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Bill C-5

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Notice of error	264. (1) A director or officer of a coopera tive shall, without delay, notify the auditor and the audit committee, if any, of any error or misstatement of which the director or officer becomes aware in a financial statement that the auditor or a former auditor has reported on.
Errors in financial statements	(2) If the auditor or former auditor of a cooperative is notified or becomes aware of an error or misstatement in a financial statement on which the auditor or former auditor has reported, and if in their opinion the error or misstatement is material, the auditor or former auditor must inform each director according ly.
Duty of directors	(3) When under subsection (2) the auditor or former auditor informs the directors of an error or misstatement in a financial statement, the directors shall
	(a) prepare and issue revised financial statements; or
	(b) otherwise inform the members and shareholders and, if the cooperative is one that is required to comply with section 252, inform the Director of the error or misstate ment in the same manner as it informs the members.
Qualified privilege	265. Any oral or written statement or report made under this Act by the auditor or former auditor of a cooperative has qualified privi lege.
	PART 14
	TRUST INDENTURES
	Interpretation
Definitions	266. The definitions in this section apply in this Part.
``event of default'' « cas de défaut »	``event of default'' means, in relation to a trust indenture, an event specified in the trust in denture on the occurrence of which the prin cipal, interest and other money payable un der the trust indenture become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period for giving the notice has elapsed.
``guarantor'' « caution »	``guarantor'' means a person that has guaran teed an obligation of an issuer under a trust indenture.
``issuer'' « émetteur »	``issuer'' means a cooperative that has issued, is about to issue or is in the process of issu ing debt obligations.
``trustee'' « fiduciaire »	``trustee'' means a person appointed as trustee under the terms of a trust indenture to which a cooperative is a party, and includes a suc cessor trustee.
``trust indenture'' « acte de fiducie »	``trust indenture'' means a deed, indenture or other document, including a supplement or amendment to such a document, made by a cooperative under which the cooperative is sues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations issued under it.
	Application
Application	267. (1) This Part applies to a trust indenture if the debt obligations issued or to be issued under it are part of a distribution to the public.
Exemptions	(2) The Director may, in writing, exempt a trust indenture from the application of this Part if, in the Director's opinion, the trust indenture and the debt obligations under it are subject to a law of another jurisdiction that is substantially equivalent to the provisions of this Act relating to trust indentures.
	General
Conflict of interests	268. (1) No person may be appointed as trustee if there is a material conflict of interests between the person's role as trustee and any other role of the person.
Eliminating conflict of interests	(2) A trustee must, no later than ninety days after the trustee becomes aware that a material conflict of interests exists,
	(a) eliminate the conflict of interests; or
	(b) resign from office.
Validity despite conflict	269. A trust indenture, any debt obligations issued under it and the security interest effected by them are valid even if there is a material conflict of interests of the trustee.
Removal of trustee	270. If a trustee is appointed in contraven tion of subsection 268(1) or if a trustee contravenes subsection 268(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on any terms that it thinks fit.
Trustee application	271. A trustee, or at least one of the trustees if more than one is appointed, must be a trust company incorporated under the laws of Canada or a province and authorized to carry on business as a trustee.
List of security holders	272. (1) A holder of debt obligations issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, no later than fifteen days after the delivery to the trustee of the statutory declaration, a list setting out the following information, as shown on the re cords maintained by the trustee on the day the statutory declaration is delivered to the trust ee:
	(a) the names and addresses of the regis tered holders of the outstanding debt ob ligations;
	(b) the principal amount of outstanding debt obligations of each such holder; and
	(c) the total principal amount of debt obligations outstanding.
Duty of issuer	(2) On the demand of a trustee, the issuer must provide the trustee with the information required to enable the trustee to comply with subsection (1).
When applicant is entity	(3) If the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection may be made by a director or an officer of the entity or a person acting in a similar capacity.
Contents of statutory declaration	(4) The statutory declaration must state
	(a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, its address for service; and
	(b) that the list will not be used except as permitted by subsection (5).
Use of list	(5) No person shall use a list obtained under this section except in connection with
	(a) an effort to influence the voting of the holders of debt obligations;
	(b) an offer to acquire debt obligations; or
	(c) any other matter relating to the debt obligations or the affairs of the issuer or guarantor of them.
Compliance with trust indentures	273. (1) An issuer or a guarantor of a debt obligation issued or to be issued under a trust indenture must provide the trustee with evi dence of compliance with the conditions in the trust indenture before undertaking
	(a) the issue, certification and delivery of debt obligations under the trust indenture;
	(b) the release, or release and substitution, of property subject to a security interest constituted by the trust indenture; or
	(c) the satisfaction and discharge of the trust indenture.
Compliance by issuer or guarantor	(2) On the demand of a trustee, the issuer or guarantor must provide the trustee with evi dence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.
Evidence of compliance	(3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):
	(a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;
	(b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been com plied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and
	(c) an opinion or report of the auditors of the issuer or guarantor, or any other accountant that the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires com pliance with conditions that are subject to review by auditors or accountants.
Further evidence of compliance	(4) The evidence of compliance described in subsection (3) must include a statement by the person giving the evidence
	(a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);
	(b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and
	(c) declaring that the person has made any examination or investigation that the person believes necessary to enable the statements to be made or the opinions contained or expressed in the statement to be given.
Trustee may require evidence	274. (1) On request of a trustee, the issuer or guarantor must provide the trustee with evi dence in any form that the trustee requires of compliance with any condition relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.
Certificate of compliance	(2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor must provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust inden ture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars of the failure.
Notice of default	275. A trustee must, no later than thirty days after the trustee becomes aware of the occur rence of an event of default, give to the holders of debt obligations issued under a trust indenture notice of every event of default arising under the trust indenture and continu ing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs the issuer and guarantor in writing.
Duty	276. (1) In exercising powers and discharg ing duties, the trustee must
	(a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and
	(b) exercise the care, diligence and skill of a reasonably prudent trustee.
Reliance on statements	(2) Despite subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declara tion, certificate, opinion or report that com plies with this Act or the trust indenture.
No exculpation	277. No term of a trust indenture or of an agreement between a trustee and the holders of debt obligations issued under the indenture or agreement or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by this Part.
	PART 15
	RECEIVERS AND RECEIVER-MANAGERS
Functions of receiver	278. (1) Subject to the rights of secured creditors, a receiver of any property of a cooperative may
	(a) receive the income from the property and pay the liabilities connected with it; and
	(b) realize the security interest of those on whose behalf the receiver is appointed.
If receiver not manager	(2) Despite subsection (1) but subject to any order that the court may make under section 282, a receiver who is not appointed manager of the cooperative may not carry on the business of the cooperative.
Functions of receiver- manager	279. Despite section 278, if a receiver of a cooperative is also appointed manager of the cooperative, the receiver may carry on any business of the cooperative to protect the security interest of those on whose behalf he or she was appointed.
Directors' powers cease	280. If a receiver or receiver-manager is appointed by a court or pursuant to an instrument, no director shall exercise the directors' powers that the receiver or receiver- manager is authorized to exercise until the receiver or receiver-manager is discharged.
If receiver appointed by court	281. (1) A receiver or receiver-manager appointed by a court must act in accordance with any directions of the court.
If receiver appointed pursuant to instrument	(2) A receiver or receiver-manager ap pointed pursuant to an instrument must act in accordance with the instrument and any direction that the court may make under section 282.
Duty	(3) A receiver or receiver-manager must
	(a) act honestly and in good faith; and
	(b) deal with any property of the coopera tive in their possession or control in a commercially reasonable manner.
Directions given by court	282. (1) A court may, on the application of a receiver or receiver-manager appointed by a court or pursuant to a document, or any other interested person, make any order giving directions on any matter relating to the duties of the receiver or receiver-manager appointed by it or pursuant to a document that it considers appropriate, including an order
	(a) appointing, replacing or discharging a receiver or receiver-manager and approv ing the accounts of the receiver or receiver- manager;
	(b) determining the notice to be given to any person or dispensing with notice to any person;
	(c) fixing the remuneration of the receiver or receiver-manager;
	(d) requiring the receiver or receiver-man ager, or a person by or on behalf of whom the receiver or receiver-manager was ap pointed, to make good any default in connection with the receiver's or receiver- manager's custody or management of the property and business of the cooperative, or relieving a receiver or receiver-manager, or a person by or on behalf of whom a receiver or receiver-manager was appointed, from any default on any terms that the court considers appropriate;
	(e) confirming any act of the receiver or receiver-manager; and
	(f) giving directions on any other matter relating to the duties of the receiver or receiver-manager.
Required action	283. A receiver or receiver-manager must
	(a) take the property of the cooperative into custody and control in accordance with the court order or instrument pursuant to which the receiver or receiver-manager is ap pointed;
	(b) open and maintain a bank account as receiver or receiver-manager of the cooper ative for the money of the cooperative coming under their control;
	(c) keep detailed accounts of all transac tions carried out as receiver or receiver- manager;
	(d) keep accounts of the administration as receiver or receiver-manager and cause them to be made available during usual business hours for inspection by the direc tors;
	(e) prepare, at least once in every six month period after the day of appointment, finan cial statements of the administration, as far as is feasible, in the form required by section 247;
	(f) on completion of their duties, render a final account of the administration in the form that the receiver or receiver-manager has adopted for preparation of interim accounts under paragraph (e); and
	(g) if section 252 would otherwise apply, file with the Director a copy of any financial statement mentioned in paragraph (e) and any final account mentioned in paragraph (f) not later than fifteen days after it is prepared or rendered.

Bill C-5

PART 14

TRUST INDENTURES

Interpretation

Application

General

PART 15

RECEIVERS AND RECEIVER-MANAGERS