Bill C-5

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	PART 7
	DIRECTORS AND OFFICERS
	General Provisions
Number of directors	76. (1) A cooperative must have at least three directors or any greater minimum num ber that is set out in the articles.
Effect of decrease	(2) If the articles are amended to decrease the number of directors, the term of any incumbent director is not affected.
Effect of increase	(3) At a meeting to amend the articles to increase the number of directors, the persons who are entitled to do so may elect or appoint the additional number of directors.
Directors as members	77. Not less than two thirds of the directors, or any greater proportion that is provided for by the articles, must be members of the cooperative, or representatives of members that are entities or members of members that are cooperative entities.
Qualifica- tions	78. (1) A person is not qualified to be a director if the person
	(a) is not an individual;
	(b) is less than eighteen years of age;
	(c) is of unsound mind and has been so found by a court in Canada or elsewhere; or
	(d) has the status of bankrupt.
Additional qualifications	(2) A cooperative may provide in its by-laws for qualifications or disqualifications of directors in addition to those in subsection (1).
Status of directors	(3) Unless Part 21 applies to a cooperative, a majority of the directors must be individuals who are not full-time officers or employees of the cooperative.
Resident in Canada	(4) A majority of the directors must be resident in Canada.
Member election	(5) Subject to subsections 124(3) and (4), all directors are to be elected by the members.
Functions of directors	79. Subject to this Act and to the articles and any unanimous agreement, the directors man age or supervise the management of the business and affairs of the cooperative.
Duties	80. (1) Every director and officer must, in exercising the powers and performing the duties of office,
	(a) act honestly and in good faith with a view to the best interests of the cooperative; and
	(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
Duty of compliance	(2) Every director and officer must comply with this Act, the articles, the by-laws and any unanimous agreement.
No exculpation	(3) Subject to subsection 115(5), no provi sion in a contract, the articles, the by-laws, a unanimous agreement or a resolution relieves a director or officer from complying with this Act and the regulations or from liability for non-compliance.
Notice of directors	81. (1) At the time of sending articles of incorporation, the incorporators must send the Director a notice of directors, in the form that the Director fixes.
First directors	(2) When a cooperative comes into exis tence, the individuals identified in the notice have all the powers and duties of directors until the first meeting of members.
First meeting	(3) At the first meeting of members after a cooperative comes into existence, the direc tors are to be elected or appointed in accor dance with this Act, the articles, the by-laws and any unanimous agreement.
Organiza- tional meeting	82. (1) After a cooperative comes into existence, a meeting of directors must be held at which the directors may
	(a) adopt forms of security certificates and of cooperative records;
	(b) admit persons to membership in the cooperative and issue or authorize the issuance of membership shares and member loan certificates;
	(c) appoint officers;
	(d) appoint an auditor to hold office until the first meeting of members;
	(e) make arrangements with an appropriate financial institution; and
	(f) transact any other business necessary to organize the cooperative.
Notice	(2) An incorporator or a director may call a meeting of directors referred to in subsection (1) by giving not less than five days notice of the meeting to each director, stating the time and place of the meeting.
Rules for election of directors	83. (1) Unless the articles, the by-laws or a unanimous agreement provides otherwise, the election of the directors must be in accordance with this section, subsection 78(5) and sec tions 84 to 87 and 124.
Annual election	(2) Elections of directors are to be held annually at a meeting of the persons who are entitled to elect or appoint them.
Term of office	(3) Directors hold office until the close of the meeting at which their successors are elected.
Staggered terms	(4) It is not necessary that all directors elected at a meeting of the cooperative hold office for the same term.
Re-election	(5) Directors may be re-elected.
Consent to nomination	(6) No election or appointment of an individual as a director is valid unless
	(a) the individual consents in writing no later than ten days after their election or appointment; or
	(b) in the case of a director who is elected or appointed at a meeting, the individual did not refuse at the meeting to act as a director.
Consent in writing	(7) A consent in writing referred to in paragraph (6)(a) is effective during the indi vidual's term of office unless the consent states that it is valid until the date stated in the consent or until she or he revokes the consent.
Secret ballot	(8) Directors are to be elected by secret ballot if the number of nominees exceeds the number of directors to be elected.
Casting ballot	(9) A ballot that is cast for the election of more than the number of directors to be elected is null or void.
Determining election of directors	(10) The individual who receives the great est number of votes at an election of directors is elected a director and the other individuals who receive, in descending order, the next greatest numbers of votes are also elected directors, until the number of directors to be elected has been elected. If two individuals receive an equal number of votes for the last vacancy on the board, the directors already elected to the board must determine which of the two individuals is to be elected.
Separate election	(11) If shareholders have a right to elect one or more directors, they vote separately from the members.
Maximum term	84. Subject to section 86, no director may hold office for a single term of more than three years.
Vacancy on board	85. (1) Subject to subsection (3), if there is a vacancy on the board of directors, except a vacancy because of an increase in number or minimum number of directors or because of a failure to elect or appoint the number of directors required by the articles, and there is still a quorum on the board, the remaining directors may
	(a) continue to fulfil their functions without filling the vacancy; or
	(b) subject to subsection (8), appoint a director to fill the vacancy until the next annual meeting.
Failure to appoint or elect minimum	(2) If, at the close of a meeting of a cooperative, the persons at the meeting have failed to appoint or elect the number or minimum number of directors required by this Act or the articles, the purported appointment or election of directors at the meeting
	(a) is valid if the directors purported to be appointed or elected and the incumbent directors, if any, whose terms did not expire at the close of the meeting, together consti tute a quorum; or
	(b) is null or void if the directors purported to be appointed or elected and the incum bent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.
Special meeting	(3) The articles may provide that if there is a vacancy on the board of directors, the remaining directors must call a special meet ing of the persons who are entitled to vote for the purpose of electing or appointing directors to fill the vacancy.
Absence of quorum	(4) If there is not a quorum of directors, the directors must, without delay, call a special meeting of the persons who are entitled to vote to fill the vacancy, and if they fail to do so, any person who is entitled to vote at a meeting of the cooperative may call the meeting.
Vacant board	(5) If the board of directors is vacant, any person who is entitled to vote at a meeting of the cooperative may call a special meeting to elect directors to fill the vacancies.
Deemed directors	(6) If all of the directors have resigned or been removed without replacement, a person who manages or supervises the management of the business and affairs of the cooperative is, subject to any unanimous agreement, deemed to be a director for the purposes of this Act.
Exceptions	(7) Subsection (6) does not apply to
	(a) an officer who manages the business or affairs of the cooperative under the direc tion or control of a member, shareholder or other person;
	(b) a lawyer, notary, accountant or other professional who participates in the man agement of the cooperative solely for the purpose of providing professional services; or
	(c) a trustee in bankruptcy, receiver, receiv er-manager or secured creditor who partici pates in the management of the cooperative or exercises control over its property solely for the purpose of the realization of security or the administration of a bankrupt's estate, in the case of a trustee in bankruptcy.
Class director	(8) Subject to subsection (3), if there is a vacancy in the position of a director who is to be elected by a class vote of either the members or the shareholders,
	(a) any remaining directors elected or appointed by that class may act under subsection (1); or
	(b) if there are no such remaining directors, any member of the class may act under subsection (5).
Unexpired term	(9) Unless the by-laws provide otherwise, a director who is elected or appointed to fill a vacancy holds office for the unexpired term of their predecessor in office.
Continuation in office	86. If the election of directors does not occur at the time fixed by this Act, the by-laws or a unanimous agreement, the directors then in office continue in office until their succes sors are elected.
Ceasing to hold office	87. (1) A director ceases to hold office when he or she dies, resigns, is removed from office or is no longer qualified to be a director.
Resignation date	(2) A resignation of a director becomes effective on the later of
	(a) the day a written letter of resignation is sent to the cooperative, and
	(b) the day specified in the letter of resignation.
Removal of directors	88. (1) A director may be removed from office by ordinary resolution at a special meeting of the persons who are entitled to vote in the election or appointment of that director.
Vacancy	(2) The vacancy created by the removal of a director may be filled at the meeting at which the director was removed.
Resignation statement	89. (1) A director who resigns is entitled to submit to the cooperative a written statement giving the reasons for the resignation.
Opposition statement	(2) A director who learns of
	(a) a meeting of the cooperative called for the purpose of removing the director, or
	(b) a meeting of the cooperative, or of the directors, at which another person is to be appointed or elected to succeed or replace the director,
	is entitled to attend and address the meeting, or to submit a written statement to the cooper ative, giving the reasons why the director op poses any proposed action or resolution at the meeting.
Circulation of statement	(3) When the cooperative receives a state ment under subsection (1) or (2), it must ensure that a copy of it is sent without delay to the Director and to every person who is entitled to receive notice of the meeting.
Immunity for statement	(4) No cooperative or person acting on its behalf incurs any liability by reason only of circulating a director's statement in com pliance with subsection (3).
Right to attend meetings	90. A director is entitled to receive notice of, to attend and to be heard at every meeting of the cooperative.
Notice of change	91. A cooperative, no later than fifteen days after a change among its directors or of the address of any of them, must send the Director a notice in the form that the Director fixes, setting out the change.
Place of meetings	92. (1) The directors may meet at any place unless the articles or by-laws provide other wise.
Notice of meeting	(2) Unless the by-laws provide otherwise, notice of the time and place of a meeting of directors must be given to every director by sending the notice not less than ten days before the date of the meeting to the latest address of the director as shown on the records of the cooperative.
Content of notice	93. Notice of a meeting of directors must specify the time and place of the meeting but need not specify the matter to be dealt with at the meeting, unless the matter is one listed in subsection 109(3).
Waiver of notice	94. A director may, in any manner, waive notice of a meeting of directors and atten dance at a meeting constitutes waiver of notice unless the director is attending for the purpose of objecting to the meeting on the ground that it was not lawfully called.
Adjourned meeting	95. There is no need to give notice for the continuation of a meeting of directors that is adjourned or for a meeting of directors that immediately follows an annual meeting.
Quorum	96. Unless the articles, the by-laws or a unanimous agreement provides for a greater proportion, a majority of the number or minimum number of directors, subject to section 97, constitutes a quorum at any meeting of directors or of a committee of directors, and, despite any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.
Majority	97. (1) To constitute a quorum, a majority of the directors at the meeting must be
	(a) resident in Canada; and
	(b) members of the cooperative, or repre sentatives of members that are entities or members of members that are cooperative entities.
Exception	(2) Despite subsection (1), a meeting of directors may be held without the required majority of directors who are resident in Canada if

Bill C-5

PART 7

DIRECTORS AND OFFICERS

General Provisions