registered holder of the security.
``solicit'' or ``solicita- tion'' « sollicita- tion »	``solicit'' or ``solicitation'' includes
	(a) a request for a proxy whether or not accompanied by or included in a form of proxy,
	(b) a request to execute or not to execute a form of proxy or to revoke a proxy,
	(c) the sending of a form of proxy or other communication to a shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and
	(d) the sending of a form of proxy to a shareholder under section 165,
	but does not include
	(e) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,
	(f) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,
	(g) the sending by an intermediary of the documents referred to in section 169,
	(h) a solicitation by a person in respect of shares of which they are the beneficial owner,
	(i) a public announcement by a shareholder of how the shareholder intends to vote and the reasons for that decision,
	(j) anything that would be a solicitation under this definition but is conveyed by public broadcast, speech or publication, if a proxy circular in final form is sent to the cooperative and is filed with the Director, or
	(k) a communication, other than a solicitation by or on behalf of the management of the cooperative, that is made to not more than fifteen shareholders, in any circumstances that may be prescribed.
``solicita- tion by or on behalf of the management of a cooperative'' « sollicita- tion effectuée par la direction ou pour son compte »	``solicitation by or on behalf of the management of a cooperative'' means a solicitation by a person pursuant to a resolution or instructions of, or with the acquiescence of, the directors or a committee of directors.
Membership and membership shares excluded	(2) This Part does not apply to a member or membership shares, but a member who is a shareholder may exercise the rights given to a shareholder by this Part for all investment shares held.
Appointing proxyholder	164. (1) A shareholder who is entitled to vote at a meeting of shareholders may appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.
Execution of proxy	(2) For a proxy to be valid, it must be executed by the shareholder or by their legal representative authorized in writing.
Validity of proxy	(3) A proxy is valid only at the meeting in respect of which it is given or at any adjournment of that meeting.
Revocation of proxy	(4) A shareholder may revoke a proxy
	(a) by depositing a document in writing executed by the shareholder or by their legal representative authorized in writing
	(i) at the registered office of the cooperative at any time up to and including the last business day before the day of the meeting or adjournment at which the proxy is to be used, or
	(ii) with the chairperson of the meeting on the day of the meeting or adjournment; or
	(b) in any other manner permitted by law.
Deposit of proxies	(5) The directors may specify in a notice calling a meeting of shareholders a time not more than forty-eight hours, excluding Saturdays and holidays, before the meeting or adjournment before which time proxies to be used at the meeting must be deposited with the cooperative or its agent.
Mandatory solicitation	165. (1) Subject to subsection (2), the management of a cooperative shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder who is entitled to receive notice of the meeting.
Exception	(2) The management of a cooperative is not required to send a form of proxy under subsection (1) if
	(a) it is not a distributing cooperative; and
	(b) it has fewer than fifty shareholders entitled to vote at a meeting, two or more joint holders being counted as one shareholder.
Soliciting proxies	166. (1) No person may solicit a proxy unless the applicable circular described in subsection (2) is sent to the auditor of the cooperative, to each shareholder whose proxy is solicited, to each director and, if paragraph (2)(b) applies, to the cooperative.
Circulars	(2) The circular that is to be sent under subsection (1) is
	(a) in the case of solicitation by or on behalf of the management of a cooperative, a management proxy circular in the prescribed form, either as an appendix to or as a separate document accompanying the notice of the meeting; and
	(b) in the case of any other solicitation, a dissident's proxy circular in the prescribed form stating the purposes of the solicitation.

Bill C-91

Marketing

Loans and Guarantees

PART 9

PROXIES