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 ...

 
Part 4 -- Finance

 
Division 1 -- Share Capital Structure

Capital -- membership and investment shares

48 (1) The authorized share capital of an association consists of

(a) a single class of membership shares, with or without par value, regardless of whether or not the association has more than one class of membership, and

(b) if authorized by the association's memorandum or rules, one or more classes of investment shares, with or without par value.

(2) If the authorized investment share capital of an association consists of investment shares both with and without par value, the investment shares with par value must be a class or classes of shares distinct from the shares without par value.

(3) Every investment share of a class of investment shares without par value must be equal to every other investment share of that class, and are subject to special rights or restrictions attached to the investment shares of that class.

(4) A share in an association is personal estate.

Investment shares -- provisions in memorandum and rules

49 An association may provide in its memorandum or rules for the association to issue investment shares, and if the memorandum or rules so provide,

(a) the memorandum and rules, considered together, must be consistent with the requirements for investment shares in section 48 and must set out the following:

(i) whether the investment shares may be issued to non-members;

(ii) whether the number of investment shares that may be issued is unlimited and, if not, the maximum number of investment shares that may be issued;

(iii) the number of classes of investment shares;

(iv) whether the investment shares in each class are with or without par value, and

(b) the association's rules must set out the following:

(i) the special rights and restrictions attached to the investment shares;

(ii) if there is more than one class of investment shares, the designation of each class and the special rights and restrictions attached to each class.

Consistency between memorandum and rules

50 If an association provides in its rules or memorandum for the association to issue investment shares, the association's rules, considered together with the memorandum, must be consistent with the requirements of sections 48 and 49.

Consideration for membership and investment shares

51 (1) The consideration for a share with par value issued or allotted by an association, whether it is a membership share or investment share, must be equal to or greater than the par value of the share.

(2) The consideration for a share without par value issued or allotted by an association, whether it is a membership share or investment share, must be set

(a) in the manner required by the association's rules, or

(b) by special resolution of the association if its rules do not set out the manner in which the consideration is to be set.

(3) All membership shares and investment shares in an association must be paid for in money, except as permitted by subsection (4), and must not be issued at a discount.

(4) An association may issue membership shares or investment shares in consideration or partial consideration for the acquisition of

(a) shares or other securities of an association having a purpose similar to its own,

(b) assets to be used in its business, or

(c) all or part of the business of another person if the business is consistent with the association's own purpose.

Issue of membership and investment shares

52 (1) An association must not issue or allot membership shares or investment shares until the shares are fully paid, except, in the case of membership shares with par value, as permitted by the association's rules under subsection (2).

(2) An association whose membership shares are shares with par value may provide in its rules for either or both of the following:

(a) that the membership shares in the association may be payable on call;

(b) that the membership shares may be forfeited for default in payment.

Payments to joint shareholders

53 Unless otherwise agreed between an association and its joint membership shareholders or joint investment shareholders, as the case may be,

(a) payments, including redemption amounts and interest and dividends, must be made to the shareholders jointly, and

(b) payment by an association in accordance with this section is an effective discharge of the association, with respect to a demand by a person against it, up to the amount so paid.

Member share dividends or interest

54 A member must not receive any dividend or interest on membership shares, except in proportion to the amount paid up on them, if they are membership shares with par value.

Liability of members and investment shareholders

55 (1) The liability of a member or investment shareholder of an association for the debts, obligations and acts of the association is limited to the amount, if any, unpaid on the shares held by the member or investment shareholder.

(2) Money payable by a member or investment shareholder to an association under its memorandum or rules is a debt due from the member or investment shareholder to the association of the nature of a debt due by instrument under seal.

Association's lien on membership or investment shares

56 An association has a lien on the membership shares or investment shares of the person who holds the shares for a debt due to the association by that person, and the lien extends to any dividend or interest credited to that person for the membership shares or investment shares, as the case may be.

Membership or investment share certificates

57 (1) A person whose name is entered in an association's register of investment shareholders or in the association's register of members is entitled, without payment, to a certificate of the association, specifying the investment shares of each class or the membership shares that are held by the person and the amount paid up on them.

(2) A certificate referred to in subsection (1) is evidence of the person's title to the membership shares or investment shares described in the certificate.

(3) Despite subsection (1), an association's rules may require that the association not issue membership share certificates.

Particulars of issue on investment share certificates

58 (1) If an association has more than one class of investment shares, the association must ensure that

(a) a full text of the special rights or restrictions attached to any class of investment shares is contained in or permanently attached to every share certificate representing that class of investment shares, or

(b) every share certificate representing investment shares of a particular class of investment shares includes a statement on it that

(i) there are special rights or restrictions attached to that class of investment shares, and

(ii) a free copy of the full text of the special rights or restrictions may be obtained at the registered office of the association.

(2) An association must

(a) keep at its registered office a copy of the full text of the special rights or restrictions attached to any class of investment shares, and

(b) provide a free copy of that text to any person who requests one.

 
Division 2 -- Voting by Investment Shareholders

Investment shareholder voting rights and restrictions

59 (1) Subject to this section, no right to vote on a matter that is the subject of a special or ordinary resolution of the members of an association attaches to an investment share in the association.

(2) The memorandum or rules of an association may provide that investment shares, or if there are classes or series of investment shares, investment shares of a specified class or series of investment shares, confer on their holders the right

(a) to vote on an election of directors because of the occurrence of a contingency that has occurred and is continuing, or

(b) to elect a fixed number or a percentage of the directors.

(3) A right referred to in subsection (2) is exercisable at a separate meeting of the investment shareholders or of the holders of the investment shares of the specified class or series, as the case may be.

(4) Despite subsection (2) of this section, the memorandum or rules must not provide

(a) contrary to section 72, or

(b) that the investment shareholders have the right to elect more than 20% of the directors.

Separate resolution rights not affected

60 Section 59 does not affect the right of investment shareholders of an association to vote on any separate resolution under this Act.

One investment share, one vote

61 (1) If holders of investment shares have the rights referred to in section 59 or the right in accordance with this Act to vote on a separate resolution,

(a) each investment share entitles the holder to only one vote, and

(b) each investment share held jointly by 2 or more holders entitles the holders considered together to only one vote.

(2) An association may provide in its rules that on an equality of votes, the chair at any meeting of investment shareholders has a casting or second vote.

Proxy voting by investment shareholders

62 (1) If holders of investment shares have the rights referred to in section 59 or the right in accordance with this Act to vote on a separate resolution, a holder of any of the investment shares may vote by proxy, and the proxy may be any person appointed by the investment shareholder.

(2) An association may provide in its rules for proxy voting by investment shareholders.

(3) Rules referred to in subsection (2) are subject to subsection (1).

Members holding investment shares

63 Despite section 40, a member who holds an investment share in an association may exercise any voting rights attached to that investment share.

 
Division 3 -- Joint Investment Shares

Joint investment shares

64 (1) Unless an association's rules provide otherwise, if 2 or more persons are joint holders of investment shares in an association, the joint shareholder whose name appears as the first of 2 or more joint shareholders on the share certificate for the investment share or investment shares held by the joint shareholders is entitled to cast the vote.

(2) If a joint holder of an investment share in an association entitled under subsection (1) to cast the vote does not do so, the joint shareholder whose name next appears on the share certificate is entitled to cast the vote, and so on if there are more than 2 joint shareholders.

(3) If investment shares are held jointly by more than one person,

(a) an association is not required to issue more than one share certificate in respect of those investment shares, and

(b) delivery of a share certificate to one of the joint shareholders is sufficient delivery to them all.

Joint tenancy or tenancy in common

65 A joint investment share in an association may be held in joint tenancy or tenancy in common, and if the joint shareholders do not specify which to the association, the joint investment share is deemed to be held in joint tenancy.

 
Division 4 -- Share Capital Redemption and Reduction

Redeeming shares, loans to members, paying dividends

66 (1) Subject to its memorandum or its rules, an association

(a) may redeem and reissue its own membership shares or investment shares,

(b) on the security of property, may advance money to or guarantee the contracts of its members,

(c) may pay dividends at rates not exceeding 8% yearly, or higher limits that the association may set out in its rules, on membership shares that are paid up, and

(d) may pay dividends on investment shares that are paid up.

(2) An association must not exercise its powers to redeem membership shares or investment shares, prepay loans made to the association by its members or pay dividends if there are reasonable grounds for believing that

(a) the association is unable to pay its liabilities as they become due in the ordinary course of business, or

(b) exercising one or more of the association's powers to redeem membership shares or investment shares, to prepay loans made to the association by its members or to pay dividends would

(i) render the association unable to pay its liabilities as they become due in the ordinary course of business, or

(ii) cause the realizable value of the association's assets to be less than its liabilities.

(3) The court, on the application of a director of an association, may declare that, in view of all the circumstances, there are reasonable grounds for believing that

(a) the association is unable to pay its liabilities as they become due in the ordinary course of business, or

(b) exercising one or more of the association's powers to redeem membership shares or investment shares, to prepay loans made to the association by its members or to pay dividends would

(i) render the association unable to pay its liabilities as they become due in the ordinary course of business, or

(ii) cause the realizable value of the association's assets to be less than its liabilities.

Reduction of share capital

67 (1) This section is to be read together with the relevant provisions of the Company Act that, in section 5 of this Act or by a regulation under section 5 (2), are adopted by reference for the purposes of this Act.

(2) An association may reduce its membership share capital or investment share capital by special resolution in any way that a company having share capital is authorized under the Company Act to reduce its share capital.


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