1. The Acts
Retail cooperatives are legally incorporated under provincial legislation, known as either the Cooperatives Act or the Cooperative Associations Act . (FCL comes under the Canada Cooperatives Act ). The Acts are passed by provincial legislatures and provide the legal authority and guidelines within which cooperatives function. They set out such items as the means of incorporating a cooperative, the powers of a cooperative, the qualifications of directors, the responsibilities of directors and the penalties for which they may be liable. Legislative Acts are seldom changed.
In British Columbia, the Business Corporations Act is also important to cooperatives. The Cooperative Association Act of British Columbia incorporates, by reference, several sections of the Company Act which has been replaced by the Business Corporations Act .
Directors are not expected to know all the details of the Act that sets out the rules and requirements for operating a cooperative in their province, but they should know how to access the information and familiarize themselves with the relevant parts of the Act that refer to the responsibilities and obligations of Directors and Officers.
2. The Regulations
In addition to the Act , each province has Regulations passed by the provincial cabinet. The Act generally sets out the framework of a regulatory scheme and delegates the authority to develop the details and express them in regulations.
The contents of the Regulations vary from province to province, but most contain forms to be used when incorporating a cooperative, fee schedules and other routine items.
A cooperative requiring legal interpretation of a provincial Act or Regulations should first contact their Retail Advisor or the Associate VicePresident in their region. They may in turn refer the cooperative to legal counsel if necessary.
3. Bylaws or Rules
Bylaws or rules deal primarily with matters relating to the particular needs of each cooperative, such as number of directors, procedure for holdings meetings, distribution of surplus and withdrawal of members.
Bylaws/rules are established by the members and are binding on all members who chose to join the cooperative. Each member, when joining the cooperative, agrees to be bound and to abide by them. Any changes to the cooperative’s bylaws/rules must be made by the members by special resolution at a general meeting, usually on recommendation from the Board of Directors. It is therefore the responsibility of the board to understand the bylaws/rules, to be guided by them, to communicate their content to members, and to recommend amendments as needed.
In Alberta, Saskatchewan and Manitoba, each cooperative is responsible for drawing up its own bylaws in accordance with the provisions laid out in the Act and the Regulations . In British Columbia, the Regulations have a set of rules attached as a schedule that may be adopted or modified by each cooperative. The Acts in these provinces also set out procedures for changing or adding to the bylaws or rules.
As a good practice, the cooperative’s bylaws or rules should be reviewed by the board every three to five years, in collaboration with the General Manager. The board may see fit to assign a board committee to undertake this task and make any recommendations for changes to the board.
If there are recommendations for changes, they must be set out in the appropriate resolution with proper notice for consideration at the next membership meeting. The process for amending a cooperative’s bylaws/rules is laid out in provincial legislation and often, in the bylaws/rules themselves. The General Manager or your Retail Advisor will support you to ensure that the process is consistent with provincial legislation and the cooperative’s bylaws/rules.
Proposed bylaw or rule amendments should be submitted to the provincial department in charge of cooperatives for review prior to bringing it to the members to ensure that there are no legal or other impediments to the proposed changes. The bylaw/rule amendment is then taken to the cooperative’s membership meeting for approval.
In British Columbia and Saskatchewan, changes to rules or bylaws are not effective until filed with the Registrar. In Alberta, changes are to be filed with the Director (of Cooperatives) within 60 days of coming into force. Manitoba does not have any requirements for filing bylaw changes.
Once government approval is given, the bylaws/rules are consolidated to reflect the amendments. An updated version of the bylaws/rules is put on file and is also distributed to the directors.
4. Incorporating Documents
Another important legal document for cooperatives to maintain in their files is the incorporating document:
- in British Columbia, the memorandum of association;
- in Alberta, Saskatchewan and Manitoba, the articles of incorporation or articles of amendment.
This document details the nature of the business to be conducted by the cooperative. Like the coop’s bylaws/rules, the incorporating documents should also be reviewed every three to five years to ensure that the provisions are still relevant.
5. Membership Application
The application for membership signed by each applying member is a legal contract in which the member agrees to abide and be bound by the bylaws or rules of the cooperative. Each member’s application form should be kept in a safe location at the cooperative.
6. Keeping Records
Each of the provincial Cooperatives Acts sets out what records must be kept at the registered office and those that must be made available to members upon request. The Acts also include requirements for maintaining membership lists and how, for what purposes and by whom they may be accessed. It is best to check with your Retail Advisor before making any records or membership lists available to anyone.
In general, cooperatives must keep a record of: • their articles and bylaws and all amendments to its articles and bylaws;
- minutes of member meetings and resolutions of members;
- the register of its directors;
- the register of its members;
- the investment shareholders, if any; and,
- a security register if applicable.