Canada Cooperatives Regulations (SOR/99-256)

34 [Repealed, SOR/2008-315, s. 11]

Financial Statements in Proxy Circular

• 35 (1) When financial statements accompany or form part of a management proxy circular, the statements shall be prepared in accordance with Part 4.

• (2) The financial statements referred to in subsection (1), if not reported on by the auditor of the cooperative, shall be accompanied by a report of the chief financial officer of the cooperative stating that the financial statements have not been audited but have been prepared in accordance with Part 4.

Proxy Circular Exemptions

• 35.1 (1) For the purpose of subparagraph (b)(v) of the definition solicit or solicitation in subsection 163(1) of the Act, a solicitation does not include a public announcement that is made by

  • (a) a speech in a public forum; or

  • (b) a press release, an opinion, a statement or an advertisement provided through a broadcast medium or by a telephonic, electronic or other communication facility, or appearing in a newspaper, a magazine or other publication generally available to the public.

• (2) For the purpose of subparagraph (b)(vii) of the definition solicit or solicitation in subsection 163(1) of the Act, the prescribed circumstances are circumstances in which the communication is made to shareholders

  • (a) by one or more shareholders and concerns the business and affairs of a cooperative — including its management or proposals contained in a management proxy circular — if no form of proxy is sent to those shareholders by the shareholder or shareholders making the communication or by a person acting on their behalf;

  • (b) by one or more shareholders and concerns the organization of a dissident proxy solicitation, and no form of proxy is sent to those shareholders by the shareholder or shareholders making the communication or by a person acting on their behalf;

  • (c) as clients, by a person who gives financial, corporate governance or proxy voting advice in the ordinary course of business and concerns proxy voting advice if

    • (i) the person discloses to the shareholder any significant relationship with the cooperative and any of its affiliates and any material interests the person has in relation to a matter on which advice is given,

    • (ii) the person receives any special commission or remuneration for giving the proxy voting advice only from the shareholder or shareholders receiving the advice, and

    • (iii) the proxy voting advice is not given on behalf of any person soliciting proxies or on behalf of a nominee for election as a director; or

  • (d) by a person who does not seek directly or indirectly, the power to act as proxy for a shareholder.

• (3) The circumstances described in paragraph (2)(a) are not prescribed circumstances if the communication is made by

  • (a) a shareholder who is an officer or director of the cooperative, or who serves in a similar capacity, if the communication is financed directly or indirectly by the cooperative;

  • (b) a shareholder who is a nominee or who proposes a nominee for election as a director, if the communication relates to the election of directors;

  • (c) a shareholder whose communication is in opposition to an amalgamation, arrangement, consolidation or other transaction recommended or approved by the board of directors of the cooperative and who is proposing or intends to propose an alternative transaction to which the shareholder or an affiliate or associate of the shareholder is a party;

  • (d) a shareholder who, because of a material interest in the subject-matter to be voted on at a shareholders meeting, is likely to receive a benefit from its approval or non-approval, which benefit would not be shared pro rata by all other holders of the same class of shares, unless the benefit arises from the shareholder’s employment with the cooperative; or

  • (e) any person acting on behalf of a shareholder described in any of paragraphs (a) to (d).

• 35.2 (1) For the purpose of subsection 166(4.1) of the Act, the prescribed circumstances are those in which the solicitation conveyed by public broadcast, speech or publication sets out the information provided for in Items 3.2, 3.4, 5(b) and 11 of Part 2 of Form 51-102F5 (Information Circular) of NI 51-102.

• (2) A person making a solicitation referred to in subsection (1) shall send the required information and a copy of any related written communication to the Director and to the cooperative before soliciting proxies.

PART 4Financial Disclosure

General

36 The financial statements referred to in paragraph 247(1)(a) of the Act of a distributing cooperative shall be prepared in accordance with the generally accepted accounting principles that are set out in the CPA Canada Handbook – Accounting or the CPA Canada Public Sector Accounting Handbook, as amended from time to time.

37 The auditor’s report referred to in section 261 of the Act shall be prepared in accordance with the generally accepted auditing standards that are set out in the CPA Canada Handbook – Assurance, as amended from time to time.

Contents of Financial Statements

• 38 (1) The financial statements referred to in paragraph 247(1)(a) of the Act shall include at least

  • (a) a balance sheet;

  • (b) a statement of retained earnings;

  • (c) an income statement; and

  • (d) a statement of changes in financial position.

• (2) Financial statements need not be designated by the names set out in paragraphs (1)(a) to (d).

PART 4.1Fundamental Changes

38.1 Despite subparagraph 298(1)(b)(ii) of the Act, the resolutions approving the amalgamation of a holding cooperative with one or more of its wholly owned subsidiary cooperatives may provide that the cooperative name set out in the articles of amalgamation is not the same as that set out in the articles of the amalgamating holding cooperative.

PART 5Constrained Share Cooperatives

Interpretation

39 The definitions in this section apply in this Part.

Canadian

Canadian means

• (a) a resident of Canada;

• (b) a partnership of which a majority of the members are resident in Canada and in which interests representing in value more than 50% of the total value of the partnership property are owned by residents of Canada;

• (c) a trust established by a resident of Canada

  • (i) a majority of the trustees of which are resident in Canada, or

  • (ii) in which beneficial interests representing in value more than 50% of the total value of the trust property are owned by residents of Canada;

• (d) Her Majesty in right of Canada or of a province or a municipal corporation or public board or commission in Canada; or

• (e) a body corporate

  • (i) incorporated under the laws of Canada or a province,

  • (ii) of which a majority of the directors are residents in Canada, and

  • (iii) over which persons described in any of paragraphs (a) to (d) or in this paragraph exercise control or direction or of which the persons beneficially own investment shares or securities currently convertible into investment shares carrying more than 50% of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and that is continuing, including currently exercisable options or rights to acquire the investment shares or convertible securities. (canadien)

constrained class

constrained class means the class of persons specified in the articles of a constrained share cooperative as being ineligible to hold, as a class, more than the maximum aggregate holdings. (catégorie restreinte)

constrained share cooperative

constrained share cooperative means a cooperative that has provisions in its articles imposing a constraint. (coopérative à participation restreinte)

constraint

constraint means a restriction on

• (a) the issue or transfer of investment shares of any class or series to persons who are not residents of Canada;

• (b) the issue or transfer of investment shares of any class or series to enable a cooperative or any of its affiliates or associates to qualify under the laws of Canada or a province referred to in paragraph 53(1)(a)

  • (i) to obtain a licence to carry on any business,

  • (ii) to become a publisher of a Canadian newspaper or periodical, or

  • (iii) to acquire investment shares of a financial intermediary as defined in paragraph 53(1)(b); or

• (c) the issue, transfer or ownership of investment shares of any class or series in order to assist a cooperative or any of its affiliates or associates to qualify under the laws of Canada referred to in subsection 53(2) to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control. (restriction)

control

control means control in any manner that results in control in fact, whether directly through the ownership of investment shares or indirectly through a trust, a contract, the ownership of investment shares of any other body corporate or otherwise. (contrôle)

maximum aggregate holdings

maximum aggregate holdings means the total number of voting investment shares of a constrained share cooperative that may be held by or on behalf of persons in the constrained class and their associates in accordance with the articles of the cooperative. (avoir maximum total)

maximum individual holdings

maximum individual holdings means the total number of voting investment shares of a constrained share cooperative that may be held by or on behalf of any one person in the constrained class and the person’s associates in accordance with the articles of the cooperative. (avoir maximum individuel)

resident of Canada

resident of Canada means an individual who

• (a) is a citizen of Canada, as determined in accordance with the Citizenship Act, and who is ordinarily resident in Canada;

• (b) a citizen of Canada, as determined in accordance with the Citizenship Act, who is not ordinarily resident in Canada and who

  • (i) is a full-time employee of the Government of Canada or a province, of an agency of any such government or of a federal or provincial crown corporation,

  • (ii) is a full-time employee of a body corporate

    • (A) of which more than 50% of the voting investment shares are beneficially owned or over which control or direction is exercised by a resident of Canada,

    • (B) a majority of the directors of which are residents of Canada, or

    • (C) that is a subsidiary or a wholly owned subsidiary of a body corporate described in clause (A) or (B), if the principal reason for the residence of the employee outside Canada is to act as such an employee,

  • (iii) is a full-time student at a university or other educational institution recognized by the educational authorities of a majority of the provinces and who has been resident outside Canada less than 10 consecutive years,

  • (iv) is a full-time employee of an international association or organization of which Canada is a member, or

  • (v) was, on the date of their 60th birthday, ordinarily resident in Canada and has been resident outside Canada less than 10 consecutive years; or

• (c) is a permanent resident within the meaning of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time when he or she first became eligible to apply for Canadian citizenship. (résident canadien)

voting investment share

voting investment share means an investment share that is subject to a constraint referred to in paragraph (a) or (b) of the definition constraint and that carries voting rights under all circumstances or by reason of the occurrence of an event that has occurred and that is continuing, and includes a security currently convertible into such an investment share and a currently exercisable option or right to acquire the investment share or the convertible security. (part de placement conférant un droit de vote)