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Bill C-5

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PART 17

LIQUIDATION AND DISSOLUTION

Definition of ``court''

306. In this Part, ``court'' means a court having jurisdiction in the place where the cooperative has its registered office.

Application of Part

307. (1) This Part, other than sections 311 to 313, does not apply to a cooperative that is insolvent within the meaning of the Bankrupt cy and Insolvency Act or that is a bankrupt within the meaning of that Act.

Staying of proceedings

(2) Any proceedings taken under this Part to dissolve or to liquidate and dissolve a cooper ative are stayed if the cooperative is at any time found, in a proceeding under the Bank ruptcy and Insolvency Act, to be insolvent within the meaning of that Act.

Revival

308. (1) When a cooperative is dissolved under this Part, any interested person, or any person who would be an interested person if a certificate of revival is issued under this section, may apply to the Director to have the cooperative revived under this Act.

Articles of revival

(2) Articles of revival in the form that the Director fixes must be sent to the Director, together with a declaration of the directors to the same effect as one referred to in paragraph 10(d) and, if applicable, in paragraph 10(e).

Certificate of revival

(3) On receipt of articles of revival, the Director must issue a certificate of revival, unless the Director is of the opinion that issuing the certificate

    (a) would result in the cooperative

      (i) no longer being organized or operat ing or carrying on business on a coopera tive basis,

      (ii) if the cooperative is one to which Part 20 applies, not complying with Part 20, and

      (iii) if the cooperative is one to which Part 21 applies, not complying with Part 21; or

    (b) would not be advisable for any other valid reason.

Reliance on declarations

(4) For the purpose of subsection (3), the Director may rely on the articles of revival and the declarations referred to in subsection (2).

Date of revival

(5) A cooperative is revived under this Act on the date shown on the certificate of revival.

Rights preserved

(6) In the same manner and to the same extent as if it had not been dissolved, but subject to any reasonable terms that may be imposed by the Director and to the rights acquired by any person after its dissolution, the revived cooperative is

    (a) restored to its previous position in law, including the restoration of all its property whether acquired before its dissolution or after its dissolution and before its revival, and any rights and privileges whether arising before its dissolution or after its dissolution and before its revival; and

    (b) liable for the obligations that it would have had if it had not been dissolved whether they arise before its dissolution or after its dissolution and before its revival.

Legal actions

(7) Any legal action respecting the affairs of a revived cooperative, other than those with its affiliates, taken between the time of its dissolution and its revival is valid and effec tive.

Dissolution if no property and no liability

309. (1) A cooperative that has no property and no liabilities may be dissolved by a special resolution of the members and, if the coopera tive has issued investment shares, by a sepa rate special resolution of the shareholders of each class, whether or not they are otherwise entitled to vote.

Dissolution if property disposed of

(2) A cooperative that has property or liabilities, or both, may be dissolved by a special resolution of the members and, if the cooperative has issued investment shares, by a separate special resolution of the sharehold ers of each class, whether or not they are otherwise entitled to vote, if

    (a) by the special resolution or resolutions they authorize the directors to cause the cooperative to distribute property and dis charge liabilities; and

    (b) the cooperative has distributed property and discharged liabilities before it sends articles of dissolution to the Director under subsection (3).

Articles of dissolution

(3) Articles of dissolution in the form that the Director fixes must be sent to the Director.

Certificate of dissolution

(4) On receipt of articles of dissolution, the Director must issue a certificate of dissolu tion.

Effect of certificate

(5) The cooperative ceases to exist on the date shown in the certificate of dissolution.

Proposing liquidation and dissolution

310. (1) The directors may propose, or a member may, in accordance with section 58, make a proposal for, the voluntary liquidation and dissolution of a cooperative.

Notice of meeting

(2) Notice of any meeting of the coopera tive at which voluntary liquidation and dis solution is to be proposed must set out the terms of the proposal.

Approval

(3) A cooperative may liquidate and dis solve by a special resolution of the members and, if the cooperative has issued investment shares, by a separate special resolution of the shareholders of each class, whether or not they are otherwise entitled to vote.

Statement of intent to dissolve

(4) A statement of intent to dissolve in the form that the Director fixes must be sent to the Director.

Certificate of intent to dissolve

(5) On receipt of a statement of intent to dissolve, the Director must issue a certificate of intent to dissolve.

Effect of certificate

(6) On the issue of a certificate of intent to dissolve, the cooperative must cease to carry on business except to the extent necessary for the liquidation, but its corporate existence continues until the Director issues a certificate of dissolution.

Liquidation

(7) After the issue of a certificate of intent to dissolve, the cooperative must, without delay,

    (a) cause a notice to be sent to each known creditor of the cooperative;

    (b) proceed to collect its property, dispose of properties that are not to be distributed in kind to its members or shareholders, dis charge all its obligations and do all other acts required to liquidate its business; and

    (c) after giving the notice required under paragraph (a) and adequately providing for the payment or discharge of all its obliga tions, but subject to the articles and Parts 20 and 21, distribute its remaining property among its members and shareholders, if any, according to their respective rights.

Supervision by court

(8) Any interested person may, at any time during the liquidation of a cooperative, apply to a court for an order that the liquidation be continued under the supervision of the court as provided in this Part, and on the application the court may so order and make any further order it thinks fit.

Notice to Director

(9) An applicant under this section must give the Director notice of the application.

Revocation

(10) At any time after issue of a certificate of intent to dissolve and before issue of a certificate of dissolution, a certificate of intent to dissolve may be revoked by sending the Director a statement of revocation of intent to dissolve in the form that the Director fixes, if the revocation is approved in the same manner as the resolution under subsection (3).

Certificate of revocation of intent to dissolve

(11) On receipt of a statement of revocation of intent to dissolve, the Director must issue a certificate of revocation of intent to dissolve.

Effect of certificate

(12) On the date shown in the certificate of revocation of intent to dissolve, the revocation is effective and the cooperative may continue to carry on its business or businesses.

Articles of dissolution

(13) If a certificate of intent to dissolve has not been revoked and the cooperative has complied with subsection (7), articles of dissolution in the form that the Director fixes must be sent to the Director.

Certificate of dissolution

(14) On receipt of articles of dissolution, the Director must issue a certificate of dissolu tion.

Effect of certificate

(15) The cooperative ceases to exist on the date shown in the certificate of dissolution.

Dissolution by Director

311. (1) Subject to subsections (2) and (3), the Director may dissolve a cooperative by issuing a certificate of dissolution under this section if the cooperative

    (a) has not commenced business within three years after the date shown in its certificate of incorporation;

    (b) has not carried on its business for three consecutive years;

    (c) is in default for a period of one year in sending the Director any fee, notice or document required by this Act; or

    (d) if the cooperative is in the situation described in subsection 85(6).

Publication

(2) The Director may not dissolve a cooper ative under this section until

    (a) one hundred and twenty days have elapsed since notice of intent to dissolve has been given to the cooperative and to each of its directors; and

    (b) notice of intent to dissolve the coopera tive has been published in a publication generally available to the public.

Certificate of dissolution

(3) Unless cause to the contrary has been shown or an order has been made by a court under section 315, the Director may, after the end of the one hundred and twenty days referred to in subsection (2), issue a certificate of dissolution.

Effect of certificate

(4) The cooperative ceases to exist on the date shown in the certificate of dissolution.

Grounds for dissolution

312. (1) Any interested person may apply to a court for an order dissolving a cooperative if the cooperative has

    (a) except if a unanimous agreement con tains a provision that eliminates the need for meetings of shareholders referred to in subsection 115(6), failed for two or more consecutive years to comply with the requirements of this Act with respect to the holding of annual meetings;

    (b) contravened section 18, subsection 27(2) or section 31, 247 or 249; or

    (c) procured any certificate under this Act by misrepresentation.

Notice to director

(2) An applicant under this section must give the Director notice of the application.

Dissolution order

(3) On an application under this section, the court may order that the cooperative be dissolved or that it be liquidated and dissolved under the supervision of the court, and the court may make any other order it thinks fit.

Certificate

(4) On receipt of an order under this section or section 313, the Director must

    (a) if the order is to dissolve the coopera tive, issue a certificate of dissolution in the form that the Director fixes; or

    (b) if the order is to liquidate and dissolve the cooperative under the supervision of the court, issue a certificate of intent to dissolve in the form that the Director fixes and publish notice of the order in a publication generally available to the public.

Effect of certificate

(5) The cooperative ceases to exist on the date shown in the certificate of dissolution.

Further grounds

313. (1) A court may order the liquidation and dissolution of a cooperative or any of its affiliates on the application of a member or a shareholder if the court is satisfied

    (a) that the cooperative no longer carries on business or is no longer organized or operating on a cooperative basis;

    (b) that an act or omission of the coopera tive or any of its affiliates effects a result, that the business or affairs of the coopera tive or any of its affiliates are or have been carried on or conducted in a manner, or that the powers of the directors of the coopera tive or any of its affiliates are or have been exercised in a manner, that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, a member, shareholder, security holder, creditor, direc tor or officer; or

    (c) that events have occurred that entitle a member or shareholder, in accordance with a unanimous agreement, to demand that the cooperative be dissolved or that it is just and equitable that the cooperative be liquidated and dissolved.

Alternate order

(2) On an application under this section, a court may make any order under this section or section 340 that it thinks fit.

Application of section 341

(3) Section 341 applies to an application under this section.

Application for supervision

314. (1) An application to a court to supervise a voluntary liquidation and dissolu tion under subsection 310(8) must state the reasons, verified by an affidavit of the appli cant, why the court should supervise the liquidation and dissolution.

Court supervision

(2) If a court makes an order applied for under subsection 310(8), the liquidation and dissolution of the cooperative continues under the supervision of the court in accordance with this Act.

Application to court

315. (1) An application to a court under subsection 313(1) must state the reasons, verified by an affidavit of the applicant, why the cooperative should be liquidated and dissolved.

Show cause order

(2) On an application under subsection 313(1), the court may make an order requiring the cooperative and any person who has an interest in it or claim against it to show cause, at a specified time and place, not less than four weeks after the date of the order, why the cooperative should not be liquidated and dissolved.

Powers of court

(3) On an application under subsection 313(1), the court may order the directors and officers of the cooperative to provide the court with all material information known to or reasonably ascertainable by them, including

    (a) financial statements of the cooperative;

    (b) the name and address of each member and shareholder; and

    (c) the name and address of each known creditor or claimant, including any creditor or claimant with unliquidated, future or contingent claims, and any person with whom the cooperative has a contract.

Publication

(4) A copy of an order made under subsec tion (2) must be

    (a) published as directed in the order, at least once in each week before the time appointed for the hearing, in a publication generally available to the public; and

    (b) served on the Director and each person named in the order.

Person responsible

(5) Publication and service of an order under this section must be effected by the cooperative or by any other person and in any manner that the court may order.

Powers of court

316. In connection with the liquidation and dissolution of a cooperative, the court may, if it is satisfied that the cooperative is able to pay or adequately provide for the discharge of all its obligations, make any order it thinks fit, including an order

    (a) to liquidate;

    (b) appointing a liquidator, with or without security, and fixing their remuneration, or replacing a liquidator;

    (c) appointing inspectors or referees, speci fying their powers and fixing their remuner ation, or replacing inspectors or referees;

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