Modernizing the Credit Unions and Caisses Populaires Act

PART IV
MEMBERSHIP

Who May Be Member

Membership

      28. (1) Membership in a credit union is governed by the credit union's by-laws, subject to the provisions of this Act and the credit union's articles.

Minimum membership shares required

      (2) To be a member, a person or entity must hold the minimum number of membership shares required under the by-laws of the credit union.

Member who ceases to hold the minimum

      (3) A member who ceases to hold enough shares to be a member shall, nonetheless, continue to be a member of the credit union for the purposes of this Act, subject to any limitations in the by-laws of the credit union, including limitations on the rights that member may exercise.

Ground for expulsion

      (4) For greater certainty, subsection (3) does not prevent holding fewer than the minimum number of shares from being set out in the by-laws of the credit union as a ground for expulsion under subsection 47 (1).

Becoming a member

      29. (1) Each incorporator of a credit union who has subscribed for a membership share in the credit union becomes a member upon the effective date of incorporation.

Subscription deemed application

      (2) A subscription for the number of membership shares in a credit union required by the by-laws of the credit union constitutes an application for membership and the issue of a membership share to the applicant constitutes admission to membership.

Applicants for membership

      (3) Subject to subsection (1), no person shall become a member of a credit union until the person's application for membership has been approved by the board or an employee authorized by the board and the applicant has complied fully with the by-laws governing admission of members.  1994, c. 11, s. 29.

Limitation on membership

      30.  (1)  The by-laws of every credit union shall provide that the membership of the credit union is limited to persons, related persons and entities who come within a bond of association and shall specify the nature of the bond of association.

Interpretation

      (2) Repeal

Same

      (3)  Despite subsection (1), the by-laws may provide that an employee of a credit union may become a member.  1994, c. 11, s. 30 (3).

Same

      (4)  Repeal

Same

      (5)  Repeal

Approval needed

      (6)  Repeal

Same

      (7)  Repeal

Admissions outside bond of association

      31. (1) If the credit union's by-laws permit it to do so, the board may admit, as a member of the credit union, any person or entity who does not come within the bond of association in the following circumstances:

           1.    The number of members who do not come within the bond of association does not exceed 3 per cent of the number of members in the credit union.

           2.    The admission of specific members who do not come within the bond of association is approved by the board.

           3.    Members who do not come within the bond of association must be identified as such in the membership register register under section 230.

Same

      (2) A person or entity admitted as a member who does not come within the bond of association has all the rights and obligations of membership.  1994, c. 11, s. 31.

Retaining membership

      32. (1) If authorized by the by-laws, a member who no longer falls within the bond of association may retain membership in the credit union.

Exception

      (2) Section 31 does not apply to members who retain their membership under subsection (1). 1994, c. 11, s. 32.

Record, information relating to membership

      33. (1) Every person or entity whose name is registered in the register of members register under section 230 is entitled to,

         (a)    a record specifying the amount paid upon membership shares, deposits and loans by the person or entity; and

         (b)    such other information as may be prescribed by the by-laws of the credit union.

Same

      (2) The record referred to in clause (1) (a) is admissible in evidence as proof, in the absence of evidence to the contrary, of membership and of the information entered therein.  1994, c. 11, s. 33.

Corporate and partnership members

      34. Her Majesty the Queen in right of Ontario or in right of Canada or a corporation including a municipality as defined in the Municipal Affairs Act, an unincorporated association or a partnership registered under the Business Names Act or a predecessor thereof may become a member of a credit union on such conditions as are prescribed.  1994, c. 11, s. 34.

Voting

One vote

      35. Repeal - moved to Part X

Mail balloting

      36. Repeal - moved to Part X

 

Rights and Liabilities

Liability of members

      37. The members of a credit union are not, by reason only of holding membership shares of a credit union, liable for any liability, act or default of the credit union except as otherwise provided by this Act.  1994, c. 11, s. 37.

Not bound by trust

      38. A credit union is not bound to see to the execution of any trust to which any membership share is subject.

Application

              (2) Subsection (1) applies whether the trust is express, implied or constructive.

Trusts for named beneficiaries

      39. (1) A credit union may accept deposits from a member in trust for a named beneficiary only if,

      (a) the member holds, in trust for the beneficiary, the minimum number of membership shares required under subsection 28 (2); or

      (b) the member and the beneficiary are related persons.

Deposit is separate for deposit insurance purposes

              (2) A deposit of a member in trust for a named beneficiary shall be deemed, for the purpose of paragraph 2 of subsection 270 (2), to be a deposit separate from any other deposit of the member.

Exercise of rights of membership shares held in trust

              (3) The following apply with respect to membership shares held by a member in trust for a beneficiary:

              1. The member shall exercise the rights attached to the shares, subject to paragraph 2.

              2. A deposit of a member in trust for a named beneficiary shall be deemed, for the purpose of paragraph 2 of subsection 270 (2), to be a deposit separate from any other deposit of the member.

Disclosure of beneficiary

              (4) The member shall disclose to the credit union such personal information concerning the beneficiary as the credit union requires to comply with all applicable laws.

Failure to disclose

              (5) A credit union may refuse to accept or maintain a deposit made by a member in trust for a named beneficiary if the member refuses or fails to provide the information referred to in subsection (4).

Joint accounts

      40. Two or more members may hold their membership shares and deposits in a joint account and, in the absence of written notice to the contrary, payment by the credit union to any of the members or to the survivor or any of the survivors of the members of any money standing to the credit of the joint share or deposit account discharges the credit union from any further liability for such payment.  1994, c. 11, s. 40.

Members under the age of 18 years

      41. (1) If permitted by the by-laws of a credit union, a person under the age of 18 years may be a member of the credit union, subject to such conditions and restrictions as may be set out in the by-laws.

 

Death, etc.

Transmission of shares

      42. (1)  Repeal

Limited payment re deceased member

      43. (1) If a member of a credit union dies and the credit union makes a payment of an amount described in subsection (2) to such person as the credit union is satisfied is entitled to receive the amount, the payment discharges any obligation of the credit union and its board in respect of and to the extent of the amount paid even if the payment is made without letters probate or letters of administration being taken out.

Type of paymet

      (2) The payment referred to in subsection (1) is a payment of the following:

      1. An amount not exceeding the prescribed amount payable from the amount on deposit in the name of the deceased or in consideration for the membership shares of the deceased.

      2. An amount not exceeding the prescribed amount payable from any money that is received by the credit union under any policy of insurance on the life of the deceased.

Restrictions

      (3) Subsection (1) applies only if the credit union pays the amount in good faith and without negligence and the credit union receives, before the payment,

      (a) a statutory declaration attesting to the person's entitlement to receive the amount; or

      (b) such other evidence of the person's entitlement to the amount as the credit union considers to be appropriate in the circumstances.

Credit union can require more

      (4) Nothing in this section prevents the credit union from requiring additional documentation or evidence as the credit union considers appropriate.

Recovery from recipient

      (5) Subsection (1) does not affect any right of a person claiming to be entitled to recover the amount from the person to whom it was paid.

No limit on other powers, requirements

      (6) For greater certainty, this section does not prevent a credit union from making a payment or transfer as otherwise allowed or required by law.

If deceased member was trustee

      If a member of a credit union dies holding membership shares or money on deposit in trust for a named beneficiary, the credit union may pay the amount of, or transfer, the membership shares or deposit and any interest or dividends on them,

      (a) to the executor or administrator of the estate of the deceased member; or

      (b) to the beneficiary if there is no executor or administrator of the estate of the deceased member or, if the beneficiary is a minor, to the beneficiary's parent or guardian.

Liens and Credits

Lien for liability

      44. (1) A credit union has a lien on the deposits and membership shares of a member for any liability to it by the member, and may set off any sum standing to the credit of the member on the books of the credit union towards the payment of the liability.  1994, c. 11, s. 44.

Lien for liability

       (2) Despite subsection (1), a credit union shall not apply any service charges or other deductions against a member's share account except upon the termination of the membership.

Unclaimed credits

      45.  Repeal

Withdrawals and Expulsions

Withdrawal of members

      46. (1) A member of a credit union may withdraw from the credit union at any time by giving notice in accordance with the by-laws.

Same

      (2) A deceased member shall be deemed to have given notice to the credit union of intention to withdraw on the day of his or her death.  1994, c. 11, s. 46.

Rights of withdrawing member

      (3) The by-laws of a credit union shall set out the rights of a withdrawing member which shall include the right to receive payment for the member's membership shares, subject to subsection 62 (3), and the return of any money on deposit and property held by the credit union.

Expulsion of members

      47. (1) A member of a credit union may be expelled from membership, in accordance with the by-laws, by a resolution of the board on the grounds set out in the by-laws.

Member rights relating to expulsion

      (2) The by-laws of a credit union shall provide for the following rights:

        1.    The right of a member to receive advance notice of any meeting of the board at which the board will consider a resolution to expel the member.

        2.    The right of the member not to be expelled without being given an opportunity to appear at the meeting of the board, to make submissions and to be represented by legal counsel or an agent at the meeting.

        3.    The right of an expelled member to appeal the decision of the board at the next general meeting of the members.

        4.    The right of the expelled member to be reinstated as a member of the credit union if, at the next general meeting, the members, by a majority of the votes cast at the meeting, set aside the resolution of the board.

        5.    The right of the expelled member to receive payment for the member's membership shares, subject to subsection 62 (3), and the return of any money on deposit and property held by the credit union.

Procedures to be set out in by-laws

        (3) The by-laws of a credit union shall set out the following:

        1. The procedures to be followed by the board to provide the advance notice referred to in paragraph 1 of subsection (2).

        2. The procedures to be followed relating to the appeal referred to in paragraph 3 of subsection (2).

Notice of decision

        (4)  If the board passes a resolution expelling a member, the credit union shall, within five days after the resolution is passed, notify the member of the decision of the board by registered letter addressed to the member at the member's last known address.

Payment to withdrawing and expelled member

      48.  Repeal

Appeal from expulsion

      49.  (1)  Repeal

REPRESENTATIVE ACTIONS BY MEMBERS

Members may maintain representative actions

      50. (1) Subject to subsection (2), a member of a credit union may maintain an action in a court of competent jurisdiction in a representative capacity for the member and all other members of the credit union suing for and on behalf of the credit union to enforce any right, duty or obligation owed to the credit union under this Act or under any other statute or rule of law or equity that could be enforced by the credit union itself, or to obtain damages for any breach of any such right, duty or obligation.

Court order required

      (2) An action under subsection (1) shall not be started until the member has obtained an order of the court permitting the start of the action.

Application to court

      (3) A member may, upon at least seven days notice to the credit union, apply to the court for an order referred to in subsection (2).

Court order

      (4) The court may make the order upon such conditions as the court thinks fit if the court is satisfied that,

         (a)    the member was a member of the credit union at the time of the transaction or other event giving rise to the cause of action;

         (b)    the member has made reasonable efforts to cause the credit union to start or prosecute diligently the action on its own behalf; and

         (c)    the member is acting in good faith and it is apparently in the interests of the credit union or its members that the action be started.

Costs

      (5) At any time while an action started under this section is pending, the plaintiff may apply to the court for an order for the payment to the plaintiff by the credit union of reasonable interim costs, including solicitor's and counsel fees and disbursements.

Accountability for costs

      (6) The plaintiff is accountable to the credit union for the interim costs if the action is dismissed on final disposition at the trial or on appeal.

Action, court approval

      (7) An action started under this section shall not be discontinued, settled or dismissed for want of prosecution without the approval of the court.

Same

      (8) If the court determines that the interests of the members or any class of members may be substantially affected by a discontinuance, settlement or dismissal, the court, may direct that notice in manner, form and content satisfactory to the court shall be given, at the expense of the credit union or any other party to the action as the court directs, to the members or class of members whose interests the court determines may be affected.  1994, c. 11, s. 50.

PART V
CAPITAL STRUCTURE

Shares

Classes of shares

      51. (1) The articles of a credit union must provide for a class of shares known as membership shares and may provide for additional classes of shares, including patronage shares referred to in section 52.1.

Nature of shares

      (2) The shares of a credit union are personal property.

Form

      (3) The shares of a credit union are without nominal or par value and, if they are not membership shares or patronage shares, must be in registered form.

Membership shares

      52. (1) Membership shares confer on the holder the right to receive dividends declared on the shares and to receive the remaining property of the credit union on dissolution.

Number of shares that member can hold

      (2) Subject to any prescribed limit or limit set out in the by-laws of the credit union, a member may hold more than the minimum number of membership shares required, under subsection 28 (2), to be a member.

Same

      (3)  Repeal

Transfer prohibited

      (4) The holder of a membership share may not transfer an interest in the share to a person other than the credit union or another credit union and any transaction that purports to make such a transfer is void.

Certificates not mandatory

      (5) The by-laws of a credit union may provide that membership share certificates need not be issued but, if this is the case, the credit union shall give each member who requests one a statement of the number of membership shares held by the member.

Certificates

      (6) Membership share certificates issued after this subsection comes into force must include such information as may be prescribed.  1994, c. 11, s. 52

Patronage shares

      52.1 (1) The articles of a credit union may provide for a class of shares known as patronage shares to be payable to members as a dividend under section 65 or as a patronage return under section 66.

Nature of shares

      (2) A patronage share does not confer on the holder the right to vote at meetings of the members of the credit union, the right to notice of any meeting of members of the credit union, the right to receive dividends or the right to receive the remaining property of the credit union on dissolution.

Transfer prohibited

      (3) The holder of a patronage share may not transfer an interest in the share to a person other than the credit union or another credit union and any transaction that purports to make such a transfer is void.

Rights of classes

      53.(1) For each class of shares, the articles must set out,

         (a)    the rights, privileges, restrictions and conditions attaching to the shares of each such the class; and

         (b)    the maximum number, if any, of shares of any such the class that the credit union is authorized to issue.

Restrictions

      (2) Shares, other than membership shares, do not confer on their holder the right to vote at meetings of the members of the credit union except as permitted under this Act or the right to receive any of the remaining property of the credit union on dissolution. 1994, c. 11, s. 53.

Shares in series

      54. (1) The articles of a credit union may authorize the issue of any class of shares, other than membership shares, in one or more series and may fix the number of shares in, and determine set out the designation, rights, privileges, restrictions and conditions attaching to the shares of each series.

Same

      (2) The articles may authorize the board to fix the maximum number, if any, of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to the limitations set out in the articles and the limitations under this Act.

Series participation

      (3) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.

Voting rights

      (4) If voting rights are attached to any series of a class of shares, the shares of every other series of that class have the same voting rights.

Restriction on series

      (5) No rights, privileges, restrictions or conditions attached to a series of shares confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding. 1994, c. 11, s. 54 (1-5).

Information to Superintendent

      (6) Before issuing shares in series, the credit union must file with the Superintendent articles of amendment designating the series and setting out the rights, privileges, restrictions and conditions attaching to the shares.

Authorization

      (7)  Repeal

Proxies

      55.  Repeal (moved to s. 217.4)

Pre-emptive right

      56. (1) If the articles so provide, a credit union shall not issue shares of a class, other than membership shares, unless the shares or patronage shares have first been offered to shareholders holding shares of that class.

Same

      (2) Those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at the same price and on the same conditions as the shares are to be offered to others.

Exception

      (3) A shareholder has no pre-emptive right in respect of shares that are to be issued,

         (a)    as a share dividend; or

         (b)    pursuant to the exercise of conversion privileges, options or rights previously granted by the credit union.

Same

      (4) A shareholder has no pre-emptive right in respect of shares that are to be issued,

         (a)    if the issuance of shares to the shareholder is prohibited under this Act; or

         (b)    if, to the knowledge of the board, the offer of shares to a shareholder whose recorded address is outside Ontario ought not to be made unless the appropriate authority in that jurisdiction is provided with information in addition to that submitted to the shareholders at the most recent annual meeting.  1994, c. 11, s. 56.

Conversion privileges

      57. (1) A credit union may issue conversion privileges, options or rights to acquire its securities, other than membership shares or patronage shares, and shall set out the applicable conditions,

         (a)    in the documents that evidence the conversion privileges, options or rights; or

         (b)    in the securities to which the conversion privileges, options or rights are attached.

Transferable rights

      (2) Conversion privileges, options and rights to acquire securities of a credit union may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from the securities to which they are attached.

Reserved shares

      (3) If a credit union has granted privileges to convert its securities into shares or into shares of another class or series, or has issued or granted options or rights to acquire shares, and if the articles limit the number of authorized shares, the credit union shall reserve and continue to reserve sufficient authorized shares to meet the exercise of the conversion privileges, options and rights.  1994, c. 11, s. 57.

Issuing Shares

Power to issue shares

      58. (1) A credit union may issue shares at such times, to such persons and for such consideration as the board may determine.

Restrictions re shares

      (2) A credit union may issue shares only in accordance with this Act and the articles and by-laws of the credit union.  1994, c. 11, s. 58.

Consideration

      59. (1) A credit union shall not issue any share,other than a patronage share, until the credit union has received full payment for it in cash or, with the approval of the Superintendent, in property.  1994, c. 11, s. 59 (1); 1997, c. 28, s. 53.

Exception for certain asset purchases

     (1.1) Subsection (1) does not apply to the issue of shares by a credit union if the issue is part of a transaction in which the credit union (the "purchaser credit union") acquires the assets of another credit union (the "vendor credit union") and, as part of that transaction, shareholders of the vendor credit union are to be issued with shares of the purchaser credit union.

Prohibition re commission

      (2) No person shall charge or accept payment of a commission on the purchase or sale of a membership share of a credit union.

Same

      (3)  Repeal (Moved to s. 83.1)

Shares non-assessable

      60. Shares issued by a credit union are non-assessable and no person is liable to the credit union or to its creditors in respect of his or her the person's shares.  1994, c. 11, s. 60.

Redemption and Cancellation of Shares

Holding own shares

      61. (1) Except as permitted under this Act or prescribed by regulation, a credit union shall not,

         (a)    hold shares of the credit union;

         (b)    permit a subsidiary to hold a greater number of membership shares than the minimum number required for membership in the credit union; or

         (c)    permit a subsidiary to hold any other shares of the credit union.

Holding as personal representative

      (2) A credit union may hold its shares in the capacity of a personal representative and may permit a subsidiary to do so, but only if neither the credit union nor any subsidiary has a beneficial interest in the shares.  1994, c. 11, s. 61 (1, 2).

Security interest

      (3) A credit union may hold its shares by way of a security interest and may permit a subsidiary to do so if the security interest is nominal or immaterial when measured by criteria established by the credit union that have been approved in writing by the Superintendent.  1994, c. 11, s. 61 (3); 1997, c. 28, s. 53.

Transitional provision

      (4) Nothing in this section precludes a credit union or any of its subsidiaries from holding a security interest held immediately before this Part comes into force.

Exception

      (5) Section 28 of the Business Corporations Act does not apply to prevent a subsidiary of a credit union from holding membership shares in a credit union that is its holding body corporate.  1994, c. 11, s. 61 (4, 5).

Purchase and redemption of shares

      62. (1) A credit union may purchase or redeem its shares only in accordance with this section and with its articles the articles and by-laws of the credit union.

Same

      (2) A credit union may purchase, for the purpose of cancellation, any of its shares or redeem any of its redeemable shares at a price not exceeding the redemption price of the share calculated according to a formula stated in its articles or, in the case of shares other than membership shares, according to the conditions attaching to the shares.

Restrictions

      (3) A credit union shall not make any payment to purchase or redeem its shares if there are reasonable grounds for believing that the credit union is, or the payment would cause it to be, in contravention of section 84.

Donations

      (4) A credit union may accept a share surrendered to it as a gift but may not extinguish or reduce a liability in respect of an amount unpaid on the share except in accordance with section 72.  1994, c. 11, s. 62.

Cancellation of shares

      63. A credit union shall cancel its shares or fractions of its shares that it has purchased, redeemed or otherwise acquired, other than through the realization of security  1994, c. 11, s. 63.

Shares acquired through realization of security

      64. (1) If a credit union acquires any of its shares through the realization of security, the credit union shall sell, cancel or otherwise dispose of them within six months after the day of the realization.

Same

      (2) If a subsidiary of a credit union acquires shares of the credit union through the realization of security, the credit union may shall cause the subsidiary to sell or otherwise dispose of them within six months after the day of the realization. 1994, c. 11, s. 64.

Dividends AND PATRONAGE RETURNS

Declaration of dividend

      65. (1) The board may declare, subject to the by-laws, and the credit union may pay a dividend in money or property.

Form of dividend

      (2) A dividend may be paid,

      (a) in cash;

      (b) by issuing patronage shares;

      (c) by issuing fully paid shares, other than membership shares, or options or rights to acquire fully paid shares, other than membership shares, in any class or series of shares; or

      (d) in a combination of two or more forms of patronage returns described in clauses (a), (b) and (c).

Declaration of patronage return

      66. (1) The board may declare, subject to the by-laws, and the credit union may pay, a patronage return to its members in proportion to the business done by each member with or through the credit union.

Form of patronage return

      (2)  A patronage return may be paid,

     (a) in cash;

      (b) by issuing patronage shares;

      (c) by issuing fully paid shares, other than membership shares, or options or rights to acquire fully paid shares, other than membership shares, in any class or series of shares; or

      (d) in a combination of two or more forms of dividends described in clauses (a), (b) and (c).

Rebate of interest

      (3)  A patronage return may include a rebate of interest paid by members during a financial year in respect of loans from the credit union.

 

Restriction on dividends, etc.

      67. The board shall not declare, and the credit union shall not pay, a dividend or patronage return if there are reasonable grounds for believing that the credit union is, or the payment would cause it to be, in contravention of section 84.  1994, c. 11, s. 67.

Stated Capital

Stated capital account

      68. (1) A credit union shall maintain a separate stated capital account for each class and series of shares it issues.

Addition to account

      (2) A credit union shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

Transition

      (3)  Repeal

Same

      (4)  Repeal

Adjustment due to conversion

      69. (1) On a conversion of outstanding shares, other than membership shares or patronage shares, of a credit union into shares of another class or series, the credit union shall,

         (a)    deduct from the stated capital account maintained for the class or series of shares converted 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, and dividing by the number of outstanding shares of that class or series immediately before the conversion; and

         (b)    record the result obtained under clause (a) and any additional consideration received on the conversion in the stated capital account maintained for the class or series of shares into which the shares have been converted.

Stated capital of convertible shares

      (2) For the purposes of subsection (1) and subject to the articles, if a credit union issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, 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 outstanding shares of both classes immediately before the conversion.

Conversion or change of shares

      (3) Shares issued by a credit union and converted into shares of another class or series become issued shares of the class or series into which the shares have been converted.

Definition

      (4) In this section,

"conversion" of a share includes a change made under subsection 311 (1) into another class or series.  1994, c. 11, s. 69.

Addition due to debt conversion

      70. On conversion of a debt obligation of a credit union into shares, the credit union shall,

         (a)    deduct from the liabilities of the credit union the nominal value of the debt obligation; and

         (b)    record the result obtained under clause (a) and any additional consideration received for the conversion in the stated capital account maintained for the class or series of shares into which the debt obligation has been converted.  1994, c. 11, s. 70.

Reduction due to purchase, etc.

      71. (1) On a purchase, redemption or other acquisition of shares or fractions of shares by a credit union, the credit union shall deduct from the stated capital account maintained for the applicable class or series of shares an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares purchased, redeemed or acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or acquisition.

Exception

      (2) This section does not apply with respect to shares acquired as described in subsection 61 (2) or acquired through the realization of security and sold in accordance with subsection 64 (1).  1994, c. 11, s. 71.

Reduction by special resolution

      72. (1) The stated capital of a credit union may be reduced by special resolution of the members of the credit union.

Contents of special resolution

      (2) The special resolution must specify each stated capital account to be affected by the reduction.  1994, c. 11, s. 72 (1, 2).

Approval

      (3) The special resolution has no effect until it is approved in writing by the Superintendent.  1994, c. 11, s. 72 (3); 1997, c. 28, s. 53.

Conditions for approval

      (4) The Superintendent may not approve the special resolution unless an application for his or her approval is made within three months after the resolution is passed and a copy of the resolution, together with a notice of intention to apply for approval, has been published in The Ontario Gazette.  1994, c. 11, s. 72 (4); 1997, c. 28, s. 53.

Information

      (5) An application for approval must include such information and documents as the Superintendent may require.  1994, c. 11, s. 72 (5); 1997, c. 28, s. 53.

Restriction

      (6) A credit union shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the credit union is, or the reduction would cause it to be, in contravention of section 84.

Reducing capital account

      (7) A credit union shall adjust its stated capital account or accounts in accordance with any special resolution referred to in subsection (1).  1994, c. 11, s. 72 (6, 7).

Recovery by action

      73. (1) If money has been paid or property distributed as a consequence of a reduction of capital made contrary to section 72, a creditor of the credit union may apply to a court for an order compelling the member, shareholder or other person to pay the money or deliver the property to the credit union.  1994, c. 11, s. 73 (1).

Shares held by personal representative

      (2) A person holding shares as a personal representative who is registered on the records of the credit union in the register under section 230 as a member or shareholder and described as the personal representative for a named person is not personally liable under subsection (1) but the named person is liable.  1994, c. 11, s. 73 (2).

      (3) Repealed:  2002, c. 24, Sched. B, s. 25.

Remedy preserved

      (4) This section does not affect any liability that arises under section 153.  1994, c. 11, s. 73 (4).

Transfer of Securities

Application of Business Corporations Act

      74. Part VI of the Business Corporations Act applies, with necessary modifications, with respect to the transfer of securities, other than membership shares or patronage shares, as if the credit union were incorporated under that Act. 1994, c. 11, s. 74.

Note: On a day to be named by proclamation of the Lieutenant Governor, section 74 is repealed by the Statutes of Ontario, 2006, chapter 8, section 142 and the following substituted:

Application of Securities Transfer Act, 2006

      74.  The Securities Transfer Act, 2006 applies, with necessary modifications, with respect to the transfer of securities, other than membership shares or patronage shares.  2006, c. 8, s. 142.

See:  2006, c. 8, ss. 142, 145 (2).

Restrictions on transfer of securities

      74.1 (1)   A security issued under circumstances described in clause 75 (1) (a) shall not be transferred except to another member of the credit union or to a prescribed person.

Same

      (2)  The transfer of a security that is permitted under subsection (1) shall be made in the prescribed manner and subject to the prescribed conditions.

Same

      (3)  The transfer of a security that is permitted under subsection (1) is effective when the transfer is recorded in the register under section 230.

Offering Statement

Selling securities

      75. (1) A credit union may sell its securities to a member or accept from a member, directly or indirectly, consideration for its securities if,

         (a)    the credit union has obtained a receipt under section 78 for an offering statement respecting the securities and the receipt has not been revoked or expired; or

         (b)    the credit union has provided the Superintendent with a copy of receipts from the Ontario Securities Commission under the Securities Act for a preliminary prospectus and a prospectus respecting the offering of the securities.  1994, c. 11, s. 75 (1); 1997, c. 28, s. 53.

When Securities Act does not apply

      (2) The Securities Act does not apply to securities sold or disposed of by a credit union pursuant to a receipt, under section 78, for an offering statement.

Exception

      (3) Subsection (1) and the Securities Act do not apply with respect to the issuance of,

         (a)    membership shares;

         (b)    patronage shares; or

         (c)    shares under section 65 or 66.

Interpretation

      (4) When, in subsection (1), credit union is read to mean league, a member of a league includes a member of a credit union that is a member of the league.  1994, c. 11, s. 75 (2-4).

Permitted sellers

      76. Securities sold under the circumstances described in clause 75 (1) (a) may be sold by,

         (a)    the directors, officers and employees of the issuing credit union;

         (b)    in the case of an issuing league, the directors, officers and employees of the league or of a credit union that is a member of the league; or

         (c)    a person registered under the Securities Act as a securities dealer, investment dealer or broker. 1994, c. 11, s. 76.

Offering statement

      77. (1) Application for a receipt for an offering statement is made by filing with the Superintendent a copy of the offering statement and paying the applicable fee established by the Minister. 1994, c. 11, s. 77 (1); 1997, c. 28, s. 53.

Contents

      (2) The offering statement must contain such information as may be prescribed and must be in a form approved by the Superintendent.  1994, c. 11, s. 77 (2); 1997, c. 28, s. 53.

Standard of disclosure

      (3) The offering statement must provide full, true and plain disclosure of all material facts relating to the securities that the credit union proposes to issue. 1994, c. 11, s. 77 (3).

Certificate

      (4) The offering statement must be accompanied by a disclosure certificate signed by the chair of the board and the chief executive officer, certifying that the offering statement satisfies the requirements of subsections (2) and (3).

Additional material

      (5) The Superintendent may require,

         (a)    the credit union to provide additional documents, reports and other material; and

         (b)    that the information contained in the material referred to in clause (a) form part of the offering statement.  1994, c. 11, s. 77 (5); 1997, c. 28, s. 53.

Examination

      (6) Before issuing a receipt, the Superintendent may require the credit union to permit an examination of its affairs, at its own expense, by a person authorized in writing by the Superintendent.  1994, c. 11, s. 77 (6); 1997, c. 28, s. 53.

Receipt for offering statement

      78. (1) The Superintendent shall issue a receipt for an offering statement unless it appears to him or her that,

         (a)    the statement or any document accompanying it,

                        (i)    fails to comply in any substantial respect with this Act or the regulations,

                       (ii)    contains any statement, promise, estimate or forecast that is misleading, false or deceptive,

                     (iii)    contains an extract from an opinion or statement of an expert that does not fairly represent the opinion or statement, or

                      (iv)    conceals or omits to state any material facts necessary in order to make any statement contained in the offering statement not misleading in light of the circumstances in which it was made;

         (b)    the proceeds from the sale of the securities are insufficient, together with the other resources of the credit union, to accomplish the purpose of the issue that is stated in the offering statement; or

         (c)    it would not be in the public interest to issue a receipt for the offering statement.  1994, c. 11, s. 78 (1); 1997, c. 28, s. 53.

Refusal to issue, revocation

      (2) The Superintendent may refuse to issue or may revoke a receipt for an offering statement in any of the following circumstances:

           1.    The credit union is not complying with section 84.

           2.    The credit union is subject to the supervision of the Corporation or under the administration of the Corporation.

           3.    Repeal

Same

      (3) Before refusing to issue a receipt or revoking a receipt, the Superintendent shall give the applicant an opportunity to be heard make written submissions.  1994, c. 11, s. 78 (3); 1997, c. 28, s. 53.

Same

      (4) A decision to refuse to issue a receipt or a decision to revoke a receipt must be given in writing and must include the reasons for the refusal or revocation.

Expiry of receipt

      (5) A receipt for an offering statement expires on the earlier of,

      (a) the date that is six months after the day it is issued; and

      (b) the date on which the offering of securities contemplated by the offering statement for which the receipt is granted is closed in accordance with the offering statement.

Renewal of receipt

      79. (1) Application for renewal of the receipt for an offering statement may be made by filing an application with the Superintendent with a copy of the statement and paying the fee established by the Minister.

Time for application

      (2) Application for renewal must be made before the receipt for the offering statement expires.

Receipt

      (3) Section 78 applies, with necessary modifications, with respect to the renewal of a receipt.  1994, c. 11, s. 79 (2, 3).

Material change

      80. (1) If there is a material change in the facts set out in an offering statement, the credit union shall file with the Superintendent,

         (a)    an amendment to the offering statement, if no receipt has been issued for the statement; or

         (b)    a statement of material change, if a receipt has been issued for the offering statement and the receipt has not been revoked or expired.  1994, c. 11, s. 80 (1); 1997, c. 28, s. 53.

Time

      (2) The credit union shall give the Superintendent the amendment or statement of material change promptly and, in any event, within ten days after the date on which the material change occurred.  1994, c. 11, s. 80 (2); 1997, c. 28, s. 53.

Notice to persons

      (3) The credit union shall give a copy of the amendment or statement of material change to every person to whom it gave a copy of the offering statement.  1994, c. 11, s. 80 (3).

Replacement statement

      (4) A credit union may, and if requested to do so by the Superintendent, shall file with the Superintendent a new offering statement instead of one or more statements of material change.  1994, c. 11, s. 80 (4); 1997, c. 28, s. 53.

Contents

      (5) Sections 77 and 78 apply with respect to a statement of material change as if it were an offering statement.

Exclusion

      (6) In this section,

"material change" does not include such types of change as may be prescribed.  1994, c. 11, s. 80 (5, 6).

Distribution of statements

      81. (1) A credit union shall give a copy of an offering statement or statement of material change to each member that requests a copy of one.

Same

      (2) A person who offers a security in a credit union for sale shall give a copy of the offering statement and statement of material change, if any, to a prospective purchaser upon request and to a purchaser.

Withdrawal from purchase

      (3) An agreement of purchase and sale in respect of securities is not binding on the purchaser if the person from whom the purchaser has agreed to purchase the security receives written notice of the purchaser's intention not to be bound by the agreement not later than midnight on the second business day after receipt by the purchaser of the latest offering statement and any statement of material change.

Same

      (4) (4) Subsection (3) applies with necessary modifications in respect of a person who is subscribing for securities to be issued by a credit union.

Written notice

      (5) A written notice is considered to be received by a recipient for the purposes of subsection (3) if the recipient receives the notice by facsimile or electronic means.

"business day"

      (6) In subsection (3),

     "business day" means a day that is not,

      (a) Saturday, or

      (b) or any other holiday, other than Easter Monday and Remembrance Day.

 

Effect of misrepresentation

      82. (1) If an offering statement or a statement of material change contains a misrepresentation, a purchaser of a security shall be deemed to have relied upon the misrepresentation if it was a misrepresentation when the purchase was made.

Exception

      (2) Subsection (1) does not apply if the purchaser knew about the misrepresentation when purchasing the security.  1994, c. 11, s. 82 (1, 2).

Right of action

      (3) The purchaser has a right of action for damages against,

         (a)    the credit union;

         (b)    every person, other than an employee of a credit union, who sells the security on behalf of the credit union;

         (c)    every director of the credit union at the time the offering statement or statement of material change was filed with the Superintendent;

         (d)    every person whose consent has been filed pursuant to a requirement of the regulations but only with respect to reports, opinions or statements that have been made by them; and

         (e)    every person who signed the offering statement or statement of material change other than the persons included in clauses (a) to (d).  1994, c. 11, s. 82 (3); 1997, c. 28, s. 53.

Same

      (4) If the purchaser purchased the security from a credit union, the purchaser may elect to exercise a right of rescission against the credit union, in which case the purchaser has no right of action for damages against the credit union. 1994, c. 11, s. 82 (4).

Defence

      (5) A person who signed the disclosure certificate in a form approved by the Superintendent or a director is not liable under this section if he or she the person proves one of the following:

           1.    The offering statement or statement of material change was filed with the Superintendent without the person's knowledge or consent. As soon as the person became aware that it had been filed with the Superintendent, the person advised the Superintendent that it was filed with the Superintendent without the person's knowledge or consent.

           2.    The person was not aware of the misrepresentation when the offering statement or material change statement was filed with the Superintendent. After the receipt for the statement was issued but before the purchaser bought the security, the person immediately after he or she the person became aware of the misrepresentation advised the Superintendent that he or she the person withdrew consent to the filing of the statement with the Superintendent.

           3.    The person had no reasonable grounds to believe, and did not believe, that there had been a misrepresentation.  1994, c. 11, s. 82 (5); 1997, c. 19, s. 5 (3); 1997, c. 28, s. 53; 1999, c. 12, Sched. I, s. 2 (4).

Interpretation

      (6) In this section,

"misrepresentation" means,

         (a)    an untrue statement of material fact, or

         (b)    an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. 1994, c. 11, s. 82 (6).

Restrictions on transfer of securities

      83. Repeal (moved to s. 74.1)

RESTRICTION ON COMMISSION FOR PURCHASE OR SALE

No Commission by directors, officers, employees

      83. (1)  None of the following persons shall charge or accept payment of a commission on the purchase or sale of a security of a credit union:

         (1)    The directors, officers and employees of the credit union.

         (2)    The related persons of a director, officer or employee of the credit union.

         (3)    If the credit union is a member of a league, the directors, officers and employees of the league.

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