Copyright 2009: Queen s Printer, St. John's, Newfoundland and Labrador, Canada SNL2009 CHAPTER C-37.2 CREDIT UNION ACT, Amended: CHAPTER C-37.

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1 Copyright 2009: Queen s Printer, St. John's, Newfoundland and Labrador, Canada SNL2009 CHAPTER C-37.2 CREDIT UNION ACT, 2009 Amended: CHAPTER C-37.2 AN ACT RESPECTING CREDIT UNIONS (Assented to May 28, 2009 ) Analysis 1. Short title 2. Definitions 3. Part prevails 4. Prohibition PART I INCORPORATION OF CREDIT UNIONS 5. Incorporation 6. Articles 7. By-laws 8. Application for incorporation 9. Certificate of incorporation

2 10. Business commencement requirements 11. Name 12. Prohibited names 13. Pre-incorporation contract PART II CAPACITY AND POWERS 14. Capacity 15. Jurisdiction outside province 16. Business of credit unions 17. Coercive tied selling 18. Subsidiaries and trade 19. Restrictions 20. No contravention notice 21. Reliance PART III REGISTERED OFFICE AND RECORDS 22. Registered office 23. Branch office 24. Records 25. Examination of records 26. Form of records

3 PART IV CAPITALIZATION AND OPERATING STANDARDS 27. Member shares 28. Shares other than members' equity shares 29. Dividend or patronage refund 30. Purchase of surplus shares 31. Exception 32. Liability limited 33. Remedy 34. Unclaimed balances 35. Member right to withdraw deposits 36. Trust funds 37. Partial payment on death 38. Loans 39. Lien 40. Liquid assets 41. Investments 42. Doubtful loans 43. Equity

4 44. Borrowing 45. Matching 46. Insurance required 47. Sound business and financial practices PART V MEMBERSHIP 48. Membership 49. Bond of association 50. Membership termination 51. Remedy preserved 52. By-laws 53. Members bound 54. Place of meetings 55. Calling meetings 56. Record date 57. Notice of meetings 58. Waiver of notice 59. Member notice 60. Quorum 61. Voting

5 62. Corporate representation 63. Voting by proxy 64. Joint membership 65. Executors and administrators 66. Ballot 67. Requisition by members to call meeting 68. Meeting called by superintendent PART VI DIRECTORS AND OFFICERS 69. Directors 70. Qualifications 71. Terms of office 72. Ceasing to hold office 73. Removal of directors 74. Reasons 75. Vacancy 76. Notice of change of directors 77. Meetings 78. Appointing committees

6 79. Establishing committees 80. Validity of acts 81. Resolution 82. Liability 83. Duty to report 84. Designation of officers 85. Remuneration and expenses 86. Duty of care 87. Dissent 88. Indemnification PART VII RETURNS AND FINANCIAL DISCLOSURE 89. Fiscal year 90. Annual returns 91. Annual financial statements 92. Conditions re: financial statements 93. Request for documents 94. Auditors 95. Auditor removal 96. Vacancy

7 97. Auditor appointed by guarantee corporation 98. Duty to attend meetings 99. Examinations by auditor 100. Superintendent or guarantee corporation may enlarge scope 101. Right to demand information 102. Auditor's report 103. Audit committee 104. Duty of auditor 105. Additional requirements 106. Access to papers 107. Qualified privilege 108. No liability PART VIII FUNDAMENTAL CHANGES 109. Amendment of articles 110. Articles to superintendent 111. Certificate of amendment 112. Effect of certificate 113. Restated articles

8 114. Amalgamation 115. Amalgamation agreement 116. Approval of agreement 117. Articles of amalgamation 118. Compulsory amalgamation 119. Certificate and effect of amalgamation 120. Extraordinary sale, lease or exchange 121. Approval of guarantee corporation 122. Dissent 123. Reorganization under a court order PART IX DISSOLUTION AND LIQUIDATION 124. Mandatory dissolution 125. Voluntary dissolution by members 126. Voluntary liquidation and dissolution 127. Articles of dissolution and certificate 128. Custody of records 129. Effect of dissolution 130. Unclaimed property 131. Effect of Bankruptcy and Insolvency Act ( Canada )

9 PART X CREDIT UNION DEPOSIT GUARANTEE CORPORATION 132. Application 133. Continuation 134. Duties 135. Capacity 136. Powers 137. Board 138. Officers 139. Vacancy 140. Office ceases 141. Management 142. Quorum 143. By-laws 144. Guaranteed deposit insurance 145. Prohibition 146. Deposit guarantee fund 147. Determination of levy 148. Manner of collection

10 149. Loans to guarantee corporation 150. Records 151. Fiscal year 152. Audit 153. Application 154. Payment of levy 155. Report to minister PART XI REMEDIES, OFFENCES AND PENALTIES 156. Definitions 157. Derivative action 158. Powers of court 159. Application to court 160. Application 161. Rectification of register 162. Compliance application 163. Application for direction 164. Appeal 165. Review and examination 166. Examination powers

11 167. Voluntary compliance 168. Compliance order 169. Offence 170. General offence 171. Compliance order following offence 172. Maintenance of action PART XII COMPLIANCE AND SUPERVISION 173. Supervision of credit union 174. Supervisor 175. Length of supervision 176. Powers of supervisor 177. Report 178. Accounting GENERAL PART XIII 179. Notice 180. Service of notice 181. Waiver of notice or delivery 182. Certificates

12 183. Signatures 184. Copies 185. Verification 186. Statement of intent 187. Alter notice or document 188. Corrected certificate 189. Examination of documents 190. Records 191. Superintendent 192. Register of credit unions 193. Regulations 194. Fees and forms PART XIV TRANSITIONAL, REPEAL AND CONSEQUENTIAL AMENDMENTS 195. Transitional 196. Amending instruments 197. RSNL1990 cc-37.1 CNLR 800/96 and NLR 54/99 Rep Commencement Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows: Short title

13 1. This Act may be cited as the Credit Union Act, cc-37.2 s1 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

14 (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

15 the guarantee corporation under section 174 to supervise a credit union cc-37.2 s2 Part prevails 3. Where a provision of Part X is inconsistent with another provision of this Act, the provision of that Part prevails cc-37.2 s3 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 cc-37.2 s4 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; and (b) the proposed by-laws that are required by the Act and the Regulations; (c) other information that the superintendent may require cc-37.2 s5

16 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 cc-37.2 s6 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 cc-37.2 s7

17 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 cc-37.2 s8 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 cc-37.2 s9

18 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 cc-37.2 s10 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.

19 (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 cc-37.2 s11 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,

20 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 cc-37.2 s12 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

21 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 cc-37.2 s13 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 cc-37.2 s14 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 cc-37.2 s15 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

22 (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 cc-37.2 s16 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.

23 (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 cc-37.2 s17 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 cc-37.2 s18 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 cc-37.2 s19 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.

24 2009 cc-37.2 s20 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 cc-37.2 s21 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.

25 (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 cc-37.2 s22 Branch office 23. A credit union may establish or relocate a branch office of the credit union as prescribed by regulation cc-37.2 s23 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 cc-37.2 s24 Examination of records 25. (1) The members of a credit union, their agents and legal representatives

26 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 cc-37.2 s25 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

27 (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 cc-37.2 s26 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 cc-37.2 s27 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,

28 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 cc-37.2 s28 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 cc-37.2 s29 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 cc-37.2 s30 Exception 31. (1) Nothing in section 29 affects the payment of a dividend on shares other

29 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 cc-37.2 s31 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 cc-37.2 s32 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 cc-37.2 s33 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 cc-37.2 s34 Member right to withdraw deposits 35. (1) A member may withdraw an amount contained in his or her deposit

30 account together with accrued interest or (a) during the normal business hours of the credit union at the credit union; (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 cc-37.2 s35 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 cc-37.2 s36 Partial payment on death 37. Where a member of a credit union dies and there is no executor of a will of

31 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 cc-37.2 s37 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 cc-37.2 s38 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 cc-37.2 s39

32 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 cc-37.2 s40 Investments 41. A credit union may make investments in addition to those referred to in subsection 40(2) only in accordance with the regulations cc-37.2 s41 Doubtful loans 42. A credit union shall maintain an allowance for doubtful loans in accordance with the regulations cc-37.2 s42 Equity 43. A credit union shall maintain equity in accordance with the regulations cc-37.2 s43 Borrowing 44. A credit union shall not borrow money in excess of the amount prescribed by regulation cc-37.2 s44

33 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 cc-37.2 s45 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 cc-37.2 s46 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 cc-37.2 s47 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

34 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 cc-37.2 s48 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 cc-37.2 s49 Membership termination 50. Membership in a credit union may be terminated, withdrawn or refused in accordance with the by-laws of the credit union cc-37.2 s50 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 cc-37.2 s51 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

35 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 cc-37.2 s52 Members bound 53. The articles and by-laws of a credit union bind the credit union and its members cc-37.2 s53 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 cc-37.2 s54

36 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 cc-37.2 s55 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 cc-37.2 s56 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

37 (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 cc-37.2 s57 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 cc-37.2 s58 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

38 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. where (5) A credit union is not required to comply with subsections (2) and (3) (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

39 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 cc-37.2 s59 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 cc-37.2 s60 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 cc-37.2 s61 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

40 natural person cc-37.2 s62 Voting by proxy 63. A member shall not vote by proxy at a meeting of members of a credit union cc-37.2 s63 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 cc-37.2 s64 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 cc-37.2 s65 Ballot 66. A credit union may in its by-laws establish procedures to permit members to vote by mail ballot or by other means cc-37.2 s66 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

41 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 cc 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