This is an official version.
Copyright © 2006: Queens Printer,
RSNL1990 CHAPTER F-14
FISHERIES RESTRUCTURING ACT
2001 cN-3.1 s2
AN ACT TO RATIFY, CONFIRM AND ADOPT AN AGREEMENT ENTERED INTO BETWEEN THE GOVERNMENT OF THE PROVINCE AND THE GOVERNMENT OF
1. This Act may be cited as theFisheries Restructuring Act.
The Agreement executed and delivered by and between the government of the province and the Government of Canada and set out in the Schedule to this Act is ratified, confirmed and adopted from
Effect of law
3. The Agreement set out in the Schedule to this Act has the full effect of law for all purposes as if expressly enacted in this Act.
AGREEMENT BETWEEN THE GOVERNMENT OF
The common objectives of both governments in participating in restructuring are:
To find a just and lasting solution for the rebuilding of the deep sea fishery which recognizes the fundamental role which the fishing industry plays in
(b) To see restructuring proceed in an orderly way with minimum disruption to harvesting, processing and marketing;
To create a company whose primary objective is to strengthen the
Notwithstanding paragraph (c), the company may acquire assets outside of
(e) To ensure maximum employment stability and productivity through employee participation in the company;
(f) To ensure that the company is well managed on a commercial basis with management being left to manage;
(g) To pursue divestiture to the private sector of both governments' ownership in the company as soon as possible;
(h) To provide new opportunities for independent processors to have effective access to international markets;
To have the company internally organized in a way which leaves open the option of a variety of innovative industry structures for the
1. New Company
It is the intention that a new operating company will be formed from the companies and assets set forth in Schedule A.
2. Corporate Structure
There would be two companies formed with head offices in
*Represents an amount to be negotiated for first year of a 'social compact' with the union. It is assumed that additional shares may be issued over the period of the life of the social compact.
The investment by each of the participants as set forth above results from:
the Government of
the Government of
(iii) the Bank of Nova Scotia converting outstanding loans in the existing companies in the amount of $44.1 million;
(iv) employees agreeing to enter into an employee deduction scheme to purchase shares.
Redemption of Bank of
Regarding the purchase by the Government of Canada of the Class A Preferred Shares held by the bank as set forth in clause 6(b) of the letter addressed to the Bank of Nova Scotia by the Task Force on Atlantic Fisheries and dated June 24, 1983 the Government of Canada would give to the Government of Newfoundland a right to purchase, at the same time, up to 50% of such shares from it at the same price the shares were purchased from the Bank.
Regarding the guarantees and Sub-charters set forth in Schedule B which have been provided by the Government of Newfoundland it would be the intention of Governments to obtain releases of such guarantees from the appropriate parties once restructuring has taken place.
(d) Board of Directors
The membership of the Boards of Directors of the Company and the holding company would be the same. Each Board of Directors would consist of 11 members; 5 members to be appointed by the Government of Canada; 3 to be appointed by the Government of Newfoundland; 1 to be appointed by the Bank o Nova Scotia; 1 to be selected by employee shareholders and the Chairman, who will also be the Chief Executive Officer of the Company, to be appointed jointly by both governments. In the event that after three months consultation, the two governments fail to agree on the Chief Executive Officer, the Chief Executive Officer shall be chosen by a panel consisting of one nominee from each government who shall agree on a third person to chair the panel.
Public Servants would not be eligible to sit on the Board of Directors.
(e) Significant Corporate Decisions that could have a Negative Social Impact
Plant closures, plant mergers, mechanization or trawler transfers resulting in a significant permanent change in employment in excess of 100 people, or one-half the work force, as the case may be, associated with any single plant location would be subject to the approval of both governments.
In the event that one of the governments opposes the action contemplated, then the Government opposing that action shall assume the additional costs associated with the continuation of the existing level of operations, such costs, including the loss of income to the Company, to be determined by reference to a firm of Chartered Accountants, agreed to by both Governments.
3. Relations Between Government Shareholders and The Company
(a) Business Plan
Prior to the business plan being presented to the Board for approval, management would consult with the Governments and the Governments with each other, regarding the contents of the plan. Adoption of the business plan would require approval of at least seven members of the Board of Directors.
Management would consult with Governments on a quarterly basis regarding the companies' activities.
(c) Authorized and Issued Capital
There would be no change in the authorized or issued capital without the consent of both Governments. Where additional shares are issued, those shares that are taken up by Governments would be taken up by both Governments on a pro rata basis.
(d) No Material Change
The Company cannot engage in a business other than the fishery, without the consent of both Governments and the Bank of Nova Scotia.
Except as specified in the letter of understanding with The Bank of Nova Scotia
The by-laws of the Company would not be altered without the approval of both Governments and The Bank of Nova Scotia.
The Company would not be wound up without the approval of both Governments and The Bank of Nova Scotia.
4. Divestiture of Shares or Assets
It would be the objective of both Governments to return the business either in whole or in part to private investors in the shortest possible time.
In the event that the Board of Directors of the Company approve the sale of plants or a significant portion of the trawler fleet belonging to the company, and such sale is unacceptable to either Government, the Government opposing would have an option to purchase the assets referred to above at the same price and on the same terms.
In the event that the Directors of the holding company approve the sale of the shares in the operating company, each Government and the Bank shall have the right to veto such sale provided, however, that a Government or the Bank which approve such sale shall have the right to cause the vetoing shareholder to purchase their pro-rata interest in such shares and to have their holding company shares purchased for cancellation at a price equal to the sale price.
Without the unanimous consent of the two Governments and the Bank, no shares of the holding company shall be sold to third parties.
5. Corporate Organization
The operating company would be organized into three or more divisions consisting of a common services division including marketing, and two or more processing/harvesting divisions each with portions of the Company' enterprise allocation, as decided by management from time to time, and would have separate accounts. Each division would be run by a vice-president reporting to the Chief Executive Officer. The processing/harvesting divisions would be established so as to facilitate a possible sale of groups of plants and trawlers in the future. In the event of a sale the purchaser of the group of assets shall have the right to purchase services from the common services division subject to mutually agreeable terms and conditions.
6. Fishing Industry Structural Study
The two Governments agree to fund a study on a 70/30 basis (federal/provincial)
to examine various organizational alternatives for the harvesting, processing and
marketing sectors of the
Notwithstanding Government objective (d), the marketing arm of the operating company would have as its first priority the marketing of the Company's own products; its second priority would be to act as a vehicle through which independent fish companies in Newfoundland, meeting certain standards of product quality and other commercial requirements, may market their product upon mutually agreeable terms and conditions; and as its third priority the Company could also market for non-Newfoundland based companies if to do so constituted a sound commercial business decision for the Company. The Company would be charged with the responsibility of developing marketing strategies, techniques and standards on a non-discriminatory basis.
In order to ensure the fair and effective working of the marketing system for independent processors a Newfoundland Market Planning and Co-ordination Council will be established by the Company. At each Council meeting there shall be a report on the marketing activity of the Company and an opportunity given to the independent processors to express their views on marketing strategies and related issues. The Council shall meet quarterly.
The Council would have as its members the following:
- Representatives of the independent processors;
- 3 Representatives from the Board of Directors of the company including at least one provincial nominee;
- 1 Representative from the union;
- 2 Representatives from the management of the Company.
The Minutes of Council meetings will be circulated to members of the Board of Directors of the Company.
8. Fish for Resource Short Plants
Whenever part of the Company's trawler fleet is not fully utilized and is otherwise available such trawlers will be utilized for the harvesting and supply of fish at an agreed upon price, which shall be equivalent to the Company's harvesting costs, as determined by the management of the Company, to independently owned plants under the Resource Short Plant Program. If the owner of an independent plant disputes those costs, the Company shall ask an independent firm of chartered accountants to review management's determination of the costs and make a report to the Company's Board of Directors. This report shall be made available to the Governments on a confidential basis. No more than one report may be required each year.
9. Social Compact
The two Governments would jointly seek a 'social compact' with the
Newfoundland Fishermen, Food & Allied Worker's
10. Resource Utilization Task Force
The two Governments would establish a Resource Utilization Task Force
composed of equal representation. The first priority of the Task Force would be
to review resource avail ability to fish plants on the
The mandate of the Task Force would be to review and report upon the following:
(a) the displacement of foreign fishing effort;
(b) the harvesting of underutilized species and the development of markets for these species; and
(c) measures for the utilization of the resource in a manner which would promote local employment and would enhance the long term economic viability of the fishing industry.
11. Plant Utilization
(a) Recognizing the social importance of the plants at Harbour Breton, Gaultois, Ramea and St. Anthony due to the lack of alternative employment opportunity in the areas the Company would be obligated to keep the plants at Harbour Breton, Gaultois, Ramea and St. Anthony open for the foreseeable future.
(b) The company will reopen the Burin plant as a secondary processing operation and trawler refit centre. The existing secondary processing operation would be upgraded and expanded so as to meet the Company's further processing requirements for the Canadian markets. Capital improvements in this regard would begin immediately.
(c) Following the settlement of the present labour dispute the plant at Grand Bank would be reopened as a primary processing facility for at least 18 months during which time its future would be assessed by the Company in light of the work of the Resource Utilization Task Force and other factors pertaining to the operation of the Company.
(d) The plant at St. Lawrence would reopen as an inshore feeder plant and would process overflow offshore landings if available and appropriate.
(e) The plant at Fermeuse would operate as an inshore plant and would be eligible to receive fish under the 'Resource Short Plant Program'.
(f) The future of the plants at Hermitage and Belleoram will be assessed in light of their impact on inshore fish supply to Harbour Breton and Gaultois.
Subject to the restructuring of the
12. Factory Trawlers
Factory trawlers will not be permitted to harvest northern cod.
13. Plant Construction
The existing processing licence freeze will be continued.
14. Trawler Replacement
Both Governments shall employ every effort to ensure that a major share of the Atlantic trawler replacement program shall be undertaken at the Marystown shipyard.
15. Northern Fisheries Development Corporation
(a) The two Governments will work together to establish a Northern Fisheries Development Corporation (NFDC), and would consult regarding its scope, mandate, ownership and area of operation.
NFDC could be created to include the plant at St. Anthony and those plants
(c) NFDC would not operate as a monopoly; any plant now in the private sector would be free to remain outside the NFDC.
(d) A supply of offshore northern shrimp is important to the economic viability of NFDC and thus means shall be sought to provide such supply.
The two Governments will establish jointly (on a 70/30 basis -Federal Provincial) a multi-million dollar 'Burin Peninsula Development Fund' to diversify the economic base and to provide new employment opportunities for the people in the area.
17. Fish Allocations
It is the understanding of the two Governments that the inclusion of the Riverport
Scallop Operation in the Newfound land based fishing company shall not be used
as a factor in establishing the allocation of fish stocks adjacent to the
It is also the understanding of the two Governments that neither the signing of
this Agreement, nor any action of the new Company pursuant to this Agreement
will be used as a factor in determining the allocation of fish stocks adjacent to the
In summary, this Agreement shall not have any impact on fish stock allocation decisions.
IN WITNESS WHEREOF the Honourable A. Brian Peckford, P.C., M.H.A., Premier of Newfoundland and Labrador and Minister for Intergovernmental Affairs, and the Honourable James Morgan, M.H.A., Minister of Fisheries of Newfoundland and Labrador, have hereunto set their hands on behalf of Newfoundland, and the Honourable Pierre De Bane, P.C., M.P., Minister of Fisheries and Oceans of Canada has hereunto set his hand on behalf of Canada on the 26th day of September, 1983.
on behalf of
Sgd. David G. Norris
Sgd. William Matthews
Sgd. James Morgan
on behalf of
Fishing Companies and Plants*
*This schedule is deemed to include all fishing vessels owned or leased by the companies.
**Plants leased from the Government of Newfoundland.
GUARANTEES AND SUB-CHARTER S
1983 c28 Sch
©Earl G. Tucker, Queen's Printer