Bill C-5

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	Incorporation
Issuance of certificate of incorporation	12. (1) The Director must issue a certificate of incorporation for a cooperative if the Director is satisfied that
	(a) the articles are in accordance with section 11 and, if applicable, section 353 and subsection 359(2);
	(b) the cooperative will be organized and operated and will carry on business on a cooperative basis; and
	(c) the cooperative will comply with Part 20 or 21, if applicable.
Reliance on certificate	(2) For the purposes of paragraphs (1)(b) and (c), the Director may rely on the articles and the declarations required by section 10.
Date of existence and effect	13. On the day set out in its certificate of incorporation, a cooperative comes into existence and the incorporators become members of the cooperative.
	By-laws
Adoption of by-laws	14. Without delay after the issuance of the certificate of incorporation, a meeting of the members must be held to make by-laws for the cooperative.
By-laws - mandatory provisions	15. (1) The by-laws of a cooperative must provide for
	(a) the qualifications of members and the procedures for acceptance of members;
	(b) the rights of joint members, if any;
	(c) the membership obligations of members, including any obligation to use the services of the cooperative and any fees to be paid by members;
	(d) if the cooperative has auxiliary members, the rights and obligations of auxiliary members and the conditions for their acceptance by the cooperative as auxiliary members, including
	(i) the relationship an individual must have with the cooperative in order to be an auxiliary member, and
	(ii) the services of the cooperative that may be available to auxiliary members;
	(e) whether the interest of a member in the cooperative may, subject to section 46, be transferred or assigned, and any conditions or restrictions that apply to such a transfer or assignment;
	(f) the selection, qualifications, term of office and removal of directors and members of committees of directors;
	(g) the distribution of any surplus earnings arising from the operations of the cooperative;
	(h) if the cooperative is to act as an agent or mandatary for its members, a definition of that relationship;
	(i) subject to sections 39 and 40 and Parts 20 and 21, the conditions on which membership is terminated, whether by withdrawal or by involuntary termination, if it may be terminated otherwise than as provided for in this Act, and the determination of the value and disposition of the member's interest in the cooperative on termination; and
	(j) if the cooperative wishes to permit members or shareholders to attend a meeting of the cooperative by means of a communication facility referred to in subsection 48(3), the ways in which votes must be held.
By-laws - other provisions	(2) The by-laws of a cooperative may provide for
	(a) the representation of members by delegates and, if so,
	(i) the designation of the classes of members, if any, who may be represented by delegates,
	(ii) the procedure for altering classes of members, if applicable, and
	(iii) the powers, duties, selection, voting rights and procedures for the removal of delegates;
	(b) the division of members into classes and, if so,
	(i) the qualifications for membership in each class,
	(ii) the conditions precedent to membership in each class,
	(iii) the method, time and manner of withdrawing from a class or transferring membership from one class to another and any applicable conditions on a transfer, and
	(iv) the conditions on which membership in a class ends;
	(c) the referral of disputes between a member and the cooperative to a process of dispute resolution; and
	(d) any other matter that the members consider necessary or desirable.
Binding effect of by-laws and articles	16. The articles and by-laws of a cooperative bind it and its members to the same extent as if they
	(a) had been signed by the cooperative and every member; and
	(b) contained undertakings by every member and the successors, assigns, mandataries and legal representatives of every member to observe all the provisions of the articles and by-laws.
Copies	17. (1) Each member and shareholder may on request, not more than once in each calendar year, receive free of charge one copy of the articles, the by-laws and any unanimous agreement, and one copy of any amendments to the articles, the by-laws and any unanimous agreement, of the cooperative.
Copies	(2) The cooperative must provide each creditor, and, where the cooperative is a distributing cooperative, any other person, on payment of a reasonable fee, with a copy of the articles, the by-laws and any unanimous agreement of the cooperative.
	Cooperative Basis
Cooperative basis	18. (1) Every cooperative must be organized and operated and must carry on business on a cooperative basis.
Complaint	(2) A person may make an application to the court in accordance with section 329 if the person has a complaint that
	(a) a cooperative is not organized, operated or carrying on business on a cooperative basis; or
	(b) in the case of a cooperative to which Part 20 or 21 applies, the cooperative is not complying with the applicable Part.
	Pre-incorporation Contracts
Pre-incorporat ion contracts	19. (1) Subject to this section, a person who enters into, or purports to enter into, a written contract in the name of or on behalf of a cooperative before it comes into existence is personally bound by the contract and is entitled to its benefits, unless the contract expressly provides otherwise.
Adoption by cooperative	(2) A cooperative may, within a reasonable time after it comes into existence, adopt a contract that was made in its name or on its behalf before it came into existence by any act or conduct that signifies the cooperative's intention to be bound by the contract.
Effect of adoption	(3) If a cooperative adopts a contract under this section,
	(a) the cooperative is bound by the contract and entitled to its benefits as of the date of the contract; and
	(b) the person who originally entered into the contract ceases to be bound by the contract or to be entitled to its benefits, subject to an order made under subsection (4).
Court order	(4) Whether or not a cooperative has adopted a contract, the court may, on application by a party to the contract,
	(a) make an order respecting the nature and extent of the obligations and liability under the contract of the cooperative and the person who purported to enter into the contract by or on behalf of the cooperative; and
	(b) make any other order that the court considers just in the circumstances.
	Name
Required name	20. (1) A cooperative must have the word ``cooperative'', ``co-operative'', ``coop'', ``co-op'', ``coopérative'', ``united'' or ``pool'', or another grammatical form of any of those words, as part of its name.
Use of abbreviation	(2) A cooperative that has the word ``cooperative'', ``co-operative'', ``coop'', ``co-op'' or ``coopérative'', or another grammatical form of any of those words, as part of its name may use and be legally designated by any of those words or forms.
Business restriction	(3) If the business of a cooperative is restricted by its articles or by a resolution of its members to a specific business purpose, the cooperative must have as part of its name one or more words that suggest the nature of the restriction.
Alternate form	(4) The name of a cooperative may be set out in its articles in an English form, a French form, an English form and a French form, or a combined English and French form, so long as the form meets any criteria contained in a regulation made under subsection (5). The cooperative may use and be legally designated by any such form.
Regulations	(5) The Director may make regulations prescribing the criteria for what constitutes an English form and a French form, and a combined English and French form, of the names of cooperatives.
Identification outside Canada	(6) A cooperative may set out in its articles its name in any language form and, if it does, it may use and be legally designated outside Canada by its name in that form.
Publication of name	(7) A cooperative must set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for things or services made by or on behalf of the cooperative and in all documents filed with the Director under this Act.
Other name	21. Subject to subsection 20(3) and section 23, a cooperative may carry on business or identify itself by a name or style other than as set out in its articles.
Reservation of name	22. The Director may, on request, reserve for ninety days a name for an intended cooperative or for one that intends to change its name.
Prohibited names	23. A cooperative may not be incorporated with, have, carry on business under or identify itself by a name that is
	(a) prohibited, or deceptively misdescriptive, as may be prescribed; or
	(b) reserved for another body corporate.
Direction to change name	24. (1) The Director may direct a cooperative to change its name if the cooperative's name contravenes section 23 when the cooperative comes into existence or is continued.
Revocation of name	(2) If a cooperative has not complied with a direction under subsection (1) within sixty days after it is served with a written copy of the direction, the Director may issue a certificate of amendment revoking the name of the cooperative and assigning a new name to it.
Undertaking to change name	(3) If a cooperative acquires a name as a result of a person undertaking to dissolve or to change names, and the undertaking is not honoured, the Director may direct the cooperative to change its name in accordance with section 289, unless the undertaking is honoured within the period specified in subsection (2).
Amendment of articles when certificate of amendment issued	(4) The articles of the cooperative are deemed to be amended accordingly on the date shown in the certificate of amendment issued under subsection (2).
Notice of revocation	(5) On issuing a certificate of amendment under subsection (2), the Director must give notice of the change of name without delay in a publication generally available to the public.
Prohibition on use of name	25. Every entity, other than a cooperative incorporated under this Act or a body corporate incorporated by or under the authority of another Act of Parliament or an Act of the legislature of a province, is guilty of an offence if the entity uses or authorizes the use of the word ``cooperative'', ``co-operative'', ``co-op'', ``coop'', ``coopérative'' or ``pool'', or another grammatical form of any of those words, as part of its name or in any manner in connection with the conduct of its business so that the entity could reasonably be considered to be holding itself out as carrying on business as a cooperative entity.
	PART 3
	CAPACITY AND POWERS
Legal capacity	26. (1) Subject to this Act, a cooperative
	(a) has the capacity and the rights, powers and privileges of a natural person; and
	(b) may carry on business throughout Canada.
By-laws not required to confer powers	(2) It is not necessary for a cooperative to pass a by-law in order to confer any particular power on a cooperative or its directors.
Powers outside the jurisdiction	27. (1) Subject to this Act, a cooperative has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.
Business restriction	(2) No cooperative and no subsidiary of a cooperative may carry on any business contrary to a restriction set out in the articles of the cooperative.
Validity of acts	(3) No act of a cooperative, including a transfer of property, is invalid by reason only that the act is contrary to its articles or this Act.
Constructive notice	(4) A member of a cooperative is deemed to have knowledge of the content of the articles and by-laws of the cooperative.
No constructive notice	(5) Subject to subsection (4), no person is deemed to have knowledge of the content of a document by reason only that it is filed with the Director or is available for inspection at the cooperative.
Assertions	28. (1) No cooperative and no guarantor of an obligation of a cooperative may assert against a person dealing with the cooperative or against a person who acquired rights from the cooperative that
	(a) the cooperative's articles, by-laws or any unanimous agreement have not been complied with;
	(b) the persons named in the most recent notice of directors filed with the Director are not the directors;
	(c) the place named in the most recent notice of registered office filed with the Director is not the registered office;
	(d) a person held out as a director, an officer, an agent or a mandatary of the cooperative has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the cooperative or usual for a director, officer, agent or mandatary;
	(e) a document issued by a director, officer, agent or mandatary of the cooperative with actual or usual authority to issue it is not valid or genuine;
	(f) any financial assistance referred to in section 160 was not authorized; or
	(g) a sale, lease or exchange of all or substantially all of the property of the cooperative was not authorized.
Exception	(2) Subsection (1) does not apply in respect of a person who has, or ought to have, knowledge to that effect by virtue of their relationship to the cooperative.
No personal liability	29. The members and shareholders of a cooperative, by reason only of being members or shareholders, are not liable for any liability, act or default of the cooperative, except as provided in this Act.

Bill C-5

Incorporation

By-laws

Cooperative Basis

Pre-incorporation Contracts

Name

PART 3

CAPACITY AND POWERS