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Bill C-91

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First Reading

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	Application
Application	178. This Part governs the transfer or transmission of a security.
	Security Certificates
Security certificate	179. Every security holder is entitled, at their option, to obtain from the cooperative
	(a) a security certificate that complies with this Act; or
	(b) a non-transferable written acknowledgement of their right to obtain a security certificate.
Fee	180. A cooperative may charge a reasonable fee for a security certificate issued in respect of a transfer.
Joint owners	181. If securities are held jointly by more than one person,
	(a) a cooperative is not required to issue more than one security certificate in respect of those securities; and
	(b) delivery of a security certificate to one of the joint owners is sufficient delivery to them all.
Signatures	182. (1) A security certificate must be signed manually by one of the following individuals, or a facsimile of the signature must be reproduced on the certificate:
	(a) at least one director or officer;
	(b) an individual on behalf of a director, transfer agent or branch transfer agent of the cooperative; or
	(c) a trustee who certifies it in accordance with a trust indenture.
Former director	(2) A cooperative may issue security certificates that contain the signature of a person who is no longer a director or officer and the validity of the certificate is not adversely affected.
Contents of certificate	183. (1) The following information must be stated on the face of each security certificate issued by a cooperative:
	(a) the name of the cooperative;
	(b) the words ``Incorporated under the Canada Cooperatives Act'', ``constituée sous l'autorité de la Loi canadienne sur les coopératives'', ``Subject to the Canada Cooperatives Act'' or ``assujetti à la Loi canadienne sur les coopératives'';
	(c) the name of the person to whom it was issued; and
	(d) the number and class of shares and the designation of any series that the certificate represents.
Notation of restrictions	(2) No restriction, charge or endorsement described in subsection (3) is effective against a transferee of a security, issued by a cooperative or by a body corporate before it is continued under this Act, who has no actual knowledge of the restriction, charge or endorsement unless it or a reference to it is noted conspicuously on the security certificate.
Restrictions, etc.	(3) The restrictions, charges and endorsements referred to in subsection (2) are
	(a) a restriction on transfer other than a constraint under section 130;
	(b) a charge in favour of the cooperative;
	(c) a unanimous agreement; and
	(d) an endorsement under subsection 302(10).
Restrictions	(4) If the issued investment shares of a cooperative are or were part of a distribution to the public, remain outstanding and are held by more than one person, the cooperative must not restrict the transfer or ownership of its investment shares of any class or series except by way of a constraint under section 130.
Conspicuous notation	(5) A reference to a constraint on the issue, transfer or ownership of any class or series of investment shares must be noted conspicuously on every security certificate evidencing such a share that is issued after the share becomes subject to the constraint under this Act, if the constraint is one
	(a) for the purpose of attaining or maintaining a level of Canadian ownership or control specified in its articles or required by law to carry on business or qualify for benefit; or
	(b) to comply with section 379 of the Trust and Loan Companies Act, section 411 of the Insurance Companies Act or Part X.3 of the Income Tax Act.
Effect of failure to note constraint	(6) A failure to note a constraint under subsection (5) does not invalidate the investment share or the security certificate and does not render the constraint ineffective.
Contents of certificate	184. (1) Every share certificate for an investment share of a cooperative that is authorized to issue shares of more than one class or series must clearly state
	(a) the rights, privileges, restrictions and conditions attached to the shares of each class and series that exist when the share certificate is issued; or
	(b) that the class or series of shares that it represents has rights, privileges, restrictions or conditions attached to it and that the cooperative will provide a shareholder, on demand and without charge, with a full copy of the text of
	(i) any rights, privileges, restrictions and conditions attached to each class authorized to be issued, and to each series, that have been fixed by the directors, and
	(ii) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series.
Copy of information	(2) If a share certificate for an investment share contains the statement referred to in paragraph (1)(b), the cooperative must provide the shareholder, on demand and without charge, with a copy of
	(a) the rights, privileges, restrictions and conditions attached to each class or series of investment shares authorized to be issued; and
	(b) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series of investment shares in the same class.
Fractional shares	185. (1) A cooperative may issue a certificate for a fractional investment share or may instead issue a scrip certificate in bearer form that entitles the holder to receive a certificate for a full investment share in exchange for sufficient scrip certificates equalling a full investment share.
Conditions	(2) The directors may attach conditions to scrip certificates issued by the cooperative, including conditions that
	(a) the scrip certificates become null or void if not exchanged for an investment share representing a full investment share before a specified date; and
	(b) any investment shares for which the scrip certificates are exchangeable may, despite any pre-emptive right, be issued by the cooperative to any person and the proceeds distributed rateably to the holders of the scrip certificates.
Voting rights	(3) A holder of a fractional investment share is not entitled to exercise voting rights or to receive a dividend in respect of the investment share unless
	(a) the fractional share results from a consolidation of investment shares; or
	(b) the articles of the cooperative provide otherwise.
Exercise of voting rights	(4) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.
	Registers
Securities register	186. (1) A cooperative that issues securities must maintain a securities register in which it records the securities issued by it in registered form, showing with respect to each class or series
	(a) the names, in alphabetical order, and the latest known address of each person who holds or previously held the security;
	(b) the number of securities held by each security holder; and
	(c) the date and particulars of the issue and transfer of each security.
Location of register	(2) The securities register must be maintained at the cooperative's registered office or at any other place in Canada designated by the directors.
Branch registers	(3) A cooperative may maintain additional branch securities registers in other places designated by the directors.
Contents of branch register	(4) A branch securities register only contains particulars of securities issued or transferred at the branch. The same information is also recorded in the central registry.
Destruction of certificates	(5) A cooperative, its agent or mandatary or a trustee as defined in section 266 is not required to produce
	(a) a cancelled security certificate in registered form, an instrument referred to in any of subsections 142(1) to (3) that is cancelled or a like cancelled instrument in registered form six years after the date of its cancellation;
	(b) a cancelled security certificate in bearer form or an instrument referred to in any of subsections 142(1) to (3) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or
	(c) an instrument referred to in any of subsections 142(1) to (3) or a like instrument, irrespective of its form, after the date of its expiration.
Agent	187. A cooperative may appoint an agent to maintain securities registers on its behalf.
Registration	188. The registration of the issue or transfer of an investment share in a securities register maintained by the cooperative is complete and valid registration for all purposes.
Trustee	189. Subject to sections 51, 53 and 61, a cooperative or a trustee as defined in section 266 may treat the person whose name appears on the securities register as the owner of a security as its owner for all purposes.
Proof of ownership	190. If a cooperative restricts the right to transfer its investment shares, the cooperative may, despite section 189, treat a person as the registered holder of a security if the person provides the cooperative with evidence that reasonably meets the requirements of the cooperative that the person is
	(a) the heir of a deceased security holder, or the fiduciary of the estate or succession of a deceased security holder, or of a registered security holder who is a minor, an incompetent or incapable person or a missing person; or
	(b) a liquidator of, or a trustee in bankruptcy for, a registered security holder.
Proof of ownership	191. A cooperative must treat a person, other than one described in section 190, as being entitled to exercise the rights and privileges attached to a security if the person provides proof that the person has acquired ownership of the security by operation of law or has legal authority to exercise the rights and privileges.
Joint owners	192. If satisfactory proof of the death of a joint holder of a security is provided to a cooperative, it may treat any surviving joint holders as the owner of the security.
Duties of cooperative	193. A cooperative is not required to inquire into the existence of, or see to the performance of, any duty owed to a third person by a registered holder or a person who may be treated as a registered holder of a security.
Minors	194. If an individual who is less than eighteen years of age exercises a right of ownership in a security of a cooperative, no subsequent repudiation or avoidance is effective against the cooperative.
Deceased owner	195. (1) Subject to any applicable law relating to the collection of taxes, a person who is an heir or a fiduciary of an estate or succession of a deceased security holder is entitled to become the registered holder or to designate a registered holder if the person deposits the following information with the cooperative or its transfer agent, together with any reasonable assurances that the cooperative may require:
	(a) the security certificate or, in default of one, a document proving that the deceased was the security holder;
	(b) a document proving the death of the security holder; and
	(c) a document proving that the heir or fiduciary has the right under the law of the place in which the deceased was domiciled immediately before their death to deal with the security.
Endorsement	(2) A security certificate referred to in paragraph (1)(a) must be endorsed
	(a) in the case of a transfer to an heir or fiduciary, by that person; and
	(b) in any other case, in a manner acceptable to the cooperative.
Right of cooperative	(3) Deposit of the documents required by subsection (1) empowers a cooperative or its transfer agent to record in a securities register the transmission of a security from the deceased holder to the heir or fiduciary or to any person that the heir or fiduciary may designate and to treat the person who becomes a registered holder as the owner of the securities.
Overissue	196. (1) Subject to this section, the provisions of this Part that validate a security or compel its issue or reissue do not apply if the validation, issue or reissue of a security would result in overissue.
Identical security	(2) The person who is entitled to a validation or issue may, if there has been an overissue and if a valid security that is similar in all respects to the security involved in the overissue is reasonably available for purchase, compel the issuer to purchase and deliver that security against the surrender of the security that the person holds.
If identical security not available	(3) If a valid security that is similar in all respects to the security involved in the overissue is not reasonably available for purchase, the person who is entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.
Increase in capital	(4) The overissued securities are valid from the date they were issued only if the issuer increases the number of its authorized securities to a number equal to or greater than the number of securities previously authorized plus the number of the securities overissued.
Exemptions	197. Sections 147 to 149 and 152 do not apply to a payment or purchase by an issuer under section 196.

Bill C-91

Application

Security Certificates

Registers