PART 8Capital Structure (continued)
Corporate Finance (continued)
Marginal note:Exception for holding own shares
145 (1) A cooperative may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares in itself or in its holding body corporate only if the cooperative, holding body corporate or subsidiary does not have a beneficial interest in the shares.
Marginal note:Holding shares by way of security
(2) A cooperative may hold shares in itself or its holding body corporate by way of security for the purposes of a transaction entered into by it in the ordinary course of a business that includes the lending of money.
- 1998, c. 1, s. 145
- 2011, c. 21, s. 85
Marginal note:Redemption of membership shares
146 Subject to section 149, a cooperative may at any time redeem any of its membership shares, if issued on a par-value basis at par value and if issued on a no-par-value basis in accordance with the price or formula that is set out in its articles, or, if no such price or formula is set out in the articles, at a fair value.
Marginal note:Acquisition of investment shares
147 (1) Subject to its articles and to subsection (2), a cooperative may at any time acquire any investment share issued by it.
(2) A cooperative may not make a payment to acquire investment shares if there are reasonable grounds to believe that
(a) the cooperative is, or would after the payment be, unable to pay its liabilities as they become due; or
(b) the realizable value of the cooperative’s assets after the payment would be less than the total of the stated capital of all its issued shares and its liabilities.
Marginal note:Redemption of investment shares
(3) Subject to section 149, a cooperative may at any time redeem any of its investment shares that are redeemable, in accordance with any price or formula that may be set out in its articles or, if the articles do not so provide, at fair market value.
- 1998, c. 1, s. 147
- 2001, c. 14, s. 183(F)
Marginal note:Alternative share acquisition
148 Despite section 146 and subsection 147(2), but subject to section 149 and to its articles, a cooperative may acquire shares issued by it
(a) to satisfy the claim of members or shareholders who dissent under section 302;
(b) to comply with an order under section 340;
(c) to settle or compromise a debt or claim asserted by the cooperative;
(d) to eliminate fractional shares; or
(e) to fulfil the terms of a non-assignable option or obligation to purchase shares owned by a director, officer or employee.
Marginal note:Limitation on acquisition or redemption
149 A cooperative may not make a payment to acquire or redeem a share under section 146 or 148 if there are reasonable grounds to believe that
(b) the realizable value of the cooperative’s assets after the payment would be less than the total of
(i) its liabilities, and
(ii) the amount that would be required to pay the holders of shares that have a right to be paid, on a redemption or liquidation, rateably with or in priority to the holders of the shares to be purchased or redeemed.
Marginal note:Cancellation or resurrection of shares
150 Shares of a cooperative that are redeemed or otherwise acquired by it are cancelled or, if the articles limit the number of authorized shares, restored to the status of unissued shares.
Marginal note:Reduction of capital
151 (1) Subject to subsection (2), a cooperative may reduce its stated capital for any purpose, by special resolution of its members and, if an investment share is proposed to be affected by the reduction, by the holders of the investment shares.
Marginal note:Limitation on reductions
(2) A cooperative may not reduce its stated capital if there are reasonable grounds to believe that
(b) the realizable value of the cooperative’s assets after the reduction would be less than the total of its liabilities.
(3) Subsection (2) does not apply to a reduction of stated capital that is not represented by realizable assets.
Marginal note:If several stated capital accounts
(4) If a cooperative maintains more than one stated capital account, the special resolution to reduce stated capital required by subsection (1) must specify the stated capital account or accounts from which the reduction will be deducted.
Marginal note:Court order
(5) A creditor of a cooperative may apply to a court for an order compelling a person
(a) to pay to the cooperative an amount equal to any liability of the person that was extinguished or reduced contrary to this section; or
(b) to pay or deliver to the cooperative any money or property that was paid or distributed to the person as a consequence of a reduction of stated capital made contrary to this section.
Marginal note:Limitation period
(6) No action may be commenced to enforce a liability imposed by this section more than two years after the date of the act complained of.
Marginal note:Adjustment of stated capital account
152 (1) On a redemption or acquisition of any of its shares, a cooperative must adjust the stated capital account in relation to that share by the ratio of the stated capital for that class to that share.
Marginal note:If special resolution
(2) A cooperative must adjust its stated capital account in accordance with any special resolution made under subsection 151(1).
Marginal note:Class or series
(3) On a conversion of investment shares of a cooperative into investment shares of another class or series or a change under section 289, a reorganization under section 303 or the redemption or exchange of investment shares under an order made under section 340, the cooperative must
(a) deduct from the stated capital account maintained for the class or series of shares converted or changed, or subject to the reorganization, redemption or exchange, an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, or subject to the reorganization, redemption or exchange, divided by the number of issued shares of that class or series immediately before the conversion, change, reorganization, redemption or exchange; and
(b) add the result obtained under paragraph (a) and any additional amount received pursuant to the conversion, change, reorganization, redemption or exchange to the stated capital account maintained or to be maintained for the class or series of shares.
Marginal note:Stated capital of interconvertible shares
(4) For the purposes of subsection (3) and subject to its articles, if a cooperative issues two classes of investment shares and there is attached to each such class a right to convert an investment share of the one class into an investment share of the other class, if an investment share of one class is converted into a share of the other class, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of issued investment shares of both classes immediately before the conversion.
(5) For the purposes of this section, a cooperative holding shares in itself as permitted by section 145 is deemed not to have redeemed or acquired them.
Marginal note:Conversion or change of investment shares
(6) Investment shares issued by a cooperative and converted into shares of another class or series or changed under section 289, or subject to a reorganization under section 303 or the redemption or exchange of investment shares under an order made under section 340, become shares of the other class or series of shares.
Marginal note:Effect of change of investment shares on number of unissued shares
(7) If the articles limit the number of authorized shares of a class of investment shares of a cooperative and issued shares of that class or of a series of shares of that class have become, under subsection (6), issued investment shares of another class or series, the number of unissued shares of the first-mentioned class is, unless the articles provide otherwise, increased by the number of investment shares that, under subsection (6), became investment shares of another class or series.
Marginal note:Form of dividend
153 (1) A cooperative may pay a dividend by issuing fully paid shares of the cooperative and, subject to section 154, a cooperative may pay a dividend in money or property, except that membership shares may only be issued to members.
Marginal note:Stated capital account
(2) If shares of a cooperative are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money must be added to the stated capital account.
Marginal note:Limitation on paying dividends
154 A cooperative may not declare or pay a dividend if there are reasonable grounds to believe that
(b) the realizable value of the cooperative’s assets after payment of the dividend would be less than the total of its liabilities and the stated capital of all its issued shares.
Marginal note:Patronage returns
155 (1) A cooperative 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 cooperative in a financial year in proportion to the business done by the members with or through the cooperative in that financial year, calculated in the manner described in subsection (2) at a rate set by the directors.
Marginal note:Calculation of patronage
(2) For the purpose of subsection (1), the directors may calculate the amount of the business done by each member with or through a cooperative 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 cooperative;
(b) the services rendered
(i) by the cooperative on behalf of or to the member, and
(ii) by the member on behalf of or to the cooperative; and
(c) differences that are, in the opinion of the directors, appropriate for different classes, grades or qualities of things and services.
Marginal note:Non-member patronage allocation
(3) The by-laws may provide that a cooperative may allocate among and credit or pay to persons who use the services of the cooperative 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.
Marginal note:Calculation of non-member patronage
(4) If a cooperative 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).
Marginal note:Investment of patronage return
156 (1) A cooperative may, by by-law, provide that the whole, or any part that the directors may determine, of the patronage return of each member in respect of each financial year be applied to the purchase for the member of membership or investment shares in the cooperative.
Marginal note:Contents of by-law
(2) The by-law must provide for the giving of notice to each member of the number of shares purchased or to be purchased for the member, the manner of issuance or transfer of shares, the payment for the shares out of the patronage returns of members and, if applicable, the issuance and forwarding of certificates to members representing shares so issued or transferred.
Marginal note:Price of shares
(3) No member is required under this section to purchase membership shares, in the case of membership shares with a par value, at a price in excess of their par value, and in the case of membership shares with no par value or investment shares,
(a) if the articles provide for a fixed price or a price determined in accordance with a formula, in excess of that price; and
(b) in any other case, in excess of the fair value of the membership shares or the fair market value of the investment shares.
Marginal note:Stated capital account
(4) If shares of a cooperative are issued in payment of a patronage return, the amount of the patronage return, stated as an amount of money, must be added to the stated capital account.
Marginal note:Loans from patronage returns
157 A cooperative may, by by-law, require its members to lend to it the whole, or any part that the directors may determine, of the patronage returns to which they may become entitled in each financial year, on the terms and at the rate of interest that the directors determine, so long as the rate of interest does not exceed the rate that is provided in the by-laws.
Marginal note:Insolvent cooperative
158 If a cooperative is unable to pay its liabilities as they become due, no member need, under section 157, lend a patronage return to the cooperative, and no member need purchase shares under section 156.
Marginal note:Marketing plans
159 (1) Subject to subsection (3), this section applies to a cooperative and its members if the members are required by a marketing plan established under an Act of Parliament or of the legislature of a province to sell or deliver things or render services to or through a producer board or a marketing commission or agency.
Marginal note:Patronage returns
(2) For the purposes of allocating, crediting and paying patronage returns among or to members and of making payments to members as part of the price or proceeds of their things or services, the members referred to in subsection (1) are deemed to have sold and delivered the things or to have rendered the services, or, if the by-laws so specify, any portion or category of the things or services, to the cooperative.
(3) The by-laws of a cooperative may provide that this section does not apply to a member until any conditions with respect to the delivery of things or rendering of services set out in the by-laws are fulfilled.
160 [Repealed, 2001, c. 14, s. 184]
Marginal note:Enforcement of contract to buy shares
161 (1) A cooperative must fulfil its obligations under a contract to buy shares of the cooperative, except if the cooperative can prove that enforcement of the contract would put it in breach of subsection 147(2) or section 149.
Marginal note:Right of claimant
(2) Until the cooperative has fulfilled all its obligations under a contract referred to in subsection (1), the other party retains the status of claimant entitled to be paid as soon as the cooperative is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors and to the rights of any class of shareholders whose rights were in priority to the rights given to the class of investment shares being purchased, but in priority to the rights of members and other shareholders.
Marginal note:Debt obligations
162 (1) Debt obligations issued by a cooperative are not redeemed by reason only that the indebtedness evidenced by the debt obligation is repaid.
Marginal note:Cancellation, etc.
(2) Debt obligations issued by a cooperative and purchased, redeemed or otherwise acquired may be cancelled or may secure any obligation of the cooperative then existing or later incurred.
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