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Bill C-5

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	PART 13
	FINANCIAL DISCLOSURE
Annual financial statements to members	247. (1) Subject to section 248, the directors must place before the members at every annual meeting of members
	(a) comparative financial statements as may be prescribed relating separately to
	(i) the period that began on the date the cooperative came into existence and ended not more than six months before the annual meeting or, if the cooperative has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting, and
	(ii) the immediately preceding financial year;
	(b) the report of the auditor, if any; and
	(c) any further information respecting the financial position of the cooperative and the results of its operations required by the articles, the by-laws or a unanimous agreement.
Annual financial statements to shareholders	(2) If shareholders have a right to have an annual meeting under subsection 133(1), the directors must place the documents described in subsection (1) before the shareholders at every annual meeting of shareholders.
Exception	(3) Despite paragraph (1)(a) and subsection (2), the financial statements referred to in subparagraph (1)(a)(ii) may be omitted if the reason for the omission is set out in the financial statements, or in a note to those statements, to be placed before the members at an annual meeting of members and, in a case to which subsection (2) applies, the shareholders at an annual meeting of shareholders.
Exemption	248. The Director may, on application of a cooperative, authorize the cooperative to omit from its financial statements any prescribed item, and the Director may, if the Director reasonably believes that disclosure of any information to be contained in the statements would be detrimental to the cooperative, permit the omission on any reasonable conditions that the Director thinks fit.
Consolidated statements	249. (1) A cooperative must keep at its registered office a copy of the financial statements of each of its subsidiaries and of each entity the accounts of which are consolidated in its financial statements.
Examination	(2) The members and shareholders of a cooperative and their agents, mandataries and legal representatives may on request examine the statements referred to in subsection (1) during the usual business hours of the cooperative and may take extracts from them free of charge.
Barring examination	(3) A cooperative may, not later than fifteen days after a request to examine under subsection (2), apply to a court for an order barring the right of any person to so examine, and the court may, if it is satisfied that the examination would be detrimental to the cooperative or a subsidiary, bar the right and make any further order it thinks fit.
Notice	(4) A cooperative must give the person requesting to examine under subsection (2) notice of an application under subsection (3), and the person may appear and be heard in person or by counsel.
Approval of financial statements	250. (1) The directors must approve the financial statements referred to in section 247 and the approval is evidenced by the manual signature of one or more directors, or a facsimile of the signatures reproduced on the statements.
Condition precedent	(2) A cooperative may not issue, publish or circulate copies of the financial statements referred to in section 247 unless they are
	(a) approved and signed in accordance with subsection (1); and
	(b) accompanied by the report of the auditor of the cooperative, if any.
Copies to shareholders	251. A cooperative shall send a copy of the documents referred to in section 247 to each member and shareholder, except to a member or shareholder who has informed the cooperative in writing that they do not want a copy of the documents,
	(a) not less than twenty-one days before each annual meeting of members;
	(b) not less than twenty-one days before each annual meeting of shareholders, if subsection 247(2) applies; or
	(c) not later than a resolution in lieu of an annual meeting is signed under section 66.
Copies of financial statements to Director	252. (1) If any of the securities that were part of a public distribution are outstanding and are held by more than one person, a distributing cooperative must, not less than twenty-one days before each annual meeting of members, or without delay after a resolution referred to in paragraph 251(c) is signed, and in any event not later than fifteen months after the last preceding annual meeting of members was held or the resolution referred to in paragraph 251(c) in lieu of that meeting was signed, send a copy of the documents referred to in section 247 to the Director.
Subsidiary cooperative	(2) A subsidiary cooperative is not required to comply with this section if its financial statements are consolidated or combined with those of its holding cooperative entity and the statements of its holding cooperative entity are sent to the Director in compliance with this section.
Qualifications of auditor	253. (1) Subject to subsection (5), a person is disqualified from being an auditor of a cooperative if the person is not independent of the cooperative, of any of its affiliates or of the directors or officers of the cooperative or its affiliates.
Independence	(2) For the purposes of this section,
	(a) independence is a question of fact; and
	(b) a person is deemed not to be independent if the person, or another person with whom the person is in business,
	(i) is a director, officer or employee of the cooperative or any of its affiliates, is in business with the cooperative or any of its affiliates, or is in business with a director, officer or employee of the cooperative or any of its affiliates,
	(ii) beneficially owns or controls, directly or indirectly, a material interest in the securities of the cooperative or any of its affiliates, or
	(iii) has been a receiver, receiver-manager, liquidator or trustee in bankruptcy of the cooperative or any of its affiliates within two years of the proposed appointment of the person as auditor of the cooperative.
Duty to resign	(3) An auditor who becomes disqualified under this section must, subject to subsection (5), resign without delay after becoming aware of the disqualification.
Disqualificati on order	(4) Any interested person may apply to a court for an order declaring an auditor to be disqualified under this section and the office of auditor to be vacant.
Exemption order	(5) Any interested person may apply to a court for an order exempting an auditor from disqualification under this section and the court may, if it is satisfied that an exemption would not unfairly prejudice the members or shareholders, make an exemption order on any terms that it thinks fit. The order may have retrospective effect.
Appointment of auditor	254. (1) Subject to section 255, the members must, by ordinary resolution, at the first annual meeting of members and at each subsequent annual meeting, appoint an auditor to hold office until the close of the next annual meeting.
Eligibility	(2) An auditor appointed under section 82 is eligible for appointment under subsection (1).
Incumbent auditor	(3) Despite subsection (1), if an auditor is not appointed at a meeting of members, the incumbent auditor continues in office until a successor is appointed.
Remuneration	(4) The remuneration of an auditor may be fixed by ordinary resolution of the members or, if not so fixed, may be fixed by the directors.
Dispensing with auditor	255. (1) A cooperative that is not required to comply with section 252 may resolve not to appoint an auditor by
	(a) special resolution of the members; and
	(b) special resolution of all shareholders, including those who do not otherwise have the right to vote.
Limitation	(2) A resolution under subsection (1) is valid only until the next annual meeting of members.
Ceasing to hold office	256. (1) An auditor of a cooperative ceases to hold office when the auditor dies, resigns or is removed under section 257.


Effective date of resignation	(2) A resignation of an auditor becomes effective on the date on which a written resignation is sent to the cooperative, or on the date specified in the resignation, whichever is later.
Removal of auditor	257. (1) The members may by ordinary resolution at a special meeting remove the auditor from office, unless the auditor was appointed by a court under section 259.
Vacancy	(2) A vacancy created by the removal of an auditor may be filled at the meeting at which the auditor is removed or, if not so filled, may be filled under section 258.
Filling vacancy	258. (1) Subject to subsection (3), the directors must fill a vacancy in the office of auditor without delay after it occurs.
Calling meeting	(2) If there is not a quorum of directors, the directors then in office must, not later than twenty-one days after a vacancy in the office of auditor occurs, call a special meeting of members to fill the vacancy and, if they fail to call a meeting or if there are no directors, the meeting may be called by any member.
Members filling vacancy	(3) The by-laws of a cooperative may provide that a vacancy in the office of auditor may only be filled by vote of the members.
Unexpired term	(4) An auditor appointed to fill a vacancy holds office for the unexpired term of their predecessor.
Court appointed auditor	259. (1) If a cooperative does not have an auditor, the court may, on the application of a member or shareholder, appoint and fix the remuneration of an auditor who holds office until an auditor is appointed by the members.
Exception	(2) Subsection (1) does not apply if a resolution made under section 255 not to appoint an auditor is in effect.
Right to attend meeting	260. (1) The auditor of a cooperative is entitled to receive notice of every meeting of the cooperative and, at the expense of the cooperative, to attend and be heard at the meetings on matters relating to the auditor's duties.
Duty to attend	(2) If a director or member of a cooperative, whether or not the member is entitled to vote at the meeting, or a shareholder that is entitled to vote at that meeting of shareholders, gives written notice not less than ten days before a meeting of the cooperative to the auditor or a former auditor of the cooperative, the auditor or former auditor shall attend the meeting at the expense of the cooperative and answer questions relating to the auditor's duties.
Notice to cooperative	(3) A director, member or shareholder who sends a notice referred to in subsection (2) must send a copy of the notice to the cooperative at the same time.
Statement of auditor	(4) An auditor is entitled to submit to the cooperative a written statement giving the reasons for the auditor's resignation or the reasons why the auditor opposes a proposed action or resolution set out in any of paragraphs (a) to (d), in any of the following situations:
	(a) the auditor resigns;
	(b) the auditor receives a notice or otherwise learns of a meeting of members called for the purpose of removing the auditor from office;
	(c) the auditor receives a notice or otherwise learns of a meeting of directors or members at which another person is to be appointed to fill the office of auditor, whether because of the resignation or removal of the incumbent auditor or because the term of office of the incumbent auditor has expired or is about to expire; or
	(d) the auditor receives a notice or otherwise learns of a meeting at which a resolution referred to in section 255 is to be proposed.
Other statements	(5) In the case of a proposed replacement of an auditor, whether through removal or at the end of the auditor's term, the following rules apply with respect to other statements:
	(a) the cooperative must make a statement on the reasons for the proposed replacement; and
	(b) the proposed replacement auditor may make a statement in which he or she comments on the reasons referred to in paragraph (a).
Circulating statement	(6) The cooperative must send a copy of the statements referred to in subsections (4) and (5) without delay to every person who is entitled to receive notice of a meeting referred to subsection (1) and to the Director.
Replacing auditor	(7) No person may accept appointment or consent to be appointed as auditor of a cooperative if the person is replacing an auditor who has resigned or been removed or whose term of office has expired or is about to expire until the person has requested and received from that auditor a written statement of the circumstances and the reasons why, in that auditor's opinion, the auditor is to be replaced.
Exception	(8) Despite subsection (7), a person otherwise qualified may accept appointment or consent to be appointed as auditor of a cooperative if, no later than fifteen days after making the request referred to in that subsection, the person does not receive a reply.
Effect of non-complian ce	(9) Unless subsection (8) applies, an appointment as auditor of a cooperative of a person who has not complied with subsection (7) is null or void.
Examination	261. (1) An auditor of a cooperative must make any examination that is in the auditor's opinion necessary to enable the auditor to report in the manner that may be prescribed on the financial statements required by this Act to be placed before the members or shareholders, except any financial statements or parts of statements that relate to the period referred to in subparagraph 247(1)(a)(ii).
Reliance on other auditor	(2) Despite section 262, an auditor of a cooperative may reasonably rely on the report of an auditor of an entity the accounts of which are included in whole or in part in the financial statements of the cooperative.
Application	(3) Subsection (2) applies whether or not the financial statements of the cooperative reported on by the auditor are in consolidated form.
Right to information	262. (1) On the demand of an auditor of a cooperative, the present or former directors, officers, employees or agents or mandataries of the cooperative must provide any information and explanations, and access to any documents of the cooperative or any of its subsidiaries that are, in the opinion of the auditor, necessary to enable the auditor to make the examination and report required under section 261 and that they are reasonably able to provide.


Other information	(2) On the demand of the auditor of a cooperative, the directors must obtain from the present or former directors, officers, employees and agents or mandataries of any subsidiary of the cooperative the information and explanations that the present or former directors, officers, employees and agents or mandataries are reasonably able to provide and that are, in the auditor's opinion, necessary to enable the auditor to make the examination and report required under section 261 and provide them to the auditor.


No civil liability	(3) A person who in good faith makes an oral or written communication under subsection (1) or (2) is not liable in any civil action arising from having made the communication.
Audit committee	263. (1) Subject to subsection (2), a distributing cooperative must, and any other cooperative may, have an audit committee composed of not fewer than three directors, a majority of whom are not full-time officers or employees of the cooperative or any of its affiliates.
Exemption	(2) The Director may, on application of a cooperative, authorize the cooperative to dispense with an audit committee and the Director may, if satisfied that the members and shareholders will not be prejudiced, permit the cooperative to dispense with an audit committee on any reasonable conditions that the Director thinks fit.
Duty of committee	(3) An audit committee must review the financial statements of the cooperative before they are approved under section 250.
Auditor's attendance	(4) The auditor of a cooperative is entitled to receive notice of every meeting of the audit committee and, at the expense of the cooperative, to attend and be heard at the meeting. If requested to do so by a member of the audit committee, the auditor must attend every meeting of the committee held during the auditor's term of office.
Calling meeting	(5) The auditor of a cooperative or a member of the audit committee may call a meeting of the committee.

Bill C-5

PART 13

FINANCIAL DISCLOSURE