Bill C-5

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	Investment Shares
Investment shares	124. (1) The articles of a cooperative may provide that the cooperative may issue investment shares, and if they do, the articles must set out the following:
	(a) whether the investment shares may be issued to non-members;
	(b) whether the number of investment shares is to be unlimited and, if not, the maximum number of investment shares that may be issued;
	(c) the number of classes of investment shares; and
	(d) the preferences, rights, conditions, restrictions, limitations and prohibitions attaching to the investment shares and, if there is to be more than one class, the designation of each class and the special preferences, rights, conditions, restrictions, limitations and prohibitions attaching to each class.
No voting rights	(2) Subject to the articles and to this Act, no right to vote at a meeting of the cooperative attaches to an investment share.
Exception	(3) The articles may provide that
	(a) an investment share confers on its holder the right to vote at an election of directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; or
	(b) the shareholders, any class of shareholders or the holders of a series of investment shares, may elect a fixed number or a percentage of the directors.
Limit on shareholders' directors	(4) Despite subsections (2) and (3), neither the articles nor a unanimous agreement may provide that the shareholders have the right to elect more than twenty per cent of the directors.
One share, one vote	(5) If shareholders are entitled to vote in accordance with subsection (3) or otherwise in accordance with this Act, each investment share entitles the holder to one vote.
Members may exercise shareholder rights if shareholders	(6) Despite section 37, a member who holds an investment share may exercise any voting right that holders of investment shares have.
No-par-value shares	125. (1) Investment shares of a cooperative must be in registered form and without a par value.
When cooperative continued	(2) Investment shares of a cooperative that is continued under this Act are deemed to be investment shares without a par value.
Shares in series	126. (1) The articles may authorize, subject to any limitations set out in them and subject to subsection (2), the issue of any class of investment shares in one or more series and may
	(a) fix the number of investment shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the investment shares of, each series; or
	(b) authorize the directors to fix the number of investment shares in, and to determine the designation, rights, privileges, restrictions and conditions attaching to the investment shares of, each series.
Member authorization	(2) No investment share may be issued until the members have authorized the principle of the issuance of investment shares.
Series participation	(3) If any cumulative dividends or amounts payable on return of capital in respect of a series of investment shares are not paid in full, the investment shares of all series of the same class must participate rateably in respect of accumulated dividends and return of capital.
Restrictions on series	(4) No rights, privileges, restrictions or conditions attached to a series of investment shares authorized under this section confer a priority in respect of dividends or return of capital on a series over any other series of investment shares of the same class that are then outstanding.
Amendment of articles	(5) If the directors exercise their authority under paragraph (1)(b), they must, before the issue of shares of the series, send to the Director articles of amendment in the form that the Director fixes to designate a series of investment shares.
Certificate of amendment	(6) On receipt of articles of amendment designating a series of shares under subsection (5), the Director must issue a certificate of amendment.
Effect of certificate	(7) The articles of the cooperative are amended accordingly on the date shown in the certificate of amendment.
Pre-emptive right	127. (1) If the articles so provide, no investment shares of any class may be issued unless the investment shares are first offered to the shareholders of that class. The shareholders of that class have a pre-emptive right to acquire the offered investment shares in proportion to their holdings of the investment shares of that class, at the price at which and on the terms on which those investment shares are to be offered to others.
Limitation	(2) Even if the articles provide the pre-emptive right referred to in subsection (1), shareholders have no pre-emptive right to acquire investment shares that are to be issued
	(a) in exchange for a thing or service other than money;
	(b) as an investment share dividend or in payment of a patronage return; or
	(c) pursuant to the exercise of conversion privileges, options or rights previously granted by the cooperative.
Commissions	128. The directors may authorize the cooperative to pay a reasonable commission to any person in consideration of the person
	(a) purchasing or agreeing to purchase investment shares from the cooperative or from some other person; or
	(b) procuring or agreeing to procure purchasers for any such investment shares.
Charge on investment shares	129. (1) Subject to subsection 183(2), the articles may provide that the cooperative has a charge on an investment share registered in the name of a shareholder or the legal representative of a shareholder for a debt of the shareholder to the cooperative, including an amount unpaid as of the date a body corporate was continued under this Act, in respect of an investment share issued by it.
Enforcement	(2) A cooperative may enforce a charge referred to in subsection (1) in accordance with its by-laws.
	Constraints
Constraints on shares	130. (1) Subject to subsection 290(3), a cooperative that has issued investment shares that are or were part of a distribution to the public, remain outstanding and are held by more than one person may, by special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to constrain
	(a) the issue or transfer of investment shares of any class or series to persons who are not resident in Canada;
	(b) the issue or transfer of investment shares of any class or series to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province
	(i) to obtain a licence to carry on a business,
	(ii) to become a publisher of a Canadian newspaper or periodical, or
	(iii) to acquire investment shares of a financial intermediary as defined in the regulations;
	(c) the issue, transfer or ownership of investment shares of any class or series to assist the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control;
	(d) the issue, transfer or ownership of any investment share to assist the cooperative to comply with
	(i) section 379 of the Trust and Loan Companies Act, or
	(ii) section 411 of the Insurance Companies Act; or
	(e) the issue, transfer or ownership of any investment share to enable the cooperative to be a registered labour sponsored venture capital corporation under Part X.3 of the Income Tax Act.
Exception in respect of paragraph (1)(c)	(2) Paragraph (1)(c) does not permit a constraint on the issue, transfer or ownership of investment shares of any class or series of which any investment shares are outstanding unless the investment shares of that class or series are already subject to a constraint permitted under that paragraph.
Limitation of prohibition of investment shares	(3) If the ownership by a person of investment shares would adversely affect the ability of a cooperative or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in paragraph (1)(c), the cooperative may, under that paragraph, limit the number of investment shares of the cooperative that may be owned, or prohibit the ownership of investment shares, by that person.
Change or removal of constraint	(4) A cooperative referred to in subsection (1) may, by a special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to change or remove any constraint on the issue, transfer or ownership of its investment shares.
Termination	(5) The directors may, if authorized by a special resolution effecting an amendment under subsection (1) or (4), revoke the resolution before it is acted on without further approval.
Regulations	(6) The Governor in Council may make regulations with respect to a cooperative that constrains the issue, transfer or ownership of its investment shares, prescribing
	(a) the disclosure required of the constraints in documents issued or published by the cooperative;
	(b) the duties and powers of the directors to refuse to issue or register transfers of investment shares in accordance with the articles;
	(c) the limitations on voting rights of any investment shares held contrary to the articles;
	(d) the powers of the directors to require disclosure of beneficial ownership of investment shares of the cooperative and the right of the cooperative and its directors, employees and agents to rely on that disclosure and the effects of that reliance; and
	(e) the rights of any person owning investment shares of the cooperative at the time of an amendment to its articles constraining investment share issues or transfers.
Validity of acts	(7) An issue or a transfer of an investment share or an act of a cooperative is valid despite any failure to comply with this section or the regulations.
Sale of constrained shares	131. (1) A cooperative that has constraints on the issue, transfer or ownership of any class of investment shares may, in accordance with any regulations, sell any of the investment shares that are owned, or that the directors determine may be owned, contrary to those constraints, as if it owned the investment shares, for the purposes of
	(a) attaining or maintaining the level of Canadian ownership or control specified in its articles or required by law to carry on a business or qualify for a benefit; or
	(b) complying 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.
Selection of shares	(2) The directors must select the investment shares to be sold under subsection (1) in good faith and in a manner that does not unfairly prejudice or disregard the interests of the holders of the investment shares in the constrained class as a whole.
Right to proceeds	(3) A person who owned an investment share that was sold under this section is divested of all interests in the investment share and is entitled to receive only the net proceeds of the sale and any net income on the proceeds.
Immunity	(4) Sections 192, 193 and 194 apply to the person referred to in subsection (3) as if the proceeds were a security and the person were a registered owner of the security.
Trust moneys	132. (1) The proceeds of a sale under section 131 are trust moneys in the hands of the cooperative for the benefit of the person who is entitled to receive them.
Handling of trust moneys	(2) Trust moneys under this section
	(a) may be commingled with other such trust moneys; and
	(b) must be invested as may be prescribed.
Costs of administration	(3) Reasonable costs of administration of trust moneys referred to in subsection (1) may be deducted from the trust moneys and any income earned on them.
Appointment of trust company	(4) Subject to this section, a cooperative may transfer any trust moneys referred to in subsection (1), and the administration of them, to a trust company in Canada registered as one under the laws of Canada or a province, and the cooperative is discharged of all further liability in respect of the trust moneys.
Discharge of cooperative and trust company	(5) A receipt signed by a person entitled under subsection 131(3) to receive the proceeds of a sale that constitute trust moneys under subsection (1) constitutes a complete discharge of the cooperative and of any trust company to which trust moneys are transferred under subsection (4), in respect of the trust moneys and income earned on them paid to the person.
Vesting in Crown	(6) Trust moneys described in subsection (1), together with any income earned on them, less any taxes and costs of administration, that has not been claimed by a person entitled under subsection 131(3) to receive the proceeds of a sale that constitute the trust moneys for a period of ten years after the date of the sale vests in Her Majesty in right of Canada.
Escheats Act applies	(7) Sections 3 to 5 of the Escheats Act apply in respect of a trust fund that vests in Her Majesty in right of Canada under subsection (6).
Election of directors	133. (1) If the holders of a class or series of investment shares of a cooperative have, under section 124, a right to elect or appoint one or more directors, or have a right to elect or appoint one or more directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled, the directors must call the following meetings for the purpose of electing or appointing the director or directors:
	(a) a special meeting of the holders of the class or series of investment shares, to be called within six months or at any earlier date that may be specified in the articles, after the date on which investment shares of the class or series are first issued or after the event has occurred or the condition has been fulfilled; and
	(b) an annual meeting of those holders for every subsequent year.
Cumulative voting	(2) If the articles so provide, directors who are to be elected by holders of investment shares may be elected by cumulative voting.
When cumulative voting	(3) If the articles provide for cumulative voting,
	(a) the articles must require a fixed number of directors to be elected by the holders of investment shares, and not a minimum and maximum number of directors;
	(b) each shareholder who is entitled to vote at an election of directors by holders of investment shares has the right to cast a number of votes equal to the number of votes attached to the investment shares held by that shareholder multiplied by the number of directors to be elected, and the shareholder may cast all the votes in favour of one candidate or distribute them among the candidates in any manner;
	(c) a separate vote of shareholders must be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single resolution;
	(d) if a shareholder has voted for more than one candidate without specifying the distribution of votes among the candidates, the shareholder is deemed to have distributed their votes equally among the candidates for whom the shareholder voted;
	(e) if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes are eliminated until the number of candidates remaining equals the number of positions to be filled;
	(f) each director ceases to hold office at the close of the first annual meeting after their election of the holders of investment shares entitled to elect that director;
	(g) a director may only be removed from office if the number of votes cast in favour of the director's removal is greater than the product of the number of directors and the number of votes cast against the motion; and
	(h) the number of directors required by the articles may only be decreased if the votes cast in favour of the motion to decrease the number of directors is greater than the product of the number of directors and the number of votes cast against the motion.
Amendment of articles	134. (1) The holders of investment shares of a class or, subject to subsection (4), of a series are, unless the articles provide otherwise in the case of an amendment referred to in paragraphs (a), (b) and (e), entitled to vote separately as a class or series on a proposal to amend the articles to

Bill C-5

Investment Shares

Constraints