Be it enacted by the Lieutenant-Governor and
House of Assembly in Legislative Session convened, as follows:
Short title
1. This
Act may be cited as the Credit Union Act,
2009.
Definitions
2. In this Act
(a) "articles"
means
(i) the original or
restated articles of incorporation, amendment, amalgamation, continuance,
reorganization and dissolution of a credit union, and
(ii) a statute or other
constating instrument evidencing the corporate existence of a credit union
continued as a credit union under this Act;
(b) "associate
member" means a person other than a member who has rights as set out in
the by-laws and the regulations but that person shall not have a vote at a
meeting of a credit union or become a director of a credit union;
(c) "bond of
association" means a characteristic common to all members of a credit
union;
(d) "court"
means the Trial Division of the Supreme Court of Newfoundland and Labrador;
(e) "credit
union" means a corporation incorporated or continued as a credit union
under this Act and includes a caisse populaire;
(f) "deposit"
means money placed in an account in a credit union or a financial central;
(g) "director"
in relation to a credit union means a person occupying in the credit union, the
position of director by whatever name that person is called and
"directors" and "board of directors" includes a single
director;
(h) "equity"
means in relation to a credit union,
(i) the value of the consideration paid for
membership shares and other shares issued by the credit union that are not
redeemable within one year or another period as approved by the superintendent,
(ii) the book value of
surplus shares issued by the credit union,
(iii) the retained earnings
of the credit union, and
(iv) other capital items
approved by the superintendent,
unless the credit union has an accumulated
deficit, in which case it means the amounts determined under subparagraphs (i),
(ii) and (iv) minus the accumulated deficit;
(i) "guarantee
corporation" means the Credit Union Deposit Guarantee Corporation
continued under section 133;
(j) "member"
means a person who is a shareholder of a
credit union and who, in accordance with the credit union's by-laws, qualifies
for membership in that credit union;
(k) "minister" means the minister appointed under the Executive Council Act to administer this
Act;
(l) "ordinary
resolution" means a resolution passed by a majority of the votes cast by
the members who voted in respect of that resolution;
(m) "patronage refund" means an amount
that under this Act is allocated among and credited or paid by a credit union
to its members, based on the business done by each of them with the credit
union;
(n) "security"
means a share or a debt obligation or a certificate evidencing a share or a
debt obligation;
(o) "security interest" means an
interest in or charge upon property of a credit union or the guarantee
corporation taken by a creditor to secure payment of a debt or performance of
an obligation of a credit union or the guarantee corporation and includes a
certificate evidencing a share or debt obligation;
(p) "sound business and
financial practices" means a set of stated business principles as set out
by the guarantee corporation against which the credit unions' boards of
directors and the credit unions' management personnel can measure their
performance;
(q) "special resolution" means a
resolution passed by a majority of not less than 2/3 of the votes cast by the
persons who voted in respect of that resolution or signed by all the persons
entitled to vote on that resolution;
(r) "subsidiary"
means a corporation in which a credit union has a majority of the voting
shares;
(s) "superintendent"
means the Superintendent of Credit Unions appointed under section 191; and
(t) "supervisor"
means the guarantee corporation or a person appointed by the guarantee
corporation under section 174 to supervise a credit union.
Part prevails
3. Where
a provision of Part X is inconsistent with another provision of this Act, the provision
of that Part prevails.
Prohibition
4. A
person not incorporated as a credit union under this Act or under or continued
under the Credit Union Act in force
immediately before the commencement of this Act, shall not carry on the business
of a credit union in the province.
PART I
INCORPORATION OF CREDIT UNIONS
Incorporation
5. (1) Twenty or more persons who are 19 years of age or older and are bondable may
incorporate as a credit union.
(2) The incorporators shall apply for
incorporation as a credit union by sending to the superintendent
(a) the proposed articles
of incorporation in a form acceptable to the superintendent;
(b) the proposed by-laws that
are required by the Act and the Regulations; and
(c) other information
that the superintendent may require.
Articles
6. (1) Articles
of incorporation of a credit union shall set out,
(a) the name of the
credit union;
(b) the place in the
province where the registered office is to be situated;
(c) the name, residence
address and principal occupation of each first director;
(d) a statement of the
proposed bond of association of the credit union;
(e) the classes and maximum number of shares that
the credit union is authorized to issue other than membership shares, and where
there will be 2 or more classes of shares the rights, privileges, restrictions
and conditions attaching to each class of shares;
(f) where the right to
transfer shares of the credit union is to be restricted, a statement that the
right to transfer shares is restricted and the nature of the restrictions; and
(g) restrictions on the
business that the credit union may carry on,
and shall provide for other matters which under this Act are required
to be dealt with in the articles.
(2) The articles may set out provisions permitted
by this Act to be set out in the by-laws of the credit union.
By-laws
7. (1) A credit union shall establish by-laws which provide for
those matters required by the regulations and the by-laws shall be approved by ordinary
resolution of the members in attendance at a duly convened meeting of the
credit union.
(2) The by-laws of a credit union may provide for
matters in addition to those matters required by the regulations if the by-laws
are not inconsistent with this Act.
Application for
incorporation
8. (1) The
guarantee corporation may approve an application for incorporation as a credit
union
(a) where the guarantee
corporation is satisfied that
(i) the proposed articles
of incorporation and by-laws are in compliance with this Act,
(ii) the applicants are
qualified to establish and the proposed directors are qualified to establish
and operate the proposed credit union, and
(iii) sections 6 and 7 have
been complied with; and
(b) unless the guarantee
corporation considers the application is contrary to the public interest.
(2) The superintendent shall if the guarantee
corporation approves the application under subsection (1), file the articles of
incorporation and by-laws submitted under subsection 5(2)
and shall issue a certificate of incorporation in accordance with section 182.
(3) The superintendent shall give notice of the
issuing of a certificate of incorporation in the Gazette.
Certificate of
incorporation
9. (1) A
credit union comes into existence on the date shown in the certificate of
incorporation.
(2) A certificate of incorporation shall be
considered to be proof
(a) that the provisions of this Act in relation to
incorporation of a credit union and all requirements precedent and incidental
to incorporation have been complied with; and
(b) that the credit union
has been incorporated under this Act on the date shown in the certificate of
incorporation.
Business commencement
requirements
10. (1) A
credit union incorporated under this Part shall not commence business in the
province until the guarantee corporation has given approval for that
commencement.
(2) The guarantee corporation shall not approve
the commencement of business of a credit union unless that credit union has
complied with the requirements that are prescribed by regulation for the
commencement of business.
(3) Subsection (1) shall not prohibit business
activities that are necessary to enable the credit union to meet the
requirements of subsection (2).
(4) All
deposits and share subscriptions taken in support of an application for
incorporation of a credit union or before a credit union is approved to
commence business shall be held in trust in the manner required by the
guarantee corporation.
Name
11. (1) A
credit union shall include the words "credit union" or the words
"caisse populaire" in its name and the word "Limited" or
"Limitee" or the abbreviation "Ltd." or "Ltee" as
the last word of that credit union's name.
(2) A credit union shall clearly identify itself
and set out its name in legible characters in all contracts, invoices,
negotiable instruments, seals, orders, advertising and other representations to
the public.
(3) A credit union may carry on business by a name
other than its full name, provided that the words "credit union" or
"caisse populaire" are included in that name.
(4) A person or association of persons shall not
(a) use the words
"credit union" or "caisse populaire" or a derivative or
abbreviation of those words as part of its name; or
(b) conduct business in
the province in a manner that might lead to the belief that that person or
association of persons is carrying on business as a credit union,
unless that person or association of
persons is incorporated under this Act or incorporated or continued under the Credit Union Act in force immediately
before the commencement of this Act.
(5) Subsection (4) does not apply to the guarantee
corporation.
(6) Notwithstanding subsection (1), a credit union
continued under the Credit Union Act in
force immediately before the commencement of this Act and operating under the
title or name of "Co-operative Credit Society" may be continued under
this Act in that name.
Prohibited names
12. (1) A
credit union shall not carry on business under a name
(a) that is identical
to the name of an existing or a dissolved credit union except as may be
prescribed by regulation;
(b) that, in the opinion of the superintendent,
suggests or implies a connection with the Crown, the Government of Canada, the
government of a province or territory of Canada or a department, branch, bureau,
service, agency or activity of that government, without the consent in writing
of the appropriate authority;
(c) that includes the word "loan",
"trust", "mutual", "insurance" or
"securities"; or
(d) which in the opinion
of the superintendent is contrary to public policy.
(2) A credit union shall not carry on business
under a name that is similar to the name of another business, association or
corporation if the use of that name by the credit union would, in the opinion
of the superintendent, be likely to confuse or mislead, unless the business,
association or corporation consents in writing to its name being given in whole
or in part to the credit union and, if required by the superintendent, the
business, association or corporation undertakes to dissolve or to change its
name within 6 months after the incorporation of the credit union.
(3) Where a credit union is granted a name subject
to an undertaking given under subsection (2) and the undertaking is not carried
out within the specified time, the superintendent may direct the credit union
to which the name is granted to change its name to a name that complies with
this Act.
(4) Where a credit union
(a) comes into existence
or is continued with a name; or
(b) upon an application
to change its name, is granted a name,
that violates this section, the superintendent may direct the credit
union to change its name.
(5) Where a credit union is directed under
subsections (3) or (4) to change its name and fails within 60 days after the
service of that directive to change its name to a name that complies with this
Act, the superintendent may revoke the name of the credit union and assign to
it a name or number and, until changed in accordance with section 109, the name
or number of the credit union is the name or number assigned.
(6) Where a credit union has had its name revoked
and a name or number assigned to it under subsection (5), the superintendent
shall issue a certificate of amendment showing the new name of the credit union
and shall give notice of the change of name in the Gazette.
Pre-incorporation
contract
13. (1) Except
as provided in this section, a person who enters into a contract in the name of
or purportedly on behalf of a credit union before it comes into existence is
personally bound by the contract and is entitled to the benefits of it.
(2) A credit union may, within a reasonable time
after it comes into existence, by an action or conduct signifying its intention
to be bound by it, adopt an oral or written contract made before it came into
existence in its name or on its behalf, and on that adoption
(a) the credit union is bound by the contract and
is entitled to the benefits of it as if the credit union had been in existence
at the date of the contract and had been a party to it; and
(b) a person who purported to act in the name of
or on behalf of the credit union ceases, except as provided in subsection (3),
to be bound by or entitled to the benefits of the contract.
(3) Except as provided in subsection (4), whether
or not an oral or written contract made before the coming into existence of a
credit union is adopted by the credit union, a party to the contract may apply,
within a reasonable time after the date of incorporation of the credit union,
to the court for an order fixing obligations under the contract as joint or
joint and individual or apportioning liability between or among the credit
union and a person who purported to act in the name of or on behalf of the
credit union and a judge of the court may make an order that he or she
considers appropriate.
(4) Where expressly provided in the oral or
written contract, a person who purported to act in the name of or on behalf of
the credit union before it came into existence is not bound by the contract or
entitled to the benefits of it.
PART II
CAPACITY AND POWERS
Capacity
14. A
credit union has the capacity and, subject to this Act, the rights, powers and
privileges of a natural person.
Jurisdiction outside
province
15. (1) A
credit union may, with the approval of the guarantee corporation, carry on its
business, conduct its affairs and exercise its powers in a jurisdiction outside
the province to the extent that the laws of that jurisdiction permit.
(2) A credit union may enter into joint services
with other credit unions to provide services to its members who reside in the
province and to its members that move and reside outside the province.
Business of
credit unions
16. (1) A
credit union may carry on the business of a credit union as permitted by the
Act and, unless otherwise restricted may,
(a) receive deposits from
and operate chequing services for its members;
(b) make loans to its
members;
(c) sell life insurance
products through its branches either through an affiliate, by contractual
arrangement or in the capacity of a licensed agent or broker as defined in the Insurance Adjusters, Agents and Brokers Act,
including but not limited to
(i) life insurance,
(ii) disability insurance,
(iii) annuities,
(iv) segregated funds,
(v) critical illness
insurance, and
(vi) long term care
insurance; and
(d) provide other
financial services including wealth management, mutual funds, financial
planning and taxation services.
(2) A credit union shall not carry on a business
other than that pertaining to the business of credit unions and a credit union
shall not
(a) engage in the trading
of real estate;
(b) except as authorized
under another Act of the province, execute the office of executor,
administrator, guardian of a minor's estate or of a mentally disabled person or
provide services of a fiduciary nature commonly provided by a trust company;
(c) issue securities on
behalf of another person or otherwise carry on the business of a securities
dealer;
(d) carry on the business
of an insurance company; and
(e) carry on the business
of a property and casualty agent, broker or adjustment company.
(3) Notwithstanding
subsections (1) and (2), a credit union may, in the manner prescribed by
regulation, enter into an arrangement for services.
Coercive tied selling
17. (1) A
credit union shall not engage in coercive tied selling that imposes undue
pressure on, or coerces a person to obtain a product or service from a particular
person, including the credit union and its affiliates, as a condition for
obtaining another product or service from the credit union.
(2) Nothing in subsection (1) precludes a credit
union
(a) from requiring
insurance to be placed by a member for the security of a credit union; or
(b) from entering into those group plans of
insurance as may be prescribed by regulation with an insurance agency or company
for the security of a credit union or for the benefit of its members.
Subsidiaries and
trade
18. (1) A
credit union may establish a subsidiary corporation as prescribed by
regulation.
(2) Except as provided under this Act, a credit
union shall not, directly or indirectly, through a subsidiary or otherwise,
deal in goods, wares and merchandise or engage in a trade or other business.
Restrictions
19. (1) A
credit union shall not carry on a business or exercise a power if it is
restricted by its articles, by-laws or this Act or the regulations from carrying
on that business or exercising that power and shall not exercise its powers in
a manner contrary to its articles, by-laws or this Act.
(2) An act of a credit union against good faith
third party purchasers, including a transfer of property to or by a credit union,
is not invalid by reason only that the act or transfer is contrary to its articles,
by-laws or this Act.
No contravention
notice
20. A
person is not affected by and shall not be considered to have notice or
knowledge of the contents of a document concerning a credit union by reason
only that the document has been filed with the superintendent or is available
for inspection at an office of the credit union.
Reliance
21. A
credit union or a guarantor of an obligation of the credit union may not assert
against a person dealing with the credit union or with a person who has
acquired rights from the credit union that
(a) this Act, the
regulations, articles or by-laws of the credit union have not been complied
with;
(b) the persons named as
directors in the most recent notice sent to the superintendent under this Act
are not the directors of the credit union;
(c) the place named in
the most recent notice sent to the superintendent under this Act is not the
registered office of the credit union;
(d) a person held out by the credit union as a director,
officer or agent of the credit union has not been appointed or does not have
authority to exercise the powers or perform the duties that are customary in
the business of the credit union or usual for that director, officer or agent;
(e) a document issued by
a director, officer or agent of the credit union with actual or usual authority
to issue the document is not valid or genuine; and
(f) financial assistance
to members or directors or a sale, lease or exchange of all or substantially
all of the property of the credit union was not authorized,
except where the person has or, by virtue of that person's position with
or relationship to the credit union ought to have, knowledge of that fact.
PART III
REGISTERED OFFICE AND RECORDS
Registered office
22. (1) A
credit union shall at all times have a registered office in the place within
the province specified in its articles.
(2) A notice of registered office shall be sent to
the superintendent together with the articles that designate the place of the
registered office of the credit union.
(3) The directors of a credit union may change the
address of the registered office within the place specified in the articles.
(4) A credit union shall file a notice of a change
of registered office with the superintendent, within 15 days after a change of
address of its registered office.
Branch office
23. A
credit union may establish or relocate a branch office of the credit union as
prescribed by regulation.
Records
24. A
credit union shall prepare and maintain, at its registered office or at another
place in the province designated by the directors, records containing
(a) copies of the
articles and the by-laws and all amendments to them;
(b) the executed minutes
of membership meetings and resolutions of members;
(c) a register of directors, officers and
committee members setting out the names, residence addresses and principal occupations
of all persons who are or have been directors, officers or committee members of
the credit union with the dates on which each became or ceased to be a
director, officer or committee member;
(d) a members' register setting out the names and
the latest known addresses of its members and the number and issue price of the
membership shares held by each member; and
(e) the accounting
records and the executive minutes of meetings and resolutions of the directors
and a committee appointed by the directors.
Examination of
records
25. (1) The
members of a credit union, their agents and legal representatives may examine
the records referred to in paragraphs 24(a),
(b) and (c) during the normal business hours of the credit union and may take
extracts from them without charge.
(2) The members of the credit union, their agents
and legal representatives may examine the members' register referred to in paragraph
24(d) during the normal business hours of the
credit union and may, on payment of a reasonable fee,
receive from the credit union a copy of the members' register.
(3) A request made under subsection (1) shall have
attached an affidavit of the applicant that
(a) states the name and address of the applicant;
(b) is made by a director or officer of the
corporation if the applicant is a corporation; and
(c) states that the register shall not be used by
a person except for the purpose relating to the affairs of the credit union.
(4) A person who uses a register for a purpose not
related to the affairs of the credit union commits an offence.
(5) A credit union shall make the members'
register available at a meeting of members for examination by the members.
(6) The directors of a credit union or the
authorized representative of the board of directors may examine the records of
the credit union at all reasonable times without charge.
(7) The guarantee corporation or a person
authorized by the guarantee corporation may examine the records of a credit
union at all reasonable times without charge.
Form of records
26. (1) All
registers and other records required by this Act to be prepared and maintained
may be in a bound or loose-leaf form or in a photographic film form, or may be
entered or recorded by a system of mechanical or electronic data processing or
other information storage device that is capable of reproducing the required
information in intelligible written form within a reasonable time.
(2) A credit union and its agents shall take
reasonable precautions to
(a) prevent loss or destruction of;
(b) prevent falsification of entries in; and
(c) facilitate detection and correction of
inaccuracies in,
the registers and other records required
by this Act to be prepared and maintained.
PART IV
CAPITALIZATION AND OPERATING STANDARDS
Member shares
27. (1) Member
equity shares of a credit union shall have an issue price fixed by the articles
and that price shall not be less than $5 a share.
(2) A member of a credit union shall purchase and
hold not fewer than the number of fully paid member equity shares that is prescribed
by regulation.
(3) Notwithstanding subsection (2), the by-laws of
a credit union may permit or require that members hold more than the number of
member equity shares that are prescribed by regulation.
Shares other than
members' equity shares
28. (1) In
addition to member equity shares, the articles of a credit union may provide
for the issuing of surplus shares and other shares with the approval of the
superintendent.
(2) Where the articles provide for the issuing of
classes of shares in addition to member equity shares, there shall be set out
in the articles
(a) the maximum number of shares in each class
other than surplus shares that the credit union is entitled to issue;
(b) the total consideration to be paid for each
class of shares other than surplus shares; and
(c) the rights, privileges, restrictions and conditions,
including dividends, attaching to the shares of each class.
(3) The superintendent shall not approve the
issuing of a class of shares other than member equity shares or surplus shares
if, in the opinion of the superintendent, issuing those shares would
(a) not be consistent with the purpose of a credit
union generally;
(b) not be in the financial interest of the credit
union; or
(c) increase the risk that the credit union would
make a claim against the guarantee corporation.
(4) Member equity shares shall rank behind all
other classes of shares issued by the credit union and holders of member equity
shares shall not, upon the winding-up or liquidation of a credit union, be entitled
to reconsider, in whole or in part, their member equity shares until the
amounts outstanding on all other classes of shares have been paid in full.
Dividend or patronage
refund
29. A
credit union that has met the capital requirement prescribed in the regulations
may, with the approval of the members of the credit union, issue a dividend or
patronage refund as long as the dividend or patronage refund does not reduce
capital below that prescribed in the regulations.
Purchase of
surplus shares
30. A
credit union may in its by-laws provide that the whole of a patronage refund or
dividend on shares to be paid or credited to a member, or a part of the
patronage refund or dividends on shares that may be specified in the by-laws of
the credit union, may be applied to purchase on behalf of the member, surplus
shares of the credit union, up to the number that may be specified in the
by-laws.
Exception
31. (1) Nothing
in section 29 affects the payment of a dividend
on shares other than member equity or surplus shares if the dividend is
required to be paid in accordance with the terms of a share certificate.
(2) A payment authorized under subsection (1)
shall be disclosed in the notes of the financial statements of the credit
union.
Liability limited
32. A
member is not responsible for an act, default or liability of the credit union
or for an engagement, claim, payment, loss, injury, transaction, matter or
thing relating to or connected with the credit union.
Remedy
33. This
Act shall not curtail, abridge or defeat a remedy for the recovery
(a) from the borrower of money loaned by a credit
union in violation of this Act; and
(b) from the member of a credit union of an amount
withdrawn in excess of the amount contained in a member's deposit account.
Unclaimed balances
34. Where
a deposit account contains less than an amount prescribed by regulation and
business has not been transacted in connection with the account over a period
prescribed by regulation, the credit union may deal with the account in
accordance with the regulations.
Member right to
withdraw deposits
35. (1) A
member may withdraw an amount contained in his or her deposit account together
with accrued interest
(a) during the normal business hours of the credit
union at the credit union; or
(b) through electronic withdrawal that may be provided
by the credit union.
(2) Notwithstanding subsection (1), a credit union
may require in writing, not more than 90 days' notice in writing of a member's
intention to withdraw an amount contained in the member's deposit account.
(3) Subsections (1) and (2) do not apply in
relation to deposits placed with a credit union for a stated term or an amount
contained in a deposit account on which a bill of exchange payable on demand
may be drawn.
Trust funds
36. (1) Except
where the credit union is the trustee, a credit union is not bound to see to
the execution of a trust, whether express, implied or constructive, to which a
share or deposit is subject, and where an account is subject to a trust of
which the credit union has notice, the cheque, bill of exchange, withdrawal
slip, or receipt of the person
(a) in whose name the account stands; or
(b) who is, according to the document creating the
trust, entitled to deal with the trust,
is, notwithstanding this kind of trust,
sufficient authorization to and a valid and binding discharge of the credit
union and the credit union is not bound to see to the application of money paid
in relation to that cheque, bill of exchange, withdrawal slip or receipt.
(2) Unless the instrument of trust permits, an
amount contained in a deposit account held by a trustee in trust for a named
beneficiary or otherwise may not be charged to secure a loan or obligation.
Partial payment
on death
37. Where
a member of a credit union dies and there is no executor of a will of the deceased
member or administrator of the estate of the deceased member, the credit union
may on the receipt of an affidavit or other proof of death and proof of claim
that may be required by the credit union, pay an amount prescribed by
regulation out of a deposit account of the deceased member to the person who
appears to be entitled to the amount of the deceased member's interest and
payment made under this section releases the credit union from further
liability in relation to the money paid.
Loans
38. Subject to those terms, conditions, restrictions
or limitations that may be established by the guarantee corporation, a credit
union shall establish, in accordance with the regulations, loan policies in relation
to the lending activities of the credit union.
Lien
39. (1) Notwithstanding
another provision of this Act, a credit union has a lien on the deposits and
shares of a member or other person to whose credit the deposits and shares
stand in the records of the credit union, and interest on them, for indebtedness
due or accruing due to it by the member or other person or for an obligation in
relation to the indebtedness and the deposits and shares may not be withdrawn
or redeemed unless the credit union consents.
(2) A credit union may apply the deposits and
shares on which it has a lien, and interest on them, to an obligation in
relation to the indebtedness which is in default without notice to any person.
(3) For the purposes of subsection (2), an
indebtedness shall be considered to be in default where
(a) an amount of the principal or interest is not
paid on the date on which it becomes due and payable; or
(b) there has been a failure to observe or perform
an obligation with respect to the indebtedness.
Liquid assets
40. (1) A
credit union shall maintain liquidity in accordance with the regulations.
(2) A credit union may make investments for the
purpose of meeting the requirements in relation to liquidity only in accordance
with the regulations.
Investments
41. A
credit union may make investments in addition to those referred to in
subsection 40(2) only in accordance with the regulations.
Doubtful loans
42. A
credit union shall maintain an allowance for doubtful loans in accordance with
the regulations.
Equity
43. A
credit union shall maintain equity in accordance with the regulations.
Borrowing
44. A
credit union shall not borrow money in excess of the amount prescribed by
regulation.
Matching
45. A
credit union shall match the term and return of its investments and loans with
the term and return of its members' deposits in the credit union in accordance
with the regulations.
Insurance
required
46. A
credit union shall maintain those types and minimum levels of insurance that may
be required by the guarantee corporation or as may be prescribed by regulation.
Sound business
and financial practices
47. A
credit union shall comply with sound business and financial practices that are set
out by the guarantee corporation.
PART V
MEMBERSHIP
Membership
48. (1) The
membership of a credit union consists of those members defined in accordance
with this Act and the articles and by-laws of the credit union.
(2) Subject to the by-laws of the credit union and
laws of general application, the directors of a credit union may refuse to
accept an application for membership if they are satisfied that it is not in
the interest of the credit union to accept the application.
(3) A person under 19 years of age may be accepted
as a member of a credit union and shares may be held and money may be received
by the credit union in that person's name or in the name of a trustee for that
person if the trustee is a member or is eligible to be a member of the credit
union.
(4) A credit union may, where provided in its
articles and by-laws and in accordance with the regulations, provide associate
membership in that credit union.
(5) A credit union shall not be a member or an
associate member of another credit union.
Bond of
association
49. (1) The
articles of a credit union may provide that membership in the credit union
shall be limited to groups having a bond of association.
(2) Notwithstanding subsection (1), a member of
the credit union who leaves a group having a bond of association may retain membership
in the credit union and all the rights and privileges of a member where the
by-laws of the credit union so provide.
Membership termination
50. Membership
in a credit union may be terminated, withdrawn or refused in accordance with
the by-laws of the credit union.
Remedy preserved
51. The
termination of or withdrawal from membership in a credit union does not release
a person from a liability to the credit union.
By-laws
52. (1) Subject
to the articles of a credit union, the members of a credit union may at an
annual general meeting or special meeting called for that purpose by special
resolution of the members enact, amend or repeal by-laws in relation to those
matters authorized or required by this Act to be dealt with in the by-laws of
the credit union.
(2) Notwithstanding subsection (1), a by-law and
an amendment or a repeal of a by-law is not effective until it is approved by
the superintendent.
(3) A proposed by-law or amendment or repeal of a
by-law may be sent to the superintendent for approval before its adoption by
the members of the credit union.
(4) Where a by-law, amendment or repeal of a
by-law is approved by the superintendent before its adoption by the members of
a credit union,
(a) the by-law, amendment or repeal of the by-law
shall be adopted by the members of the credit union within 30 days after
receipt of the approval of the superintendent; and
(b) a certified copy of the adopted by-law or the
amendment or repeal of the by-law shall be filed with the superintendent within
30 days after its adoption by the members of the credit union or a later time
that may be authorized by the superintendent.
(5) Where a credit union fails to comply with
subsection (4), the by-law, amendment or repeal is void.
Members bound
53. The
articles and by-laws of a credit union bind the credit union and its members.
Place of meetings
54. Meetings
of the members of a credit union shall be held at the place within the province
provided in the by-laws or, in the absence of a provision, at the place within
the province that the directors determine.
Calling meetings
55. The
directors of a credit union
(a) shall call an annual meeting of members to be
held within 4 months, or another time that is approved by the superintendent, after
the end of the fiscal year of the credit union
(i) to consider the annual report of the
directors, the financial statements of the credit union and the auditor's report,
(ii) to appoint the auditor,
(iii) to elect directors, and
(iv) to deal with other matters that may properly
come before the meeting; and
(b) may call a special meeting of members.
Record date
56. The
record date for determining the members entitled to receive notice of a meeting
of members and entitled to vote at that meeting shall be at the close of
business 30 days preceding the day on which the notice is given.
Notice of
meetings
57. (1) Notice
of the time and place of a meeting of members shall be given not less than 14
days and not more than 30 days before the meeting to each member entitled to
vote at the meeting.
(2) Where a meeting of members is adjourned by one
or more adjournments for more than 7 days, notice of the adjourned meeting
shall be given as for an original meeting.
(3) All business transacted
(a) at a special meeting of members; or
(b) at an annual meeting of members, except
consideration of the annual report of the directors, the financial statements
of the credit union, the auditor's report, election of directors, appointment
of the auditor and other business authorized by the by-laws to be transacted at
an annual meeting,
shall be considered to be special
business.
(4) Notice of a special meeting of members shall
state
(a) the nature of that business in sufficient
detail to permit the member receiving the notice to form a reasoned judgment on
it; and
(b) the text of a special resolution to be
submitted to the meeting or, if the full text is too lengthy for convenient
inclusion in the notice, a summary of the text.
Waiver of notice
58. (1) A
member or another person entitled to attend a meeting of members may waive
notice of the meeting, and attendance of the member or other person at the
meeting is a waiver of notice of the meeting, except where that person attends
for the express purpose of objecting to the transaction of business on the
ground that the meeting was not lawfully called.
(2) An objection made under subsection (1) shall
be made at the commencement of the meeting.
Member notice
59. (1) A
member entitled to vote at a meeting of members may
(a) submit to the credit union notice of a matter
that the member proposes to raise at the meeting, afterwards referred to as a
"proposal"; and
(b) discuss at the meeting a matter in respect of
which the member would have been entitled to submit a proposal.
(2) A credit union shall set out a proposal in the
notice of the meeting at which the proposal is to be presented.
(3) Where requested by a member submitting a
proposal, the credit union shall include in the notice of meeting or attach to
it a statement by the member of not more than 200 words in support of the
proposal, and the name and address of the member.
(4) A proposal may include nominations for the
election of directors if the election of those nominated as directors would
conform with the provisions of this Act, the articles and the by-laws of the
credit union.
(5) A credit union is not required to comply with
subsections (2) and (3) where
(a) the proposal is not submitted to the credit
union at least 30 days before the anniversary date of the previous annual
meeting of members;
(b) the directors of the credit union reasonably
believe that the proposal is submitted by the member primarily for the purpose
of enforcing a personal claim or redressing a personal grievance against the
credit union or its directors, officers or members or for a purpose that is not
related in a significant way to the business or affairs of the credit union;
(c) the credit union, at the member's request,
included a proposal in a notice of meeting of members held within 2 years preceding
the receipt of that request and the member failed to present the proposal at
that meeting;
(d) substantially the same proposal was submitted
to the members in a notice of a meeting of members held within 2 years
preceding the receipt of the member's request, and the proposal was defeated;
or
(e) the directors of the credit union reasonably
believe that the rights conferred by this section are being abused to secure
publicity.
(6) A credit union or person acting on its behalf
shall not incur liability by reason only of circulating a proposal or statement
in compliance with this section.
(7) Where a credit union refuses to include a
proposal in a notice of meeting, the credit union shall, within 10 days after
receiving the proposal, notify the member submitting the proposal of its
intention to omit the proposal from the notice of meeting and send to the
member a statement of the reasons for the refusal.
(8) On the application of a member claiming to be
aggrieved by a refusal under subsection (7), the court may restrain the holding
of the meeting to which the proposal is sought to be presented and make another
or further order it thinks appropriate.
(9) The credit union or a person claiming to be
aggrieved by a proposal may apply to the court for an order permitting the
credit union to omit the proposal from the notice of meeting, and the court, where
it is satisfied that subsection (5) applies, may make an order that it thinks
appropriate.
(10) An applicant under subsection (8) or (9) shall
give the superintendent notice of the application and the superintendent is
entitled to appear and be heard in person or by counsel.
Quorum
60. (1) A
quorum at a meeting of members shall be as set out in the by-laws of the credit
union.
(2) Where a quorum is not present at the opening
of, or during, a meeting of members, the members present shall adjourn the
meeting to a fixed time and place.
Voting
61. (1) A
member of a credit union who is 19 years of age or over may vote at a meeting
of members.
(2) A member of a credit union has only one vote
on a question that may be voted on at a meeting of members.
Corporate representation
62. (1) Where
a corporation or association of persons is a member of a credit union, the
credit union shall recognize a natural person authorized by a resolution of the
directors or governing body of the corporation or association of persons to
represent it at meetings of members of the credit union.
(2) Notwithstanding section 63, a natural person authorized under subsection (1)
may exercise, on behalf of the corporation or association that person
represents, all the powers the corporation or association could exercise if it
were a natural person.
Voting by proxy
63. A
member shall not vote by proxy at a meeting of members of a credit union.
Joint membership
64. A
credit union may in its by-laws provide that 2 or more persons may jointly hold
a membership in a credit union but that membership is entitled to only one
vote.
Executors and
administrators
65. An
executor or administrator holding a membership in a credit union in the
capacity of executor or administrator shall represent that membership at
meetings of the credit union and may vote as a member.
Ballot
66. A
credit union may in its by-laws establish procedures to permit members to vote
by mail ballot or by other means.
Requisition by
members to call meeting
67. (1) The
directors shall call a special meeting of the members on receipt of a written
request specifying the purpose of the meeting from the lesser of 10% of the
members or 500 members of the total credit union membership having a right to
vote at the meeting.
(2) The request referred to in subsection (1), may
consist of several documents in the same form, each signed by one or more
members and shall state the business to be transacted at the meeting and shall
be sent to the registered office of the credit union.
(3) On receiving the request referred to in
subsection (1), the directors shall call a meeting of members to transact the
business stated in the request, unless the business of the meeting as stated in
the request includes a matter described in paragraphs 59(5)(b) to (e).
(4) Where the directors do not, within 30 days
after receiving the request referred to in subsection (1), call a meeting, a
member who signed the request may call the meeting.
(5) A meeting called, held and conducted in
accordance with this section is for all purposes a properly called, held and
conducted meeting of members of the credit union.
(6) Unless the members otherwise resolve at a
meeting called under subsection (4), the credit union shall reimburse the
members for the expenses reasonably incurred by them in requesting, calling and
holding the meeting.
(7) A member calling a meeting under subsection (4)
shall give the superintendent notice of the application and the superintendent
is entitled to appear and be heard in person or by counsel.
Meeting called by
superintendent
68. (1) Where
it is impractical to call a meeting of members of a credit union in the manner
in which meetings of members may be called or to conduct the meeting in the
manner required by this Act and the by-laws, or for another reason the
superintendent thinks appropriate, the superintendent may order a meeting to be
called, held and conducted in a manner that he or she directs.
(2) The superintendent may order that the quorum
required by this Act or the by-laws be varied or dispensed with at a meeting
called, held and conducted in accordance with this section.
(3) A meeting called, held and conducted in
accordance with this section is for all purposes a properly called, held and
conducted meeting of members of the credit union.
PART VI
DIRECTORS AND OFFICERS
Directors
69. (1) A
credit union shall in its by-laws establish a fixed number of directors, which
number shall not be fewer than 5.
(2) The directors of a credit union shall
(a) exercise the powers of the credit union
directly or indirectly through the employees and agents of the credit union;
and
(b) direct the management of the business and
affairs of the credit union.
Qualifications
70. A
person who is a citizen of Canada, 19 years of age or older, a member of the
credit union and who satisfies the requirements set out in the by-laws of the
credit union may be a director, unless he or she
(a) is an undischarged bankrupt person;
(b) is an employee of a credit union or the
guarantee corporation;
(c) is not bondable;
(d) is an auditor, or a member of the auditor's
firm, of that credit union;
(e) is a parent, child, grandchild, spouse,
brother or sister or in-law of an employee of the credit union, not necessarily
living in the same residence of that employee;
(f) is the solicitor of that credit union;
(g) is a representative of a bargaining agent for
the employees of that credit union; or
(h) is a public employee whose official duties are
concerned with the affairs of credit unions.
Terms of office
71. (1) A
director named in the articles holds office from the issue of the certificate
of incorporation until the first meeting of members.
(2) The members of a credit union shall, by
ordinary resolution at the first meeting of the members and at each succeeding
annual meeting of the members at which an election of directors is required,
elect directors to hold office for a term established in the by-laws and that
term shall not exceed 3 years.
(3) Notwithstanding the provisions of subsection
(2), the by-laws of a credit union may provide the manner in which members of a
credit union elect directors for a district at a district meeting.
(4) It is not necessary that all directors elected
at a meeting of members hold office for the same term.
(5) Notwithstanding anything contained in this
section, if directors are not elected at a meeting of the members, the
incumbent directors continue in office until their successors are elected.
Ceasing to hold
office
72. (1) A
director of a credit union ceases to hold office when he or she
(a) dies or resigns;
(b) is removed from office in accordance with section
73; or
(c) is disqualified under section 70.
(2) A resignation of a director becomes effective
at the time a written resignation is received by the credit union, or at the
time specified in the resignation, whichever is later.
Removal of directors
73. (1) The
members of a credit union may by ordinary resolution at a special meeting called
under section 67 remove a director from office.
(2) A vacancy created by the removal of a director
from office may be filled at the meeting of the members at which the director
is removed or, if not so filled, may be filled under section 75.
(3) Where a vacancy is not filled under subsection
(2) the superintendent may appoint a director to fill that vacancy.
Reasons
74. (1) A
director who
(a) resigns;
(b) receives a notice or otherwise learns of a
meeting of members called for the purpose of removing the director from office;
or
(c) receives a notice or otherwise learns of a
meeting of directors or members at which another person is to be appointed or
elected to fill the office of director instead of that person whether because
of that person's resignation or removal or because that person's term of office
has expired or is about to expire,
is entitled to submit to the credit union
a written statement giving the reasons for the resignation or for opposing an
action or resolution proposed for the purposes described in paragraphs (b) and
(c).
(2) Where a director resigns under paragraph
(1)(a), he or she may request that the credit union send to members of the
credit union and the superintendent, a copy of the statement referred to in
subsection (1) and where a request is made, the credit union shall immediately
comply with that request.
(3) Where a director receives a notice under
paragraphs (1)(b) or (c), the credit union shall immediately send a copy of the
statement referred to in subsection (1) to members of that credit union and to
the superintendent.
(4) A credit union or person acting on its behalf
shall not incur liability by reason only of circulating a statement in
compliance with subsections (2) or (3).
Vacancy
75. (1) A
quorum of directors may fill a vacancy among the directors, except a vacancy
resulting from an increase in the number of directors or from the members'
failure to elect the required number of directors.
(2) Where the members fail to elect the required
number of directors at a meeting, the directors elected at that meeting may
exercise all the powers of the directors where the number of directors so
elected constitutes a quorum.
(3) Where there is a failure to elect the required
number of directors at a meeting of members, the directors then in office shall
immediately call a meeting of members to fill the vacancy and, if they fail to
call a meeting or if there are no directors then in office, the meeting may be
called by a member.
(4) Notwithstanding subsection (1), the articles
or by-laws may provide that a vacancy among the directors shall be filled only
by a vote of the members.
(5) Where a vacancy among the directors is filled
in accordance with subsection (1), the appointment shall be ratified at the
next meeting of members.
Notice of change
of directors
76. (1) Within
30 days after a change of directors occurs, a credit union shall send to the
superintendent a notice setting out the change and the superintendent shall
file the notice.
(2) An interested person or the superintendent may
apply to the court for an order requiring a credit union to comply with
subsection (1), and on the application the court may so order and make any
further order it thinks appropriate.
(3) A director named in the articles or in a
notice sent by the credit union to the superintendent under subsection (1) is
presumed for the purposes of this Act to be a director of the credit union.
Meetings
77. (1) Unless
the articles or by-laws otherwise provide, the directors of a credit union may
meet at a place and on notice that the directors may determine.
(2) Unless the articles or by-laws otherwise
provide, a majority of the required number of directors constitutes a quorum at
a meeting of directors and, notwithstanding a vacancy among the directors, a quorum
of directors may exercise all the powers of the directors.
(3) Unless the by-laws otherwise provide, a notice
of a meeting of directors need not specify a matter that is to be dealt with at
the meeting except where that matter
(a) is a question or matter requiring the approval
of the members;
(b) is respecting the filling of a vacancy among
the directors;
(c) is respecting the issuing or redemption of
shares of the credit union other than membership shares; or
(d) requires the approval of financial statements
referred to in subsection 91(1).
(4) A director may waive a notice of a meeting of
directors and attendance of a director at a meeting of directors is a waiver of
notice of the meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of business on the grounds that the
meeting was not lawfully called, provided that the objection is made at the
start of the meeting.
(5) Notice of an adjourned meeting of directors is
not required to be given if the time and place of the adjourned meeting is
announced at the original meeting.
(6) Subject to the by-laws, a director may
participate in a meeting of directors or a committee appointed by the directors
under subsection 78(1) and section 79 by means of telephone or other communication
facilities that permit all persons participating in the meeting to hear each
other, and a director participating in the meeting by those means shall be considered
for the purposes of this Act to be present at that meeting.
Appointing committees
78. (1) The
directors of a credit union may appoint committees and may delegate to those
committees the powers of the directors.
(2) The members of a committee appointed by the
directors shall be members of the credit union and the chairperson of the committee
shall be a director of the credit union.
(3) A committee appointed by the directors shall
keep minutes of its proceedings and shall submit to the directors at each
meeting of directors the minutes of the committee's proceedings during the
period since the last meeting of the directors.
(4) Notwithstanding subsection (1), a committee
appointed by the directors shall not
(a) submit to the members a question or matter
requiring approval of the members;
(b) fill a vacancy among the directors;
(c) issue or redeem shares, except in the manner
and on the terms authorized by the directors;
(d) approve a financial statement referred to in
subsection 91(1); or
(e) approve or amend policies that are set by the
board.
Establishing committees
79. The directors of a credit union shall establish
those committees which the minister may prescribe by regulation and those
committees shall perform the duties and have the powers provided for in the
regulations.
Validity of acts
80. An
act of a director or an officer is valid notwithstanding an irregularity in the
election or appointment of, or a defect in the qualifications of, the director
or officer.
Resolution
81. (1) A
resolution in writing signed by all the directors entitled to vote on that
resolution at a meeting of directors or of a committee appointed by the
directors
(a) satisfies all requirements of this Act
relating to meetings of directors or committees appointed by the directors;
(b) is valid as if it had been passed at a meeting
of directors or a committee appointed by the directors; and
(c) is effective from the date specified in the
resolution, which shall not be before the date on which the first director
signed the resolution.
(2) A copy of every resolution referred to in
subsection (1) shall be kept with the minutes of the proceedings of the
directors or of a committee appointed by the directors.
Liability
82. (1) Directors
of a credit union who vote for or consent to a resolution authorizing a payment
that is contrary to section 29 or the payment of an indemnity that is contrary
to section 88 are jointly and individually liable to restore to the credit union
an amount so paid and not otherwise recovered by the credit union.
(2) Where a loan is made by a credit union to a
member in violation of this Act, the person receiving the loan and all
directors, officers and members of committees of the credit union who, with
knowledge of the violation, made or approved the loan are jointly and individually
liable to the credit union for the unpaid balance of the loan, with interest.
(3) A director, an officer or a member of a
committee who satisfies a judgment made as a result of an application to the
court and under this section is entitled to contribution from all other persons
who by virtue of this Act are also liable.
(4) A director, an officer or a member of a
committee who is liable under subsection (1) or (2) may apply to the court for
an order compelling a member or other recipient to pay money or deliver property
to the director, officer or member of a committee that was improperly paid or
distributed to the member or other recipient.
(5) An action to enforce a liability imposed by
subsection (1) or (2) shall be commenced within 2 years from the date of having
received written notification of the complaint.
Duty to report
83. A
director of a credit union who becomes aware that the credit union is unable to
make a lawful payment it is required to make shall, within 7 days after
becoming aware of it, give written notice of the matter to the guarantee
corporation.
Designation of
officers
84. (1) The
directors may elect or appoint officers of the credit union, specify their
duties and delegate to them powers to manage the business and affairs of the
credit union, except powers to
(a) submit to the members a question or matter
requiring the approval of the members;
(b) fill a vacancy among the directors;
(c) issue or redeem shares, except in the manner
and on the terms authorized by the directors;
(d) approve financial statements referred to in
subsection 91(1); or
(e) approve or amend policies that are set by the
board.
(2) A director may become an officer of the credit
union and a member of a committee but an officer cannot be a member of the
audit committee.
(3) Two or more offices of the credit union may be
held by the same person.
(4) Subsections (1) to (3) are subject to the
articles and by-laws of the credit union.
Remuneration and
expenses
85. The
directors of a credit union may be paid remuneration and reimbursed for those
reasonable expenses incurred in the performance of their duties, as set out in the
by-laws of the credit union.
Duty of care
86. (1) A
director and officer of a credit union, in exercising the powers and
discharging the duties of a director or an officer, shall
(a) act honestly and in good faith with a view to
the best interests of the credit union; and
(b) exercise the care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
(2) A provision in a contract, the articles, the
by-laws or a resolution shall not relieve a director or an officer from the
duty to act in accordance with this Act.
(3) This section is in addition to and not a
derogation from another enactment or rule of law relating to the duty or
liability of directors or officers of a credit union.
Dissent
87. (1) A
director who is present at a meeting of directors shall be considered to have
consented to a resolution passed or action taken at the meeting, unless the
director
(a) requests that his or her dissent be recorded
in the minutes of the meeting;
(b) sends a written dissent to the secretary of
the meeting before the meeting is adjourned; or
(c) sends a dissent by certified mail to the
registered office of the credit union within one business day after the meeting
is adjourned.
(2) A director who votes for or consents to a
resolution is not entitled to dissent under subsection (1).
(3) A director who was not present at a meeting at
which a resolution was passed or an action was taken shall be considered to
have consented to a resolution passed or action taken, unless within 7 days
after becoming aware of the resolution the director
(a) causes his or her dissent to be placed with
the minutes of the meeting; or
(b) sends a dissent by certified mail to the
registered office of the credit union.
(4) A director who relies in good faith on
(a) financial statements of the credit union
represented by an officer or the auditor of the credit union to reflect fairly
the financial position of the credit union; or
(b) the report of a lawyer, accountant, engineer,
appraiser or another person whose profession lends credibility to a statement
made by him or her
is not liable under section 82.
Indemnification
88. (1) Except
in relation to an action
(a) by or on behalf of the credit union or
corporation to procure a judgment in its favour; or
(b) by or on behalf of the superintendent or the
guarantee corporation, in which cases the approval of the court shall first be
obtained,
a credit union may indemnify a director or
an officer of the credit union or a person who acts or acted at the credit
union's request as a director or an officer of a corporation of which the
credit union is or was a member, shareholder or creditor, and his or her heirs
and legal representatives, against all costs, charges and expenses, including
an amount paid to settle an action or satisfy a judgment, reasonably incurred
by him or her in relation to a civil, criminal or administrative action or
proceeding to which he or she is made a party by reason of being or having been
a director or an officer of the credit union or corporation, if the director or
officer
(c) acted honestly and in good faith with a view
to the best interest of the credit union; and
(d) in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, had reasonable
grounds for believing the conduct was lawful.
(2) A person referred to in subsection (1) is
entitled to indemnity from the credit union in relation to all costs, charges
and expenses reasonably incurred in connection with the defence of civil,
criminal or administrative action or proceeding to which that person is made a
party by reason of being or having been a director or an officer of a credit
union or corporation if the person seeking indemnity
(a) was substantially successful on the merits in
defence of the action or proceeding; and
(b) fulfils the conditions set out in paragraphs
(1)(c) and (d).
(3) A credit union may purchase and maintain
insurance for the benefit of a person referred to in subsection (1) against
liability incurred by that person
(a) as a director or an officer of the credit
union, except where the liability relates to the failure of that person to act
honestly and in good faith with a view to the best interests of the credit
union; and
(b) as a director or an officer of another
corporation where he or she acts or acted in that capacity at the credit
union's request except where the liability relates to the failure to act
honestly and in good faith with a view to the best interests of the corporation.
(4) A credit union or a person referred to in
subsection (1) may apply to the court for an order approving an indemnity under
this section and the court may so order and make a further order it thinks appropriate.
(5) An applicant under subsection (4) shall give
the guarantee corporation notice of the application and the guarantee
corporation is entitled to appear, to be represented and be heard in person or
by counsel.
(6) On an application under subsection (4), the
court may order notice to be given to a person and that person is entitled to
appear to be represented and be heard in person or by counsel.
PART VII
RETURNS AND FINANCIAL DISCLOSURE
Fiscal year
89. The
fiscal year of a credit union ends on December 31 of each year.
Annual returns
90. (1) A
credit union shall, within 4 months after the end of each fiscal year, or a later
time that may be approved by the superintendent, complete and file a return
with the guarantee corporation showing, as of the end of the preceding fiscal
year,
(a) the name of the credit union;
(b) the address of the registered office of the
credit union;
(c) the date when the latest annual meeting of the
members of the credit union was held;
(d) the names, residence addresses and principal
occupations of the directors of the credit union;
(e) the names and addresses of officers of the
credit union and the most senior employee of the credit union; and
(f) other information in relation to the credit
union that may be required by this Act or the guarantee corporation.
(2) The return shall be on a form provided by the
superintendent and shall be signed and the contents of it shall be certified to
be true by a director or an officer of the credit union.
(3) In addition to the return required under
subsection (1), the superintendent may require a credit union to file, within a
time that he or she specifies, an additional return containing other
information that the superintendent may require.
(4) The minister may set a filing fee payable by a
credit union to the guarantee corporation upon the filing of a return under
this section, and the minister may set additional fees for late filing.
(5) A credit union shall provide to the guarantee
corporation, periodic financial reports on or before the dates that are
prescribed by regulations.
Annual financial
statements
91. (1) The
directors of a credit union shall place before the members at every annual
meeting
(a) financial statements in relation to the
preceding fiscal year;
(b) the report of the auditor; and
(c) other information in relation to the financial
position of the credit union and the results of its operations that may be required
by this Act or the regulations, the articles or by-laws of the credit union.
(2) The financial statements required under
subsection (1) shall, except as otherwise required by this Act or the guarantee
corporation, be prepared in accordance with Canadian generally accepted accounting
principles.
(3) At each annual meeting of members of a credit
union the directors shall disclose
(a) the aggregate amount of remuneration paid to
all directors;
(b) the aggregate amount paid to all directors as
reimbursement for expenses incurred on credit union business;
(c) the details of loans made to directors or
officers and to persons with whom directors or officers have a material interest,
which do not conform to the credit union's ordinary lending practices for
members who are not directors or officers; and
(d) other information that may be required to be
disclosed by the regulations.
(4) A credit union shall, before each annual
meeting of members, send a copy of the documents referred to in subsection (1) to
the guarantee corporation.
(5) A credit union shall, upon request, provide to
the guarantee corporation information which the guarantee corporation may
reasonably require to enable it to discharge its responsibilities under this
Act.
Conditions re:
financial statements
92. A
credit union shall not issue, publish or circulate copies of financial
statements referred to in subsection 91(1)
unless the financial statements are
(a) approved by the directors and the approval is
evidenced by the signatures of 2 or more of the directors on the statements;
and
(b) accompanied by the report of the auditor of
the credit union.
Request for documents
93. A
credit union shall, on request of a member, provide to the member a copy of the
approved financial statements and other documents referred to in subsection 91(1).
Auditors
94. (1) At
the annual meeting of a credit union the members of that credit union shall
appoint an auditor who is licensed under the Public Accountancy Act.
(2) A person is not disqualified from being an
auditor of a credit union by reason only of the person's membership in the
credit union.
Auditor removal
95. (1) The
members of a credit union may at an annual meeting or a special meeting remove
from office an auditor appointed by them.
(2) A vacancy created by the removal of an auditor
may be filled at the meeting at which the auditor is removed.
(3) Notice of a meeting called for the purpose of
removing an auditor from office shall be given to the guarantee corporation and
the guarantee corporation is entitled to be represented and heard at that
meeting.
Vacancy
96. (1) The
directors shall immediately fill a vacancy in the office of auditor.
(2) An auditor appointed by the directors to fill
a vacancy under subsection (1) holds office until the next annual meeting.
Auditor appointed
by guarantee corporation
97. (1) If
a credit union does not have an auditor, the guarantee corporation may appoint
and fix the remuneration of an auditor and the auditor so appointed holds
office until an auditor is appointed in accordance with section 96.
(2) The guarantee corporation may appoint an
auditor to do a new audit on a credit union if the guarantee corporation
determines that it is necessary and the guarantee corporation may use that
report as the audited financial statement of that credit union.
(3) The remuneration of an auditor appointed under
subsections (1) and (2) shall be paid by the credit union.
Duty to attend
meetings
98. (1) The
auditor of a credit union shall attend those meetings as requested by the board
or the audit committee referred to in section 103, of the credit union.
(2) The auditor shall be given not less than 10
days notice of a meeting the auditor is required to attend under this section.
(3) The costs of an auditor attending meetings
under this section shall be paid by the credit union.
(4) An auditor or former auditor of a credit union
who fails without reasonable cause to comply with subsection (1) commits an
offence.
Examinations by
auditor
99. (1) The
auditor of a credit union shall make those examinations that he or she considers
necessary to enable him or her to report on the financial statements referred
to in subsection 91(1) and on other financial
statements required by this Act, or the articles or by-laws of the credit union
to be placed before the members of a credit union.
(2) The auditor's examination referred to in
subsection (1) shall, except as otherwise required by this Act, or the guarantee
corporation, be conducted in accordance with Canadian generally accepted auditing
standards.
Superintendent or
guarantee corporation may enlarge scope
100. (1) The
superintendent or the guarantee corporation may enlarge or extend the scope of
the audit or direct that another or a particular examination be made or
procedure be established in a particular case where it is believed that the
public interest or the interest of the members requires.
(2) The credit union shall pay the costs and
expenses incurred in connection with a report or audit required under
subsection (1).
Right to demand
information
101. (1) On
the demand of the auditor of a credit union, the present or former directors,
officers, committee members, employees or agents of the credit union shall
furnish
(a) information and explanations; and
(b) access to records, documents, books, accounts
and vouchers of the credit union,
that are, in the opinion of the auditor,
necessary to enable the auditor to make the examination and report required
under section 99 and that the directors,
officers, committee members, employees or agents are reasonably able to furnish.
(2) On the demand of the auditor of a credit
union, the directors of a credit union shall obtain from the present or former
directors, officers, employees and agents of a subsidiary of the credit union
and furnish to the auditor information or explanations that the present or former
directors, officers, employees and agents of the subsidiary are reasonably able
to furnish and that, in the opinion of the auditor, are necessary to enable the
auditor to make the examination and report required under subsection 99(1).
(3) A person who, in good faith, makes an oral or
written communication under this section is not liable in a civil action
arising from that communication.
Auditor's report
102. (1) The
auditor of a credit union shall make a report in writing
(a) on the financial statements referred to in
subsection 91(1) to the members of the credit
union not fewer than 10 days before the date of the annual meeting of the
members; and
(b) on those other financial statements that may
be required by this Act or the articles or by-laws of the credit union to be
placed before the members on or before the date that the statement is
distributed.
(2) In a report required under subsection(1), the
auditor shall state whether, in the auditor's opinion, the financial statements
referred to in the report present fairly the financial position of the credit
union at the end of the fiscal year or other period to which it relates and the
results of the operation of the credit union and changes in its financial position
for that fiscal year or other period and whether
(a) the auditor has obtained the information and
explanations required;
(b) the examination has been made in accordance
with Canadian generally accepted auditing standards; and
(d) reliance has been placed on the reports of
other auditors.
Audit committee
103. (1) A
credit union shall have an audit committee composed of not less than 3 members
of the credit union, none of whom are officers of the credit union.
(2) An audit committee shall meet at least
annually with the auditor to review the financial performance of the credit
union and perform those other functions that may be prescribed by the regulations.
(3) The auditor of a credit union or a member of
the audit committee may call a meeting of the committee.
(4) A director or an officer of a credit union
shall upon becoming aware of an error or misstatement in a financial statement
that the auditor or a former auditor has reported upon notify the audit committee
and the auditor.
(5) An auditor or former auditor of a credit union
who is notified or becomes aware of an error or misstatement in a financial
statement that the auditor has reported upon shall, where in the auditor's
opinion the error or misstatement is material, inform each director accordingly.
(6) Where, under subsection (5), the auditor or
former auditor informs the directors of an error or misstatement in a financial
statement, the directors shall
(a) prepare and issue a revised financial
statement; and
(b) otherwise inform the members and the guarantee
corporation.
(7) A director and an officer of a credit union
who knowingly fails to comply with subsection (4) or (6) is guilty of an
offence.
Duty of auditor
104. (1) It
is the duty of the auditor of a credit union to report in writing to the
directors of a credit union transactions or conditions that affect, or could
affect, the well-being of the credit union and that, in the opinion of the
auditor, are not satisfactory and require rectification and the auditor shall,
as occasion requires, make a report to the directors where
(a) a change occurs in the circumstances of the
credit union that might materially and adversely affect the financial position
of the credit union or its ability to carry on or transact business as a going
concern;
(b) there has been a violation of this Act;
(c) there has been a violation of the Criminal Code;
(d) the credit union has entered into a
transaction that, in the opinion of the auditor, is not within the powers of
the credit union; or
(e) the credit union has adopted or implemented a
business or financial practice and procedure that, in the opinion of the
auditor, may contribute to material losses by the credit union.
(2) An auditor who makes a report under subsection
(1) shall send that report in writing to the manager, audit committee and directors
of the credit union and the report shall be presented to the next meeting of
directors after the receipt of the report, and it shall be incorporated into
the minutes of that meeting and the auditor shall, at the time of sending the
report, provide a copy of the report to the guarantee corporation.
(3) An auditor is not required to make a report
under this section unless the auditor becomes aware of the circumstances
described in subsection (1) in the ordinary course of the auditor's duties.
(4) Where as a result of an audit an auditor
prepares a management letter highlighting weaknesses and deficiencies in the
financial affairs of the credit union and other matters which may affect the
well being of the credit union, he or she shall provide a copy to the guarantee
corporation.
Additional requirements
105. (1) The
guarantee corporation may require that the auditor of a credit union report to
the guarantee corporation on the extent of the auditor's procedures in the
examination of the financial statements of the credit union and may require
that the auditor enlarge or extend the scope of that examination or direct that
another particular procedure be performed.
(2) The guarantee corporation may require that the
auditor of a credit union make a particular examination relating to the
adequacy of the procedures adopted by the credit union for the safety of its
creditors and members, or another examination that, in the opinion of the guarantee
corporation, the public interest may require.
(3) A requirement of the guarantee corporation
under subsections (1) and (2) shall be provided in writing to the auditor.
(4) The auditor of a credit union shall comply
with requirements of the guarantee corporation under subsection (1) or (2) and
shall make a written report to the guarantee corporation in relation to the
requirements immediately after complying with them.
(5) Costs or expenses incurred in relation to the
requirements of the guarantee corporation under subsection (1) or (2) shall be
borne by the credit union.
Access to papers
106. On
the request of the guarantee corporation, the auditor shall make available to
the guarantee corporation the working papers of the auditor used in conducting
an audit or preparing a report under this Act.
Qualified
privilege
107. An
oral or written statement or report made under this Act by the auditor of a
credit union has qualified privilege.
No liability
108. (1) An
auditor or former auditor of a credit union who in good faith makes an oral or
written statement or report under this Act shall not be liable in a civil
action arising from the statement or report.
(2) Subsection (1) does not relieve an auditor or
former auditor from liability in connection with a report referred to in
paragraph 91(1)(b) or subsection 99(1).
PART VIII
FUNDAMENTAL CHANGES
Amendment of
articles
109. (1) Subject
to the approval of the superintendent under section 111,
the articles of a credit union may be amended by special resolution of the
members.
(2) Notwithstanding subsection (1), the articles
of a credit union containing a clerical error may be amended by resolution of
the directors or by ordinary resolution of the members to correct the error.
Articles to
superintendent
110. Where
the articles of a credit union are amended under section 109 those articles of amendment shall, within 6
months of the date of the resolution of the members authorizing the amendment,
be sent to the superintendent for filing and the superintendent shall refuse to
accept amended articles that are not filed within those 6 months.
Certificate
of amendment
111. On
receipt of articles of amendment, the superintendent may, if satisfied that the
amendment is advisable, file the articles and issue a certificate of amendment
in accordance with section 182.
Effect of
certificate
112. (1) An
amendment becomes effective on the date shown in the certificate of amendment
and the articles are amended accordingly.
(2) An amendment to the articles of a credit union
shall not affect an existing cause of action, claim or liability to prosecution
in favour of or against the credit union or its directors, committee members, officers
or employees, or a civil, criminal or administrative action or proceeding to
which the credit union or its directors, committee members, officers or
employees is a party.
Restated articles
113. (1) The
credit union may, and shall when directed by the superintendent, restate the
articles of incorporation as amended.
(2) Restated articles of incorporation in the required
form shall be sent to the superintendent.
(3) On receipt of restated articles of
incorporation, the superintendent shall issue a restated certificate of
incorporation in accordance with section 182.
(4) Restated articles of incorporation are
effective on the date shown in the restated certificate of incorporation and
supersede the original articles of incorporation and all amendments to them.
Amalgamation
114. (1) Two
or more credit unions may amalgamate and continue as one credit union.
(2) A credit union that is under supervision under
Part XII shall not amalgamate without the written consent of the guarantee
corporation.
Amalgamation
agreement
115. Credit
unions proposing to amalgamate shall enter into an agreement with each other
setting out the terms and means of effecting the amalgamation and, in
particular, setting out
(a) the provisions required to be included in
articles of incorporation under section 6;
(b) the address of the registered office of the
amalgamated credit union;
(c) the name and address of each proposed director
of the amalgamated credit union;
(d) the name, residence address and principal
occupation of each proposed director of the amalgamated credit union;
(e) the manner in which the shares of each
amalgamating credit union are to be converted into shares of the amalgamated
credit union;
(f) if shares of an amalgamating credit union are
not to be converted into shares of the amalgamated credit union, the amount of
money that the holders of those shares are to receive in addition to or instead
of shares of the amalgamated credit union;
(g) the proposed by-laws of the amalgamated credit
union; and
(h) details of arrangements necessary to perfect
the amalgamation and to provide for the subsequent management and operation of
the amalgamated credit union.
Approval of agreement
116. (1) The
directors of each amalgamating credit union shall submit the amalgamation
agreement for approval at a meeting of the members of the amalgamating credit
unions.
(2) A notice of a meeting of members shall be sent
in accordance with section 57 to each member of
each amalgamating credit union and shall include or be accompanied by a copy or
summary of the amalgamation agreement and shall state that a member is entitled
to dissent in accordance with section 122.
(3) An amalgamation agreement is adopted when the
members of each amalgamating credit union have approved the amalgamation by a
special resolution.
(4) An amalgamation agreement may provide that
before the issue of a certificate of amalgamation the agreement may be
terminated by the board of directors of any of the amalgamating credit unions.
Articles of amalgamation
117. (1) Subject
to subsection 116(4), after an amalgamation has
been adopted under subsection 116(3), articles
of amalgamation shall be sent to the superintendent.
(2) The articles of amalgamation shall have
attached to them an affidavit made under oath or affirmation of a director or an
officer of each amalgamating credit union that establishes to the satisfaction
of the superintendent that
(a) there are reasonable grounds for believing
that
(i) each amalgamating credit union is and the
amalgamated credit union will be able to pay its liabilities as they become
due, and
(ii) the realizable value of the assets of the
amalgamated credit union upon completion of the amalgamation will not be less
than the aggregate of its liabilities and its equity other than retained
earnings; and
(b) there are reasonable grounds for believing
that
(i) a creditor or member of the amalgamating
credit unions will not be prejudiced by the amalgamation, or
(ii) adequate notice has been given to all known
creditors of the amalgamating credit unions with a claim against the credit
union in an amount that exceeds $1,000 and at least 60% of those creditors consent
to the amalgamation.
(3) A credit union may be exempt from the
requirements of paragraph (2)(a) if the guarantee corporation consents to an exemption.
(4) For the purpose of subparagraph (2)(b)(ii),
adequate notice is given if
(a) a notice is given in the Gazette and once in a newspaper published or distributed in a
place where each amalgamating credit union has its registered office; and
(b) each notice states that the credit union
proposes to amalgamate with one or more specified other credit unions in accordance
with this Act providing at least 60% of creditors with amounts exceeding $1,000
consent to the amalgamation within 30 days after the date of the notice.
Compulsory amalgamation
118. Where
a credit union that is under supervision under Part XII is ordered by its
supervisor to amalgamate in accordance with section 176(1)(i),
the provisions of section 116 and subsection 117(2) do not apply to the credit union which is
ordered to amalgamate.
Certificate and
effect of amalgamation
119. (1) On
receipt of articles of amalgamation, the superintendent may, where satisfied
that the amalgamation is advisable, file the articles and issue a certificate
of amalgamation in accordance with section 182.
(2) On the date shown in the certificate of
amalgamation
(a) the amalgamation of the amalgamating credit
unions and their continuance as one credit union becomes effective;
(b) the property of each amalgamating credit union
continues to be the property of the amalgamated credit union;
(c) the amalgamated credit union continues to be
liable for the obligations of each amalgamating credit union;
(d) an existing cause of action, claim or
liability to prosecution remains unaffected;
(e) a civil, criminal or administrative action or
proceeding pending by or against either of the amalgamating credit unions may
be continued by or against the amalgamated credit union;
(f) a conviction against, or ruling, order or
judgment in favour of or against an amalgamating credit union may be enforced
by or against the amalgamated credit union;
(g) the articles of amalgamation shall be
considered to be the articles of incorporation of the amalgamated credit union
and the certificate of amalgamation shall be considered to be the certificate
of incorporation of the amalgamated credit union;
(h) on the filing of a copy of the certificate of
amalgamation, certified as a true copy by the superintendent, in a land titles
registry or other recording office, all the lands, charges on land, estates,
real, personal or mixed real and personal property, effects, rights, credits,
judgments, assignments and rights enforceable by legal action of every
description belonging to the amalgamating credit unions are transferred and
vested in the amalgamated credit union without further act, conveyance or other
deed; and
(i) the members of the amalgamating credit unions
become members of the amalgamated credit union and the shares held in the
amalgamating credit unions become shares in the amalgamated credit union
subject to the terms of the amalgamation agreement.
Extraordinary
sale, lease or exchange
120. (1) A
sale, lease or exchange of all or substantially all of the property of a credit
union requires the approval of the members in accordance with this section.
(2) A notice of a meeting of members called under
subsection (1) shall be sent in accordance with section 57 to each member and
shall
(a) include or be accompanied by a copy or summary
of the agreement of sale, lease or exchange; and
(b) state that a member is entitled to dissent in
accordance with section 122.
(3) At the meeting held in accordance with a
notice referred to in subsection (2), the members may by special resolution
approve the sale, lease or exchange and may fix or authorize the directors to
fix a term or condition of it.
(4) A sale, lease or exchange referred to in
subsection (1) is adopted when the members have approved the sale, lease or
exchange.
(5) The directors of a credit union may, if
authorized by the members approving a proposed sale, lease or exchange, and
subject to the rights of third parties, abandon the sale, lease or exchange
without further approval of the members.
Approval of guarantee
corporation
121. (1) The
credit union shall, before the completion of a sale, lease or exchange referred
to in section 120, obtain the approval of the guarantee
corporation.
(2) An
approval shall not be granted under subsection (1) unless the guarantee
corporation has received an affidavit made under oath or affirmation of a
director or officer from the credit union proposing to sell, lease or exchange
its property establishing, to the satisfaction of the guarantee corporation,
that there are reasonable grounds for believing that
(a) the
sale, lease or exchange of the property will not increase the likelihood of a
claim upon the guarantee corporation;
(b) creditors,
including shareholders of the credit union who are not members, will not be
prejudiced by the sale, lease or exchange of the property; and
(c) the
sale, lease or exchange of the property has been consented to by not less than
60% of creditors of the credit union with amounts exceeding $1,000.
(3) For the purpose of subsection (2), adequate
notice is given if
(a) a notice is published once in the Gazette and once in a newspaper
published or distributed in the place where the credit union has its registered
office; and
(b) each notice states that the credit union
proposes to sell, lease or exchange all, or substantially all of its property
under section 120 providing at least 60% of the
creditors with amounts exceeding $1,000 consent to the sale, lease or exchange
within 30 days from the date of the notice.
Dissent
122. (1) A
member of a credit union may dissent if the credit union resolves to
(a) change its name;
(b) amalgamate with another credit union under
section 116;
(c) sell, lease or exchange all or substantially
all of its property under section 120; and
(d) add, change or remove a provision that is set
out in the articles.
(2) A dissenting member shall send to the credit
union, at or before a meeting of members at which a resolution referred to in
subsection (1) is to be voted on, a written objection to the resolution but,
where the dissenting member fails to send the written objection as required,
the dissenting member does not lose the right to dissent if the credit union
failed to give the dissenting member notice of the purpose of the meeting or of
the right to dissent.
(3) The credit union shall, within 10 days after
the members adopt the resolution,
(a) send to each member who has filed an objection
under section (2), a notice that the resolution has been adopted, but notice is
not required to be sent to a member who withdraws an objection; and
(b) send to the guarantee corporation a copy of
the resolution and copies of written objections received by the credit union
under subsection (2).
(4) A resolution in respect of which written
objection has been sent to the credit union under subsection (2) shall not be
effective until approved by the guarantee corporation.
(5) The guarantee corporation may require as a
condition of approval under subsection (4) that a part or all of the indebtedness
or other liability of the credit union to the dissenting member be paid or
satisfied on those terms that the guarantee corporation may stipulate.
Reorganization under a court order
123. (1) In
this section, "reorganization" means the reorganization of a credit
union in accordance with a court order made under
(a) section 159;
(b) the Bankruptcy
and Insolvency Act (Canada), approving a proposal; or
(c) any other Act of the Legislature that affects
the rights of the credit union, its members or creditors.
(2) Where a credit union is subject to a
reorganization, its articles may be amended by the order to effect a change
that might lawfully have been made by an amendment under section 109.
(3) Where a reorganization is made, the court may
also
(a) authorize the issue of debt obligations of the
credit union and fix the terms of them; and
(b) appoint directors in place of or in addition
to all of the directors then in office.
(4) After a reorganization has been made, articles
of reorganization shall be sent to the superintendent.
(5) On receipt of articles of reorganization, the
superintendent shall file the articles and issue a certificate of amendment in
accordance with section 182.
(6) A reorganization becomes effective on the date
shown in the certificate of amendment and the articles of incorporation are
amended accordingly.
PART IX
DISSOLUTION AND LIQUIDATION
Mandatory dissolution
124. A
credit union that does not have property and liabilities shall be dissolved by
special resolution of the members.
Voluntary dissolution
by members
125. (1) A credit union that has property or
liabilities or both may be dissolved by special resolution of the members where
(a) by the special resolution the members
authorize the directors to cause the credit union to distribute any property
and discharge liabilities; and
(b) the credit union has, under section 120, sold its property, distributed residual property
and discharged all of its liabilities.
(2) A credit union which is being dissolved under
this section shall prepare articles of dissolution in accordance with section 127 and that section applies in relation to the
dissolution.
Voluntary liquidation
and dissolution
126 (1)
The directors, or a member in accordance with section 59,
may propose the voluntary liquidation and dissolution of a credit union.
(2) Notice of a meeting of members at which
voluntary liquidation and dissolution is to be proposed shall set out the terms
of the liquidation and dissolution.
(3) A credit union may be liquidated and dissolved
by special resolution of the members.
(4) A statement of intent to dissolve in the required
form shall be sent to the guarantee corporation.
(5) On receipt of a statement of intent to
dissolve, the superintendent, if satisfied that the credit union shall be able
to discharge all of its obligations and liabilities before dissolution, shall
issue a certificate of intent to dissolve in accordance with section 182.
(6) Where a certificate of intent to dissolve is
issued, the credit union shall cease to carry on business except to the extent
necessary for the liquidation, but its legal existence continues until the
superintendent issues a certificate of dissolution.
(7) After a certificate of intent to dissolve is
issued, the credit union shall
(a) immediately give notice of the dissolution to
be sent to each known creditor of the credit union;
(b) immediately give notice in the Gazette and once in a newspaper
published or distributed in the place where the credit union has its registered
office and take reasonable steps to give notice of the dissolution in every
jurisdiction where the credit union carries on business;
(c) proceed to collect its property, to dispose of
properties that are not to be distributed in kind to its members, to discharge
all its obligations and to do all other acts required to liquidate its
business; and
(d) after giving the notice required under
paragraphs (a) and (b) and adequately providing for the payment or discharge of
all its obligations, distribute its remaining property, either in money or in
kind, in accordance with the provisions of the special resolution authorizing
the dissolution.
(8) After the issue of a certificate of intent to
dissolve and before a certificate of dissolution is issued, a certificate of
intent to dissolve may be revoked by sending to the superintendent a statement
of revocation of intent to dissolve in the required form, if the revocation is
approved in the same manner as the resolution under subsection (3).
(9) On receipt of a statement of revocation of
intent to dissolve, the superintendent shall issue a certificate of revocation
of intent to dissolve in accordance with section 182.
(10) On the date shown in the certificate of
revocation of intent to dissolve, the revocation is effective and the credit
union may continue to carry on its business.
(11) Where a certificate of intent to dissolve has
not been revoked and the credit union has complied with subsection (7), the
credit union shall prepare articles of dissolution.
Articles of
dissolution and certificate
127. (1) Articles
of dissolution shall be sent to the superintendent.
(2) On receipt of articles of dissolution, the
superintendent shall issue a certificate of dissolution in accordance with section
182.
(3) The credit union ceases to exist on the date
shown in the certificate of dissolution.
Custody of
records
128. The
guarantee corporation shall retain the documents and records of a dissolved
credit union for 6 years immediately following the effective date of the credit
union dissolution.
Effect of
dissolution
129. (1) In
this section, "member" includes the heirs and legal representatives
of a member.
(2) Notwithstanding the dissolution of a credit
union under this Act,
(a) a civil, criminal or administrative action or
proceeding commenced by or against the credit union before its dissolution may
be continued as if the credit union had not been dissolved;
(b) a civil, criminal or administrative action or
proceeding may be brought against the credit union within 2 years after its
dissolution as if the credit union had not been dissolved; and
(c) a property that would have been available to
satisfy a judgment or order if the credit union had not been dissolved remains
available for that purpose.
(3) Service of a document on a credit union after
its dissolution may be effected by serving the document on a person named as a
director in the most recent notice sent to the superintendent under this Act.
(4) Notwithstanding the dissolution of a credit
union, a member to whom property has been distributed is liable to a person
claiming under subsection (2) to the extent of the amount received by that member
on the distribution, and an action to enforce that liability may be brought within
2 years after the date of the dissolution of the credit union.
(5) A court may order an action referred to in
subsection (4) be brought against the persons who were members, subject to
those conditions that the court thinks appropriate and, if the plaintiff's
claim is established, the court may refer the proceedings to an officer of the
court who may
(a) add as a party to the proceedings each person
found by the plaintiff who was a member or shareholder;
(b) determine, subject to subsection (4), the
amount that each person who was a member or shareholder shall contribute
towards satisfaction of the plaintiff's claim; and
(c) direct payment of the amounts so determined.
Unclaimed
property
130. (1) Upon
the dissolution of a credit union, the portion of the property distributable to
a creditor, shareholder or member who cannot be found shall be converted into
money and paid to the guarantee corporation.
(2) A payment under subsection (1) is considered
to be in satisfaction of the debt to or claim of the creditor, shareholder or
member.
(3) Where it is established that a person is
entitled to money paid to the guarantee corporation under this Act, the
guarantee corporation shall pay the amount of that money to that person.
(4) Where after the dissolution of a credit union
it is established that a person is entitled to receive a document for
registration in the registry of deeds or other registry executed by that credit
union, the guarantee corporation shall execute the documents on behalf of the
dissolved credit union.
(5) A document executed by the guarantee
corporation under subsection (4) shall be accepted for registration in the
registry of deeds or other registry, if the guarantee corporation has placed an
explanation for its actions upon the document and has otherwise complied with
the requirements of the registry of deeds or other registry.
(6) Subject to this section and section 129, property of a credit union that has not been
disposed of at the date of its dissolution vests in the guarantee corporation.
(7) The costs of liquidation shall be paid out of
the property of the credit union.
Effect of Bankruptcy
and Insolvency Act (Canada)
131. (1) This
Part does not apply to a credit union that is bankrupt within the meaning of
the Bankruptcy and Insolvency Act (Canada).
(2) Proceedings taken under this Part to dissolve
or to liquidate and dissolve a credit union shall be stayed if a credit union
becomes subject to or takes a proceeding under the Bankruptcy and Insolvency Act (Canada).
PART X
CREDIT UNION DEPOSIT GUARANTEE CORPORATION
Application
132. This
Part applies to the Credit Union Deposit Guarantee Corporation.
Continuation
133. The
Credit Union Deposit Guarantee Corporation existing under the Credit Union Act in force immediately
before the commencement of this Act is continued subject to the provisions of
this Act, and the members of the board of the guarantee corporation continue in
office until their successors are appointed.
Duties
134. The
duties of the guarantee corporation are
(a) to provide, for the benefit of persons having
deposits with credit unions in the province, deposit insurance against loss of
part or all of those deposits by making payments to the depositors to the
extent and in the manner authorized by this Act;
(b) in those circumstances that the guarantee
corporation considers appropriate, to provide assistance to credit unions for
the purpose of stabilization or for the orderly liquidation of a credit union;
(c) to protect deposits in credit unions against
impairment arising from financial losses and insolvency by
(i) promoting the development and implementation
of sound business practices and sound financial policies and procedures by
credit unions, and
(ii) establishing and implementing loss prevention
programs and other controls;
(d) to act as supervisor of a credit union; and
(e) to do those other things that may be required
or authorized by this Act or the regulations.
Capacity
135. The
guarantee corporation has the capacity, rights, powers and privileges of a
natural person.
Powers
136. The
guarantee corporation may
(a) determine the amounts of money to be levied
and collected from credit unions for the purpose of section 147, 148 and 154;
(b) borrow money on the credit of the guarantee
corporation or on bills of exchange or promissory notes drawn, made, accepted
or endorsed by or on behalf of the guarantee corporation and pledge as security
assets of the guarantee corporation;
(c) enter into an agreement or arrangement with a
person relating to
(i) the stabilization of credit unions,
(ii) the merger, amalgamation and winding up of a
credit union,
(iii) financial assistance that it considers
necessary to meet the requirements of its operations, and
(iv) other matters that it considers appropriate
for the attainment of its purposes;
(d) apply to the minister for loans or guarantees
of loans to assist it in carrying out its purpose;
(e) make or cause to be made those examinations
and inquiries in relation to credit unions and those actuarial or similar
studies that the guarantee corporation considers appropriate;
(f) guarantee loans made by third parties to
credit unions and take security for those guarantees;
(g) make investments in relation to the deposit guarantee
fund or have those investments made;
(h) assume or purchase the liabilities or assets
of credit unions on their liquidation or dissolution;
(i) establish terms, conditions, restrictions and
limitations in relation to the lending activities of credit unions and the loan
policies to be established by credit unions;
(j) set out sound business and financial practices
for credit unions;
(k) issue directives in relation to sound business
practices and sound financial policies and procedures to be followed by credit
unions including directives in relation to those matters referred to in
paragraph (i);
(l) make available to credit unions assistance
including financial assistance for the purpose of stabilization on terms and
conditions that it considers appropriate;
(m) assume the costs of the winding up of credit
unions where the assets of a credit union are insufficient to cover the costs;
(n) engage employees, enter into agreements or
arrangements and incur those costs and expenses that are required to carry out
the purposes of the guarantee corporation;
(o) arrange compulsory insurance programs for
credit unions or insurance coverage on behalf of those credit unions;
(p) require credit unions to make reports and
specify the contents, frequency and form of those reports;
(q) maintain a long term unclaimed balance account
in accordance with this Act;
(r) administer the regulations under this Act as
delegated by the minister; and
(s) do those other things that may be necessary or
incidental to the attainment of its purposes.
Board
137. (1) The affairs of the guarantee
corporation shall be administered by a board of directors of not more than 7
members who shall be appointed by the minister in accordance with the
regulations.
(2) A
person who is a citizen of Canada and is at least 19 years of age may
be appointed as a director of the guarantee corporation.
(3) Notwithstanding
subsection (2), an employee, a committee member or a director of a credit union
trade association or of a credit union shall not be appointed as a director of
the guarantee corporation.
Officers
138. (1) The chairperson, vice-chairperson and
the secretary-treasurer of the board of directors of the guarantee corporation
shall be appointed in accordance with the regulations.
(2) The
board of directors of the guarantee corporation may appoint those other
officers and committees that it considers necessary to fulfil the purposes of
the guarantee corporation under this Act.
(3) Notwithstanding
paragraph 143(2)(b), employees required to exercise
the powers and duties of the guarantee corporation shall be considered to be
employees of the government of the province, shall be employed in the manner
required by law and the board of directors of the guarantee corporation may
determine the duties of those employees.
Vacancy
139. Where
a vacancy occurs in the board of directors
of the guarantee corporation, the minister shall fill the vacancy in
accordance with section 137.
Office ceases
140. A
member of the board of directors of a
guarantee corporation ceases to hold office upon
(a) death or resignation;
(b) becoming disqualified from holding the office;
or
(c) being removed from office by the minister.
Management
141. The
board of directors of the guarantee corporation shall
(a) exercise the powers of the guarantee
corporation directly, or indirectly through its employees and agents; and
(b) direct the management of the business and
affairs of the guarantee corporation.
Quorum
142. (1) A
majority of the members of the board of directors of the guarantee corporation
constitutes a quorum.
(2) The agreement of the majority of the members
of the board of directors of the guarantee corporation present at a meeting of
that board shall be necessary for a decision to be valid.
(3) The chairperson may vote as a director at a
meeting of the board of directors of the guarantee corporation and where there
is an equality of votes, he or she shall have another vote.
143. (1) The
board of directors of the guarantee corporation, in order to regulate the
business and affairs of the guarantee corporation, may enact by-laws and amend
or repeal them.
(2) The guarantee corporation may make by-laws
(a) respecting the administration, management and
control of the property and affairs of the guarantee corporation;
(b) respecting the functions, duties and
remuneration of the officers, agents and employees of the guarantee
corporation;
(c) respecting the appointment or disposition of
special committees created by the guarantee corporation;
(d) respecting the appointment of an auditor;
(e) respecting the time and place for the holding
of meetings of the directors and the procedure at those meetings;
(f) respecting the manner in which a credit union
may represent that it is a contributor to the deposit guarantee fund;
(g) authorizing and controlling the use by credit
unions of marks, signs, advertisements or other devices indicating that
deposits with credit unions are insured by the guarantee corporation;
(h) defining the word "deposit" for the
purpose of deposit insurance;
(i) adopting a seal for the guarantee corporation;
(j) setting standards of sound business and financial
practices for credit unions; and
(k) respecting the conduct in all other
particulars of the affairs of the guarantee corporation.
Guaranteed
deposit insurance
144. (1) The
guarantee corporation shall insure deposits placed with a credit union to an
amount determined in accordance with the regulations.
(2) Where the guarantee corporation is obligated
to make a payment in accordance with paragraph 146(a)
in relation to a deposit insured by it, the guarantee corporation as soon as
possible after the obligation arises shall, in relation to that deposit, make the
payment, or have that payment made to the person who appears entitled to it by
the records of the credit union with whom the deposit was made by paying, or
having paid, to that person an amount in money equal to so much of the person's
outstanding claim against the credit union that is insured by the guarantee
corporation.
(3) Payment under this section by or on behalf of
the guarantee corporation in relation to a deposit insured by deposit insurance
discharges the guarantee corporation from all liability in relation to that
deposit.
(4) Where the guarantee corporation makes a
payment, or has a payment to be made, under this section in relation to a
deposit with a credit union, the guarantee corporation is subrogated to the
extent of the payment made to all the rights and interests of the depositor as
against that credit union.
(5) The guarantee corporation may deduct from a payment
under subsection (2) the amount the credit union is entitled to deduct from the
deposit under a lien, right of set off or specific charge effectively as if the
credit union itself were repaying the deposit in full.
(6) The deduction of an amount by the guarantee
corporation under subsection (2) in respect of a lien, right of set off or
specific charge discharges the liability of the member to the credit union to
the extent of the amount deducted.
(7) Where a member entitled to a guaranteed
deposit cannot be located, the guarantee corporation shall pay the amount
guaranteed into its long-term unclaimed balances account.
Prohibition
145. (1) A
credit union shall not advertise or hold out by a written or oral
representation that its deposits are insured by the guarantee corporation
otherwise than by those marks, signs, advertisements or other devices that are
authorized by the by-laws of the guarantee corporation and used in the manner
and on the occasions specified by the by-laws.
(2) A credit union that violates subsection (1) is
guilty of an offence.
Deposit guarantee
fund
146. The
guarantee corporation shall establish and maintain a deposit guarantee fund
which may be used for the following purposes:
(a) on the liquidation of a credit union, to pay
out claims of depositors in accordance with section 144;
(b) to provide financial assistance to credit
unions for the purpose of stabilization; and
(c) to pay costs or expenses incurred in doing
those other things that may be necessary for or incidental to the attainment of
the purposes of the guarantee corporation.
Determination of
levy
147. The
guarantee corporation shall determine the amount of money to be levied and
collected from credit unions to enable the guarantee corporation to provide its
services and to carry out its purposes in accordance with this Act.
Manner of collection
148. The
guarantee corporation shall levy and collect from credit unions those amounts
that may be determined by the guarantee corporation, in a manner and at those
times as the guarantee corporation may direct.
Loans to
guarantee corporation
149. (1) On
the application of the guarantee corporation, the minister may, with the
approval of the Lieutenant-Governor in Council and subject to those terms and
conditions that the minister considers appropriate,
(a) make loans or advances to the guarantee
corporation; and
(b) guarantee loans or advances made to the
guarantee corporation by others.
(2) The amount of a loan or advance made to the
guarantee corporation under paragraph (1)(a) shall be paid out of the
Consolidated Revenue Fund of the province.
Records
150. The
board shall keep proper records of the affairs of the guarantee corporation.
Fiscal year
151. The
fiscal year of the guarantee corporation ends on December 31 in each year.
Audit
152. The
books and accounts of the guarantee corporation shall be examined, checked and
audited at least once each year.
Application
153. Sections
80 to 88, 91, 92, 94 to 99 and 101 to 104, 107 and 108 apply,
with the necessary changes, to the guarantee corporation.
Payment of levy
154. A
credit union shall pay to the guarantee corporation the amounts levied by the
guarantee corporation.
Report to
minister
155. (1) The
guarantee corporation shall, within 6 months after the end of each fiscal year,
send to the minister
(a) a copy of its financial statements, with the
auditor's report on them for that fiscal year;
(b) the annual report of the guarantee
corporation; and
(c) further information respecting the financial
position of the guarantee corporation and the results of its operations that may
be prescribed.
(2) The
guarantee corporation shall, within 120 days after the end of each fiscal year
or within the extended period that the minister may approve, send to each
credit union, a copy of its financial statements, with the auditor's report on
them, for that fiscal year.
PART XI
REMEDIES, OFFENCES AND PENALTIES
Definitions
156. In
this Part
(a) "action" means an action under this
Act;
(b) "complainant" means
(i) a member of a credit union,
(ii) a registered owner or beneficial owner, or
former registered owner or beneficial owner, of a share of a credit union,
(iii) a director or an officer or a former director
or officer of a credit union or the guarantee corporation,
(iv) a creditor of a credit union or the guarantee
corporation,
(v) the superintendent,
(vi) a credit union,
(vii) the guarantee corporation, or
(viii) another person who, in the discretion of the
court, is a proper person to make an application under this Part.
Derivative action
157. (1) A
complainant may apply to the court for leave to bring an action in the name and
on behalf of a credit union, or for leave to intervene in an action to which
the credit union is a party, for the purpose of prosecuting, defending or
discontinuing the action on behalf of the credit union.
(2) A complainant who applies to the court under
subsection (1) shall give the superintendent 30 days notice of the application
and the superintendent is entitled to appear and be heard in person or by counsel.
(3) An action may be brought and an intervention
in an action may be made under subsection (1) if the court is satisfied that
(a) the complainant has given 30 days notice to
the directors of the credit union of the complainant's intention to apply to
the court under subsection (1) if the directors of the credit union do not
bring, diligently prosecute or defend or discontinue the action;
(b) the complainant is acting in good faith; and
(c) it appears to be in the interest of the credit
union that the action be brought, prosecuted, defended or discontinued.
Powers of court
158. In
connection with an action brought or intervened in under section 157, the court may make an order it thinks
appropriate including,
(a) an order authorizing the complainant or other
person to control the conduct of the action;
(b) an order giving directions for the conduct of
the action;
(c) an order directing that an amount adjudged
payable by the defendant in the action shall be paid, in whole or in part, directly
to former and present members of the credit union;
(d) an order requiring the credit union to pay
reasonable legal fees incurred by the complainant in connection with the action;
and
(e) an order requiring the credit union to furnish
to the complainant or to another person all material or information relevant to
the action including
(i) the financial statements of the credit union,
(ii) the name and address of each member of the
credit union, and
(iii) the name and address of each creditor of the
credit union, including any creditor with unliquidated, further or contingent
claims and a person with whom the credit union has a contract.
Application to
court
159. (1) A
complainant may apply to the court for an order under this section.
(2) Where, upon an application under subsection
(1) with respect to a credit union or the guarantee corporation, the court is
satisfied that
(a) an act or omission of the credit union or the
guarantee corporation effects a result;
(b) the business or affairs of a credit union or
the guarantee corporation are or have been carried on or conducted in a manner;
or
(c) the powers of the directors of a credit union or
the guarantee corporation are to have been exercised in a manner
that is unlawful, unfairly prejudicial or
that unreasonably disregards the interests of a complainant, the court may make
an order to rectify the matters complained of.
(3) In an application under this section, the
court may make an interim or final order it thinks appropriate including,
(a) an order restraining the conduct complained
of;
(b) an order placing a credit union under
supervision under section 173;
(c) an order placing a credit union under
supervision under section 176(1)(i) for the
purpose of liquidation and dissolution;
(d) an order to regulate the affairs of a credit
union or the guarantee corporation by amending its articles or by-laws;
(e) an order directing an issue or exchange of
securities;
(f) in the case of a credit union an order
appointing directors in place of or in addition to all or any of the directors
then in office;
(g) an order varying or setting aside a
transaction or contract to which a credit union or the guarantee corporation is
a party, and compensating the credit union or the guarantee corporation or
other party to the transaction or contract;
(h) an order directing rectification of the
registers or other records of the credit union under subsection 161(1);
(i) an order requiring the trial of an issue; and
(j) an order compensating a complainant or another
person.
(4) Where an order made under this section directs
an amendment of the articles or by-laws of a credit union, in the case of
(a) an amendment to the articles, the directors
shall immediately comply with section 109; and
(b) an amendment to the by-laws, the directors
shall immediately send to the superintendent the amended by-laws together with
a certified copy of the court order,
and another amendment to the articles or
by-laws shall not be made without consent of the court, until the court
otherwise orders.
Application
160. (1) An
application made or an action brought or intervened in under this Part shall
not be stayed or dismissed by reason only that it is shown that an alleged
breach of a right or duty owed to a credit union has been or may be approved by
the members, but evidence of approval by the members may be taken into account
by the court in making an order under this Part.
(2) An application made or an action brought or
intervened in under this Part shall not be stayed, discontinued, settled or
dismissed for want of prosecution without the approval of the court given upon
those terms that the court thinks appropriate and, if the court determines that
the interest of complainant may be substantially affected by the stay,
discontinuance, settlement or dismissal, the court may order a party to the
application or action to give notice to that complainant.
Rectification of
register
161. (1) Where
the name of a person is alleged to be or to have been wrongly registered or
retained in, or wrongly deleted or omitted from, the registers or other records
of a credit union, the credit union or a member or other security holder or a
complainant may apply to the court for an order that the registers or records
be rectified.
(2) Upon an application under subsection (1), the
court may make an order it thinks appropriate including, an order
(a) requiring the registers and records of the
credit union to be rectified;
(b) restraining the credit union from calling or
holding a meeting of members or allocating or paying interest before rectification
of the registers or records;
(c) determining the right of a party to the
proceedings to have that party's name entered or retained in, or deleted or
omitted from the registers or records of the credit union whether the issue
arises between 2 or more members or security holders, or between the credit
union and a member or security holder or alleged member or security holder; and
(d) compensating a party who has incurred a loss
by reason of the wrongful entry, retention, deletion or omission.
Compliance application
162. If
a credit union or the guarantee corporation, or a director, officer, member,
employee, agent, auditor, trustee, or supervisor of them does not comply with
(a) this Act or the regulations;
(b) the articles or by-laws of the credit union or
the guarantee corporation; or
(c) an order of the superintendent or the
guarantee corporation made under this Act or the regulations,
a complainant may, in addition to another
remedy the complainant has, apply to the court for an order directing that
person to comply with, or restraining that person from violating the provision,
articles, by-laws or order and, on that application, the court may order and
make a further order it thinks appropriate.
Application for
direction
163. The
superintendent may apply to the court for direction in relation to a matter
concerning the superintendent's duties and powers under this Act and, on that
application, the court may give direction and make another order it thinks
appropriate.
Appeal
164. (1) A
person may appeal a decision or an order of the superintendent or the guarantee
corporation to the court within 30 days after the making of the decision or
order.
(2) An appeal under subsection (1) may be made on
a question of law or fact or both and the court, after hearing the appeal, may
(a) affirm or reverse the decision or order;
(b) direct the superintendent or the guarantee
corporation to make another decision or order that the superintendent or the
guarantee corporation is authorized to make under this Act; or
(c) substitute its decision or order for that of
the superintendent or the guarantee corporation.
Review and examination
165. The
superintendent or the guarantee corporation
(a) shall review information and returns received
from credit unions and their directors, officers, committee members or
employees;
(b) may examine the business and affairs of a
credit union;
(c) shall be given access to all records, books,
accounts, vouchers and other documents; and
(d) may make those inquiries that are necessary to
ascertain whether a credit union has complied with this Act, or an order or
direction.
Examination powers
166. (1) For
the purpose of the examination referred to in section 165,
a credit union shall prepare and submit to the superintendent or the guarantee
corporation, the information with respect to its business and affairs, in
addition to the returns required under Part VII, that the superintendent
or the guarantee corporation may require.
(2) Upon an examination, the superintendent, the
guarantee corporation or a person that the superintendent or the guarantee
corporation may authorize has the powers of a commissioner appointed under the Public Inquiries Act, 2006.
Voluntary compliance
167. (1) Where,
in the opinion of the superintendent or the guarantee corporation, a credit
union is committing an act or pursuing a course of conduct that
(a) does not comply with this Act or the
regulations;
(b) might reasonably be expected, if continued, to
result in a state of affairs that would not be in compliance with this Act or
the regulations;
(c) does not comply with an undertaking given or
an agreement made with the superintendent or guarantee corporation under this
Act or the regulations; or
(d) constitutes a practice that might prejudice or
adversely affect the interests of depositors or creditors,
the credit union may enter into a program
of voluntary compliance related to an act or course of conduct described in
paragraph (a), (b), (c) or (d).
(2) A voluntary compliance program under this
section shall
(a) be first approved by the guarantee corporation;
(b) be in writing; and
(c) bind the credit union from the time it is
approved by the guarantee corporation.
(3) Where a voluntary compliance program is
entered into, the guarantee corporation shall not be prevented from making
orders against a credit union
(a) on matters covered in the voluntary compliance
program where
(i) the program is not complied with,
(ii) all the facts related to the matter covered by
the program were not known by the guarantee corporation at the time the program
was entered into, or
(iii) there has been a deterioration in the
condition of the credit union; and
(b) on matters not covered in the program.
(4) The guarantee corporation, on the request of a
credit union may approve the alteration of a voluntary compliance program
entered into under this section.
Compliance order
168. (1) Where, in the opinion of the superintendent or
the guarantee corporation, a credit union is committing an act or pursuing a
course of conduct that
(a) does
not comply with this Act or the regulations;
(b) might
reasonably be expected, if continued, to result in a state of affairs that
would not be in compliance with this Act or the regulations;
(c) does
not comply with a voluntary compliance program under section 167;
(d) does
not comply with an undertaking given or agreement made with the superintendent
or the guarantee corporation under this Act or the regulations; or
(e) constitutes
a practice that might prejudice or adversely affect the interests of depositors
or creditors,
the
superintendent or the guarantee corporation may
(f) give notice to the credit union of an intention to order the credit
union to cease doing an act or to cease pursuing a course of conduct identified
by the guarantee corporation or the superintendent;
(g) order
the credit union to cease doing an act or to cease pursuing a course of conduct
identified by the superintendent or the guarantee corporation; and
(h) order
that the credit union perform those acts that, in the opinion of the
superintendent or the guarantee corporation, are necessary to remedy the
situation.
(2) The credit union may, by written notice served
on the superintendent or the guarantee corporation within 15 days after the
service of the notice on the credit union under subsection (1), request a
hearing before the superintendent or the guarantee corporation.
(3) Where a hearing is not requested within the
time set out in subsection (2) or (4), or where a hearing is held and the
guarantee corporation or the superintendent is of the opinion that an order
described in subsection (1) should be made, the superintendent or the guarantee
corporation may make an order and that order shall take effect immediately or
at a later date that may be set out in the order.
(4) Notwithstanding subsection (2), where, in the
opinion of the guarantee corporation or the superintendent, the interests of
the depositors, creditors or the public may be prejudiced or adversely affected
by a delay in the issuing of an order, the guarantee corporation or the superintendent
may make an interim order as described in subsection (1) which shall become
final on the fifteenth day after its making unless within that time a hearing
before the superintendent or the guarantee corporation is requested.
(5) A request for a hearing under subsection (4)
shall be in writing and served on the superintendent or the guarantee
corporation.
(6) Where a hearing is requested under subsection
(4), the superintendent or the guarantee corporation may extend the interim
order until the hearing is concluded or an appeal from the hearing is concluded
and the order is confirmed, varied or revoked.
(7) Where an order is made with respect to a
credit union under this section, a copy of the order shall be sent to each
director of the credit union.
(8) The superintendent or the guarantee
corporation may, after giving the credit union named in the order an
opportunity to be heard, confirm, vary or revoke an order made under this
section.
Offence
169. (1) A
person who makes or assists in making a report, return, notice or other
document required by this Act or the regulations to be sent to the
superintendent, the guarantee corporation or to another person that
(a) contains an untrue statement of a material
fact;
(b) does not state a material fact; or
(c) contains a misleading statement
is guilty of an offence and liable on
summary conviction to a fine not less than $1,000 and not exceeding $10,000 or
to imprisonment for a term not exceeding 6 months, or to both the fine and
imprisonment.
(2) Where a person who is found guilty of an
offence under subsection (1) is a corporation, then, whether or not the
corporation has been prosecuted or convicted, a director or officer of the
corporation who authorizes, permits or acquiesces in the offence is also guilty
of an offence and liable on summary conviction to a fine not less than $10,000
and not exceeding $50,000 or to imprisonment for a term not exceeding 6 months,
or to both the fine and imprisonment.
(3) A person is not guilty of an offence under
subsection (1) or (2) if the untrue statement or omission was unknown to that
person and in the exercise of reasonable diligence could not have been known to
that person.
General offence
170. A
person who, without reasonable cause, contravenes a provision of this Act or
the regulations for which another punishment is not provided in this Act or the
regulations is guilty of an offence and is liable on summary conviction to a
fine not less than $1,000 and not exceeding $10,000 in the case of a natural
person and not less than $10,000 and not exceeding $50,000 in the case of a
corporation.
Compliance order
following offence
171. (1) Where
a person is convicted of an offence under this Act or the regulations, the
court may, in addition to a punishment imposed, order the person to comply with
the provision of the Act or the regulations for the contravention of which that
person has been convicted.
(2) A prosecution under this Act or the
regulations shall be started within 2 years of
(a) the date upon which the offence is alleged to
have been committed; or
(b) the date upon which the guarantee corporation
becomes aware of the alleged offence,
whichever is later.
(3) A civil remedy for an act or omission under
this Act is not suspended or affected by reason only that the act or omission
is an offence under this Act.
Maintenance of
action
172. (1) Notwithstanding
anything contained in this Part, where an action could be brought against a
person by a credit union for loss or damage suffered by or an accounting due to
the credit union by reason of the negligence of the person or the failure of
the person to comply with this Act, or the regulations or with the articles or
by-laws of the credit union or orders, directions or notices of the
superintendent or the guarantee corporation, where
(a) the action has not been brought, the
superintendent or the guarantee corporation may, without leave, bring and maintain
the action; or
(b) the action has been brought, the
superintendent or the guarantee corporation may apply to the court to be added
as a plaintiff and to be given the conduct of the action,
and money recovered by the superintendent
or the guarantee corporation shall be held for the benefit of the credit union
or, where a grant, loan or advance has been made by the guarantee corporation,
the money shall be held for the benefit of the guarantee corporation.
(2) An action for damages does not lie against the
minister, the superintendent, the guarantee corporation, the supervisor or a
person directed by them, for an act or thing done or omitted under this Act or
the regulations that was done or omitted in good faith.
PART XII
COMPLIANCE AND SUPERVISION
Supervision of
credit union
173. Where
the guarantee corporation is satisfied that a credit union is carrying on its
business in a manner that contravenes this Act or the regulations, sound
business or financial practices or is financially unsound, including those situations
where
(a) a credit union is unable to pay its
liabilities as they become due;
(b) the realizable value of the assets of a credit
union is less than the aggregate of its liabilities and the capital account of
all classes of shares of the credit union, other than the equity of members;
(c) a credit union has requested and the guarantee
corporation has determined to give it financial assistance;
(d) a credit union fails to file a report or
document required to be filed by this Act within the time fixed for filing by
this Act; or
(e) a credit union has failed to comply with an
order of the superintendent or of the guarantee corporation,
the guarantee corporation may give notice
to the credit union that it is declared to be under the supervision of the
guarantee corporation or another person appointed by the guarantee corporation.
Supervisor
174. The guarantee corporation or a supervisor
appointed by the guarantee corporation shall act as a supervisor of a credit
union that is placed under supervision under section 173.
Length of supervision
175. (1) Where a credit union is declared to be
under supervision under section 173,
the credit union remains subject to supervision until the guarantee corporation
releases the credit union from supervision or
(a) the
supervisor appointed under section 174
applies to the guarantee corporation to have the credit union released from supervision;
or
(b) the
credit union applies in writing to the guarantee corporation, under notice to
the supervisor, to be released from supervision, stating reasons in support of
its application, and
the guarantee
corporation approves the application and by notice to the credit union and the
supervisor, releases the credit union from supervision.
(2) Where a credit union is declared to be under supervision under section
173, that supervision ceases when
(a) the
credit union is
liquidated, dissolved or amalgamated; or
(b) in
the case of a credit union that has been placed under supervision by the court,
the court has ordered the release of the credit union from supervision.
Powers of supervisor
176. (1) Notwithstanding
a provision of this Act or the regulations and subject to the approval of the guarantee
corporation, or to an order of the court, where a credit union has been placed
under the supervision of the guarantee corporation or a person appointed as
supervisor under section 174, the supervisor
may
(a) exercise or direct the exercise of the powers
of the credit union;
(b) inspect the affairs of the credit union and
make inquiries from its officers, directors, committee members, employees and
members;
(c) require the credit union to correct practices
that, in the opinion of the supervisor, are contributing to the financial difficulties
suffered by the credit union or are likely to contribute to the unsound conduct
of its affairs;
(d) order the credit union and its directors,
committee members, officers and employees to refrain from exercising those
powers of the credit union or of its directors, committee members, officers or
employees or that may be specified in the order unless approved by the
supervisor or the authorized agent or employee of the supervisor;
(e) order the credit union not to declare or pay
interest or dividends, or to restrict the amount of interest or dividends to be
paid to a rate or an amount fixed by the supervisor;
(f) carry on, manage and conduct the operations of
the credit union and, in the name of the credit union, preserve, maintain,
realize, dispose of and add to the property of the credit union, receive the
incomes and revenues of the credit union and exercise all the powers of the
credit union and of its directors, officers, committees and employees;
(g) remove the directors of the credit union and
its officers, committee members, employees and agents from the property and
business of the credit union;
(h) appoint interim directors of the credit union;
(i) in the case of a credit union, reorganize,
amalgamate, dissolve, wind-up, liquidate or otherwise dispose of the business
of the credit union; and
(j) exercise those other powers that may be
granted to it by order of the court.
(2) The guarantee corporation or a supervisor
appointed under section 174 shall ensure that
the interests of all creditors of a credit union are properly and lawfully provided
for.
Report
177. A
supervisor appointed by the guarantee corporation under section 174 may be required by the guarantee corporation to submit
a report containing
(a) an assessment of the financial condition of
the credit union and the nature and circumstances giving rise to the supervision;
(b) a statement of the course of action in
relation to the supervision; and
(c) the other information that the guarantee
corporation may require.
Accounting
178. A
supervisor appointed under section 174 shall,
upon request of the guarantee corporation and upon discharge, fully account to
the guarantee corporation for the supervision of the credit union.
PART XIII
GENERAL
Notice
179. (1) A
notice or document required by this Act, or by the by-laws of a credit union,
to be sent to a person entitled to
receive notice from the credit union may be given in accordance with the
by-laws or, in the absence of a provision in the by-laws, may be sent by
prepaid mail addressed to, or may be delivered personally to
(a) the person at the latest address of the
person, as shown in the records of the credit union or its transfer agent; and
(b) in the case of a director, at the latest
address of the director, as shown in the records of the credit union, or in the
last notice filed under section 76.
(2) A notice or document mailed in accordance with
subsection (1) is considered to have been received within 5 business days from
the date it was postmarked, unless there are reasonable grounds for believing
that the person did not receive the notice or document at that time or at all.
(3) Where a credit union mails a notice or
document to a person in accordance with subsection (1) and the notice or
document is returned on 2 consecutive occasions because the person cannot be
found, the credit union is not required to send a further notice or document to
the person until the credit union is informed, in writing, of the new address
of that person.
(4) Where the by-laws of a credit union provide
for the giving of a notice to members under subsection (1) by insertion of the
notice in a newspaper or other publication, the notice is considered to have
been received by the members at the time the publication containing the notice
is distributed.
(5) Where the by-laws of a credit union provide
for the giving of a notice to members under subsection (1) by posting the
notice in a specified place, the notice is considered to have been received by
the members at the time the notice is posted.
(6) Where the by-laws of a credit union provide
for the giving of notice to members under subsection (1) electronically, the
notice is considered to have been received on the day of transmission, if the
document is transmitted before 4 p.m., or the next day that is not a Saturday,
Sunday or a holiday, if the document is transmitted after 4 p.m. unless there
are reasonable grounds for believing that the person did not receive the notice
or document at that time or at all.
Service of notice
180. A
notice or document required to be sent to or served upon a credit union may be
sent to the registered office of the credit union shown in the last prescribed
notice filed with the superintendent,
(a) by regular mail and, if so sent, it is
considered to have been received or served within 5 business days from the date
it was postmarked;
(b) electronically, and if so sent, the notice is
considered to have been received on the day of transmission, if the document is
transmitted before 4 p.m., or the next day that is not a Saturday, Sunday or a
holiday, if the document is transmitted after 4 p.m; and
(c) delivered personally or by courier, and if so
sent, the notice is considered to have been received upon delivery
unless there are reasonable grounds for
believing that the credit union did not receive the notice or the document at
that time or at all.
Waiver of notice or delivery
181. (1) Where
a notice is required by this Act to be given, the giving of the notice may be
waived, or the time for the giving of the notice may be waived or abridged with
the consent in writing of the person entitled to the notice.
(2) Where a document is required by this Act to be
delivered the delivering of the document may be waived or the time for the
delivering of the document may be waived or abridged with the consent in
writing of the person entitled to the document.
Certificates
182. (1) Where
this Act requires or authorizes the superintendent to issue a certificate or to
certify a fact, the certificate shall be signed by the superintendent or by a
deputy superintendent appointed under section 191.
(2) A certificate referred to in subsection (1) or
a certified copy of the certificate, when introduced as evidence in a civil,
criminal or administrative action or proceeding, is conclusive proof of the
facts certified without proof of the signature or official character of the person
appearing to have signed the certificate.
Signatures
183. (1) A
certificate issued on behalf of a credit union stating a fact that is set out
in the articles or by-laws of the credit union or the members of the credit
union, or in a trust indenture or other contract to which the credit union is a
party may be signed by a director or officer of the credit union unless verification
is required under section 185.
(2) When introduced as evidence in a civil,
criminal or administrative action or proceeding
(a) a certificate of a kind referred to in
subsection (1);
(b) a certified extract from a members' register
or a securities register of a credit union; or
(c) a certified copy of minutes or an extract from
minutes of a meeting of members or directors or a committee of directors of a
credit union,
is, in the absence of evidence to the
contrary, proof of the facts certified without proof of the signature or
official character of the person appearing to have signed the certificate.
(3) An entry in a securities or members register
of, or a share certificate issued by, a credit union is, in the absence of
evidence to the contrary, proof that the person in whose name the security is
registered is the owner of the securities described in the register or in the
certificate.
Copies
184. Where
a notice or document is required to be sent to the superintendent or the
guarantee corporation under this Act, the superintendent or the guarantee
corporation may accept a copy of the notice or document.
Verification
185. (1) The
superintendent or the guarantee corporation may require that a document or a
fact stated in a document required by this Act to be sent to the superintendent
be verified in accordance with subsection (2).
(2) A document or fact required by this Act, by
the superintendent or by the guarantee corporation to be verified may be
verified by affidavit made under oath or affirmation.
(3) The superintendent or the guarantee
corporation may require a credit union to authenticate a document, and the
authentication may be signed by the secretary or director or authorized person
or by the solicitor for the credit union.
Statement of
intent
186. (1) In
this section, "statement" means a statement of intent to dissolve or
statement of revocation of intent to dissolve referred to in section 126.
(2) Where this Act requires that articles or a
statement relating to a credit union be sent to the superintendent, unless
otherwise specifically provided by this Act,
(a) 2 originals of the articles or the statement
shall be signed by a director or officer of the credit union or, in the case of
articles of incorporation, by the incorporators; and
(b) where the articles or statement conform to law
and are accompanied by all the required by-laws or other documents and the required
fees the superintendent shall, subject to being satisfied that it is advisable,
(i) endorse on each of the 2 original copies of
the articles or statement the certificate in the required form indicating the
date on which the articles or statement become effective,
(ii) file one original copy of the articles or
statement endorsed in accordance with subparagraph (i),
(iii) send the other original copy of the articles
or statement, endorsed in accordance with subparagraph (i), to the credit union
or its representative, and
(iv) publish in the Gazette a notice of the issue of the certificate and the date the
articles or statement to which it relates become effective.
(3) The date indicated on a certificate issued
under subsection (2) as the date the articles or statement become effective
shall not be earlier than the date on which the superintendent received the
articles or statement or court order under which the certificate is issued.
(4) The superintendent may provide to a person
(a) a certificate that a credit union or other
person has or has not filed with the superintendent a document required to be
filed under this Act or another Act for which this Act was substituted; or
(b) a certified copy of a document in the custody
and control of the superintendent.
Alter notice or
document
187. The
superintendent may alter a notice or document, other than an affidavit or
statutory declaration, if so authorized in writing by letter, facsimile or
electronic mail by or on behalf of the person who sent the notice or document
to the superintendent.
Corrected
certificate
188. (1) Where
a certificate or order containing an error is issued by the superintendent, the
superintendent shall issue a corrected certificate or order and may
(a) demand the surrender of the certificate or
order containing the error; and
(b) require the directors or members of the credit
union to
(i) pass resolutions, or
(ii) send to the superintendent the documents
required to comply with this Act,
and take those other steps that the
superintendent reasonably requires.
(2) A certificate or order corrected under
subsection (1) has effect from the date of the certificate or order it
replaces.
(3) Where a corrected certificate or order issued
under subsection (1) materially amends the terms of the original certificate or
order, the superintendent shall immediately give notice of the correction in
the Gazette.
Examination of
documents
189. (1) A
person who has paid the appropriate fee is entitled during usual business hours
to examine the annual returns, notices, articles or by-laws of a credit union
or an order of declaration of the superintendent or court filed with the
superintendent.
(2) The superintendent shall furnish, upon receipt
of the appropriate fee, a person with a copy or a certified copy of a document
to which reference is made in subsection (1).
Records
190. (1) The
records required by this Act to be prepared and maintained by the
superintendent may be in bound or loose-leaf form or in photographic film form,
or may be entered or recorded by a system of mechanical or electronic data
processing or by another information storage device that is capable of
reproducing any required information in intelligibly written form within a
reasonable time.
(2) Where the records maintained by the
superintendent are prepared and maintained in other than written form
(a) the superintendent shall furnish a copy
required to be furnished under subsection 189(2)
in intelligibly written form; and
(b) a report reproduced from those records, if it
is certified by the superintendent, is admissible in evidence to the same extent
as the original records would have been if they had been in written form.
(3) The superintendent is not required to produce
a document, other than a certificate and attached articles or statement filed
under section 186 after 6 years from the date
the superintendent receives it.
Superintendent
191. (1) The
minister shall appoint a Superintendent of Credit Unions for the purpose of
this Act and may appoint a deputy superintendent to act in the place of the
superintendent in his or her absence.
(2) The superintendent shall
(a) act under the instructions of the minister;
(b) have general supervision over all matters
relating to this Act; and
(c) carry out those duties and may exercise those
powers that may be required or authorized by this Act.
(3) The superintendent may issue directives with
respect to the interpretation, clarification of this Act and the powers
referred to in subsection (2).
Register of
credit unions
192. (1) The
guarantee corporation shall maintain a register of credit unions in which to
keep the name of every credit union that is
(a) incorporated under this Act;
(b) continued under this Act;
(c) registered under this Act; or
(d) restored to the register under this Act,
provided that the credit union has not been
struck off that register.
(2) Documents, notices or information required to
be sent to or filed with the superintendent under this Act shall be filed with
the superintendent at the same location as the register referred to in subsection
(1).
Regulations
193. The
minister may make regulations
(a) prescribing a matter required or authorized by
this Act to be prescribed;
(b) respecting articles of incorporation and the
by-laws of a credit union;
(c) respecting associate memberships in credit
unions;
(d) respecting requirements for the commencement
of business by a credit union including names permitted or not permitted and
the location of branch and relocated offices;
(e) respecting the designation of classes of
shares of a credit union and respecting the preferences, rights, conditions, restrictions,
limitations or prohibitions attaching to shares or classes of shares of a
credit union;
(f) respecting arrangements for the provision of a
service in accordance with section 16;
(g) restricting the business and activities that
may be carried on by a credit union or the guarantee corporation and respecting
those restrictions;
(h) respecting the creation of a subsidiary;
(i) respecting the manner in which a deposit
account is to be dealt with for the purpose of section 34;
(j) respecting the payment of funds from an
account under section 37;
(k) respecting the lending activities of a credit
union generally, the loans that may be made by a credit union and the kinds and
amounts of those loans, the loan policies to be established by a credit union
and the terms, conditions, restrictions or limitations in relation to those
lending activities, loans or loan policies;
(l) respecting deposit accounts generally, the
amounts of funds to be maintained in a deposit account and the circumstances in
which a member of a credit union may be permitted to make overdrafts on deposit
accounts of the member and requiring or respecting the establishment of
policies of credit unions in relation to overdrafts;
(m) respecting the liquid assets to be maintained
by a credit union under section 40;
(n) respecting the making of investments by a
credit union including prohibitions, conditions, restrictions or limitations in
relation to those investments;
(o) respecting an allowance for doubtful loans to
be maintained by a credit union;
(p) respecting the equity to be maintained by a
credit union;
(q) respecting the amount that may be borrowed by
a credit union under section 44;
(r) respecting matching under section 45;
(s) respecting insurance to be maintained by a
credit union;
(t) requiring directors and officers of credit
unions to meet requirements respecting their training;
(u) respecting the manner in which a member of a
credit union may appeal a termination of membership;
(v) respecting the articles of amalgamation and
dissolution that may be required;
(w) respecting the committees the credit union is
required to establish and the duties and powers of those committees;
(x) respecting information to be shown in the
return of a credit union for the purpose of section 90;
(y) respecting financial statements and auditors
reports for the purpose of this Act and the regulations;
(z) respecting information to be disclosed to the
members of a credit union for the purpose of subsections 91(1) and (3);
(aa) requiring or authorizing the guarantee
corporation to do certain things for the purpose of section 134;
(bb) respecting the making of investments by the
guarantee corporation including prohibitions, conditions, restrictions or
limitations in relation to those investments;
(cc) respecting, for the purpose of section 147, the amount of the annual levies that the
guarantee corporation is to levy and collect annually from its member credit
unions, including a maximum or minimum restrictions in relation to that amount
and the manner of its collection;
(dd) respecting information to be included in the
report of the guarantee corporation for the purpose of section 155;
(ee) requiring or authorizing the guarantee
corporation to do certain things for the purpose of section 136;
(ff) respecting the appointment of persons as
directors of the guarantee corporation under subsection 137(1) and respecting appointments of the officers of
the guarantee corporation under subsection 138(1);
(gg) respecting the amount to which deposits are
insured for the purpose of section 144;
(hh) respecting the duties and powers of the
superintendent or the guarantee corporation;
(ii) respecting the delegation of the
administration of this Act to the guarantee corporation;
(jj) respecting the filing of information and
documents required for the purpose of this Act;
(kk) defining a word or a phrase used in this Act
but not defined in this Act; and
(ll) generally, to give effect to the purposes of
this Act.
Fees and forms
194. The
minister may set fees required to be paid under this Act and may approve forms
for the purpose of this Act.
PART XIV
TRANSITIONAL, REPEAL AND CONSEQUENTIAL AMENDMENTS
Transitional
195. (1) Upon
the commencement of this Act all
(a) articles of a credit union incorporated under
the Credit Union Act in force
immediately before the commencement of this Act;
(b) cancellations, suspensions, proceedings, acts,
registrations, supervisors orders and things; and
(c) affidavits, declarations, by-laws,
resolutions, regulations and documents,
lawfully done under a provision of the Credit Union Act, in force immediately
before the commencement of this Act, are presumed to have been lawfully done,
and continue in effect under this Act as though they had been lawfully done
under this Act.
(2) For the purpose of this section "lawfully
done" means to have been lawfully granted, issued, imposed, made, taken,
done, commenced, filed or passed that the circumstances require.
(3) Notwithstanding another provision of this Act,
if a provision of the articles, by-laws, resolutions and constating instruments
of a credit union or the guarantee corporation lawfully incorporated or continued
under the Credit Union Act in force
immediately before the commencement of this Act is inconsistent under,
repugnant to, or not in compliance with this Act, that provision is not illegal
or invalid solely by reason of that inconsistency, repugnancy or
non-compliance.
(4) An act, matter or proceeding or thing done or
taken by a credit union or a director, member or officer of a credit union
under a provision mentioned in subsection (3) under the Credit Union Act in force immediately before the commencement of
this Act is not illegal or invalid by reason of being prohibited or not authorized
by law after the commencement of this Act.
(5) Where a provision of the articles, by-laws or
resolutions of a credit union or the guarantee corporation is inconsistent with
the provisions of this Act, the credit union or the guarantee corporation shall
file with the superintendent, amending articles, by-laws or resolutions that
comply with this Act within one year of the commencement of this Act.
Amending instruments
196. Amendments
to the articles, by-laws, resolutions and constating instruments of a credit
union or guarantee corporation incorporated under the Credit Union Act in force immediately before the commencement of
this Act shall be made in accordance with this Act.
RSNL1990 cC-37.1 and CNLR 800/96 Rep.
197. (1) The Credit Union Act is repealed.
(2) The Credit
Union Deposit Guarantee Regulations are repealed.
(3) The Proclamation bringing the Credit Union Act
into force, Newfoundland and Labrador Regulation 54/99, is repealed.
Commencement
198. This Act comes into force on July 1, 2009.
ŠEarl G. Tucker, Queen's Printer