Modernizing the Credit Unions and Caisses Populaires Act
Modernizing the Credit Unions and Caisses Populaires Act
A Consultation Draft of
Amendments to Legislation and Capital and Lending Regulation
PROPOSED BY THE MINISTRY OF FINANCE
AUGUST 2006
This Consultation Draft is intended to
facilitate constructive dialogue concerning its contents.
Note that the legislation will only become law if the
Legislative Assembly passes the legislation.
Note that the regulation will only become law
if the Lieutenant Governor in Council promulgates the regulation.
Dear Stakeholder:
The Ministry of Finance is pleased to enclose for your review and comment a Consultation Draft of proposed amendments to the Credit Unions and Caisses Populaires Act, 1994 and a Consultation Draft of proposed amendments to O. Reg. 76/95 concerning capital and lending.
The government, in collaboration with the Financial Services Commission of Ontario and the Deposit Insurance Corporation of Ontario, has been working with representatives of credit unions and caisses populaires to identify improvements to the Credit Unions and Caisses Populaires Act, 1994. This exercise is part of the government's commitment to modernize financial sector regulation and support a new generation of economic growth.
The proposals described in this document are intended to enable credit unions and caissess populaires to serve their customers better and enhance the sector's stability, which is an essential component of its competitiveness.
The ministry is interested in receiving input from individual credit unions and caisses populaires, their members and others. Your views will assist the ministry in finalizing proposals to update the Act and regulations.
The enclosure contains information on how you can submit comments on these proposals. Submissions will be accepted until September 11, 2006.
Thank you for contributing to this important review.
Wayne Arthurs
Parliamentary Assistant to the Minister of Finance
INVITATION FOR COMMENTS
The Ministry of Finance invites your comments on the issue outlined in this consultation draft. Interested parties are asked to provide their written submissions by September 11, 2006.
If you have any comments or questions about this consultation or how any element of your submission may be used or disclosed, please contact:
Luba Mycak
Senior Manager
Industrial & Financial Policy Branch
Ministry of Finance
777 Bay Street, 10th Floor
Toronto, ON M5G 2C8
Tel: 416-326-9227
Fax: 416-327-0941
E-Mail: cucpconsultations@fin.gov.on.ca
A copy of this consultation document can be reviewed online at www.fin.gov.on.ca
The content, structure, and form of the draft legislation and regulations are subject to change as a result of the consultation process and as a result of review by the government. These proposals will only become law if they are passed by the Legislative Assembly (in the case of draft legislation) or approved by Cabinet (in the case of draft regulations).
Please note that this is a public consultation. All comments received will be considered public and may be used by the ministry to help evaluate and revise the legislative proposals. This may involve disclosing some or all comments or materials, or summaries of them, to other interested parties during and after the consultation. Personal information will not be disclosed without prior consent.
If for any reason you feel your comments should not be shared with other parties, please indicate this in your covering letter. Please note that all submissions received are subject to the Freedom of Information and Protection of Privacy Act.
© Queen's Printer for Ontario, 2006
ISBN 1-4249-1867-7 (print)
ISBN 1-4249-1868-5 (HTML)
ISBN 1-4249-1869-3 (PDF)
CONSULTATION DRAFT
DRAFT CREDIT UNIONS AND CAISSES POPULAIRES ACT FOR CONSULTATION PURPOSES
Credit Unions and Caisses Populaires Act, 1994
S.O. 1994, CHAPTER 11
Amended by: 1997, c. 19, s. 5; 1997, c. 28, ss. 52-63; 1999, c. 6, s. 19; 1999, c. 12, Sched. I, s. 2; 2001, c. 8, s. 30; 2002, c. 18, Sched. H, s. 3; 2002, c. 24, Sched. B, ss. 25, 32; 2004, c. 8, ss. 46, 47 (1); 2004, c. 17, s. 32; 2005, c. 5, s. 18; 2006, c. 8, s. 142; 2006, c. 19, Sched. C, s. 1 (1).
CONTENTS
PART I |
|
Definitions |
|
Joint shareholders |
|
Subsidiary |
|
Holding body corporate |
|
Affiliation |
|
Controlling body corporate |
|
Member |
|
Shareholder |
|
PART III |
|
Corporate charter |
|
Articles of incorporation |
|
Contents of articles |
|
Application for incorporation |
|
Certificate of incorporation |
|
Effect of certificate |
|
Appeal re refusal of certificate |
|
Language and form of name |
|
Use of other name |
|
Prohibition, use of “credit union”, “caisse populaire” |
|
Restrictions re corporate names |
|
Reserving a corporate name |
|
Corporate seal |
|
Location of head office |
|
Objects |
|
Powers |
|
Acting outside powers |
|
Indoor management rule |
|
Financial years |
|
Corporations Act not to apply |
|
PART IV |
|
Membership |
|
Becoming a member |
|
Limitation on membership |
|
Admissions outside bond of association |
|
Retaining membership |
|
Record, information relating to membership |
|
Corporate and partnership members |
|
Liability of members |
|
Not bound by trust |
|
Trusts for named beneficiaries |
|
Joint accounts |
|
Members under age of 18 years |
|
Limited payment re deceased member |
|
Lien for liability |
|
Withdrawal of members |
|
Expulsion of members |
|
Members may maintain representative actions |
|
PART V |
|
Classes of shares |
|
Membership shares |
|
Patronage shares |
|
Rights of classes |
|
Shares in series |
|
Pre-emptive right |
|
Conversion privileges |
|
Power to issue shares |
|
Consideration |
|
Shares non-assessable |
|
Holding own shares |
|
Purchase and redemption of shares |
|
Cancellation of shares |
|
Shares acquired through realization of security |
|
Declaration of dividend |
|
Declaration of patronage return |
|
Restriction on dividends, etc. |
|
Stated capital account |
|
Adjustment due to conversion |
|
Addition due to debt conversion |
|
Reduction due to purchase, etc. |
|
Reduction by special resolution |
|
Recovery by action |
|
Application of Business Corporations Act |
|
Restrictions on transfer of securities |
|
Selling securities |
|
Permitted sellers |
|
Offering statement |
|
Receipt for offering statement |
|
Renewal of receipt |
|
Material change |
|
Distribution of statements |
|
Effect of misrepresentation |
|
Restrictions on transfer of securities |
|
PART VI |
|
Adequacy of capital and liquidity |
|
Additional requirements |
|
Variation of requirements |
|
Valuation of asset |
|
Report re adequacy |
|
Notification if credit union insolvent |
|
Provision for losses and accrued interest |
|
PART VII |
|
Qualifications of directors |
|
Disqualified individuals |
|
Number of directors |
|
Election of board |
|
Chair of the board |
|
Term of office, directors |
|
Term of office, chair |
|
Quorum |
|
Vacancies |
|
Ceasing to hold office |
|
Removal by board |
|
Removal by members |
|
Removal by Superintendent |
|
Statement re opposition |
|
Statement on resignation |
|
Duties of the board |
|
By-law powers |
|
Remuneration of directors |
|
When by-law effective |
|
Salary and benefits reported in financial statements |
|
Audit committee |
|
Powers and duties of audit committee |
|
Notification about certain matters |
|
Power to call board meeting |
|
Officers |
|
Duties of corporate secretary |
|
Duty of confidentiality |
|
Confidentiality re members |
|
Duty of care |
|
Duty to comply |
|
Disclosure of interest |
|
Voting |
|
Avoidance standards |
|
Prohibition re acting for credit union |
|
Prohibition re acting as trustee |
|
Validity of actions |
|
Requirement for bond |
|
Liability of directors, etc. |
|
Specific liability of directors |
|
Contribution |
|
Reliance on statement |
|
Insurance for directors and officers |
|
Indemnity for directors, etc. |
|
Application for indemnification |
|
Appointment of auditor |
|
Qualification as auditor |
|
Ineligibility as receiver |
|
Remuneration |
|
Replacement of auditor |
|
Removal of auditor |
|
Notice re resignation, etc. |
|
Auditor for subsidiaries |
|
Right of access |
|
Right to attend meetings |
|
Auditor's report |
|
Duty at meetings |
|
Extended examination required by Superintendent |
|
Extended examination required by Corporation |
|
Duty to report contravention, etc. |
|
PART VIII |
|
Permitted activities |
|
Ancillary businesses |
|
Restriction re partnerships |
|
Restrictions on insurance |
|
Restrictions on fiduciary activities |
|
Guarantees |
|
Appointment of receiver, etc. |
|
Deposits accepted from members, etc. |
|
Not bound by trust |
|
Unclaimed deposits |
|
Borrowing |
|
Security interests in credit union property |
|
Notice re acquisitions subject to security interests |
|
Restrictions on subordinated indebtedness |
|
Limit on borrowing |
|
Restriction on borrowing from another credit union |
|
Investment and lending policies |
|
Loans to members only |
|
Prescribed lending limits |
|
Loan workouts |
|
Order for call of unauthorized loans |
|
Definition of "cost of borrowing" |
|
Rebate of borrowing costs |
|
Disclosure of cost of borrowing |
|
Additional disclosure - term loans |
|
Disclosure in applications for credit cards, etc. |
|
Disclosure where credit cards, etc., issued |
|
Additional disclosure: loans to which ss. 197.4 and 197.6 do not apply |
|
Statement re mortgage renewal |
|
Disclosure in advertising |
|
Regulations re disclosure |
|
Eligible investments |
|
Restriction re single investment |
|
Establishing or acquiring subsidiary |
|
Investment in another credit union |
|
Status of investments upon amalgamation, etc. |
|
Order for disposal of unauthorized investments |
|
Interpretation |
|
Purchase or sale of substantial assets |
|
PART IX |
|
General prohibition |
|
Loans to officers, directors, etc. |
|
Regulations |
|
Setting aside transactions |
|
Interpretation |
|
PART X |
|
Notice of meetings |
|
Annual meeting |
|
Financial statements |
|
General meetings |
|
Proposals |
|
Refusing proposal |
|
Requisition for members' meeting |
|
Voting rights at members' meetings |
|
Different ways of member voting |
|
Proxies, members |
|
Proxies, other shareholders |
|
Telephone and electronic meetings |
|
Telephone and electronic meetings |
|
Dissent of director |
|
Meeting required by Superintendent |
|
Annual statement to be given to members |
|
Inspection of books |
|
Financial statements of subsidiaries |
|
Branches and other member groups |
|
PART XI |
|
Information required by Superintendent |
|
Information required by Corporation |
|
Annual return |
|
Examinations by Superintendent |
|
Examination by Corporation |
|
Examination powers |
|
Register of members, shareholders, etc. |
|
Requirement to maintain records and documents, etc. |
|
Form of records and documents |
|
Copies of by-laws |
|
PART XII |
|
Superintendent's order – general |
|
Order, if assets shown at more than fair value |
|
Suspension of business |
|
Procedural rules for certain orders |
|
Copies of orders to be given |
|
When orders take effect |
|
Appeals of orders to Tribunal |
|
Orders not stayed by judicial review |
|
PART XIII |
|
Incorporating leagues |
|
Application of Act |
|
Application of Federal Act |
|
Corporations Act not to apply |
|
Members |
|
PART XIV |
|
Corporation continued |
|
Board of directors |
|
Term of office |
|
Duties of board |
|
No liability for acts in good faith |
|
Keeping books |
|
Auditor |
|
Annual report |
|
Tabling reports |
|
Information to Minister |
|
Objects |
|
Ancillary powers |
|
Subsidiaries |
|
By-laws |
|
Fiscal year |
|
Investment of funds |
|
Insurance of deposits with credit unions |
|
Payment for insured deposits |
|
Insurance of deposits with amalgamating credit unions |
|
Preparatory examination |
|
Cancellation of deposit insurance |
|
Prohibition, advertising, holding out as insured |
|
Deposit Insurance Reserve Fund |
|
Annual premiums |
|
Overdue charges |
|
Repayments |
|
Supervision by Corporation |
|
Powers when credit union supervised |
|
Expenses of Corporation |
|
Administration by Corporation |
|
Administrator's powers |
|
Expenses of Corporation |
|
PART XV |
|
Definition |
|
Dissolution where no assets |
|
Voluntary winding up |
|
Notice and dissolution |
|
Winding up by court order |
|
Dissolution by Superintendent |
|
Liability of members and shareholders to creditors |
|
Forfeiture of undisposed property |
|
Responsibilities of liquidator |
|
Distribution of property |
|
Payment of costs and expenses |
|
Powers of liquidator |
|
Notice of winding-up proceedings |
|
Security interests remaining after dissolution |
|
Amalgamation of credit unions |
|
Amalgamation of credit unions under administration |
|
Articles of amendment |
|
Class vote |
|
Required documentation |
|
Certificate of amendment |
|
Restatement of articles |
|
Continuance as an Ontario credit union |
|
Transfer to another jurisdiction |
|
Continuation under other Ontario Act |
|
PART XVI |
|
Regulations: general |
|
Regulations: offering statements |
|
Regulations: capital adequacy |
|
Regulations: deposit insurance premiums |
|
Regulations: audit committee |
|
Regulations: administrative penalties |
|
Forms |
|
Reports |
|
Circulars and proxies |
|
Statements |
|
Fees |
|
PART XVII |
|
Offence, general |
|
Order to comply |
|
Restitution |
|
Repaying benefits |
|
Order to comply |
|
Effect of contravention |
|
Effect of penalty |
|
Limitation period |
|
Administrative penalties |
|
Superintendent – administrative penalties |
|
Corporation – administrative penalties |
|
Effect of paying penalty |
|
Maximum administrative penalties |
|
Enforcement of administrative penalties |
|
PART XVIII |
|
Extra-provincial credit unions |
|
Initial review |
|
Delivery of notice |
|
Existing stabilization funds |
|
