BILL 98 -- 1999: COOPERATIVE ASSOCIATION ACT, Part 1

1998/99 Legislative Session: 3rd Session, 36th Parliament
FIRST READING

The following electronic version is for informational purposes only.
The printed version remains the official version.

BILL 98 -- 1999

COOPERATIVE ASSOCIATION ACT

... continued ...

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Part 1 -- Interpretation and Application

Definitions and interpretation

1 (1) In this Act:

"affiliate" means a corporation that is affiliated with another corporation within the meaning of section 3;

"association" means an association incorporated or continued under this Act or a former Act, and includes a housing cooperative;

"call" includes an installment and any other sum paid or payable or agreed to be paid for a membership share;

"corporate purposes" means, in relation to an association, any effort to

(a) influence the voting of members, investment shareholders or debentureholders of the association at any meeting,

(b) acquire or sell shares or debentures of the association, or

"court", except in sections 79, 135, 162 (1) (b) and 202, means the Supreme Court;

"director" means a person who is appointed or elected to the governing body of a corporation and includes every person, by whatever name designated, who performs functions of a director, but does not include a person exempted, conditionally or unconditionally, from this definition by regulation;

"eligible organization" means an organization that under section 32 may be admitted to membership in an association;

"extraprovincial association" means an extraprovincial corporation that is registered under section 181 as an extraprovincial association;

"federation" means an association or extraprovincial association whose membership is comprised substantially of other associations or corporate bodies organized on a cooperative basis;

"first nation" means an aboriginal governing body, however organized and established by aboriginal people within their traditional territory in British Columbia or another province;

"former Act" means the Cooperative Association Act, R.S.B.C. 1996, c. 71, and any predecessor Act, and includes

(a) the Agricultural Act, 1915, S.B.C. 1915, c. 2, in relation to a subsisting association or society having a share capital that was incorporated under or was at any time subject to or governed by that Act, and

(b) the Industrial and Provident Societies Act, R.S.B.C. 1911, c. 105;

"housing cooperative" means an association providing accommodation for persons the majority of whom are members of the association and are ordinarily resident in the accommodation;

"investment share" means a share in an association that is not a membership share;

"investment shareholder" means a person whose name is entered in the register of investment shareholders of an association as an owner of an investment share of the association;

"joint member" means a person who is one of 2 or more persons who jointly hold one membership in an association;

"marketing board" means a marketing board appointed or established under the Natural Products Marketing (BC) Act or under another Act of British Columbia, another province or Canada for the regulation of one or more natural products;

"member" means a member of an association and includes a joint member;

"membership share" means a share, in an association, of the class designated under section 30 as the membership shares and includes the shares that under section 213 or 214 are renamed as the membership shares;

"memorandum" means an association's memorandum of association with all amendments, and includes the application for registration, certificate of incorporation, or a declaration or other equivalent to a memorandum of association, by whatever name called, of an association registered under this Act on its conversion under section 29 of the Farmers and Womens Institutes Act from an institute under that Act to an association under this Act;

"officer", in relation to an association, includes

(a) the chair of the board of directors, every vice chair of the board of directors, the president, every vice president, the secretary, every assistant secretary, the treasurer and every assistant treasurer,

(b) the general manager and every other individual designated, according to function performed for the association, as an officer by the rules or by resolution of the directors, and

(c) every other individual who performs functions for the association similar to those performed by the officers described in paragraphs (a) and (b) of this definition;

"ordinary resolution" means a resolution of the members of an association that is

(a) submitted to all the members who are entitled to vote on the resolution and passed by being consented to in writing by 3/4 of those members, or

(b) passed, after the required notice of meeting under this Act, in a general meeting by a simple majority of the total votes cast by the members who are entitled to vote on the resolution, including votes cast in person and, if permitted by this Act and the association's rules, votes cast by proxy and votes cast by mail ballot;

"patronage return" means an amount that an association allocates among and credits or pays to its members or to its member and non-member patrons based on the business done by them with or through the association;

"registrar" means the Registrar of Companies or an authorized individual performing the registrar's duties;

"reporting association" means an association that was a reporting association under a former Act immediately before the coming into force of this definition and has not ceased under section 2 of this Act to be a reporting association;

"rules" means the rules adopted by an association, as amended from time to time;

"separate resolution" means a resolution of

(a) the investment shareholders if the association has only one class of investment shares, or

(b) the investment shareholders of a particular class of investment shares, if the association has more than one class of investment shares

that is

(c) submitted to all the investment shareholders who are entitled to vote on the resolution and passed by being consented to in writing by all of them, or

(d) passed after the required notice of meeting under this Act, in a meeting of the investment shareholders entitled to vote on the resolution, by a majority that the association's rules specify is required, of the votes cast, in person or by proxy, if that specified majority is at least 2/3 but not more than 3/4 of those votes or, if the association's rules do not specify the required majority, at least 3/4 of those votes;

"special resolution" means a resolution of the members of an association

(a) that is submitted to all the members who are entitled to vote on the resolution and passed by being consented to in writing by all of them, or

(b) that is

(i) passed, after the required notice of meeting under this Act, in a general meeting by a majority that the association's rules specify is required, of the total votes cast by the members who are entitled to vote on the resolution, including votes cast in person and, if permitted by this Act and the association's rules, votes cast by proxy and votes cast by mail ballot, if the specified majority is at least 2/3, but not more than 3/4 of those votes or, if the association's rules do not specify the required majority,

(A) at least 2/3 of those votes, in the case of an association other than a housing cooperative, or

(B) at least 3/4 of those votes, in the case of a housing cooperative, and

(ii) if the association's rules provide as set out in section 41 and the resolution pertains to a matter specified by the association's rules that are authorized under that section, the resolution receives at least the percentage or percentages of favourable votes specified under those rules;

"special rights or restrictions", in relation to investment shares of an association, includes special rights and restrictions, whether preferred, deferred or otherwise, in regard to

(a) redemption or return of capital,

(b) conversion into or exchange for the same or any other number of any other kind, class or series of securities of the association or of any other corporation,

(d) voting,

(e) nomination, appointment or election of directors or other control, or

(f) any other matter.

(2) Subject to this section and to any regulations under section 5 (2), and unless the context otherwise requires, words and expressions used in the Company Act, whether or not defined in that Act, have the same meaning for the purposes of this Act as they have in the Company Act.

(3) For the purposes of the definition of "special rights or restrictions", the expressions "special rights" and "restrictions", when used in this Act, or the Company Act as it applies for the purposes of this Act, whether together or separately, have a corresponding meaning.

(4) A reference in an association's memorandum or rules to an extraordinary resolution must be read as a reference to a special resolution.

When status as reporting association ceases

2 (1) An association ceases to be a reporting association, but continues as an association under this Act, if the registrar on application by ordinary resolution of the association orders that it ceases to be a reporting association.

(2) In making an order under subsection (1), the registrar must take into account prescribed criteria.

Corporate relationships

3 (1) For the purposes of this Act, one corporation is affiliated with another corporation if

(a) one of them is the subsidiary of the other,

(b) both of them are subsidiaries of the same corporation, or

(2) For the purposes of this Act, a corporation is a subsidiary of another corporation if

(a) it is controlled by

(i) that other corporation,

(ii) that other corporation and one or more corporations controlled by that other corporation, or

(iii) 2 or more corporations controlled by that other corporation, or

(b) it is a subsidiary of a subsidiary of that other corporation.

(3) For the purposes of this Act,

(a) a corporation is controlled by a person if

(i) shares of the corporation carrying more than 50% of the votes for the appointment or election of directors are held, other than by way of security only, by or for the benefit of that person, and

(ii) the votes carried by the shares mentioned in paragraph (a) are sufficient, if exercised, to appoint or elect a majority of the directors of the corporation, and

(b) an association is controlled by a person if the person has the right to exercise more than 50% of the voting rights that may be cast at an annual general meeting or to elect or appoint a majority of the directors.

(4) For the purposes of this Act, a corporation is the holding corporation of another corporation that is its subsidiary.

Share ownership

4 (1) For the purposes of this Act, shares are held for the benefit of a person if they are beneficially owned by

(a) the person,

(b) a corporation controlled by the person, or

(2) For the purposes of this Act, a corporation is deemed to beneficially own securities that are beneficially owned by its affiliates.

Application of Company Act to associations

5 (1) For the purposes of this Act, the following provisions of the Company Act apply to and in respect of associations:

(a) sections 75 to 78 and 80 to 85 of Division 2, Borrowings, of Part 3;

(b) sections 181 to 182, 186, 187, 191 and 192 of Part 6, Audits;

(c) in relation to proceedings under section 156 of this Act, section 200 (2) to (6), Complaint by members, section 202, Relief, and section 203, Applications to court;

(d) in relation to proceedings under sections 158 and 159 of this Act, Division 3, Investigations, of Part 7, except sections 209 (1), 210 (1) and 212;

(e) subject to sections 6, 173 and 196 (2) of this Act, Part 9, Dissolution and Restoration, Divisions 1 to 3, except sections 256 and 258;

(f) section 233, Reduction of capital.

(2) The Lieutenant Governor in Council, by regulation, may adopt by reference for the purposes of this Act any provisions of the Company Act then in force, either without variation or with variations that the Lieutenant Governor in Council considers necessary or desirable to give effect to this Act according to its intent.

(3) A regulation under subsection (2) adopting a provision of the Company Act by reference may

(a) limit the application of the provision to or in respect of circumstances specified in the regulation or to or in respect of one or more categories of associations or other persons, and

(b) for the purpose of paragraph (a), define the circumstances and categories on any basis the Lieutenant Governor in Council considers appropriate.

(4) Subsections (2) and (3) and this subsection are repealed on December 31, 2001.

Application of Company Act to extraprovincial associations

6 For the purposes of this Act, the following provisions of the Company Act apply to and in respect of extraprovincial associations:

(a) Division 1, Cancellation, of Part 9, except section 256;

(b) Division 2, Restoration, of Part 9;

Rules for Company Act interpretation

7 (1) In this section, "Company Act" means that Act as it applies for the purposes of this Act.

(2) For the purposes of this Act, a reference in the Company Act

(a) to any of the forms under the Company Act or set out in the schedules to that Act must be read as a reference to the corresponding form prescribed under this Act or, if none, to the form under that Act with the necessary changes to adapt the form for the purposes of this Act,

(b) to "company" must be read as a reference to "association", as the context requires,

(d) to "reporting company" must be read as a reference to "reporting association",

(e) to "member" or "members" must be read as a reference to "member", "members", "investment shareholder" or "investment shareholders" as necessary to suit the circumstances,

(f) to "memorandum" or "articles" must be read as "memorandum" and "rules", respectively, of an association,

(g) to "minister" must be read as a reference to the minister who is responsible for the administration of this Act, and

(h) to "registered office" or "records office" must be read as a reference to "registered office".

Cooperative basis

8 (1) An association must be organized and operated and must carry on business on a cooperative basis.

(2) An association, other than as described in subsection (3), is organized, operated and administered on a cooperative basis if it is substantially organized, operated and administered on the following principles and methods:

(a) membership in the association is open in a non-discriminatory manner to persons who can use the services of the association and are willing and able to accept the responsibilities of membership;

(b) subject to sections 40 (3) and (4), 42 (1) and 45, each member or delegate has one vote;

(d) members receive limited or no return on capital subscribed to as a condition of membership;

(e) surplus funds arising from the association's operations are used for any or all of the following purposes:

(i) developing the association;

(ii) providing or improving services to members;

(iii) establishing reserves;

(iv) paying dividends;

(v) community welfare or the propagation of cooperative enterprise;

(vi) distribution among its members as a patronage return;

(f) education is provided on the principles and techniques of cooperative enterprise.

(3) An association having as its business or as one of its businesses the business of acting as a designated agency of one or more marketing boards, despite subsection (2) is organized, operated and administered on a cooperative basis with respect to that business, if it carries on that business on a basis the association's directors consider expedient in order to exercise and carry out the powers, duties, obligations and restrictions vested in and placed on the association by the marketing board or marketing boards, as the case may be.

(4) An association that is substantially organized, operated and administered on the principles and methods set out in subsection (2) but, by its rules restricts the classes of persons to whom membership is available, is organized, operated and administered on a cooperative basis, despite the restrictions, if the restrictions are consistent with applicable laws with respect to human rights and are reasonable in relation to

(a) any business restrictions set out in the memorandum or rules of the association, and

(b) the association's ability to compete commercially in offering services to members and prospective members.

Patronage returns

9 (1) An association may allocate among and credit or pay to the members, as a patronage return, all or a part of the surplus arising from the operations of the association in a financial year in proportion to the business done by the members with or through the association in that financial year, calculated in the manner described in subsection (2) at a rate set by the directors.

(2) For the purpose of subsection (1), the directors of an association may calculate the amount of the business done by each member with or through the association in a financial year by taking into account

(a) the quantity, quality, kind and value of things bought, sold, handled, marketed or dealt in by the association,

(b) the services rendered

(i) by the association on behalf of or to the member, and

(ii) by the member on behalf of or to the association, and

(c) differences that are, in the opinion of the directors, appropriate for different classes, grades or qualities of things and services.

(3) The association's rules may provide that an association may allocate among and credit or pay to persons who use the services of the association but who are not members a share of any surplus at a rate that is equal to or less than the rate at which the surplus is distributed to members.

(4) If an association allocates among and credits or pays to persons referred to in subsection (3) a share of any surplus, the directors must calculate the business done by the non-member patrons in the manner described in subsection (2).

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