Credit Unions and Caisses Populaires Act, 2020

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Sections511

• [s0]

  pART I iNTERPRETATION

• 1Definitions

  1 In this Act, “affiliate” means an affiliated body corporate within the meaning of section 5; (“membre du même groupe”) “articles of incorporation” or “articles” means the original or restated articles of incorporation, articles of amalgamation, articles of amendment, memorandum of association, a special Act or other instrument by which a credit union is incorporated and includes any amendment thereto; (“statuts constitutifs” ou “statuts”) “Authority” means the Financial Services Regulatory Authority of Ontario continued under subsection 2 (1) of the Financial Services Regulatory Authority of Ontario Act, 2016; (“Autorité”) “Authority rule” means a rule made under subsection 285 (1) of this Act or under subsection 21 (2) of the Financial Services Regulatory Authority of Ontario Act, 2016; (“règle de l’Autorité”) “board” means, with respect to a credit union, its board of directors; (“co…

• 2Joint shareholders

  2 (1) For the purposes of this Act, two or more persons holding the same share or shares jointly are considered as one member or shareholder. Exception (2) Despite subsection (1), two or more persons jointly holding enough membership shares to entitle each of them to be a member in their own right are all considered as separate members.

• 3Subsidiary

  3 For the purposes of this Act, a body corporate is a subsidiary of another body corporate if, (a) it is controlled by, (i) that other, (ii) that other and one or more bodies corporate each of which is controlled by that other, or (iii) two or more bodies corporate that are that other’s subsidiary; or (b) it is a subsidiary of a body corporate that is that other’s subsidiary.

• 4Holding body corporate

  4 For the purposes of this Act, a body corporate is another’s holding body corporate if that other is its subsidiary.

• 5Affiliation

  5 (1) For the purposes of this Act, one body corporate is affiliated with another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person. Affiliate by order (2) On application in writing by a credit union, the Chief Executive Officer may, by order and on the terms specified in the order, deem a corporate body named in the order to be an affiliate for the purposes of this Act or for the purpose of specific provisions of this Act. Revocation of order (3) The Chief Executive Officer may, by order, revoke an order under subsection (2) if the Chief Executive Officer believes that the credit union has failed to comply with a term set out in the order under subsection (2) or that it is no longer appropriate to deem the corporate body in respect of which the order under subsection (2) was m…

• 6Controlling body corporate

  6 For the purposes of this Act, a body corporate is controlled by another person or by two or more bodies corporate if, (a) voting securities of the first mentioned body corporate carrying more than 50 per cent of the votes for the election of directors are held, other than by way of security only, by or for the benefit of the other person or by or for the benefit of the other bodies corporate; and (b) the votes carried by the securities are sufficient, if exercised, to elect a majority of the board of directors of the first-mentioned body corporate.

• 7Member

  7 (1) For the purposes of this Act, a person is a holder of a membership share of a credit union when, according to the register under section 202, the person is the owner of the membership share or is entitled to be entered in the register as the owner of the share. Holder of membership share (2) A reference in this Act to the holding of a membership share by or in the name of a person is a reference to the fact that the person is registered or is entitled to be registered in the register under section 202 as the holder of the share.

• 8Shareholder

  8 (1) For the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of a share of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of a share. Holder of a share (2) A reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or a similar register of the body corporate as the holder of that share.

• [s9]

  Part II Establishing a Credit union

• [s10]

  Incorporation

• 9Corporate charter

  9 (1) The certificate of incorporation, articles of incorporation and the by-laws of a credit union, together with this Act, constitute the charter of the credit union. Date of incorporation (2) A credit union comes into existence on the date set out in the certificate of incorporation.

• 10Articles of incorporation

  10 (1) The required number of individuals, as determined by Authority rule, may incorporate a credit union by signing articles of incorporation and complying with section 12. Restriction (2) An individual is disqualified from being an incorporator if the individual, (a) is less than 18 years of age; (b) has been found under the Substitute Decisions Act, 1992 or under the Mental Health Act to be incapable of managing property or has been found to be incapable by a court in Canada or elsewhere; or (c) is an undischarged bankrupt or has been discharged as a bankrupt in the five years preceding the date the application to incorporate the credit union is made under subsection 12 (1).

• 11Contents of articles

  11 (1) The articles of incorporation must set out the information prescribed by the regulations. Same (2) The articles may include any provision that is permitted under this Act to be set out in the articles or that could be the subject of a by-law of the credit union. Same (3) The articles must set out any restrictions on the business that the credit union may carry on or on the powers that the credit union may exercise. First directors (4) The articles must name at least five individuals who hold office as the first directors of the credit union. Affidavit (5) An affidavit verifying the following matters must accompany the articles: 1. The signature of each incorporator and each first director. 2. The fact that each first director meets the criteria for eligibility under section 83, and that each incorporator and first director is not disqualified under subsection 10 (2) or section 84,…

• 12Application for incorporation

  12 (1) An application to incorporate a credit union may be made by sending to the Chief Executive Officer a copy of the proposed articles of incorporation, the proposed by-laws of the credit union and such other information as may be prescribed by Authority rule and paying the application fee established by Authority rule. Inquiry before incorporation (2) The Chief Executive Officer shall inquire into the circumstances, sufficiency and regularity of the articles and by-laws and may do any of the following before issuing a certificate of incorporation: 1. Require the incorporators to provide such additional information as the Chief Executive Officer considers relevant to the application. 2. Require any matter set out in the articles or by-laws or in the additional information provided to the Chief Executive Officer to be verified under oath. 3. Require the articles or by-laws to be amende…

• 13Certificate of incorporation

  13 (1) Subject to subsection (2), the Chief Executive Officer shall issue a certificate of incorporation to the incorporators. 2020, c. 36, Sched. 7, s. 13 (1). Grounds for refusing certificate (2) The Chief Executive Officer shall not issue a certificate of incorporation if the articles do not meet the requirements of section 11 or 12 or if the incorporators do not satisfy the Chief Executive Officer of the following matters: 1. The plans for the conduct and development of the business of the credit union are feasible and sound. 2. The credit union will be operated on a co-operative basis in accordance with subsection 23 (2). 3. The credit union will be operated in such a way that deposits will be safeguarded without the likelihood of a claim against the Authority. 4. The credit union will be operated responsibly by individuals who, by virtue of their character, competence and experienc…

• 14Effect of certificate

  14 (1) A certificate of incorporation is conclusive proof that the incorporators have complied with all conditions precedent to incorporating a credit union and that the credit union was incorporated under this Act on the date set out in the certificate. Exception (2) Subsection (1) does not apply in a proceeding under section 241.

• 15Refusal of certificate

  15 If the Chief Executive Officer decides, after giving the applicants for incorporation an opportunity to make written submissions, not to issue a certificate of incorporation, the Chief Executive Officer shall notify the incorporators, in writing, and set out the reasons for the decision.

• 16Language and form of corporate name

  16 (1) The corporate name of a credit union must be in the language and form authorized in the articles and approved by the Chief Executive Officer. Use of “credit union” (2) Subject to subsections (3) and (4), the corporate name of a credit union must include the words “credit union”, “caisse populaire” or “caisse”. Use of “caisse populaire” (3) Only a corporation incorporated under this Act or a predecessor of this Act that provides financial services to its members and promotes the interests of the French-speaking community in Ontario by providing management and democratic control in French may include “caisse populaire” or “caisse” in its corporate name, and all other corporations incorporated under this Act or a predecessor of this Act shall include “credit union” in their corporate names. Use of “Limited”, etc. (4) The corporate name of a credit union must have at the end of it one…

• 17Use of other name

  17 (1) A credit union shall not carry on business under or identify itself by a name other than its corporate name unless the Chief Executive Officer has approved that name. Restriction on approval (2) The Chief Executive Officer shall not approve a name under subsection (1), (a) if the name includes “credit union”, “caisse populaire” or “caisse”, unless the name is derived from the credit union’s corporate name; or (b) if the name would be precluded as a corporate name under section 19. Corporate name to be used in all documents (3) A credit union shall set out its corporate name in legible characters in all documents that evidence rights or obligations with respect to other parties (including contracts, invoices and negotiable instruments) and that are issued or made by or on behalf of the credit union.

• 18Prohibition, use of “credit union”, “caisse populaire”

  18 No person, other than a credit union or person or entity prescribed by regulation, shall carry on business using a name in which “credit union” or “caisse populaire” is used.

• 19Restrictions re corporate names

  19 (1) A credit union may not be incorporated under this Act with a corporate name that, (a) is prohibited under an Act of the Parliament of Canada or a province or territory of Canada; (b) does not meet the requirements prescribed by regulation; (c) is reserved under section 20 for another credit union; (d) is the same as or confusingly similar to any existing trade-mark or trade name or corporate name of a body corporate; (e) is the same as or confusingly similar to the known name under or by which another entity carries on business or is identified; (f) contains a word or phrase that indicates or suggests that it is incorporated for any object other than one set out in its articles; or (g) is deceptively misdescriptive. Exception re trade-marks, etc. (2) Clause (1) (d) does not apply if the Chief Executive Officer is satisfied that, (a) the trade-mark or trade name is being changed or…

• 20Reserving a corporate name

  20 (1) A person may reserve a corporate name for a period of up to 90 days by making an application to the Chief Executive Officer and paying the fee established by Authority rule. Effect of reservation (2) During the period that the corporate name is reserved, a body corporate is not entitled to acquire the name or a similar name without the written consent of the person for whose use and benefit the name is reserved. Renewal of reservation of corporate name (3) Within 30 days before the expiry of the reservation of a corporate name under subsection (1), the person who reserved the name may apply for a renewal of the reservation for a further period of not more than 90 days by submitting an application for the renewal to the Chief Executive Officer and paying the fee established by Authority rule.

• 21Corporate seal

  21 A credit union may, but is not required to, have a corporate seal.

• 22Location of head office

  22 (1) A credit union shall have its head office in Ontario at the place indicated in its articles. Change (2) A credit union may by articles of amendment change the location of its head office to another place in Ontario.

• [s25]

  Objects and Powers

• 23Objects

  23 (1) The object of a credit union is to provide on a co-operative basis financial services primarily for its members. 2020, c. 36, Sched. 7, s. 23 (1). Co-operative basis (2) A credit union shall operate on a co-operative basis such that, (a) membership is voluntary and is open to those that fall within its bond of association, if the credit union’s by-laws so provide; (b) its business is carried on primarily for the benefit of its members; (c) the net income that accrues from its business is, (i) used to provide services for its members, (ii) used to develop its business, (iii) used to increase its reserves or retained earnings, (iv) distributed to its members and shareholders, or (v) used for another purpose approved by the members; and (d) each member has only one vote at its general meetings of the members or in respect of elections of its directors. 2020, c. 36, Sched. 7, s. 23 (2…

• 24Powers

  24 (1) A credit union has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person. Powers outside Ontario (2) A credit union may exercise its powers outside of Ontario to the extent permitted under the laws of the applicable jurisdiction. Extra-provincial powers (3) A credit union may accept extra-provincial powers and rights.

• 25Acting outside powers

  25 (1) No act of a credit union and no transfer of real or personal property to or by a credit union before or after this section comes into force, that is otherwise lawful, is invalid because the credit union was without capacity or power to do the act or make or receive the transfer, but a lack of capacity or power may be asserted, (a) in a proceeding against the credit union by a member under subsection (2); (b) in a proceeding by the credit union, whether acting directly or through a receiver, liquidator, trustee or their legal representative or through members in a representative capacity, against a director or officer or former director or officer of the credit union; or (c) as a cause for the cancellation of the certificate of incorporation of the credit union. Restraining order (2) A member of a credit union may apply to court for an order restraining the credit union from doing …

• [s29]

  Miscellaneous

• 26Indoor management rule

  26 (1) A credit union or a guarantor of an obligation of one shall not assert against a person dealing with the credit union or with a person who has acquired rights from the credit union any of the following matters: 1. The articles or by-laws have not been complied with. 2. The individuals named in the most recent notice filed under the Corporations Information Act or named in the articles, whichever is more current, are not the directors of the credit union. 3. The location of its head office indicated in a notice filed under the Corporations Information Act, as named in the by-laws, or named in the articles, whichever is more current, is not the head office of the credit union. 4. A person held out by the credit union as a director, officer or agent has not been duly appointed or does not have authority to exercise the powers and perform the duties that are customary in the business …

• 27Financial years

  27 The financial year of a credit union must end on the date specified by Authority rule.

• [s32]
• 28Corporations Act not to apply

  28 The Corporations Act does not apply to credit unions.

• [s33]

  Part iii membership

• [s34]

  Who May Be Member

• 29Membership

  29 Membership in a credit union is governed by the credit union’s by-laws, subject to the provisions of this Act, the Authority rules and the credit union’s articles.

• 30Membership of incorporators

  30 Each incorporator who has subscribed for the minimum number of membership shares in a credit union required by the by-laws of the credit union and who is issued those membership shares becomes a member upon the effective date of incorporation.

• 31Applicants for membership

  31 Subject to section 30, no person shall become a member of a credit union until the person’s application for membership has been approved by the board or an employee authorized by the board and the applicant has complied fully with the by-laws governing admission of members.

• 32Limitation on membership

  32 (1) The by-laws of a credit union may provide that the membership of the credit union is limited to persons, related persons and entities who come within a bond of association and shall specify the nature of the bond of association. Exception (2) Despite subsection (1), the by-laws may provide that an employee of a credit union may become a member. Same (3) Despite subsection (1), the by-laws may provide that certain persons, related persons and entities who do not come within the bond of association may become members. Same (4) A person or entity admitted as a member who does not come within the bond of association has all the rights and obligations of membership. Retaining membership (5) If authorized by the by-laws, a member who no longer falls within the bond of association may retain membership in the credit union.

• [s39]
• 33Record, information relating to membership

  33 (1) Every person or entity whose name is registered in the register under section 202 is entitled to, (a) a record specifying the amount paid upon membership shares, deposits and loans by the person or entity; and (b) such other information as may be specified by the by-laws of the credit union. Same (2) The record referred to in clause (1) (a) is admissible in evidence as proof, in the absence of evidence to the contrary, of membership and of the information entered therein.

• [s40]

  Rights and Liabilities

• 34Liability of members

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

• 35Not bound by trust

  35 (1) A credit union is not bound to see to the execution of any trust to which any membership share is subject. Application (2) Subsection (1) applies whether the trust is express, implied or constructive.

• 35.1Trust for named beneficiary

  35.1 (1) A credit union may accept deposits from a member in trust for a named beneficiary. 2023, c. 20, Sched. 6, s. 1. Deposit is separate for deposit insurance purposes (2) A deposit of a member in trust for a named beneficiary shall be deemed, for the purpose of paragraph 2 of subsection 218 (2), to be a deposit separate from any other deposit of the member. 2021, c. 40, Sched. 5, s. 3. Exercise of rights of membership shares held in trust (3) The following apply with respect to membership shares held by a member in trust for a beneficiary: 1. The member shall exercise the rights attached to the shares, subject to paragraph 2. 2. At a meeting of members, the member does not have an additional vote as a result of holding the membership shares in trust. 2021, c. 40, Sched. 5, s. 3. Disclosure of beneficiary (4) The member shall disclose to the credit union such personal information con…

• 36Joint accounts

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

• [s45]
• 37Members under the age of 18 years

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

• [s46]

  Death, etc.

• [s47]
• 38Limited payment re deceased member

  38 (1) If a member of a credit union dies and the credit union makes a payment of an amount described in subsection (2) to such person as the credit union is satisfied is entitled to receive the amount, the payment discharges any obligation of the credit union and its board in respect of and to the extent of the amount paid even if the payment is made without letters probate or letters of administration being taken out. Type of payments (2) The payment referred to in subsection (1) is a payment of the following: 1. An amount not exceeding the amount prescribed by regulation payable from the amount on deposit in the name of the deceased or in consideration for the membership shares of the deceased. 2. An amount not exceeding the amount prescribed by regulation payable from any money that is received by the credit union under any policy of insurance on the life of the deceased. Restriction…

• [s48]

  Liens

• [s49]
• 39Lien for liability

  39 (1) A credit union has a lien on the deposits and membership shares of a member for any liability to it by the member, and may set off any sum standing to the credit of the member on the books of the credit union towards the payment of the liability. Limitation, member’s share account (2) Despite subsection (1), a credit union shall not apply any service charges or other deductions against a member’s share account except upon the termination of the membership.

• [s50]

  Withdrawals and Expulsions

• 40Withdrawal of members

  40 (1) A member of a credit union may withdraw from the credit union at any time by giving notice in accordance with the by-laws. Same, member’s death (2) A deceased member shall be deemed to have given notice to the credit union of intention to withdraw on the day of the member’s death. Same, Authority rules (3) The withdrawal of a member is subject to such conditions and requirements as may be prescribed by Authority rule.

• [s52]
• 41Expulsion of members

  41 (1) A member of a credit union may be expelled from membership, in accordance with the by-laws, by a resolution of the board on the grounds set out in the by-laws. Same, Authority rules (2) The expulsion of a member is subject to such conditions and requirements as may be prescribed by Authority rule.

• [s53]

  Representative Actions by Members

• [s54]
• 42Members may maintain representative actions

  42 (1) Subject to subsection (2), a member of a credit union may maintain an action in a court of competent jurisdiction in a representative capacity for the member and all other members of the credit union suing for and on behalf of the credit union to enforce any right, duty or obligation owed to the credit union under this Act or under any other statute or rule of law or equity that could be enforced by the credit union itself, or to obtain damages for any breach of any such right, duty or obligation. Court order required (2) An action under subsection (1) shall not be commenced until the member has obtained an order of the court permitting the commencement of the action. Application to court (3) A member may, upon at least seven days notice to the credit union, apply to the court for an order referred to in subsection (2). Court order (4) The court may make the order upon such condit…

• [s55]

  Part iv Capital Structure

• [s56]

  Shares

• 43Classes of shares

  43 (1) The articles of a credit union must provide for a class of shares known as membership shares and may provide for additional classes of shares, including patronage shares referred to in section 45. Nature of shares (2) The shares of a credit union are personal property. Form (3) The shares of a credit union are without nominal or par value and, if they are not membership shares or patronage shares, must be in registered form.

• 44Membership shares

  44 (1) Membership shares confer on the holder the right to receive dividends declared on the shares and to receive the remaining property of the credit union on dissolution. Transfer prohibited (2) The holder of a membership share may not transfer an interest in the share to a person other than the credit union or another credit union and any transaction that purports to make such a transfer is void. Certificates not mandatory (3) The by-laws of a credit union may provide that membership share certificates need not be issued but, if this is the case, the credit union shall give each member who requests one a statement of the number of membership shares held by the member. Certificates (4) Membership share certificates issued after this subsection comes into force must include such information as may be prescribed by regulation.

• 45Patronage shares

  45 (1) The articles of a credit union may provide for a class of shares known as patronage shares to be payable to members as a dividend under section 57 or as a patronage return under section 58. Nature of share (2) A patronage share does not confer on the holder the right to vote at meetings of the members of the credit union, the right to notice of any meeting of members of the credit union, the right to receive dividends or the right to receive the remaining property of the credit union on dissolution. Transfer prohibited (3) The holder of a patronage share may not transfer an interest in the share to a person other than the credit union or another credit union and any transaction that purports to make such a transfer is void.

• 46Rights of classes

  46 (1) For each class of shares, the articles must set out, (a) the rights, privileges, restrictions and conditions attaching to the shares of the class, including, (i) whether the class of shares may be issued to non-members, and (ii) in the case of a class of shares other than membership shares and patronage shares, whether the class of shares includes the right to receive the remaining property of the credit union upon dissolution; and (b) the maximum number, if any, of shares of the class that the credit union is authorized to issue. 2020, c. 36, Sched. 7, s. 46 (1); 2025, c. 15, Sched. 5, s. 2 (1). Restrictions (2) Except as permitted under this Act, shares, other than membership shares, do not confer on their holder the right to vote at meetings of the members of the credit union. 2025, c. 15, Sched. 5, s. 2 (2). Same (3) The articles of a credit union may provide that holders of s…

• 47Shares in series

  47 (1) The articles of a credit union may authorize the issue of any class of shares, other than membership shares, in one or more series and may fix the number of shares in, and set out the designation, rights, privileges, restrictions and conditions attaching to the shares of each series. Same (2) The articles may authorize the board to fix the maximum number, if any, of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to the limitations set out in the articles and the limitations under this Act. Series participation (3) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital. Voting rights (4) If vo…

• 48Pre-emptive rights

  48 (1) If the articles so provide, a credit union shall not issue shares of a class, other than membership shares or patronage shares, unless the shares have first been offered to shareholders holding shares of that class. Same (2) Those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at the same price and on the same conditions as the shares are to be offered to others. Exception (3) A shareholder has no pre-emptive right in respect of shares that are to be issued, (a) as a share dividend; (b) pursuant to the exercise of conversion privileges, options or rights previously granted by the credit union; (c) if the issuance of shares to the shareholder is prohibited under this Act; or (d) if, to the knowledge of the board, the offer of shares to a shareholder whose recorded address is outside Ontario ought not …

• [s63]
• 49Conversion privileges

  49 (1) A credit union may issue conversion privileges, options or rights to acquire its securities, other than membership shares or patronage shares, and shall set out the applicable conditions, (a) in the documents that evidence the conversion privileges, options or rights; or (b) in the securities to which the conversion privileges, options or rights are attached. Transferable rights (2) Conversion privileges, options and rights to acquire securities of a credit union may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from the securities to which they are attached. Reserved shares (3) If a credit union has granted privileges to convert its securities into shares or into shares of another class or series, or has issued or granted options or rights to acquire shares, and if the articles limit the number of …

• [s64]

  Issuing Shares

• 50Power to issue shares

  50 (1) A credit union may issue shares at such times, to such persons and for such consideration as the board may determine. Restrictions re shares (2) A credit union may issue shares only in accordance with this Act and the articles and by-laws of the credit union.

• 51Consideration

  51 (1) A credit union shall not issue any share, other than a patronage share, until the credit union has received full payment for it in cash or, with the approval of the Chief Executive Officer, in property. Exception for certain asset purchases (2) Subsection (1) does not apply to the issue of shares by a credit union if the issue is part of a transaction in which the credit union acquires the assets of another credit union and, as part of that transaction, shareholders of the vendor credit union are to be issued with shares of the purchaser credit union. Prohibition re commission (3) No person shall charge or accept payment of a commission on the purchase or sale of a membership share of a credit union.

• [s67]
• 52Shares non-assessable

  52 Shares issued by a credit union are non-assessable and no person is liable to the credit union or to its creditors in respect of the person’s shares.

• [s68]

  Redemption and Cancellation of Shares

• 53Holding own shares

  53 (1) Except as permitted under this Act or prescribed by regulation, a credit union shall not, (a) hold shares of the credit union; (b) permit a subsidiary to hold a greater number of membership shares than the minimum number required for membership in the credit union; or (c) permit a subsidiary to hold any other shares of the credit union. Holding as personal representative (2) A credit union may hold its shares in the capacity of a personal representative and may permit a subsidiary to do so, but only if neither the credit union nor any subsidiary has a beneficial interest in the shares. Security interest (3) A credit union may hold its shares by way of a security interest and may permit a subsidiary to do so if the security interest is nominal or immaterial when measured by criteria established by the credit union that have been approved in writing by the Chief Executive Officer. T…

• 54Purchase and redemption of shares

  54 (1) A credit union may purchase or redeem its shares only in accordance with this section and the articles and by-laws of the credit union. Same (2) A credit union may purchase, for the purpose of cancellation, any of its shares or redeem any of its redeemable shares at a price not exceeding the redemption price of the share calculated according to a formula stated in its articles or, in the case of shares other than membership shares, according to the conditions attaching to the shares. Restrictions (3) A credit union shall not make any payment to purchase or redeem its shares if there are reasonable grounds for believing that the credit union is, or the payment would cause it to be, in contravention of section 77. Donations (4) A credit union may accept a share surrendered to it as a gift but may not extinguish or reduce a liability in respect of an amount unpaid on the share except…

• 55Cancellation of shares

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

• [s72]
• 56Shares acquired through realization of security

  56 (1) If a credit union acquires shares of the credit union through the realization of security, the credit union shall sell, cancel or otherwise dispose of them within six months after the day of the realization. Same (2) If a subsidiary of a credit union acquires shares of the credit union through the realization of security, the credit union shall cause the subsidiary to sell or otherwise dispose of them within six months after the day of the realization.

• [s73]

  Dividends and Patronage Returns

• 57Declaration of dividend

  57 (1) The board may declare, subject to the by-laws, and the credit union may pay a dividend. Form of dividend (2) A dividend may be paid, (a) in cash; (b) by issuing patronage shares; (c) by issuing fully paid shares, other than membership shares, or options or rights to acquire fully paid shares, other than membership shares, in any class or series of shares; (d) in a combination of two or more forms of dividends described in clauses (a), (b) and (c); or (e) in property, with the approval of the Chief Executive Officer.

• 58Declaration of patronage return

  58 (1) The board may declare, subject to the by-laws, and the credit union may pay, a patronage return to its members. Form of patronage return (2) A patronage return may be paid, (a) in cash; (b) by issuing patronage shares; (c) by issuing fully paid shares, other than membership shares, or options or rights to acquire fully paid shares, other than membership shares, in any class or series of shares; or (d) in a combination of two or more forms of patronage returns described in clauses (a), (b) and (c). Rebate of interest (3) A patronage return may include a rebate of interest paid by members during a financial year in respect of loans from the credit union.

• [s76]
• 59Restriction on dividends, etc.

  59 The board shall not declare, and the credit union shall not pay, a dividend or patronage return if there are reasonable grounds for believing that the credit union is, or the payment would cause it to be, in contravention of section 77.

• [s77]

  Stated Capital

• 60Stated capital account

  60 (1) A credit union shall maintain a separate stated capital account for each class and series of shares it issues. Addition to account (2) A credit union shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

• 61Adjustment due to conversion

  61 (1) On a conversion of outstanding shares, other than membership shares or patronage shares, of a credit union into shares of another class or series, the credit union shall, (a) deduct from the stated capital account maintained for the class or series of shares converted an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted, and dividing by the number of outstanding shares of that class or series immediately before the conversion; and (b) record the result obtained under clause (a) and any additional consideration received on the conversion in the stated capital account maintained for the class or series of shares into which the shares have been converted. Stated capital of convertible shares (2) For the purposes of subsection (1) and subject to the articles, if a credit…

• 62Addition due to debt conversion

  62 On conversion of a debt obligation of a credit union into shares, the credit union shall, (a) deduct from the liabilities of the credit union the nominal value of the debt obligation; and (b) record the result obtained under clause (a) and any additional consideration received for the conversion in the stated capital account maintained for the class or series of shares into which the debt obligation has been converted.

• 63Reduction due to purchase, etc.

  63 (1) On a purchase, redemption or other acquisition of shares or fractions of shares by a credit union, the credit union shall deduct from the stated capital account maintained for the applicable class or series of shares an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares purchased, redeemed or acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or acquisition. Exception (2) This section does not apply with respect to shares acquired as described in subsection 53 (2) or acquired through the realization of security and sold in accordance with subsection 56 (1).

• 64Reduction by special resolution

  64 (1) The stated capital of a credit union may be reduced by special resolution of the members of the credit union. Contents of special resolution (2) The special resolution must specify each stated capital account to be affected by the reduction. Approval (3) The special resolution has no effect until it is approved in writing by the Chief Executive Officer. Conditions for approval (4) The Chief Executive Officer may not approve the special resolution unless an application for the Chief Executive Officer’s approval is made within three months after the resolution is passed and a copy of the resolution, together with a notice of intention to apply for approval, has been published on the website of the Authority. Information (5) An application for approval must include such information and documents as the Chief Executive Officer may require. Restriction (6) A credit union shall not redu…

• [s83]
• 65Recovery by action

  65 (1) If money has been paid or property distributed as a consequence of a reduction of capital made contrary to section 64, a creditor of the credit union may apply to a court for an order compelling the member, shareholder or other person to pay the money or deliver the property to the credit union. Shares held by personal representative (2) A person holding shares as a personal representative who is registered in the register under section 202 as a member or shareholder and described as the personal representative for a named person is not personally liable under subsection (1) of this section, but the named person is liable. Remedy preserved (3) This section does not affect any liability that arises under section 119.

• [s84]

  Transfer of Securities

• 66Application of Securities Transfer Act, 2006

  66 The Securities Transfer Act, 2006 applies, with necessary modifications, with respect to the transfer of securities, other than membership shares or patronage shares.

• [s86]
• 67Restriction on transfer of securities

  67 (1) A security issued under circumstances described in clause 68 (1) (a) shall not be transferred except to another member of the credit union or to a person prescribed by regulation. Same (2) The transfer of a security that is permitted under subsection (1) shall be made in the manner prescribed by regulation and subject to the conditions prescribed by regulation. Same (3) The transfer of a security that is permitted under subsection (1) is effective when the transfer is recorded in the register under section 202.

• [s87]

  Offering Statements

• 68Selling securities

  68 (1) A credit union may sell its securities or accept, directly or indirectly, consideration for its securities if, (a) the sale of the securities or acceptance of consideration for the securities is to or from a member, and the credit union has obtained a receipt under section 71 for an offering statement respecting the securities and the receipt has not been revoked or expired; (b) the credit union has provided the Chief Executive Officer with a copy of receipts from the Ontario Securities Commission under the Securities Act for, (i) a preliminary prospectus, if any, and (ii) a prospectus respecting the offering of the securities; (c) the sale is exempt from the prospectus requirements of the Securities Act under an exemption provided for in that Act, the regulations or the rules made under it; or (d) an order has been made in respect of the sale under section 74 or subsection 143.11…

• 69Permitted sellers

  69 Securities sold under the circumstances described in clause 68 (1) (a) may be sold by, (a) the directors, officers and employees of the issuing credit union; (b) in the case of an issuing central, the directors, officers and employees of the central or of a credit union that is a member of the central; or (c) a person registered under the Securities Act as an investment dealer. 2020, c. 36, Sched. 7, s. 69; 2021, c. 40, Sched. 5, s. 4. Section Amendments with date in force (d/m/y) 2021, c. 40, Sched. 5, s. 4 - 01/03/2022

• 70Offering statement

  70 (1) Application for a receipt for an offering statement is made by filing with the Chief Executive Officer a copy of the offering statement and paying the fee established by Authority rule. Contents (2) The offering statement must contain such information as may be prescribed by regulation. Standard of disclosure (3) The offering statement must provide full, true and plain disclosure of all material facts relating to the securities that the credit union proposes to issue. Certificate (4) The offering statement must be accompanied by a disclosure certificate signed by the chair of the board and the chief executive officer of the credit union, certifying that the offering statement satisfies the requirements of subsections (2) and (3). Additional material (5) The Chief Executive Officer may require, (a) the credit union to provide additional documents, reports and other material; and (b…

• 71Receipt for offering statement

  71 (1) The Chief Executive Officer shall issue a receipt for an offering statement unless it appears to the Chief Executive Officer that, (a) the statement or any document accompanying it, (i) fails to comply in any substantial respect with this Act or the regulations, (ii) contains any statement, promise, estimate or forecast that is misleading, false or deceptive, (iii) contains an extract from an opinion or statement of an expert that does not fairly represent the opinion or statement, or (iv) conceals or omits to state any material facts necessary in order to make any statement contained in the offering statement not misleading in light of the circumstances in which it was made; (b) the proceeds from the sale of the securities are insufficient, together with the other resources of the credit union, to accomplish the purpose of the issue that is stated in the offering statement; or (c…

• 72Renewal of receipt

  72 (1) Application for renewal of the receipt for an offering statement may be made by filing an application with the Chief Executive Officer with a copy of the statement and paying the fee established by Authority rule. Time for application (2) Application for renewal must be made before the receipt for the offering statement expires. Receipt (3) Section 71 applies, with necessary modifications, with respect to the renewal of a receipt.

• 73Material change

  73 (1) If there is a material change in the facts set out in an offering statement, the credit union shall file with the Chief Executive Officer, (a) an amendment to the offering statement, if no receipt has been issued for the statement; or (b) a statement of material change, if a receipt has been issued for the offering statement and the receipt has not been revoked or expired. 2020, c. 36, Sched. 7, s. 73 (1). Time (2) The credit union shall give the Chief Executive Officer the amendment or statement of material change promptly and, in any event, within ten days after the date on which the material change occurred. 2020, c. 36, Sched. 7, s. 73 (2). Notice to persons (3) The credit union shall give a copy of the amendment or statement of material change to every person to whom it gave a copy of the offering statement. 2020, c. 36, Sched. 7, s. 73 (3). Replacement statement (4) A credit…

• 74Distribution of statements

  74 (1) A credit union shall give a copy of an offering statement or statement of material change to each member that requests a copy of one. Same (2) A person who offers a security in a credit union for sale shall give a copy of the offering statement and statement of material change, if any, to a prospective purchaser upon request and to a purchaser. Withdrawal from purchase (3) An agreement of purchase and sale in respect of securities is not binding on the purchaser if the person from whom the purchaser has agreed to purchase the security receives written notice of the purchaser’s intention not to be bound by the agreement not later than midnight on the second business day after receipt by the purchaser of the latest offering statement and any statement of material change. Same (4) Subsection (3) applies with necessary modifications in respect of a person who is subscribing for securi…

• [s95]
• 75Effect of misrepresentation

  75 (1) If an offering statement or a statement of material change contains a misrepresentation, a purchaser of a security shall be deemed to have relied upon the misrepresentation if it was a misrepresentation when the purchase was made. Exception (2) Subsection (1) does not apply if the purchaser knew about the misrepresentation when purchasing the security. Right of action (3) The purchaser has a right of action for damages against, (a) the credit union; (b) every person, other than an employee of a credit union, who sells the security on behalf of the credit union; (c) every director of the credit union at the time the offering statement or statement of material change was filed with the Chief Executive Officer; (d) every person whose consent has been filed pursuant to a requirement of the regulations but only with respect to reports, opinions or statements that have been made by them…

• [s96]

  Restriction on Commission for Purchase or Sale

• [s97]
• 76No commission by directors, officers, employees

  76 None of the following persons shall charge or accept payment of a commission on the purchase or sale of a security of a credit union: 1. The directors, officers and employees of the credit union. 2. The related persons of a director, officer or employee of the credit union. 3. If the credit union is a member of a central, the directors, officers and employees of the central.

• [s98]

  No Waiver

• 76.1No waiver

  76.1 A disclosure to the Chief Executive Officer by a credit union, or by a person who controls a credit union or by an entity that is affiliated with a credit union, of any information required under this Part does not constitute a waiver of solicitor-client privilege. 2024, c. 20, Sched. 5, s. 3. Section Amendments with date in force (d/m/y) 2024, c. 20, Sched. 5, s. 3 - 06/11/2024

• [s100]

  part v Capital and Liquidity

• 77Adequacy of capital and liquidity

  77 (1) A credit union shall maintain, in relation to its operations, adequate and appropriate forms of capital and liquidity. 2020, c. 36, Sched. 7, s. 77 (1). Same (2) A credit union shall comply with the Authority rules governing adequate and appropriate forms of capital and liquidity. 2020, c. 36, Sched. 7, s. 77 (2); 2021, c. 40, Sched. 5, s. 6. Section Amendments with date in force (d/m/y) 2021, c. 40, Sched. 5, s. 6 - 01/03/2022

• 78Capital and liquidity policies

  78 (1) A credit union shall establish capital and liquidity policies for the credit union consistent with the Authority rules governing adequate capital and liquidity and the credit union shall adhere to those policies. Policies to be prudent (2) The capital and liquidity policies of a credit union shall consist of policies, standards and procedures that a reasonable and prudent person would apply in order to ensure the financial soundness of the credit union, avoid undue risk of loss and obtain a reasonable return. Approval and review by board (3) The capital and liquidity policies of a credit union are subject to the approval of the board and the board shall review the policies at least once each year. Order if policies inadequate, etc. (4) If the Chief Executive Officer considers the capital and liquidity policies of a credit union to be inadequate or imprudent, the Chief Executive Of…

• 79Additional requirements

  79 (1) The Chief Executive Officer may order a credit union, (a) to increase its capital; or (b) to provide additional liquidity in such forms and amounts as the Chief Executive Officer may require. Circumstances (2) Despite a credit union’s compliance with the Authority rules governing adequate capital and liquidity, the Chief Executive Officer may impose the requirements set out in subsection (1), (a) if there are reasonable grounds to believe that the credit union is not complying with the requirements of this Act, the regulations and the Authority rules concerning the management of risk in making loans and investments and in the general management of credit union business; (b) if the Chief Executive Officer considers that imposing the requirement is necessary to protect the interests of members, shareholders or depositors; or (c) if the Chief Executive Officer considers that imposing…

• [s104]
• 80Variation of requirements

  80 (1) A credit union may apply to the Chief Executive Officer for a variation of the requirements under section 77. Application (2) An application must be in a form approved by the Chief Executive Officer and must describe how and when the credit union will meet the requirements under section 77. Variation (3) The Chief Executive Officer may grant the variation subject to any terms the Chief Executive Officer considers appropriate if the Chief Executive Officer considers that granting the variation is in the interest of the members of the credit union and that the credit union will meet the requirements under section 77 within a reasonable time.

• [s105]
• 81Valuation of asset

  81 (1) If the Chief Executive Officer has appraised the fair market value of an asset held by a credit union or a subsidiary and the fair market value determined by the Chief Executive Officer varies materially from the value placed by the credit union or subsidiary on the asset, the Chief Executive Officer shall send to the credit union, its auditor and its audit committee a written notice of the fair market value of the asset as determined by the Chief Executive Officer and may make an order requiring the credit union to adjust the value of the asset accordingly. 2024, c. 20, Sched. 5, s. 4. Procedural rules (2) Section 209 applies with respect to an order under this section. 2024, c. 20, Sched. 5, s. 4. Appeal to Tribunal (3) A credit union that is subject to an order under this section may appeal the order to the Tribunal in accordance with section 212. 2024, c. 20, Sched. 5, s. 4. S…

• [s106]
• 82Report re adequacy

  82 A credit union shall provide a report in a form approved by the Chief Executive Officer concerning its compliance with section 77 to such persons and at such times as required by the Chief Executive Officer.

• [s107]
• 82.1Provision for losses and accrued interest

  82.1 A credit union shall make monthly provision for doubtful loans and establish reserves as required by the Authority rules or the Authority by-laws. 2021, c. 40, Sched. 5, s. 7. Section Amendments with date in force (d/m/y) 2021, c. 40, Sched. 5, s. 7 - 01/03/2022

• [s108]

  Part VI Governing the Credit union

• [s109]

  Directors

• 83Qualifications of directors

  83 Only an individual who meets the following criteria is eligible to be a director of a credit union: 1. The person is a member of the credit union. 2. The person is at least 18 years of age. 3. The person is a Canadian citizen or a person lawfully admitted to Canada for permanent residency who is ordinarily resident in Canada.

• 84Disqualified individuals

  84 Such individuals as may be prescribed by Authority rule are disqualified from being directors of a credit union.

• 85Credit union CEO director

  85 If the by-laws of a credit union permit it, the chief executive officer of the credit union may be a director of the credit union, subject to any limits or restrictions set out in the regulations.

• 87 #112Election of board
• 86Number of directors

  86 A credit union must have the minimum number of directors prescribed by Authority rule.

• 87Election of board

  87 Subject to the Authority rules, directors shall be elected in the manner provided in the by-laws of the credit union. 2021, c. 40, Sched. 5, s. 8. Section Amendments with date in force (d/m/y) 2021, c. 40, Sched. 5, s. 8 - 01/03/2022

• 88Composition of board

  88 The board shall be composed in the manner provided in the Authority rules.

• 89 #115Term of office, directors
• 89Term of office, directors

  89 Subject to the Authority rules, directors shall hold office for such term as the by-laws of the credit union provide. 2021, c. 40, Sched. 5, s. 9. Section Amendments with date in force (d/m/y) 2021, c. 40, Sched. 5, s. 9 - 01/03/2022

• 90Quorum

  90 A majority of the board constitutes a quorum, unless the Authority rules provide otherwise.

• 91Vacancies

  91 If a vacancy occurs in the board, the vacancy shall be filled in accordance with the Authority rules. 2020, c. 36, Sched. 7, s. 91. Election by non-member shareholders (2) Despite subsection (1) and subject to the by-laws of a credit union, if the holders of a class or series of class of shares of the credit union, other than membership shares or patronage shares, have an exclusive right to elect one or more directors and a vacancy occurs among those directors, (a) subject to subsection (3), the remaining directors elected by holders of that class or series may fill the vacancy except a vacancy resulting from an increase in the number of directors for that class or series or from a failure to elect the number of directors for that class or series; or (b) if there are no such remaining directors, any holder of shares of that class or series may call a meeting of the holders of that cla…

• 92Ceasing to hold office

  92 A director ceases to hold office in the circumstances prescribed by Authority rule.

• [s120]
• 93Removal by board

  93 (1) The board may remove a director in accordance with the Authority rules. 2020, c. 36, Sched. 7, s. 93 (1). Same (2) The removal of a director is subject to such conditions and requirements as may be prescribed by Authority rule. 2020, c. 36, Sched. 7, s. 93 (2). Removal by non-member shareholders (3) Despite subsections (1) and (2), if the holders of a class or series of class of shares of a credit union, other than membership shares or patronage shares, have an exclusive right to elect one or more directors, a director so elected may only be removed by an ordinary resolution at a meeting of the holders of that class or series. 2025, c. 15, Sched. 5, s. 5. Section Amendments with date in force (d/m/y) 2025, c. 15, Sched. 5, s. 5 - 27/11/2025

• 94Removal by Chief Executive Officer

  94 (1) The Chief Executive Officer may, by order, remove a director of a credit union if the Chief Executive Officer is of the opinion, (a) that the director is not suitable to hold office as a director on the basis of the character or competence of the director; or (b) that it is in the best interests of the credit union that the director be removed. 2020, c. 36, Sched. 7, s. 94 (1); 2025, c. 15, Sched. 15, s. 6 (1). Risk of prejudice (2) In forming an opinion under subsection (1), the Chief Executive Officer must consider whether the interests of the members, shareholders, depositors and creditors of the credit union have been or are likely to be prejudiced by the director’s holding office. 2020, c. 36, Sched. 7, s. 94 (2); 2025, c. 15, Sched. 15, s. 6 (2). Order re more than one director (3) An order made under this section may remove more than one director of a credit union. 2020, c.…

• [s122]
• 95Resignation of director

  95 (1) A director may resign from the board in accordance with the Authority rules. Same (2) The resignation of a director is subject to such conditions and requirements as may be prescribed by Authority rule.

• [s123]
• 96Statement re opposition

  96 (1) A director who opposes any proposed action or resolution by the directors or members is entitled to give the credit union a written statement setting out why the director opposes the proposed action or resolution. Circulation of statement (2) The credit union shall, within 30 days after receipt of the statement, send a copy of the statement to the Chief Executive Officer. Immunity (3) A credit union and a person acting on its behalf do not incur any liability by reason only of sending the statement as required by subsection (2).

• [s124]

  Powers and Duties of Board

• 97Duties of the board

  97 (1) The board shall manage or supervise the management of the business and affairs of the credit union and shall perform such additional duties as may be imposed under this Act, the regulations or the Authority rules respecting credit unions, or the by-laws of the credit union. Board, etc., not to manage day to day activities (2) The board, a committee of the board or a director shall not directly manage, or be involved in, the day to day activities of the credit union. First directors (3) The first directors of a credit union named in the articles have all the powers and duties and are subject to all the liabilities of directors.

• 98By-law powers

  98 (1) The board may pass by-laws governing the conduct of the affairs of the credit union. 2020, c. 36, Sched. 7, s. 98 (1). Required matters (2) The by-laws of a credit union shall provide for the following matters: 1. The appointment of officers of the credit union and the establishment of their duties. 2. The calling of meetings of the board, including the minimum number of times the board must meet each financial year if the minimum number of times exceeds the minimum number of times prescribed by regulation, the place or places where meetings of the board may be held and the manner in which notice of the meetings must be given. 3. Such other matters as may be prescribed by regulation. 2020, c. 36, Sched. 7, s. 98 (2); 2021, c. 40, Sched. 5, s. 10 (1). (3) Repealed: 2021, c. 40, Sched. 5, s. 10 (2). Limitation (4) By-laws that are contrary to this Act, the regulations or the article…

• 99Remuneration of directors

  99 The procedures for setting, paying and disclosing the remuneration and expenses of directors and members of committees shall be established by Authority rule.

• [s128]
• 100When by-law effective

  100 (1) A by-law is not effective until it is passed by the board and confirmed, with or without variation, by a special resolution passed at a general meeting of the members and holders of a class or series of classes of shares with voting rights duly called for that purpose or by such greater proportion of the votes cast as the articles may provide. 2020, c. 36, Sched. 7, s. 100 (1); 2025, c. 15, Sched. 5, s. 7. Filing (2) Within 30 days after a by-law is confirmed, the credit union shall file a copy of it with the Chief Executive Officer. 2020, c. 36, Sched. 7, s. 100 (2). Section Amendments with date in force (d/m/y) 2025, c. 15, Sched. 5, s. 7 - 27/11/2025

• 101Establishment of and delegation to committees

  101 The board may establish committees in accordance with the Authority rules and may delegate powers and assign duties to those committees in accordance with the Authority rules.

• [s130]
• 102Code of market conduct

  102 (1) The board of every credit union shall adopt a code of market conduct. Same, filing requirement (2) The board of a credit union shall file a copy of the credit union’s code of market conduct, and any amendments to the code, with the Chief Executive Officer. Chief Executive Officer may require amendment of code (3) The Chief Executive Officer may direct the board of a credit union to amend the credit union’s code of market conduct at any time. Chief Executive Officer may require adoption of code (4) If the board of a credit union does not adopt a code of market conduct under subsection (1), the Chief Executive Officer may require that the board adopt a code of market conduct selected by the Chief Executive Officer. Compliance (5) A credit union shall comply with its code of market conduct.

• [s131]
• 103Gender diversity report

  103 (1) The board of every credit union shall report annually on the gender diversity of the board. Same (2) A gender diversity report must comply with such requirements as may be prescribed by regulation.

• [s132]

  Audit Committee

• [s133]
• 104Audit committee

  104 (1) The board of every credit union shall establish an audit committee composed of members appointed by the board from among the directors. Powers and duties of audit committee (2) The audit committee has such powers and duties as are set out in this Act, prescribed by the Authority rules or set out in the by-laws of the credit union.

• [s134]

  Officers

• [s135]
• 105Officers

  105 (1) A credit union must have such officers as are provided for in the Authority rules and may have such additional officers as are provided for in the credit union’s by-laws. Powers and duties of officers (2) Subject to this Act, the regulations, the Authority rules and the by-laws of the credit union, the board may establish the duties of the credit union’s officers.

• [s136]
• 106Remuneration of officers

  106 The procedures for setting, paying and disclosing the remuneration and expenses of officers shall be established by Authority rule.

• [s137]

  Duties of Directors, Officers and Committee Members

• [s138]
• 107Duty of confidentiality

  107 (1) Every director, officer, member of a committee or employee of a credit union shall keep confidential all information received by the credit union or by a subsidiary or other affiliate of the credit union that the director, officer, committee member or employee knows or should know is confidential to the credit union or subsidiary or other affiliate. Use of information (2) No director, officer, member of a committee or employee of a credit union shall make use of information referred to in subsection (1) in any transaction in order to obtain, directly or indirectly, a benefit or advantage for any person other than the credit union or a subsidiary or other affiliate of the credit union.

• 108Confidentiality re members

  108 (1) Every director, officer, member of a committee or employee of a credit union shall keep confidential all information respecting members of the credit union. Exception — consent (2) Despite subsection (1), information respecting a member may be disclosed with the consent of the member. Exceptions (3) Despite subsection (1), a director, officer or member of a committee or an employee authorized by the board may disclose information, (a) to a person acting in a confidential or professional relationship to the credit union, including an employee of a central in which the credit union is a member; (b) to a financial institution with which the credit union has transactions that may involve confidential matters; (c) to another credit union with which the credit union of the director, officer, committee member or employee proposes to amalgamate, for the purposes of the amalgamation, if t…

• [s140]
• 109Duty of care

  109 (1) Every director, officer and member of a committee shall exercise their powers and discharge their duties honestly, in good faith and in the best interests of the credit union. Standard of care (2) The director, officer or committee member shall exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• [s141]
• 110Duty to comply

  110 (1) Every director, officer, member of a committee and employee of a credit union shall comply with this Act, the regulations, the Authority rules, the by-laws of the credit union and any requirements imposed by the Chief Executive Officer under this Act. 2020, c. 36, Sched. 7, s. 110. No exculpation (2) No provision in any contract, in any resolution or in the by-laws of a credit union relieves a director, an officer, a committee member or an employee from a duty under this section or relieves that individual from liability for a breach of a duty. 2021, c. 40, Sched. 5, s. 11. Section Amendments with date in force (d/m/y) 2021, c. 40, Sched. 5, s. 11 - 01/03/2022

• [s142]

  Conflicts of Interest

• 111Disclosure of interest

  111 (1) This section applies to every director, officer, member of a committee or employee of a credit union who, (a) is a party to a material contract or proposed material contract with the credit union; (b) is a director or an officer of an entity that is a party to a material contract or proposed material contract with the credit union; (c) has a material interest in a person who is a party to a material contract or proposed material contract with the credit union; or (d) is a spouse, parent or child of an individual who is a party to a material contract or proposed material contract with the credit union. 2020, c. 36, Sched. 7, s. 111 (1); 2021, c. 4, Sched. 11, s. 6 (2). Same (2) The director, officer, committee member or employee shall disclose, in writing, to the credit union or ask to have the nature and extent of that person’s interest entered in the minutes of board meetings. 2…

• [s144]
• 112Voting

  112 (1) A director to whom section 111 applies shall not be present at any meeting while the contract is being discussed or vote on, or attempt to influence the voting on, any resolution to approve the contract. Exception (2) Subsection (1) does not apply if the contract is, (a) an arrangement by way of security for money lent to or obligations undertaken by the director for the benefit of the credit union or a subsidiary of it; (b) a contract relating primarily to the director’s remuneration as a director or as a member of a committee or an officer, employee or agent of the credit union or a subsidiary of it or an entity controlled by it; (c) a contract for indemnity under section 123 or for insurance under section 122; or (d) a contract with a subsidiary of the credit union. Ineligibility (3) A director who knowingly contravenes subsection (1) ceases to hold office as a director and is…

• 113Avoidance standards

  113 (1) If a director, officer, committee member or employee made a required disclosure in respect of a contract referred to in subsection 111 (1), the contract was approved by the board or by the members of the credit union and the contract was reasonable and fair to the credit union at the time it was approved, the contract is neither void nor voidable by reason only, (a) of the relationship between the person or entity and the director, officer, committee member or employee; or (b) that an interested director is present at or is counted to determine the presence of a quorum at the board meeting that authorized the contract. Application to court (2) If a director, officer, committee member or employee of a credit union fails to disclose an interest in a material contract in accordance with section 111, a court may, on the application of the credit union or a member of the credit union,…

• [s146]
• 114Prohibition re acting for credit union

  114 (1) This section applies with respect to a person who is a director of a credit union or a member of a committee. Same (2) The person or a partnership or corporation from which the person receives compensation shall not act, for compensation, in a professional capacity in respect of business matters related to the credit union.

• [s147]
• 115Prohibition re acting as trustee

  115 An officer or employee of a credit union shall not act as a trustee with respect to a deposit with the credit union or any other business or transaction with the credit union unless the beneficiary is a related person of the officer or employee.

• [s148]

  Miscellaneous

• 116Validity of actions

  116 An act by a director, officer or member of a committee is not invalid by reason only of a defect discovered afterward in the appointment, election or qualification of the director, officer or member.

• 117Requirement for bond

  117 (1) Every director, officer or employee of a credit union who receives or has charge of money shall, on assuming the director, officer or employee’s duties, furnish to the credit union proof of bonding insurance that is satisfactory to the Chief Executive Officer. Bond (2) The bond must be for an amount equal to or greater than the amount that is prescribed by Authority rule or determined in the manner prescribed by Authority rule and must satisfy such conditions as may be prescribed by Authority rule.

• 118Liability of directors, etc.

  118 A liability imposed under this Act upon a director, officer or member of a committee is in addition to any other liability that is imposed upon that person by law.

• 119Specific liability of directors

  119 (1) The directors of a credit union who vote for or consent to a resolution of the directors authorizing the issue of shares contrary to subsection 51 (1), or the issue of subordinated indebtedness contrary to section 151 for a consideration other than money are jointly and severally liable to the credit union to make good any amount by which the consideration is less than the fair market value that the credit union would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution. Further liabilities (2) The directors of a credit union who vote for or consent to a resolution of the directors authorizing any of the distributions or payments listed in subsection (3) are jointly and severally liable to restore to the credit union any amounts so distributed or paid and not otherwise recovered by the credit union and any amounts in rela…

• 120Contribution

  120 (1) A director who has satisfied a judgment in relation to the director’s liability under section 119 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded. Recovery (2) A director who is liable under section 119 is entitled to apply to a court for an order compelling a member, shareholder or other person to pay or deliver to the director, (a) any money or property that was paid or distributed to the member, shareholder or other person contrary to this Act; or (b) an amount equal to the value of the loss suffered by the credit union as a result of any transaction contrary to Part IX or the regulations made for the purposes of that Part. Court order (3) Where an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so, (a) order a member, share…

• [s154]
• 121Due diligence, reliance on statement, etc.

  121 (1) A director, officer, member of a committee or an employee of a credit union is not liable under section 119 or 196 and has fulfilled their duty under section 110 if they exercised the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, including reliance in good faith on, (a) financial statements of the credit union represented to them by an officer of the credit union or in a written report of the auditor of the credit union fairly to reflect the financial condition of the credit union; or (b) a report of an accountant, lawyer or other professional person whose profession lends credibility to a statement made by the person. Same (2) A director, officer or member of a committee of a credit union has fulfilled their duty under section 109 if they relied in good faith on, (a) financial statements of the credit union repre…

• 122Insurance for directors and officers

  122 (1) A credit union may purchase and maintain insurance for the benefit of an eligible person as defined in section 123 against any liability incurred by the person in the person’s capacity as, (a) a director, officer or member of a committee; or (b) a director or officer of another entity if the person acts or acted in that capacity at the credit union’s request. Exception (2) Subsection (1) does not apply if the liability relates to the person’s failure to act honestly, in good faith and in the best interests of the credit union.

• [s156]
• 123Indemnity for directors, etc.

  123 (1) In this section, “eligible person” means, with respect to a credit union, (a) a director, officer or member of a committee, (b) a former director, officer or member of such a committee, or (c) a person who acts or acted at the request of the credit union as a director or an officer of an entity of which the credit union is or was a member, shareholder or creditor. Indemnification (2) A credit union may indemnify an eligible person in respect of any proceeding to which the person is made a party by reason of serving or having served in a qualifying capacity. Exception (3) Despite subsection (2), the credit union may not indemnify the person in respect of a proceeding by or on behalf of the credit union to procure a judgment in its favour. Advance to pay for costs, etc. (4) A credit union may advance money to an eligible person to pay for the costs, charges and expenses of any proc…

• [s157]
• 124Application for indemnification

  124 (1) A credit union or an eligible person under section 123 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit. Notice (2) The applicant shall give the Chief Executive Officer written notice of the application. Other notice (3) The court may order notice to be given to any interested person. Right to participate (4) The Chief Executive Officer and each interested person is entitled to appear and to be heard at the hearing of the application in person or by counsel.

• [s158]

  Auditor

• 125Auditor

  125 (1) A credit union shall appoint an auditor in accordance with the Authority rules. Qualifications of auditor (2) The auditor must have the qualifications prescribed by Authority rule.

• 126Removal by credit union

  126 (1) The credit union may remove an auditor in accordance with the Authority rules. Same (2) The removal of an auditor is subject to such conditions and requirements as may be prescribed by Authority rule.