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Cooperative Credit Associations Act (S.C. 1991, c. 48)

Act current to 2023-01-25 and last amended on 2022-01-01. Previous Versions

PART VIICorporate Governance (continued)

Trust Indentures (continued)

Marginal note:Validity despite conflict

 A trust indenture and any subordinated indebtedness issued thereunder are valid notwithstanding a material conflict of interest of the trustee.

Marginal note:Removal of trustee

 If a trustee is appointed in contravention of subsection 281(1) or if a trustee contravenes subsection 281(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.

Marginal note:Trustee qualifications

 A trustee, or at least one of the trustees if more than one is appointed, must be

  • (a) a trust company pursuant to subsection 57(2) of the Trust and Loan Companies Act; or

  • (b) a body corporate that is incorporated under the laws of a province and authorized to carry on business as a trustee.

  • 1991, c. 48, ss. 284, 496
  • 2007, c. 6, s. 157

Marginal note:List of security holders

  •  (1) A holder of subordinated indebtedness issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, within fifteen days after the delivery to the trustee of the statutory declaration, a list setting out

    • (a) the names and addresses of the registered holders of the outstanding subordinated indebtedness,

    • (b) the principal amount of outstanding subordinated indebtedness owned by each such holder, and

    • (c) the aggregate principal amount of subordinated indebtedness outstanding

    as shown on the records maintained by the trustee on the day the statutory declaration is delivered to that trustee.

  • Marginal note:Duty of issuer

    (2) On the demand of a trustee, the issuer of subordinated indebtedness shall provide the trustee with the information required to enable the trustee to comply with subsection (1).

  • Marginal note:Where applicant is entity

    (3) Where the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection shall be made by a director or an officer of the entity or a person acting in a similar capacity.

  • Marginal note:Contents of statutory declaration

    (4) The statutory declaration required under subsection (1) must state

    • (a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, the address for service thereof; and

    • (b) that the list will not be used except as permitted by subsection (5).

  • Marginal note:Use of list

    (5) No person shall use a list obtained under this section except in connection with

    • (a) an effort to influence the voting of the holders of subordinated indebtedness;

    • (b) an offer to acquire subordinated indebtedness; or

    • (c) any other matter relating to the subordinated indebtedness or the affairs of the issuer or guarantor thereof.

Marginal note:Compliance with trust indentures

  •  (1) An issuer or a guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall, before undertaking

    • (a) the issue, certification and delivery of subordinated indebtedness under the trust indenture, or

    • (b) the satisfaction and discharge of the trust indenture,

    provide the trustee with evidence of compliance with the conditions in the trust indenture in respect thereof.

  • Marginal note:Compliance by issuer or guarantor

    (2) On the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.

  • Marginal note:Evidence of compliance

    (3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):

    • (a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;

    • (b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and

    • (c) an opinion or report of the auditors of the issuer or guarantor, or such other accountant as the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors.

  • Marginal note:Further evidence of compliance

    (4) The evidence of compliance referred to in subsection (3) shall include a statement by the person giving the evidence

    • (a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);

    • (b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and

    • (c) declaring that the person has made such examination or investigation as the person believes necessary to enable the statements to be made or the opinions contained or expressed therein to be given.

Marginal note:Trustee may require evidence

  •  (1) On the request of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with evidence in such form as the trustee requires of compliance with any condition thereof relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

  • Marginal note:Certificate of compliance

    (2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.

Marginal note:Notice of default

 A trustee shall, within thirty days after the trustee becomes aware of the occurrence thereof, give to the holders of subordinated indebtedness issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the subordinated indebtedness to withhold the notice and so informs the issuer and guarantor in writing.

Marginal note:Duty of care

  •  (1) In exercising a trustee’s powers and discharging a trustee’s duties, the trustee shall

    • (a) act honestly and in good faith with a view to the best interests of the holders of the subordinated indebtedness issued under the trust indenture; and

    • (b) exercise the care, diligence and skill of a reasonably prudent trustee.

  • Marginal note:Reliance on statements

    (2) Notwithstanding subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

Marginal note:No exculpation

 No term of a trust indenture or of any agreement between a trustee and the holders of subordinated indebtedness issued thereunder or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by sections 281, 285 and 288 and subsection 289(1).

Financial Statements and Auditors

Annual Financial Statement

Marginal note:Financial year

  •  (1) The financial year of an association ends on the expiration of the thirty-first day of December in each year.

  • Marginal note:First financial year

    (2) Where an association has, after the first day of July in any year, obtained an order approving the commencement and carrying on of business, the first financial year of the association ends on the expiration of the thirty-first day of December in the next calendar year.

Marginal note:Annual financial statement

  •  (1) The directors of an association shall place before the members at every annual meeting

    • (a) a comparative annual financial statement (in this Act referred to as an “annual statement”) relating separately to

      • (i) the financial year immediately preceding the meeting, and

      • (ii) the financial year, if any, immediately preceding the financial year referred to in subparagraph (i);

    • (b) the report of the auditor of the association; and

    • (c) any further information respecting the financial position of the association and the results of its operations required by the by-laws of the association to be placed before the members at the annual meeting.

  • Marginal note:Annual statement — contents

    (2) With respect to each of the financial years to which it relates, the annual statement of an association must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the association as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the association for that financial year.

  • Marginal note:Additional information

    (3) An association shall include with its annual statement

    • (a) a list of the subsidiaries of the association, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 394 or pursuant to a realization of security in accordance with section 395 and which the association would not otherwise be permitted to hold, showing, with respect to each subsidiary,

      • (i) its name and the address of its head or principal office,

      • (ii) the book value of the aggregate of any shares of the subsidiary beneficially owned by the association and by other subsidiaries of the association, and

      • (iii) the percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the association and by other subsidiaries of the association; and

    • (b) such other information as the Governor in Council may, by order, require in such form as may be prescribed.

  • Marginal note:Accounting principles

    (4) The financial statements referred to in subsection (1), paragraph (3)(b) and subsection 294(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.

  • Marginal note:Regulations

    (5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).

  • 1991, c. 48, s. 292
  • 1997, c. 15, s. 133
  • 2001, c. 9, s. 293
  • 2005, c. 54, s. 195
  • 2017, c. 26, s. 62

Marginal note:Annual statement — approval

  •  (1) The directors of an association shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature of

    • (a) the chairperson of the board of directors or, in the event of that officer’s absence or inability to act, any other officer of the association authorized by the directors to sign in the stead of the chairperson; and

    • (b) one director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.

  • Marginal note:Condition precedent to publication

    (2) An association shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).

  • 1991, c. 48, s. 293
  • 2005, c. 54, s. 196

Marginal note:Statements — subsidiaries

  •  (1) An association shall keep at its head office a copy of the current financial statements of each subsidiary of the association.

  • Marginal note:Examination

    (2) Subject to this section, the members and shareholders of an association and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the association and may take extracts therefrom free of charge.

  • Marginal note:Barring examination

    (3) An association may refuse to permit an examination under subsection (2) by any person.

  • Marginal note:Application for order

    (4) Within fifteen days after a refusal under subsection (3), the association shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the association to permit the examination or, if it is satisfied that the examination would be detrimental to the association or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.

  • Marginal note:Notice to Superintendent

    (5) An association shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Annual statement — distribution

  •  (1) An association shall, no later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 161(1)(b) in lieu of the annual meeting, send to each member and shareholder a copy of the documents referred to in subsections 292(1) and (3) unless that time period is waived by the member or shareholder.

  • Marginal note:Exception

    (2) An association is not required to comply with subsection (1) with respect to a member or shareholder who has informed the association, in writing, that the member or shareholder does not wish to receive the annual statement.

  • Marginal note:Effect of default

    (3) Where an association is required to comply with subsection (1) and the association does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.

  • 1991, c. 48, s. 295
  • 1997, c. 15, s. 134
  • 2005, c. 54, s. 197

Marginal note:Copy to Superintendent

  •  (1) Subject to subsection (2), an association shall send to the Superintendent a copy of the documents referred to in subsections 292(1) and (3) not later than twenty-one days before the date of each annual meeting of members of the association.

  • Marginal note:Later filing

    (2) If an association’s shareholders or members sign a resolution under paragraph 161(1)(b) in lieu of an annual meeting, the association shall send a copy of the documents referred to in subsections 292(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

  • 1991, c. 48, s. 296
  • 1997, c. 15, s. 135
  • 2001, c. 9, s. 294
 
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