Information Guide on Co-operatives

From: Innovation, Science and Economic Development Canada

Table of contents

• About this Guide
• What is a Co-operative?
• How is a Co-operative Different from other Business Forms?
• Values and Principles of a Co-operative
• Structure of a Co-operative
• The Seven Steps in Forming a Co-operative
• Developing the Business Plan of a New Co-operative
• Frequently Asked Questions about Co-operatives (FAQs)

1. Federal
2. Yukon
3. Northwest Territories
4. Nunavut
5. British Columbia
6. Alberta
7. Saskatchewan
8. Manitoba
9. Ontario
10. Quebec
11. New Brunswick
12. Nova Scotia
13. Prince Edward Island
14. Newfoundland and Labrador

---

About this Guide

The guide was developed in partnership with the provinces and territories and was designed to provide Canadians with essential information on the co-operative business model.

This guide is intended to:

• introduce you to different aspects of the co-operative business model in Canada;
• present you with the key characteristics of federal, provincial and territorial co-operative legislation and regulations;
• provide you with information sources for the creation and development of co-operatives throughout Canada; and,
• provide advice to you on the process of creating a new co-operative with a description of various development stages, including a uniform format for the business plan of a new co-operative.

This guide is targeted at:

• anybody interested in learning more about co-operatives; and,
• entrepreneurs that have decided to use the co-operative business model but are not fully aware of its legal structures, specific features and the necessary steps to get started.

This guide provides information and resources only for non-financial co-operatives. Financial co-operatives such as credit unions and insurance mutuals are governed by separate legislation and regulations.

---

What is a Co-operative?

A co-operative is a legally incorporated corporation that is owned by an association of persons seeking to satisfy common needs such as access to products or services, sale of their products or services, or employment. While co-operatives serve a wide variety of functions, they generally fit one of the following four types:

• A consumer co-op provides products or services to its members (such as a retail co-op, housing, financial, health-care or child-care co-op).
• A producer co-op processes and markets the goods or services produced by its members, and/or supplies products or services necessary to the members' professional activities (such as independent entrepreneurs, artisans, or farmers).
• A worker co-op provides employment for its members. In this type of co-op, the employees are the members and the owners of the enterprise.
• A multi-stakeholder co-op serves the needs of different stakeholder groups—such as employees, clients, and other interested individuals and organizations. This type of co-op is usually found in health, home care and other social enterprises.

In Canada, a co-operative must incorporate under a specific co-operative Act at the provincial, territorial or federal level. These Acts govern all types of co-operatives, with the exception of financial co-operatives which are governed by separate legislation. The nature of the co-operative business model and how they operate is largely defined by these Acts. Whatever the governing Act may be, co-operatives share three common characteristics in areas of ownership, governance and distribution of profits.

Ownership: A co-operative is a business jointly owned by its members who use its products or services. In some cases, co-operatives can have members who do not use its services or products (e.g. support members, investor members).

Governance: Co-operatives are democratically controlled businesses with the governing principle “one-member, one-vote”. This right is exercised at the co-operative's annual general meeting ( AGM ), where members can vote directly for the board of directors. This democratic governance structure is reinforced by the co-operative's by-laws and the legislation under which the co-operative is incorporated (provincial, territorial or federal).

Distribution of Profits: Any surplus of a co-operative is owned by the member-owners who can decide how to distribute the profits at the AGM , which can include the following decisions:

• to allocate either part or all of the surplus to the general reserve for future investments; and,
• to distribute the profits to all the members in the form of patronage dividends based on the individual member's usage of the co-operative over the past fiscal year.

In addition, depending on the governing legislation, a co-operative may become a non-profit entity. These non-profit co-operatives do not provide members with a patronage dividend. All surpluses are directed eventually into the general reserve.

How is a co-operative different from other business forms?

Cooperative Corporations	Share Capital Corporations	Not-for-Profit Corporations
Ownership
Cooperatives may issue shares in the member's name.	Shares must be issued in the name of the person who is registering the share.	Not-profits do not issue shares.
In general, a membership share may not increase in value. It can usually only be redeemed by the coop at its par value. Some legislation allows for investment shares (non-par value) to members and/or non-members.	A common share may increase in value. A shareholder may sell his or her shares to another person at an agreed upon price.	Generally, anyone can be a member on payment of a fee and in accordance with the requirements of the articles and by-laws.
A member's ownership is limited to the amount of the membership shares he or she holds.	A shareholder's ownership is limited to the value of the shares he or she holds.	Members do not have ownership in the not-for-profit organization.
Directors
A cooperative must have at least three directors or any greater minimum number that is set out in the articles.	A corporation shall have one or more directors. Corporations that report to a securities commission shall have not fewer than three directors, at least two of whom are not officers or employees of the corporation or its affiliates.	A not-for-profit corporation shall have one or more directors, but a soliciting corporation shall not have fewer than three directors, at least two of whom are not officers or employees of the corporation or its affiliates.
Directors are elected by members. The articles of the cooperative may permit investment shareholders to elect directors by reason of a condition that has been fulfilled; or a fixed number or a percentage of the directors.	Directors are elected by shareholders as prescribed by the type of share that they hold.	Directors are elected by members.
Directors in exercising their powers and discharging their duties shall act honestly and in good faith with a view to the best interests of the cooperative; and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.	Every director in exercising their powers and discharging their duties shall act honestly and in good faith with a view to the best interests of the corporation; and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.	Directors in exercising their powers and discharging their duties shall act honestly and in good faith with a view to the best interests of the corporation; and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
Voting
A member is entitled to only one vote at a general meeting, regardless of the number of shares he or she holds.	A shareholder is entitled to the number of votes based on the type of share he or she holds in the company.	Generally, a member is entitled to one vote.
Some cooperatives with a large and dispersed membership have a delegate structure for representing members (e.g., one delegate represents multiple members from a geographic district).	Legislation does not permit delegates.	Legislation does not permit delegates.
No proxy voting allowed.	A shareholder may be permitted to vote by proxy for other shareholders.	Absentee voting for example through proxy is permitted.
Holders of investment shares have restricted voting rights.	Shareholders have voting rights in accordance with the terms of the shares they hold.	Members have the right to vote at any meeting of the members.
Sharing in the Surplus
Cooperative legislation may limit or prohibit the payment of interest on share capital.	There is no limit on share dividend.	Not-for-profit corporations cannot issue dividends or payments of capital to members.
Surpluses may be paid into the reserve and/or to members in the form of patronage returns proportional to the business done by each member with the cooperative. Dividends on any membership share are limited to the maximum percentage fixed in the articles.	Profits may be distributed in the form of dividends according to the provisions for each class of shares, or reinvested in the company. The value of shares reflects the net value of the corporation.	Surpluses do not belong to individual members but to the organization. They may, therefore, not be redistributed among the members but must be returned in full to the indivisible general reserve of the organization.
Some cooperatives, such as housing, health and day-care cooperatives are structured as non-profit entities. Surpluses are not distributed to members.	N/A	N/A
Some provincial legislation may stipulate that a cooperative's general reserve is indivisible, or divisible in whole or in part.	Shareholders may dispose of all of the assets of the business in accordance with certain legislative provisions.	Legislation and the articles of incorporation may specify how assets are to be disposed upon dissolution.

*This comparison table is generally based on federal corporate statutes (Canada Cooperatives Act, Canada Business Corporations Act, and Not-For-Profit Corporations Act) and may vary by jurisdiction. The purpose of this tool is solely for general comparison and is not intended to be used as legal advice on corporate structures. It is recommended to seek legal counsel for your specific business needs.

---

Values and Principles of a Co-operative

A distinguishing feature of co-operatives is that they share the same values and guiding principles that are exercised in their governance and operations. The Statement on Co-operative Identity was adopted in 1995 by the General Assembly of the International Co-operative Alliance (ICA) held in Manchester to mark its centennial. The statement is the result of a long process of consultation involving thousands of co-operatives around the world. Many of Canada's governing co-operative Acts refer to the Statement on Co-operative Identity to define the co-operative basis.

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

Principles

The co-operative principles are guidelines by which co-operatives put their values into practice.

1st Principle: Voluntary and Open Membership

Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.

2nd Principle: Democratic Member Control

Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are organized in a democratic manner.

3rd Principle: Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their
co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.

6th Principle: Co-operation Among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional, and international structures.

7th Principle: Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved by their members.

Source: International Co-operative Alliance, 2014.

---

Structure of a Co-operative

A co-operative is both an association of people and an enterprise. It therefore has two different structures:

• the association of people requires a democratic structure (general meeting, board of directors, other boards and committees) in which members or their representatives can participate directly or as delegates of groups or members; and,
• the enterprise structure may be simple or complex, depending on the scale and nature of the economic activities, but it will likely be similar to that of other private enterprises.

Source: Alain Bridault, Gérer la vie démocratique d'une coopérative dans la collection Gestion d'une coopérative, Sillery, Québec, ORION Research and Consulting Co-operative, Mars 1998, p. 36.

A co-operative's articles of incorporation may vary according to federal or provincial legislation. For example, under the Canada Cooperatives Act, your articles of incorporation determine the name of the co-operative, the municipality and province where the co-operative's registered office is, any restrictions of the business or membership classes of the co-operative, membership share capital or member rights, among other provisions. You must submit articles of amendment for any proposed changes regarding your articles of incorporation, continuance, amalgamation or revival.

A co-operative's by-laws are like a government's constitution. They define the rights and obligations of each member of the co-operative, and they constitute a legal document. In many cases, they may only be amended by a majority (two-thirds) of the members at a general meeting.

Depending on the legislation, the by-laws must include provisions such as:

• the co-operative's mission and its fields of activity;
• requirements for becoming a member (including the number of co-op shares) and for terminating membership (withdrawal or expulsion);
• the procedure for calling the annual general meeting, special general meetings, and meetings of the board of directors;
• the powers and responsibilities of the board of directors, the executive committee, and other committees and boards; and
• the powers and responsibilities of the chief executive officer/executive director.

Under the federal Act, by-laws are strictly internal to the co-operative. They can be amended internally, according to the procedure set out by the co-operative. For example, at the federal level, neither by-laws nor by-law amendments have to be filed with the government.

A co-operative works according to rules inspired by the rules of parliamentary democracy.

Annual General Meeting

The board of directors must call and organize an annual general meeting. The by-laws may provide for a quorum (number of members or percentage of total members), without which a general meeting may not be held. One member may not vote on behalf of another member (no proxy voting).

In particular, the members at the the annual meeting have exclusive authority to (this can vary by jurisdiction):

• amend the by-laws;
• elect members of the board of directors and of other committees as required;
• set the amount of daily allowances of the board of directors;
• appoint the external auditor (they are obligated in Quebec);
• decide to wind up the co-operative or amalgamate it with another co-operative; and
• decide to apply for membership in a federation or another inter-co-operative organization (in Quebec).

Board of Directors

The board of directors governs the co-operative on behalf of members. It usually has exclusive authority to:

• hire and fire the person holding the position of director general;
• approve salary and human resource management policies;
• define the co-operative's strategic and operational objectives;
• approve production (type and quality) and sales (price) policies for the co-operative's products and services;
• dispose of the co-operative's assets;
• propose at the annual meeting the amount and method of payment for patronage dividends; and
• prepare and submit the annual report of activities at the general meeting.

Director General

The Director General has the same responsibilities and powers as in a private company, i.e. planning, organizing, directing and controlling the enterprise on a day-to-day basis.

The person in this position must report directly to the board of directors and keep them informed on the activities of the enterprise.

The Director General has the power to hire and fire employees of the enterprise in accordance with the provisions of the by-laws and with the directives and policies issued by the board of directors.

---

The Seven Steps in Forming a Co-operative

Phase I - Develop the Co-operative Business Idea

• Identify the needs to be met:
  • availability or stability of employment
  • availability of certain products or services
  • quality of certain products or services
  • products or services at a better price
  • market development
• Identify professional assistance needed to launch the business:
  • legal consultant
  • co-operative development consultant
  • feasibility study, business plan and financial consultant
  • accounting consultant
  • others

• Conduct a preliminary market review.
• Identify available technical and financial assistance.
• Assess receptiveness to the co-operative business idea in the local community.
• Evaluate if the co-operative is the best legal framework to use or if the kind of co-operative selected is the most suitable.
• Define the intended benefits of the co-operative for members (e.g., quality, price) and characteristics:
  • products and services offered (consumer co-op)
  • or products and services marketed (producer co-op)
  • or jobs and working conditions (worker co-op)
• Evaluate the project's potential to attract the minimum number of members required.

If this preliminary study is not conclusive, the group should re-evaluate its business idea. If this study shows that the planned co-operative is feasible, the group can proceed to the second phase.

Phase II - Co-ordinate the Pre-Co-operative's Activities

 

• Choose the corporate name of the co-operative and location of its head office.
• Define the co-operative's mission (objectives, purpose).
• Elect a temporary board of directors and secretary to the board.
• Officially submit an application for incorporation as a co-operative to the provincial ministry responsible for co-operatives or to Innovation, Science and Economic Development Canada, if you are incorporating federally.

• Obtain financing for the viability study from such sources as:
  • internal financing by the members
  • special grant and/or
  • negotiate a technical assistance or business start-up agreement with a specialized organization.
• Define the strategic objectives.
• Evaluate the various strategic scenarios, production costs, and human, material and financial resources necessary.
• Evaluate the various start-up financing scenarios.
• Do a preliminary projection of budgeted statements and of a cash budget (revenues and expenditures, investments by members in share capital, partners, credit union or bank loans, grants).

If this study concludes that the co-operative's business idea is not financially viable, the group should consider terminating the project. If the study shows that the new co-operative will be financially viable, the group can proceed to the third phase.

Phase III - Organize and Start-up the Co-operative

• Decide on the association's structure and define the various categories of members, if necessary (e.g., consumers, suppliers, workers).
• Determine the roles and responsibilities of the various democratic bodies (general meeting, board of directors, committees).
• Establish the articles and by-laws.
• Recruit members.
• Organize and offer a program to train members in the administration and management of a co-operative, the chairing and running of annual meetings (e.g., parliamentary procedure), and the operation of a committee or board.
• Set up ad hoc committees to distribute the workload among the members of the temporary board of directors. For example:
  • planning committee
  • training committee
  • committee to draft by-laws

Step 6.A: Plan the operation of the enterprise

• Draw up an organization chart of the enterprise.
• Do the operational planning for the first year of activities.
• Negotiate contracts for the supply of necessary products and services (inputs) and, as required, sales or marketing contracts (depending on the kind of co-operative and the nature of the enterprise).
• Devise and implement an accounting system.
• Define the duties and responsibilities of each position.
• Develop a salary policy.
• Select and/or recruit the person who will occupy the position of chief executive officer/general manager.

Step 6.B: Plan and organize the enterprise's start-up financing

• Determine the value of the membership share to become a member.
• Determine the value of the share capital on start-up and during the first three years of operation (in terms of the expected growth in the number of members).
• Prepare the preferred share by-laws (if applicable).
• Prepare the loan by-laws (if applicable).
• Draw up the overall financing plan for the first three years of operation.
• Draw up the business plan.
• Negotiate the capital contribution of external financial partners (if necessary); e.g., venture capital corporations, private funds, caisse populaire or credit union investment programs.
• Apply for a government start-up grant (if available and if necessary).
• Negotiate medium-term credit union or bank loans and a line of credit, (if necessary).

Step 6.C: Recruiting and training the enterprise's staff

• Select and recruit employees (responsibility of the director general, except in the case of a worker co-operative where recruitment decisions are sometimes made collectively).
• Organize and offer a staff training program.
• Organize and offer a co-operative training program.

Step 6.D: Ensure the legality of the enterprise's operations

• Take care of the legal formalities and obtain the legal authorization necessary to start up the enterprise's activities:
  • federal: employer numbers for government discounts, for GST/HST, for the Canada Revenue Agency.
  • provincial: numbers for the provincial revenue department, for provincial tax.
  • legislation may also require co-operatives to register with, or be licensed by other federal or provincial departments.
  • municipal: municipal permits, employer number, etc.

• Adopt the by-laws.
• Adopt the business plan.
• Approve the co-operative's membership in a sectoral federation or an inter-sectoral co-operative organization.
• Appoint an external auditor.
• Elect the members of the board of directors, and of any other committees (if the general meeting has the power to do this).

If you are a young entrepreneur looking for advice and guidance, Futureprenuer Canada's moMENTum program may be of interest.

---

Developing the Business Plan of a New Co-operative

A business plan is a document that provides a complete description of the co-operative enterprise you wish to form. It describes in detail the products or services that will be produced or sold; the organization of work and management approach; results of the market study and marketing plan; characteristics of the paid and unpaid human resources (the members); equipment and material needed; financing requirements and plan.

The business plan is a working tool that serves two purposes:

• To facilitate the acquisition of external capital, credit union/bank loans or grants.
  • It must convey to the person or organization from whom you seek financial support why they should invest in the enterprise you are proposing, the seriousness of that enterprise, and your team's ability to launch and develop it successfully.
• To facilitate control of the process of launching and developing the new co-operative.
  • This plan will be the means by which you monitor the new co-operative's results and follow-up on its activities.

The business plan must be written in clear and straightforward language, and be relatively brief (no more than thirty pages, plus appendices), since the people who will consult it before deciding whether or not to invest in your co-operative, loan it money, or give it a grant often have no time to waste. They have to be able to understand your plan and the exact nature of what you are requesting very quickly.

1. Summary of the business plan (2 pages maximum)
2. Brief description of the co-operative (1 page)
   • Name, address of the head office, date formed.
   • Type of co-operative, objectives, number of members.
3. Analysis of the co-operative's market
   • Brief description of the characteristics of the products or services offered with respect to comparable products and services available on the market.
   • Characteristics of the market: size, parts of the market held by competing enterprises, market segments, market trends.
   • Characteristics of your sales strategy (direct, through third party, shipping costs, etc.).
   • Characteristics of the clientele (members or non-members), age groups, gender, occupation, family income, location, buying habits, etc.
   • The price of your products or services.
4. Description of products and services
   • Originality of the products and services compared to what is available from the competition, their distinguishing characteristics (include photographs or sketches if necessary).
   • Description of any research and development activities required before these products or services can be marketed (with associated costs and timetable).
   • Description of new products and services development plan.
   • List of legislation that must be complied with and legal authorizations that must be obtained before the products and services can be introduced on the market.
5. Marketing plan
   • Estimate of sales for the first three years and the market share sought (refer to your detailed market study on which you based your sales objectives; include it as an appendix).
   • List of buyer-members or potential buyers who have already expressed an interest in buying.
   • Description of market segments targeted (size, location, and other characteristics).
   • Description of your strategic market penetration plan and its cost (how you will advertise your products and services, promotion campaign, media publicity, discounted membership prices, etc.).
6. Operations
   • Advantages of the location of your place of business.
   • Characteristics and costs of the building and equipment already owned, or to be bought or leased (attach a plan if necessary and refer to detailed descriptions in an attachment).
   • Description of the process and methods of producing the products and services.
   • Description of the characteristics of the manpower required (professional qualifications, number, salary costs, etc.).
7. Management and organization
   • Characteristics of the association's structure and method of operation (division of powers and responsibilities of the various bodies, names of the directors and a brief description of their expertise).
   • Characteristics of the structure (organization chart) and of the enterprise's method of operation (management philosophy, methods of participatory management that will be introduced, names of managers, their qualifications, a description of their duties, their responsibilities and reporting relationships, etc.).
   • Identification of external professional resources with whom you plan to deal (organization specializing in start-up assistance, accounting firm, marketing consultant, trainer, etc.).
8. Timetable of activities
   • A graph of the timetable for the first three years, with monthly or semi-monthly columns and thick horizontal lines to indicate the beginning, duration and end of the enterprise's major series of operations. Each activity should be coded and a brief description given in a column to the left.
9. Projected financial statements to include
   • Statement of assets and liabilities for the first three years.
   • Statement of earnings for the first three years.
   • Projected cash budget for the first year, estimate of working capital for the following two years.
   • Break-even point (level of revenue beyond which the co-operative will generate a surplus, after fixed and variable costs are subtracted).
10. Financing plan
    • Total investment needed for start-up.
    • Short and medium-term investment plan.
    • Source of funds (share capital, external investors, medium-term loans, etc.).
    • Amounts by source, conditions of acquisition (interest, share of surplus, etc.), repayment schedule, security given.
11. Attachments
    • Articles of Incorporation of the co-operative.
    • By-laws.
    • Data from the market study.
    • Summary of expertise of the main people in charge and a list of members.
    • Letters of support, intention to buy or sell, etc.
    • Any other relevant information that may shed more light on the nature of your operations, equipment needed, manufacturing methods and procedures, etc.

Find out more information on business plans on the Canada Business and Industry.

---

Frequently asked questions about co-operatives

What does it mean to incorporate as a co-operative?

The act of incorporating means that the co-operative becomes a legal entity. This means that the co-operative has the same rights as a natural person: it can acquire assets, go into debt, enter into contracts, etc. The act of incorporation limits the liability of a co-operative's members. As a general rule, members are not liable for a co-operative's debts. Finally, raising capital is easier for incorporated entities than for others.

How do I incorporate as a co-operative?

In Canada, you can incorporate your co-operative at the federal or provincial/territorial level. Specific information on the 14 co-operative statutes can be found in this Guide.

How many people are needed to form a co-operative?

The number of people you need to incorporate a co-operative varies according to the legislation governing your co-operative.

For example, federal legislation requires at least three persons to incorporate a co-operative and they must be at least eighteen years of age, of sound mind and not bankrupt. One or more federation(s) of co-operatives can also incorporate a co-operative. Under some provincial and territorial legislation you are obligated to have a minimum of six founding members.

Who owns and controls a co-operative?

A co-operative is both an association of members and an enterprise. The enterprise is essentially owned by the association of members who, based on the principle of “one member, one vote,” have only one vote. Members can vote for the board of directors or delegates from the membership and other important business decisions.

What does it mean to be a member of a co-operative?

Membership in a federally incorporated co-operative is governed by its by-laws. When you become a member of a co-operative it generally means you have access to the co-operative's products or services and you can actively participate in the organization's decision making process such as the right to vote for the board of directors or delegates. In general, members can voluntarily withdraw from a co-operative and be redeemed for membership shares or amounts owed to the members. You can have a membership in more than one co-operative.

Can a co-operative be a non-profit?

Depending on the governing legislation, a co-operative may decide not to distribute surpluses, and in some situations will meet the definition of a non-profit organization, except in Quebec where this possibility does not exist for co-operatives. This is often the case when co-ops aim to address social needs, such as housing, day care, and health care co-operatives. Co-operatives can also obtain registered charitable status should they meet all the necessary requirements.

How does a co-operative distribute its profits?

Instead of generating a profit for investors, co-operatives try to provide services to their members at the lowest possible cost. In general, the surplus (gross income less expenses) generated through business operations is either reinvested in the organization or is redistributed to the members in the form of patronage refunds. Patronage refunds are calculated in proportion to a member's use of the services provided by the co-operative, not the amount they have invested in the co-operative. In 2009, non-financial co-operatives in Canada paid approximately $396 million in patronage dividends to their members.

Typically, a co-operative operating on a non-profit basis must clearly state in its Articles of Incorporation that it will not distribute surplus to its members. In this case, the surplus is usually allocated to the general reserve in order to complete its stated objective and in order to qualify for income tax exempt status.

Why would I choose to form a co-operative business?

If you are attempting to meet an economic or social need that cannot be met by individuals acting alone and would prefer to address collectively, the co-operative option could prove to be the best legal choice because it is an organizational tool designed to meet the needs, and facilitate the operations, of both small and large groups of people. For example, you might be looking for a way to obtain affordable quality housing, or access to high-speed internet, or any other product or service unavailable in your region.

The co-operative model may also be suitable for your business needs if you are considering keeping a local business open or trying to achieve greater sustainability and corporate social responsibility goals.

It is always recommended to seek the advice of your legal counsel in order to meet your specific business needs.

Is there data on co-operatives in Canada?

Yes. The Government of Canada surveys non-financial co-operatives and publishes the data on the Research data about co-operatives webpage.

Are there federal programs or services available to co-operatives?

Yes. There are a variety of programs and services available to start or develop your co-operative. You can find some of these resources on the Canada Business and industry.

Is there sector support for co-operatives in Canada?

Yes. There is sector support at the national and provincial level throughout Canada. Co-operatives and Mutuals Canada is the national, bilingual organization that represents all co-operatives and mutuals in Canada. Find more resources, information, and provincial associations by visiting the Co-operatives and Mutuals Canada website. You can find provincial co-operative sector support organizations in the legislative section of this guide.

How do co-operatives capitalize their operations?

Member shares are typically the first source of capital in a co-operative. Some provincial legislation may determine the dollar value of a co-op share (e.g. 10 dollars), but the co-op's by-laws will then determine the minimum number of $10 shares each member must purchase, so as to meet the capital requirements for start-up. Member shares establish co-ownership of the enterprise and grant one vote per member.

Preferred shares are sometimes issued by co-operatives—both to members and/or non-members—although this type of share does not offer title of co-ownership or voting privilege as does a member share.

Investment shares are now allowed by most co-operative legislation, and they can be issued to members and non-members, sometimes only made available to members. The co-operative can then allocate a portion of its surplus as dividends on those shares. Investment shares generally do not confer voting privilege, and the legislation may place a limit on the percentage of share capital that can be held by non-members.

What is the economic contribution of co-operatives to the Canadian economy?

In Canada, 9,000 non-financial and financial co-operatives accounted for a combined $266 billion in assets, $47 billion in volume of business, and 156,000 employees (Industry Canada, 2009).

Does a co-operative perform as well as a traditional private enterprise?

Co-operatives have been competing successfully in the Canadian marketplace for almost a century, many of them leaders in their industries. As in all businesses, however, co-op performance depends on good management and the ability to adapt and innovate in a changing economy.

Information on Canada's Top 50 Non-financial Co-operatives can be found on the Research webpage.

---

Federal

The Canada Cooperatives Act (S.C. 1998, c. 1) and Canada Cooperatives Regulations (SOR/99-256) govern the incorporation, operation and liquidation of non-financial cooperatives that carry on business in more than one jurisdiction, in other words cooperatives that carry on their business in two or more provinces and have a fixed place of business in more than one province.

The Act establishes the rules for the incorporation of cooperatives, content and adoption of by-laws, composition of capital (member shares, investment shares, loan capital), holding of meetings (annual, special or meetings of investment shareholders), composition and operation of the board of directors, and form and content of records to be kept (articles, by-laws, list of members, investment shareholders, etc). The Act sets out requirements for the audit and filing of financial statements. It also defines the terms and conditions governing the amalgamation, liquidation and dissolution of a cooperative.

A cooperative is organized and operated and carries on its business on a cooperative basis if:

• Membership in the cooperative is open, without discrimination, to people who may use its services and who are willing and able to take on the responsibilities of a member.
• Each member or delegate has only one vote.
• No member may vote by proxy.
• Interest on member loans and dividends on member shares are limited to a percentage fixed by the articles of incorporation.
• The members provide, insofar as possible, the capital the cooperative needs, and the return paid on this capital must not exceed the maximum percentage fixed in the articles of incorporation.
• An operating surplus may be used to expand the cooperative's business, deliver or improve common services for members, establish a reserve fund, pay interest on loans to members or dividends on share capital, promote collective wellbeing or the expansion of cooperative businesses, or distribute the surplus among the members as a patronage return.
• The cooperative makes members, managers, employees and the public aware of the principles and techniques of a cooperative.

• A minimum of three persons, or one or more co-operative entities, who intend to be members can apply for incorporation.
• The persons must be at least 18 years old, be of sound mind and not be bankrupt.
• The articles of incorporation must indicate the name of the cooperative, the planned head office location in Canada, the name and residential address of each founding member, the exact number or minimum or maximum number of directors, any restrictions on the business and member categories of the cooperative, a statement to the effect that the cooperative will be organized and operated and will carry on business on a cooperative basis, a statement that the cooperative will carry on its business in two or more provinces and will have a fixed place of business in more than one province, and whether the cooperative is to be incorporated with or without share capital.
• For cooperatives with share capital, the articles of incorporation must indicate whether the number of shares is unlimited or limited; if limited, the maximum number of shares that may be issued and the value of member shares must be stated (at or not at par value).
• For cooperatives without share capital, the articles of incorporation must include a statement to the effect that each member has the same rights and responsibilities as each other member.

• Prospective members must submit an application to the board of directors, which must approve it.
• Members must meet by-law requirements, such as by subscribing for the minimum number of member shares and making one or more payments for the shares or making one or more payments on the minimum member loan.
• Persons under the age of 18 may be admitted and allowed to vote according to the by-laws.
• Unless stipulated otherwise in the by-laws, each partner member may vote.

• The cooperative may issue member shares at or not at par value.
• If a cooperative can issue member shares not at par value, its articles of incorporation must indicate whether these shares are to be issued, purchased, redeemed or acquired at a fixed price or at a price determined in accordance with a formula. The formula must be set out, where applicable.
• In its articles of incorporation, a cooperative may set a maximum return paid on member loans or shares.
• A cooperative may be authorized to issue investment shares not at par value to members and non-members alike if the articles of incorporation include a provision to this effect. In this case, the articles of incorporation must specify whether these shares are unlimited or not and the number of share categories, including related preferences, rights, conditions, restrictions, limitations or prohibitions.
• If the financial health of the cooperative is compromised, the directors may extend by one year the share buy-back period when a member leaves or must refuse to refund members if the cooperative becomes insolvent.
• The capital of a cooperative without share capital may be made up of member loans, and the articles of incorporation may indicate the loan amounts, refund deadlines and interest, as the case may be.

There must be at least three directors or a larger minimum number provided in the articles of incorporation.

• The directors must be at least 18 years old, be of sound mind and not be bankrupt.
• At least two thirds of the directors, or a larger proportion as specified in the articles of incorporation, must be members of the cooperative, either personally, members of member cooperatives or representatives of members that are legal entities.
• The majority of the members on the board of directors must be individuals who are not full-time managers or employees of the cooperative, except in the case of worker cooperatives.
• At least a quarter of the members on the board of directors must be individuals living in Canada. If the cooperative has three administrators, at least one of them must live in Canada.
• No more than 20% of the directors may be elected by investment shareholders.

• The Canada Cooperatives Act includes special provisions applicable to non-profit housing cooperatives and worker cooperatives. Some sections of the Act have been tailored for cooperative federations.

Resources and Support

Innovation, Science and Economic Development Canada is responsible for applying the Canada Cooperatives Act and incorporating cooperatives at the federal level. Corporations Canada is the agency that regulates federal corporations in Canada, including non-financial cooperatives. Information and forms are available on its website. Corporations Canada examines applications to ensure they are complete and valid. The agency then analyzes the applications to ensure they comply with the Canada Cooperatives Act and issues certificates of incorporation.

A number of programs and services that help with the development of your cooperative can be found on the Canada Business and industry.

To submit an application in accordance with the Canada Cooperatives Act:

Corporations Canada
By mail or in person:
Jean Edmonds Building, South Tower, 9th floor
365 Laurier Avenue West
Ottawa, Ontario
K1A 0C8
Fax: Toll-free (in Canada): 1-877-568-9922;
(National Capital Region or abroad): 613-941-4803
Email: ic.corporationscanada.ic@canada.ca

This guide provides analysis, advice and support to promote co-operative business innovation and growth in Canada.

Strategic Policy Branch, Strategic Policy Sector
Innovation, Science and Economic Development Canada
235 Queen Street
Ottawa, Ontario  K1A 0H5
Telephone: 613-954-5031 (Toll-free) 1-800-328-6189
Fax: 613-954-2340
Email: ic.info-info.ic@canada.ca

Co-operatives and Mutuals Canada  (CMC) is the national association representing co-operative and mutual businesses, sector federations and provincial associations. CMC activities are targeted at helping co-operatives and mutuals form, develop and thrive in their communities. In addition, most provinces and territories have co-operative associations and/or conseils who provide information about starting up and growing your co-operative as well as general information on incorporating as a co-operative specific to each province (see listings under each province).  For a more comprehensive list of these organizations and other links for co-operative information and support, please refer to CMC's online services.

Co-operatives and Mutuals Canada (CMC)
275 Bank Street, Suite 400
Ottawa, Ontario
K2P 2L6
Telephone: 613-238-6712
Fax: 613-567-0658
Email: info@canada.coop

CoopZone Developers' Network Co-operative
c/o Canadian Workers Co-operative Federation
#104, 402 - 30th Ave. NE
Calgary, Alberta T2E 2E3
Telephone: (403) 276-8250

This guide provides general information on co-operatives.  The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Yukon

The requirements and procedures for incorporating and operating all types of cooperative associations are set out in the Cooperative Associations Act (R.S.Y., 2002, Chapter 43), the Cooperative Associations Regulations (O.I.C. 1980/301) and the prescribed schedule entitled “Incidental and Ancillary Powers of an Association” (O.I.C. 1988/192).

Where relevant, sections 209 to 230 of the Business Corporations Act (Part 17 – Liquidation and Dissolution) [PDF document] apply.

The Act sets out the general terms and conditions for the incorporation, operation and dissolution of any cooperative. The Regulations concerning cooperatives include standard by-laws.

Although there is no definition as such in the Act, the following elements are part of the cooperative system. A cooperative association, established with or without share capital, brings together people who have decided to form an association in order to operate or carry on a business, enterprise or industry on a cooperative basis.

• Each member has only one vote regardless of the number of shares held.
• Members cannot vote by proxy, unless the by-laws allow representation by delegates.
• The responsibility of shareholders is limited to the portion of the value of the remaining unreleased shares.
• The responsibility of members for the association's debts and liabilities is limited to the unpaid balance of their membership fee.
• Dividends are established in the by-laws.
• Surpluses may be paid into the reserve or used to pay, at an annual rate of return no greater than 10%, interest and dividends on share capital for which there is no obligation to pay interest or to pay members proportional to the business done with the association.
• The cooperative must set up a reserve for contingencies equal to at least 20% of the funds available to be distributed at the end of each fiscal year. The reserve is not distributed to the members.
• The obligation to keep a reserve is lifted when the reserve reaches a percentage of total assets: 30% of assets up to $25,000; 20% of assets from $25,000 to 50,000; and 10% of assets over $50,000.
• Cooperatives without share capital must allocate all surplus to the reserve for contingencies. This reserve is not distributed to the members.

• It takes five or more applicants to incorporate a cooperative association.
• The memorandum of association must include the following information: the name of the association, its purpose and the location of its registered office, and a list of applicants and their signatures. For associations with share capital, the amount of each share and an indication of their number, whether they are unlimited or, if there is no share capital, the terms and conditions of membership and the method for determining the participation of each member.
• The name must include the word “cooperative”, “co-operative”, “coop”, “co-op” or “cooperative” and end in “limitée”, “Ltée”, “Limited” or “Ltd”.

• Members must be 16 years old or older.
• A cooperative association may be a member of another cooperative association.
• A membership application must be submitted to the board of directors, which must approve it for someone to become a member of the cooperative association.
• An application for shares in a cooperative with share capital is equivalent to a membership application.
• Members must subscribe and pay for the number of shares established in the memorandum of association or pay the membership fee.

• Share capital includes shares.
• The capital of an association that has share capital is divided into shares whose minimum value is set out in the memorandum of incorporation.
• The Act does not mention preferred shares.
• Compensation from capital shares is established in the by-laws.
• An association may, by means of by-laws, authorize loans to members for fixed terms of at least 90 days. The amounts borrowed are credited to a borrowed capital account.
• The members may withdraw their capital provided they give six months' notice; they are entitled to the par or paid-up value of the capital shares.
• In accordance with the by-laws, the association is not obligated to allow withdrawal if the revolving fund is reduced by 10% or more.

• Cooperative associations with less than 10 members have three directors. Those with 10 or more members have five or fewer directors.
• Only members may be elected or appointed to the board of directors.
• The directors, manager and treasurer of the association, who are members or shareholders, must be at least 18 years old.
• Directors are elected by secret ballot on the day and in the manner indicated in the by-laws.
• The board of directors may appoint an Executive Committee among its own members and specify its functions.

None

Resources and Support

 

The Minister of the Department of Community Services is responsible for administering the Act. Corporate Affairs promotes and supports business development by providing information and services for businesses and the public. The Registrar of Cooperative Associations is responsible for incorporating cooperative associations and enforces the Act and Regulations. The Registrar may approve, amend or reject articles of incorporation and by-laws, in whole or in part. The Registrar may also investigate the internal affairs of the association and report to the Minister.

The following steps are required to incorporate a cooperative association:

• Choose a name. The name must be searched using NUANS and approved by Corporate Affairs.
• Draft the memorandum of association, which must be signed by each applicant in the presence of a witness who attests to the authenticity of the applicant's signature.
• Produce by-laws that must be signed by each party who signed the memorandum of association.
• Send to the Registrar the memorandum of association and two copies of the by-laws accompanied by the fee established by the Commissioner in Executive Council.

If the documents are deemed to comply with the Act, the Registrar registers them and issues a certificate of association. The Registrar also has a notice published in the appropriate manner and at the appropriate time and place (the association must pay for the cost of publication).

Corporate Affairs
307 Black Street, 1st Floor 
Whitehorse, Yukon
Y1A 2N1  
Telephone: 867-667-5314 (Toll-free in the Yukon): 1-800-661-0408, extension 5314
Fax: 867-393-6251
Email: corporateaffairs@gov.yk.ca

Mailing address:

Box 2703 (C-6)
Whitehorse, Yukon  Y1A 2C6

A list of national organizations providing information and services about starting up or growing your co-operative can be found in the federal co-operative section of the guide.

This guide provides general information on co-operatives. The specific policies, regulations and laws are briefly explained and accurate as of June, 2014. Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Northwest Territories

The requirements and procedures for the incorporation and operation of co-operatives in the Northwest Territories are laid out in the Co-operative Associations Act, RSNWT 1988, c. C-19, which governs all types of co-operatives in the NWT except credit unions.

This territory's current Co-operative Associations Act was declared in 1988 with the last amendments in 2012. The Act provides for the incorporation, examination, supervision and inspection of enterprises whose primary purpose is to provide services to member/owners on a co-operative basis and whose gains are distributed to members in proportion to their patronage of the co-operative.

An organization must be incorporated under the Co-operative Associations Act of 1988, in order to be called a co-operative. Although the Act doesn't define ‘co-operative basis', the following are key co-operative features under the Act.

• Each member or delegate has only one vote at a members' meeting.
• A co-operative's primary purpose is to provide goods and services to its members.
• Any surpluses in a co-operative with share capital that are generated are used to eliminate a deficit, to create a reserve as required by the Act, and for distribution to members in proportion to patronage, all of which is set out in the bylaws.
• A co-operative without share capital may not distribute its surpluses to members but must retain them as reserves.

• Any five or more persons may form a co-operative either with or without share capital.
• The incorporators must submit to the Supervisor of Co-operatives two copies of the memorandum of association and the required fee.
• The memorandum of association must state:
  • The name of the co-operative.
  • Its objects (purpose).
  • The location of the registered office.
  • The limits, if any, on the co-operative's powers under the Act.
  • If there is share capital, the amount of each share and whether the shares are unlimited in number or of a fixed number.
  • If share capital includes preferred shares, the amount of each preferred share, whether the preferred shares are unlimited in number or of a fixed number and the nature of the preference.
  • If there is no share capital, the terms of membership and the basis on which the interest of each member is to be determined.

• If the co-operative is adopting the ‘Standard Bylaws” the co-op is not required to submit them to the Supervisor. Each co-operative is assumed to have adopted the Standard Bylaws. However, the co-operative may adopt bylaws which replace some or all of the provisions of the Standard Bylaws as long as they do not conflict with provisions of the Co-operative Associations Act.
• On approval by the Supervisor of Co-operatives of the memorandum and the bylaws (if necessary), the Registrar shall register the co-operative and issue a certificate of incorporation if the memorandum of association and by-laws appear to comply with the Act.

• The co-op determines within its bylaws the requirements for membership.
• Application for membership must be approved by the board of directors.
• An application for shares in a co-operative constitutes an application for membership and the issuing of a share to the applicant constitutes acceptance as a member.
• Unless provided for otherwise in the bylaws a person of 16 years of age or older may be a member.
• A co-operative may be a member of another co-operative.
• The co-operative must keep a register which records the details of all members. This includes the name and address, the date of their acceptance into membership and the date they cease to be members and the details on the share purchases.
• Members may voluntarily withdraw from the co-operative by following the terms and conditions set out in the bylaws and Section 13(2) of the Act.
• A person's membership may also be terminated by the members after a hearing and by a two-thirds majority vote of the members present at the meeting.

• A co-operative can secure members' capital as either co-operative shares or member loans.
• A co-operative may also issue non-voting preferred shares whose terms and conditions are set out in the memorandum.
• The maximum rate of interest and dividends on loans and co-op shares is set in the bylaws.
• The co-operative is not obligated to redeem the share capital of a withdrawing member if it reduces the working capital of the co-operative by more than 10 percent in a given year as per Section 13(2) of the Act.

• Three directors are required for any co-operative with fewer than 10 members.
• For co-operatives with 10 or more members, the Act specifies a minimum of 5 directors.
• Directors must be members of the co-operative and be at least 19 years of age.
• The number of directors, terms and the election of directors is provided for within the bylaws.
• The co-operative may designate that up to 25% of the directors be elected by the preferred shareholders.

There are special provisions for federations of co-operatives in Part II of the Act.

Resources and Support

 

The requirements for incorporation, outlined in the Act, are administered by the Supervisor of Co-operatives, with NWT Industry, Tourism and Investment. Incorporation requirements and instructions are available online from the Corporate Registry, Department of Justice. This includes a sample memorandum of association and standard bylaws as well as the Act and Regulations. Once the co-operative has satisfied the requirements, the Registrar will issue a certificate of incorporation.

Supervisor of Co-operative Associations
Industry, Tourism and Investment
Government of the Northwest Territories
P.O. Box 1320
Yellowknife, Northwest Territories
X1A 2L9
Telephone: 867-873-7361

The following provincial organization can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in the Northwest Territories. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Arctic Co-operatives Ltd.
1645 Inkster Boulevard
Winnipeg, Manitoba
R2X 2W7
Telephone: 204-697-1625
Fax: 204-697-1880
Email:  info@ArcticCo-op.com

This guide provides general information on co-operatives.  The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

British Columbia

The requirements and procedures for the incorporation and operation of cooperative associations in British Columbia are laid out in the Cooperative Association Act, SBC, 1999, Chapter 28, which governs all types of cooperative associations in British Columbia except credit unions.

The province's current Cooperative Association Act (the Act) was assented to in 1999. The Act provides for the registration, incorporation and inspection of enterprises whose primary purpose is to provide services to member/owners on a cooperative basis. It is broad, inclusive legislation which lays out the regulations and procedures regarding how cooperative associations are incorporated / registered and operate in this province.

An organization must be incorporated under the Act , in order to be called a cooperative association. The key minimum legal requirements to incorporate and operate as a cooperative association in British Columbia include the following:

• The membership in the association is open in a non-discriminatory manner to persons who can use the services of the association and are willing and able to accept the responsibilities of membership.
• Subject to sections 40(3) and (4), 42(1) and 45, each member or delegate has one vote.
• Members contribute to the capital of the association.
• The members receive limited or no return on capital subscribed to as a condition of membership.
• Education is provided on the principles and techniques of cooperative enterprise.
• Any surpluses that are generated may be used to establish reserves, to develop the association, to provide or improve services to members, to pay dividends and for distribution to members in proportion to patronage.
• The surpluses may also be used for community welfare or the propagation of cooperative enterprise.

• Any 3 or more persons and/or eligible organizations (government, a first nation, a corporation) may form an association.
• Before completing the incorporation documentation, the subscribers must request a name approval for the association and have it approved by BC Registry Services.
• Once the name is approved, the subscriber must submit to the Registrar the association's memorandum of association, the rules of the association, list of first directors, notice of registered office and incorporation fees.
• Refer to section 12 of the British Columbia Cooperative Association Act for memorandum requirements. The memorandum of association must contain:
  • Full name of the association.
  • Purpose of the association.
  • Every restriction, if any, on the business to be carried on by the association or on the powers of the association.
  • A detailed listing of the number and classes of shares the cooperative is authorized to issue (called the authorized share capital).
  • The number, class and par value, if applicable, of shares subscribed for by the subscribers.
  • The terms of the disposition of property on the association's dissolution.
  • The names and address of the subscribers and the details of their share purchases.
  • A statement that the liability of the members or investment shareholders is limited in accordance with the Act.
• For additional requirements for the memorandum of association and the rules of the association, follow the link to the online incorporation guide.

• The association determines by its rules the requirements for membership.
• The rules can allow those under 19 years of age who are at least 16 years of age to be eligible for membership.
• The rules can set out the terms and conditions for different classes of membership.
• The association must keep a share register which records the details of all members and investment shareholders. This includes the name and address, the date of their acceptance into membership or their purchase of investment shares and the date they cease to be members or sell their investment shares.
• The association must also keep a record of the number of shares and the amount paid for the shares for each member and each investment shareholder.
• Joint memberships are allowed; such a membership has a single vote unless the rules allow for each of the joint members to have a vote. 
• Members may voluntarily withdraw from the association by following the terms and conditions set out in the rules.
• A person's membership may also be terminated by the board of directors as set out in the rules which must be in conformity with Sections 34 or 35 of the Act.
• A member may appeal their termination of membership as provided for in Section 37 of the Act.

• An association must issue a single class of membership shares which can be with or without par value, regardless of whether or not the association has more than one class of membership.
• Membership shares with par value may only receive a dividend in proportion to the amount paid up on them.
• The dividend on membership shares is limited to 8% or a higher amount as set out in the association's rules.
• An association can issue one or more classes of investment shares either restricted to members or available to members and non-members. These shares can be with or without par value.
• All member capital and investment shares can only be redeemed by the association should the redemption not imperil the financial viability of the co-operative as set out in Section 66 of the Act.

• A minimum of three directors is required.
• To be eligible for the board of directors an individual must be at least 18 years of age.
• The majority of directors must be Canadian residents and at least one must ordinarily reside in British Columbia.
• The rules may set out the other qualifications for directors.
• The rule may provide for up to 20% of its directors to be non-members.
• The number of directors, terms and the election of directors are provided for within the rules.
• The rules may provide for the terms and conditions on which investment shareholders may elect a director(s).

There are special provisions in Part 11 of the Act for the following types of co-operatives:

• Division 1- Housing Cooperatives
• Division 2 - Certain Producer Associations (Cooperative Marketing)
• Division 3 - Community Service Cooperatives

Resources and Support

 

The requirements for incorporation, outlined in the Act, are administered by the BC Registry Services.

To assist with incorporation, BC Registry Services provides an online Guide, Incorporating a Cooperative Association in British Columbia which includes the requirements for the memorandum of association, rules of the association (commonly called by-laws in other jurisdictions), name search and other information. The Cooperative Association Act, Regulations (new link) and the Extraprovincial Associations and Corporations from a Designated Province Regulation are available online.

Once the association has satisfied the requirements, the Registrar issues a Certificate of Incorporation.

BC Registry Services
200 - 940 Blanshard Street
Victoria, British Columbia
V8W 3E6
Telephone: (Toll Free) 1-877-526-1526

Mailing address for Incorporation Documents:
Corporate Registry
P.O. Box 9431 Stn Prov Govt
Victoria, British Columbia
V8W 9V3

The following provincial organization can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in British Columbia. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

BC Co-operative Association
1737 West 3rd Avenue, Suite 212
Vancouver, British Columbia
V6J 1K7
Telephone: 604-662-3906 
Fax: 604-662-3968
Email: general@bcca.coop

This guide provides general information on co-operatives. The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

British Columbia

The requirements and procedures for the incorporation and operation of cooperative associations in British Columbia are laid out in the Cooperative Association Act, SBC, 1999, Chapter 28, which governs all types of cooperative associations in British Columbia except credit unions.

The province's current Cooperative Association Act (the Act) was assented to in 1999. The Act provides for the registration, incorporation and inspection of enterprises whose primary purpose is to provide services to member/owners on a cooperative basis. It is broad, inclusive legislation which lays out the regulations and procedures regarding how cooperative associations are incorporated / registered and operate in this province.

An organization must be incorporated under the Act , in order to be called a cooperative association. The key minimum legal requirements to incorporate and operate as a cooperative association in British Columbia include the following:

• The membership in the association is open in a non-discriminatory manner to persons who can use the services of the association and are willing and able to accept the responsibilities of membership.
• Subject to sections 40(3) and (4), 42(1) and 45, each member or delegate has one vote.
• Members contribute to the capital of the association.
• The members receive limited or no return on capital subscribed to as a condition of membership.
• Education is provided on the principles and techniques of cooperative enterprise.
• Any surpluses that are generated may be used to establish reserves, to develop the association, to provide or improve services to members, to pay dividends and for distribution to members in proportion to patronage.
• The surpluses may also be used for community welfare or the propagation of cooperative enterprise.

• Any 3 or more persons and/or eligible organizations (government, a first nation, a corporation) may form an association.
• Before completing the incorporation documentation, the subscribers must request a name approval for the association and have it approved by BC Registry Services.
• Once the name is approved, the subscriber must submit to the Registrar the association's memorandum of association, the rules of the association, list of first directors, notice of registered office and incorporation fees.
• Refer to section 12 of the British Columbia Cooperative Association Act for memorandum requirements. The memorandum of association must contain:
  • Full name of the association.
  • Purpose of the association.
  • Every restriction, if any, on the business to be carried on by the association or on the powers of the association.
  • A detailed listing of the number and classes of shares the cooperative is authorized to issue (called the authorized share capital).
  • The number, class and par value, if applicable, of shares subscribed for by the subscribers.
  • The terms of the disposition of property on the association's dissolution.
  • The names and address of the subscribers and the details of their share purchases.
  • A statement that the liability of the members or investment shareholders is limited in accordance with the Act.
• For additional requirements for the memorandum of association and the rules of the association, follow the link to the online incorporation guide.

• The association determines by its rules the requirements for membership.
• The rules can allow those under 19 years of age who are at least 16 years of age to be eligible for membership.
• The rules can set out the terms and conditions for different classes of membership.
• The association must keep a share register which records the details of all members and investment shareholders. This includes the name and address, the date of their acceptance into membership or their purchase of investment shares and the date they cease to be members or sell their investment shares.
• The association must also keep a record of the number of shares and the amount paid for the shares for each member and each investment shareholder.
• Joint memberships are allowed; such a membership has a single vote unless the rules allow for each of the joint members to have a vote.
• Members may voluntarily withdraw from the association by following the terms and conditions set out in the rules.
• A person's membership may also be terminated by the board of directors as set out in the rules which must be in conformity with Sections 34 or 35 of the Act.
• A member may appeal their termination of membership as provided for in Section 37 of the Act.

• An association must issue a single class of membership shares which can be with or without par value, regardless of whether or not the association has more than one class of membership.
• Membership shares with par value may only receive a dividend in proportion to the amount paid up on them.
• The dividend on membership shares is limited to 8% or a higher amount as set out in the association's rules.
• An association can issue one or more classes of investment shares either restricted to members or available to members and non-members. These shares can be with or without par value.
• All member capital and investment shares can only be redeemed by the association should the redemption not imperil the financial viability of the co-operative as set out in Section 66 of the Act.

• A minimum of three directors is required.
• To be eligible for the board of directors an individual must be at least 18 years of age.
• The majority of directors must be Canadian residents and at least one must ordinarily reside in British Columbia.
• The rules may set out the other qualifications for directors.
• The rule may provide for up to 20% of its directors to be non-members.
• The number of directors, terms and the election of directors are provided for within the rules.
• The rules may provide for the terms and conditions on which investment shareholders may elect a director(s).

There are special provisions in Part 11 of the Act for the following types of co-operatives:

• Division 1- Housing Cooperatives
• Division 2 - Certain Producer Associations (Cooperative Marketing)
• Division 3 - Community Service Cooperatives

Resources and Support

 

The requirements for incorporation, outlined in the Act, are administered by the BC Registry Services.

To assist with incorporation, BC Registry Services provides an online Guide, Incorporating a cooperative association in British Columbia which includes the requirements for the memorandum of association, rules of the association (commonly called by-laws in other jurisdictions), name search and other information. The Cooperative Association Act, Regulations and the Extraprovincial Associations and Corporations from a Designated Province Regulation are available online.

Once the association has satisfied the requirements, the Registrar issues a Certificate of Incorporation.

BC Registry Services
200 - 940 Blanshard Street
Victoria, British Columbia
V8W 3E6
Telephone: (Toll Free) 1-877-526-1526

Mailing address for Incorporation Documents:
Corporate Registry
P.O. Box 9431 Stn Prov Govt
Victoria, British Columbia
V8W 9V3

The following provincial organization can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in British Columbia. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

BC Co-operative Association
1737 West 3rd Avenue, Suite 212
Vancouver, British Columbia
V6J 1K7
Telephone: 604-662-3906 
Fax: 604-662-3968
Email: general@bcca.coop

This guide provides general information on co-operatives. The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Alberta

The requirements and procedures for the incorporation and operation of co-operatives in Alberta are laid out in the Cooperatives Act, SA, 2001, Chapter C-28.1, which governs all types of co-operatives in Alberta except utility co-operatives and credit unions.

This province's current Cooperatives Act was declared in 2001. The Act provides for the incorporation, inspection and supervision of enterprises whose primary purpose is to provide services to member/owners on a co-operative basis and whose gains are distributed to members in proportion to their patronage of the co-operative.

An organization must be incorporated under the Cooperatives Act of 2001, in order to be called a co-operative.  The key minimum legal requirements to incorporate and operate as a co-operative in Alberta include the following:

• Membership is available to persons who can use the co-operative's services and accept the responsibilities of membership.
• Restrictions on membership may be set out in the articles as long as the restrictions are consistent with applicable laws and with human rights.
• Each member or delegate has only one vote at a members' meeting.
• A member must cast the vote themselves as there is no proxy voting (voting by another person on your behalf).
• To the extent feasible, members provide the capital required by the co-operative.
• The interest or dividends on loan or share capital does not exceed the rate prescribed by the co-operative's articles.
• Any surpluses that are generated are used to create reserves, to pay interest or dividends on member loans or shares, and for distribution to members in proportion to patronage.
• The surpluses may also be used to develop the co-operative or improve its services; support the development of co-operative enterprises; as well as for donation for the general community's benefit.
• The cooperative provides education on the principles of co-operation.

• Any three or more persons of at least 18 years of age, or one or more co-operatives, may form a co-operative either with or without share capital.
• The incorporators must submit to the Director of Co-operatives the articles of incorporation and a statutory declaration that the co-operative will operate on a co-operative basis and conform to the specific requirements for various types of co-operatives in conformity with Part 18 of the Act, verified by an affidavit of execution.
• A NUANS name search report confirming the availability of the proposed name must also be submitted.
• The articles of incorporation must state, among other particulars, the following:
  • The name of the co-operative and the address of the registered office.
  • Any restriction on class of membership.
  • Whether it is incorporated with or without share capital.
  • If with share capital, the limit on the number of shares issued if any, whether they are with or without par value, and if without par value, then other particulars.
  • The maximum rate of return which may be paid on member shares and loans.
  • Whether the co-operative will issue investment shares, and if so their terms and conditions.
  • For additional requirements, please see Section 5 of the Act.
• On approval by the Director of Co-operatives of the articles and accompanying documents, the Director shall register the co-operative and issue a certificate of incorporation.

• The co-op determines within its bylaws the requirements for membership.
• Application for membership is made to the board of directors.
• The bylaws may provide for joint memberships for two or more persons.
• An individual less than 18 years of age may be a member and have voting rights, unless the by-laws state otherwise.
• The co-op must keep a share register which records the details of all members. This includes the name and address of each member.
• The co-op must also keep a record for each member of their shares or member loans.
• Members may voluntarily withdraw from the co-op or have their membership terminated according to the terms and conditions set out in the bylaws.
• A person's membership which is terminated by the board of directors may appeal the termination as provided for in Sections 39 and 40 of the Act.

• A co-operative can secure members' capital as either co-op shares or member loans.
• Member shares may be either par or non-par value shares.
• A co-operative may also issue investment shares which must be without par value and whose terms and conditions are set out in the articles.
• Investment shares may be restricted to members or open to both members and non-members as stated in the articles.
• Any maximum annual interest and dividends on members' loans and shares is set out in the articles.
• All member and investment shares can only be redeemed by the co-op should the redemption not imperil the financial viability of the co-operative as set out in Section 131 of the Act.

• A co-operative must have at least three directors, or any higher minimum number that is set out in the articles.
• To be eligible for the board of directors the Act requires a person to be an individual who is at least 18 years of age, of sound mind and not have the status of a bankrupt.
• The majority must be Canadian residents.
• At least two-thirds of directors must be members of the co-operative.
• The bylaws provide for the election and terms as well as other qualifications for directors.
• In a worker co-operative, 80% of the directors must be members and permanent employees or contractors of the co-op.
• If provided for in the articles, investment shareholders may elect up to 20% of the directors.

Part 18 of the Act prescribes special provisions for the following types of co-operatives.

• Division 1 – Housing Co-operatives
• Division 2 – Employment Co-operatives
• Division 3 – Multi-stakeholder Co-operatives
• Division 4 – New Generation Co-operatives

Other

Rural utility co-operatives are incorporated under the Rural Utilities Act, RSA, 2000 Chapter R-21. Some co-operatives such as United Farmers of Alberta are governed by their own Acts.

Resources and Support

 

The requirements for incorporation, outlined in the Cooperatives Act, are administered by the Director of Co-operatives, with Service Alberta.  To assist with incorporation, Service Alberta provides a website which includes the requirements for the articles of incorporation, name search and other information and Cooperatives Regulations. Once the co-operative has satisfied the requirements, the Director issues a certificate of incorporation.

Service Alberta
Director of Cooperatives
3C, Commerce Place
10155 - 102 Street
Edmonton, Alberta
T5J 4L4
Telephone: Edmonton 780-427-5210 (Toll free in Alberta), dial 310-0000
Email:  SA.Business Licensing

The following provincial organizations can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in Alberta. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Alberta Community and Co-operative Association
#202, 5013 – 48 Street
Stony Plain, Alberta
T7Z 1L8
Telephone: 780-963-3766
Fax: 780-968-6733

Le Conseil de développement économique de l'Alberta (French website)
Bureau 140, 8627, rue Marie-Anne-Gaboury
Edmonton, Alberta
T6C 3N1
Telephone: 780-414-6125
Fax: 780-414-2885

This guide provides general information on co-operatives.  The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Saskatchewan

The requirements and procedures for the incorporation and operation of co-operatives in Saskatchewan are laid out in The Co-operatives Act, SS, 1996, Chapter C-37.3, which governs all types of co-operatives in Saskatchewan except new generation co-operatives and credit unions.

This province's current Co-operatives Act was declared in 1996 and most recently amended in 2013. The Act provides for the registration, incorporation and inspection of enterprises whose primary purpose is to meet the social, cultural or economic needs of members or the community on a co-operative basis. It is broad, inclusive legislation which lays out the regulations and procedures regarding how co-operatives are registered and operate in this province.

An organization must be incorporated under the Co-operatives Act of 1996, in order to be called a co-operative.  The key minimum legal requirements to incorporate and operate as a co-operative in Saskatchewan include the following:

• Each member or delegate has only one vote at a members' meeting.
• A member must cast his or her own vote as there is no proxy voting (voting by another person on your behalf).
• The membership in the co-operative is voluntary and available, without artificial restriction or unlawful discrimination, to a person who can use its services and is willing to accept the responsibilities of membership.
• The business is carried on primarily for the benefit of members.
• The limit on the interest or dividends on loan or share capital does not exceed the prescribed rate.
• Any surpluses that are generated are used to develop the co-operative or improve its services and for distribution to members in proportion to patronage.
• The surpluses may also be used to educate members, employees and the general public in the principles of co-operation, as well as for donation for the general community's benefit.

• Any six or more persons 18 years or older may form a co-operative. However the registrar, where deemed appropriate, may allow two or more person to incorporate a co-operative.
• The incorporators must submit the co-operative's articles of incorporation and bylaws to the Registrar.
• The articles of incorporation must state:
  • The name of the co-operative and its objectives;
  • For a share-based co-operative, the classes of shares and the maximum number authorized, and for a non-share co-op that the interest of each member is the same as every other member;
  • The minimum and maximum number of directors;
  • A minimum of six people must be listed as first directors on the incorporation papers, and
  • Any restrictions applied to its business.
• The requirements for the bylaws are set out in Section 8 of the Act.

• The co-op determines by its bylaws the requirements for membership.
• The bylaws can set out the terms and conditions for different classes of membership.
• The co-op must keep a share register which records the details for all members. This includes the name and address, the date of their acceptance into membership and the date they cease to be members.
• The co-op must also keep a record for each member of their shares or member loans.
• Joint memberships are allowed and each person of the joint membership has the right to a vote although only one can sit as a director at any one time.
• Members may voluntarily withdraw from the co-op by following the terms and conditions set out in the bylaws.
• A person's membership may also be terminated by the board of directors or the members.
• A member may appeal the termination to the Registrar as provided for in section 123 of the Act and section 9 of the Regulations.

• A co-operative can secure members' capital as either common shares or member loans.
• The shares of a co-operative shall have a par value fixed by the articles.
• Dividends on common shares are limited to a rate that is less than the average of the rate paid by Credit Union Central of Saskatchewan (SaskCentral) for one-year term deposits as set out in Section 6 of the Regulations.
• A co-operative may also issue non-voting preferred shares whose terms and conditions are set out in the articles.
• All member capital and preferred shares can only be redeemed by the co-op should the redemption not imperil the financial viability of the co-operative as set out in Section 42 of the Act.

• To be eligible for the board of directors, the Act requires a person to be a member of the co-operative who is at least 18 years of age, of sound mind, and not have the status of a bankrupt.
• The majority of directors must be Canadian residents.
• The bylaws may set out other qualifications for directors. 
• A minimum of five directors is required for any co-operative unless otherwise approved by the registrar.
• The number of directors, terms and the election of directors are provided for within the bylaws.
• No more than one-third of the directors may be employees of the co-op unless otherwise approved by the registrar, although the majority of the directors of an employment co-operative may be employees.
• Preferred shareholders may not elect a director unless the co-operative is in default of the terms and conditions of the share issue.

There are special provisions in the Act for the following types of co-operatives:

• Consumer Co-operatives Part XXI
• Community Service Co-operatives Part XXII
• Housing Co-operatives Part XXIII
• Employment Co-operatives Part XXIV
• Community Clinics Part XXV

New Generation co-operatives are incorporated under The New Generation Co-operatives Act.

Resources and Support

 

Saskatchewan has recently undergone a transition with respect to the way in which the Corporate Registry has been administered. The Corporate Registry was initially transferred from the Ministry of Justice to Information Services Corporation (ISC) on October 1, 2010. At the time, ISC was the provincial Crown corporation responsible for land titles, vital statistics, personal property, surveys and related geographic information.

On May 31, 2013, ISC was privatized. Consequently, the Office of Public Registry Administration (OPRA) was established in the Ministry of Justice. OPRA has oversight and responsibility for the Corporate Registry while ISC, as a Saskatchewan business corporation, acts as the service provider for the management and operation of the Corporate Registry.

Accordingly, the requirements for the incorporation of co-operatives, outlined in the Act, are handled by Information Services Corporation. Once the co-operative has satisfied the requirements, the Registrar issues a certificate of incorporation.  Both The Co-operatives Act, 1996 and The Co-operatives Regulations, 1998 [PDF document] are available online.

Office of the Public Registry Administration
(oversight/responsibility for Corporate Registry)
Registrar of Co-operatives
1110 – 1874 Scarth Street  
Regina, Saskatchewan
S4P 4B3
Telephone: 306-798-1202
Fax: 306-787-5830    
Email:  corporateregistry@isc.ca

Information Services Corporation  
(manages and operates the Corporate Registry)
Corporate Registry
1301 1st Avenue
Regina, Saskatchewan
S4R 8H2
Telephone: 306-787-2962
Fax: 306-787-8999

The following provincial organizations can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in Saskatchewan.  In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Saskatchewan Co-operative Association
1515 20th Street West
Saskatoon, Saskatchewan
S7M 0Z5
Telephone:  306-244-3702
Fax: 306-244-2165
Email: sca@sask.coop

le Conseil de la Coopération de la Saskatchewan
1440, 9 Avenue North, Suite 205
Regina, Saskatchewan
S4R 8B1
Telephone: 306-566-6000
Fax: 306-757-4322
Email: info@ccs-sk.ca

This guide provides general information on co-operatives. The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Manitoba

The Cooperatives Act(C.C.S.M. c. C223) and the Cooperatives Regulation govern the incorporation and operation of all types of cooperatives (with or without share capital), except for credit unions.

The Act establishes the rules for incorporation, adoption of by-laws, structure of capital (member shares, investment shares, patronage shares and loan capital), overissue, payment of interest or dividends, membership terms and conditions, holding of board meetings (annual or special), composition and operation of the board of directors, and form and content of records to be kept (articles, by-laws, etc). The Act sets out requirements for the audit and filing of financial statements. It also defines the terms and conditions governing the amalgamation, liquidation and dissolution of a cooperative.

A cooperative is organized and operated, and carries on business, on a cooperative basis if:

• Membership in the cooperative is open, without discrimination, to people who may use its services.
• Each member or delegate has only one vote.
• No member may vote by proxy unless stipulated otherwise in the by-laws.
• If two or more people are joint members, either co-member may exercise the right to vote. If several co-members attend a meeting, they vote as a single member.
• Interest on member loans and patronage loans is limited by the articles of incorporation (maximum percentage fixed in the by-laws).
• Dividends on member shares are limited by the articles of incorporation (maximum percentage fixed in the by-laws).
• The members provide, insofar as possible, the capital the cooperative needs.
• An operating surplus may be used to expand the cooperative's business, deliver or improve common services for members, establish a reserve fund, pay interest on loans to members or dividends on share capital, promote collective wellbeing or the expansion of cooperative businesses, or pay returns to members according to the volume of business they carry on with the cooperative.
• The cooperative makes members, managers, employees and the public aware of the principles and techniques of a cooperative.

• Any group of at least three people aged 18 or older and who are not bankrupt, any group of at least two corporations, and any cooperative entity may apply to incorporate a cooperative.
• The articles of incorporation must include the following information: the name of the cooperative, the planned location of its registered office, the type of cooperative in question, restrictions to the cooperative's business, a statement to the effect that the cooperative will be organized and operated and will carry on its business on a cooperative basis, and the provisions for the distribution of the cooperative's assets upon dissolution.
• The articles of incorporation must also indicate the existence or absence of share capital and, if there is no share capital, a declaration stating that the members all have the same rights.
• There must be a minimum of three directors.

• Cooperative members must be at least 16 years old.
• In its articles, the cooperative sets out membership restrictions or conditions.
• The cooperative's by-laws must stipulate the obligations of members, including the obligation to use the cooperative's services and membership fees.
• A written membership application must be submitted and approved by resolution of the board of directors or by someone who, by resolution, is authorized to approve membership applications.
• To become a member, the person must have purchased the minimum number of member shares or paid for the membership fee established in the by-laws and must comply with all other prescribed membership terms and conditions.

• The cooperative may issue member and investment shares.
• The share number (limited or unlimited), categories and characteristics (par value, rights, privileges, restrictions and redemption terms and conditions) must be set out in the articles of incorporation.
• Investment shares may be issued to non-members if the articles provide for it.
• The cooperative may create one or more categories of shares that can be issued only if, by virtue of a by-law, returns are used to purchase shares.
• The cooperative may borrow from its members (loan capital). The amounts, repayment deadlines and, where applicable, interest on these loans must be established in the articles of incorporation.
• Interest rates or rates of return on shares must be set out in the articles, subject to the maximum rate of return established in the by-laws.
• Shares may be reimbursed except if the payment could make the cooperative insolvent.

• The minimum or maximum number of directors must be indicated in the articles of incorporation. It must never be fewer than three.
• Persons under the age of 18 may not be directors or managers of the cooperative.
• The majority of the board of directors must be individuals who are not full-time managers or employees, except in the case of worker cooperatives.
• The majority of the board of directors must be made up of Canadian residents.
• Up to 20% of the board may be made up of non-members.

• The Cooperatives Act includes special provisions applicable to specific cooperatives: housing cooperatives, worker cooperatives and multi-stakeholder cooperatives.

Resources and Support

 

Co-operative Development Services, a branch of Housing and Community Development, provides services and programs for cooperatives. Financial aid programs are provided by the Co-operative Loans and Loans Guarantee Board and the Cooperative Promotion Board.

The Financial Institutions Regulation Branch provides online forms for cooperatives (in French and English) and model by-laws. The Registrar of Cooperatives is responsible for incorporating cooperatives and ensures compliance with the Act and Regulation. It may approve, amend or reject the articles of incorporation and by-laws in whole or in part.

The following steps are required to incorporate a cooperative:

• Choose a name. The name must be approved by the Registrar of Cooperatives.
• Draft the articles of incorporation and include the founders' names and addresses. The articles must be signed by all the founders.
• Include as an appendix to the articles of incorporation, in the format approved by the Registrar, the consent of each first director who is not a founder.
• Send to the Registrar two copies of the articles of incorporation and the required fee.

Registrar of Cooperatives

Financial Institutions Regulation Branch
405 Broadway, Suite 1115
Winnipeg, Manitoba
R3C 3L6
Telephone: 204-945-4466 or (Toll-free) 1-800-282-8069
Email: coop-cu@gov.mb.ca

Housing and Community Development Manitoba
Co-operative Development Services
352 Donald Street, 4th Floor
Winnipeg, Manitoba
R3B 2H8
Telephone: 204-945-3379 (Toll-free) 1-866-479-6155
Fax: 204-948-1065
Email: co-ops@gov.mb.ca

The following provincial organization can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in Manitoba.   In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Conseil de développement économique des municipalités bilingues du Manitoba (CDEM)
614 Des Meurons Street, Suite 200
Winnipeg, Manitoba
R2H 2P9
Telephone: 204-925-2320 (Toll-free) 1-800-990-2332
Fax: 204-237-4618

Manitoba Co-operative Association Inc (MCA)
317 Donald Street, Suite 400
Winnipeg, Manitoba
R3B 2H6
Telephone: 204-989-5930
Fax: 204-885-8515
Email: info@manitoba.coop

This guide provides general information on co-operatives.  The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Ontario

The Co-operative Corporations Act (R.S.O. 1990, Chapter C.35) and its Regulation (R.R.O. 1990, Regulation 178) govern the incorporation, operation and liquidation of all types of co-operatives (with share capital or without share capital), with the exception of caisse populaires.

The Act establishes rules for the incorporation and naming of co-operatives (exclusive use of the word “cooperative” or “co-operative”), as well as the adoption of by-laws, composition of capital (common shares, preference shares, loan capital), distribution of surplus, payment of dividends, determination of member status (membership, rights and responsibilities), holding of meetings (annual or general), composition and operation of the board of directors, and form and content of records to be kept (articles of incorporation, by-laws, register of transfers, list of members and security holders, etc.). The Act sets out requirements for the audit and filing of financial statements and for the maintenance of co-operative status. It also defines the terms and conditions governing the amalgamation or dissolution of a co-operative (for liquidation, see the Business Corporations Act).

Apart from the legal obligation to conduct at least half of its business with members, the Act does not regulate the co-operative's day-to-day operations or the by-laws adopted by its members.

“Co-operative means a corporation carrying on an enterprise on a co-operative basis.”

• Each member has only one vote, regardless of the member's investment in the co-operative.
• No member may vote by proxy.
• Interest on loan capital and dividends on share capital are limited to a percentage fixed by the Act or the articles of incorporation.
• The enterprise must be operated as nearly as possible at cost after providing for reasonable reserves and the payment or crediting of interest on loan capital or dividends on share capital.
• Surplus funds may be used to maintain or improve services to members or donated for community welfare, or distributed among the members.
• When a portion of the surplus funds are distributed among the members, this is done in proportion to the volume of business each member has done with the organization, with the exception of renewable energy co-operatives, for which funds are distributed “in accordance with the by-laws of the co-operative.”  

• At least five individuals (three for worker co-operatives) wishing to become members of the co-operative must sign the articles of incorporation.
• They must be at least 18 years of age.
• The articles of incorporation must indicate: the name of the co-operative, the restrictions imposed on the activities and authorities that the co-operative may exercise, the location and full address of the co-operative's head office, the number of directors or the minimum number and maximum number of directors of the co-operative, as well as the first and last names and personal addresses of the first directors and the first and last names and personal addresses of each of the incorporators.
• For co-operatives with share capital, the articles of incorporation must state the authorized capital (classes of shares, number of shares of each class and par value of each share) and the features of the preference shares, if applicable (designations, preferences, rights, conditions, etc.).
• For co-operatives without share capital, the articles of incorporation must state the amount of the membership fee, the amount of a minimum member loan, the restrictions on the transfer of member loans and any conditions if there are classes of membership.
• There must be at least three directors.

• Individuals (aged 16 or more) and non-profit corporations or business corporations may be members of co-operatives.
• To become a member, an application for membership must be made to the board of directors.
• Members must agree to comply with the by-laws and conditions of membership.
• The articles of incorporation may provide for a number of classes of membership with the designation of and terms and conditions attaching to each class.
• Shares may be held jointly, but all joint shareholders present at a meeting share a single vote.

• The co-operative may issue two basic types of shares: common shares and preference shares. 
• Shares are of par value ($1 or any multiple of $1).
• Preference shares may be held by members and non-members.
• A co-operative may not redeem shares if it is insolvent or if the redemption would render the co-operative insolvent.
• The capital of co-operatives without share capital may be in the form of loans from members, known as member loans.

• Directors must be at least 18 years of age.
• No undischarged bankrupt or person who is incapable of managing property within the meaning of the Substitute Decisions Act, 1992 can be a director of the co-operative.
• The majority of directors must be Canadian residents.
• Directors must be members of the co-operative or directors, officers, shareholders or members of a corporate member.
• The by-laws of a co-operative, other than a non-profit housing co-operative, may provide for the appointment or election of directors who are non-members (the number must not exceed one-fifth of the total number of directors).

• The Co-operative Corporations Act has specific provisions that apply to certain co-operatives: non-profit housing co-operatives, worker co-operatives, multi-stakeholder co-operatives and renewable energy co-operatives. 

• Except for worker co-operatives, non-profit housing co-operatives and renewable energy
  co-operatives, each co-operative must conduct at least 50 percent of its business with members.

Resources and Support

 

The Financial Services Commission of Ontario (FSCO) registers organizations conducting business as a co-operative under the Co-operative Corporations Act. A number of publications and forms for establishing a co-operative corporation are available on the FSCO's website.  

FSCO issues certificates of incorporation for co-operative corporations with or without share capital. When required, it reviews prospectuses for the sale of a co-operative's securities (common and preference shares, member loans, obligations, debentures and other debt securities) before issuing a receipt for the sale of the securities.

The following must be done in order to incorporate a co-operative:

• Perform a name search (NUANS report) to ensure that the name chosen for the co-operative is not the same as, or similar to, that of another business, and send the FSCO the original copy of the report as proof of the search, along with the fees for reserving the selected name.
• Send the FSCO two copies of the articles of incorporation (Form 1: Articles of Incorporation for a Co-operative With Share Capital, or Form 2: Articles of Incorporation for a Co-operative Without Share Capital) bearing the applicants' original signatures, along with the incorporation fees.
• If the co-operative has directors who are not incorporators, Form 3: Consent to Act as a First Director must also be provided.

After receiving its certificate of incorporation, the co-operative has 60 days to register with the Ministry of Government Services by filling out an Initial Notice (007-07200) form.

Licensing and Market Conduct Division
Financial Services Commission of Ontario
5160 Yonge Street 
Box 85, 4th Floor 
Toronto, ON
M2N 6L9
Telephone: 416-250-7250 or (Toll-free) 1-800-668-0128 
Fax: 416-226-7838
Email: contactcentre@fsco.gov.on.ca

The following provincial organization can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in Ontario.  In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Conseil de la coopération de l'Ontario (French website)
Head Office – Eastern Region Office
435 St. Laurent Blvd., Suite 201
Ottawa, Ontario
K1K 2Z8
Telephone: 613-745-8619 or (Toll-free) 1-866-290-1168
Fax: 613-745-4649
Email: info@cco.coop

Northern Region Office
10 Elm Street, Suite 604
Sudbury, Ontario P3C 1S8
Telephone: 705-560-1121 
Email: info@cco.coop

Toronto Office
192 Spadina Avenue, Office 212
Toronto, Ontario, M5T 2C2
Telephone: 416-364-4545
Email : info@cco.coop

Ontario Co-operative Association
450 Speedvale Avenue West, Suite 101
Guelph, Ontario N1H 7Y6
Telephone: 519-763-8271(Toll-free) 1-888-745-5521 (within North American Only)
Fax: 519-763-7239
Email: info@ontario.coop

This guide provides general information on co-operatives.  The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Quebec

The Cooperatives Act (RSQ, c. C-67.2) and the Regulation under the Cooperatives Act (c. C-67.2, r.1) govern the incorporation, operation and liquidation of non-financial cooperatives.

The Cooperatives Act defines the rules related to the incorporation of cooperatives, composition of share capital, definition of the status of members, holding of meetings (annual, special or meetings of investment shareholders), composition and operation of the board of directors, and form and content of by-laws that the cooperative must adopt (first by-law, by-laws covering internal governance, loans and securities, etc). The Act sets out the records to be kept, audit requirements and the method for distributing an operating surplus or surplus earnings. It also defines the terms and conditions governing the amalgamation, liquidation and dissolution of a cooperative. Finally, the Act contains provisions applicable to federations and confederations of cooperatives.

The Regulation under the Cooperatives Act includes provisions concerning the name of the cooperative, the form and content of financial statements, audit, operations with members (at least 50% of total operations) and the calculation method for the various cooperative categories and prescribed rights.

“A cooperative is a legal person in which persons or partnerships having economic, social and cultural needs in common unite for the prosecution of an enterprise according to the rules of cooperative action to meet those needs.”

• The members must use the services of the cooperative, except for supporting members in solidarity cooperatives.
• Members have only one vote regardless of how many shares they own.
• No member may vote by proxy.
• Payment of interest on capital is limited.
• The cooperative must establish a reserve (which cannot be shared upon dissolution).
• Operating surpluses and surplus earnings may be paid into the reserve, to the members according to the operations between the member and the cooperative, or to other accessory purposes determined by law.
• The cooperative must promote the training of members, directors, managers and employees in cooperation.
• Cooperation must be promoted among the members and between cooperatives (inter-cooperation).
• The cooperative must support community development.

• Five founders (three in the case of a work cooperative) are needed to apply to incorporate a cooperative.
• Minors may found cooperatives if the purpose concerns them. They are deemed to be of majority age if they are at least 14 years old.
• A cooperative's articles of constitution must include the name of the cooperative, its purpose, the names and addresses of the founders and their signatures.
• The articles of a cooperative may include a clause prohibiting the allotment of rebates and the payment of interest on any category of preferred shares.
• A cooperative with less than 25 members can decide not to elect directors for a one-year period if it receives the consent of 90% of its members (agreement on administration by the meeting of the members).

• A person or corporation must be capable of actually being a user of the cooperative's services.
• Prospective members must apply for membership to the board of directors (except for the founders). The status of member is bestowed by the board of directors.
• Members must subscribe and pay for the required qualifying shares (common shares or common and preferred shares) in accordance with the by-laws.
• The cooperative may, by by-law, provide for one or more categories of auxiliary members who may not vote and are not eligible to hold any office.
• A member may resign by submitting a 30-day written notice to the board of directors.
• The board of directors may suspend or expel members if they are not capable of actually being users of the cooperative or fail to comply with the terms and conditions of the by-laws.

• Share capital is made up of common shares, preferred shares and, occasionally, participating preferred shares.
• Common shares are registered and the par value is established at $10 (no interest is paid on common shares).
• The board of directors may issue preferred shares in accordance with the by-laws and determines the characteristics of the shares: the amount of the shares, the preferences, rights and restrictions, and the conditions governing the redemption, repayment or transfer of the shares (obligation to own the shares for three years).
• The board may issue participating preferred shares if permitted by by-law. These shares are issued only to non-member persons or corporations or auxiliary members of the cooperative.
• Shares may not be repaid or redeemed if this threatens the solvency or financial stability of the cooperative (the board must demonstrate this).

• The minimum number of directors is three and the maximum is fifteen (set out in the by-laws).
• Any member or representative of a corporation may be a member of the board.
• Employees may not be elected as directors (except in the case of a work cooperative, a shareholding workers cooperative or a solidarity cooperative consisting of members who are workers of the cooperative).
• A non-member whose application has been recommended by the board of directors may be eligible for a director position (the number of positions may not exceed a third of the total number of director positions).

• The Cooperatives Act includes special provisions applicable to certain cooperatives: agricultural cooperatives, housing cooperatives, students' cooperatives, worker cooperatives, worker shareholder cooperatives and solidarity cooperatives.

Resources and Support

Through the Cooperative Development Directorate, the Department of Finance and Economy (MFE) administers the Cooperatives Act (RSQ, c. C-67.2) and the Regulation under the Cooperatives Act. It also manages the Entente de partenariat relative au développement des coopératives and two fiscal measures: the Régime d'investissement coopératif (RIC) and Ristourne à impôt différé (RID).  Cooperatives have access to IMPLIQ Financing administered by Investissement Québec.

The website of the Direction du développement des coopératives (French website) includes the various forms needed to incorporate cooperatives and other relevant information, including “Outils COOP” tools, which provide details on the incorporation, organization and operation of the different types of cooperatives.

To apply for incorporation, the following forms and applicable fee must be submitted:

• Articles of constitution of the cooperative, including the name of the cooperative, its purpose, the names and addresses of the founders and their signatures.
• Application and notice to accompany the articles of constitution: name and contact details of the provisional secretary, method for convening organization meetings and the address of the cooperative. The application must be signed by two founding members.
• Description of the planned cooperative. This form must be signed by a duly authorized founding member and the designated mandatary, where applicable.

When an application for constitution is received, the Minister notifies the Conseil de la coopération et de la mutualité du Québec (CQCM) (French website) and sends it copies of the articles and application. No later than 15 days after the copies are sent, or as soon as the Conseil responds to the notification, the Minister may, if deemed timely, constitute the cooperative.

Économie, Innovations et Exportations (French website)
Cooperative Development Directorate
710 Place D'Youville, 7th Floor
Quebec City, Quebec
G1R 4Y4
Telephone: 418-691-5978 (Toll-free) 1-866-680-1884

The following provincial organizations can provide you with additional co-operative information and support. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Conseil de la coopération et de la mutualité du Québec (CQCM) (French only)
5955, rue Saint-Laurent, bureau 204
Lévis, Quebec
G6V 3P5
Telephone: 418-835-3710
Fax: 418-835-6322
Email: info@coopquebec.coop

Coopératives de développement régional du Québec (French only)
1400, Avenue Saint-Jean-Baptiste, Suite 200
Québec City, Quebec
1 800 601-6954
info@cdrq.coop

This guide provides general information on co-operatives. The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

New Brunswick

The requirements and procedures for the incorporation and operation of non-financial co-operative associations in New Brunswick are set out in the Co-operative Associations Act (S.N.B. 1978, C-22.1) and the Co-operative Associations Regulation (New Brunswick Regulation 82-58).

The purpose of this Act is to provide for the incorporation, inspection, examination and supervision of associations operated on a co-operative basis. It specifies which types of co-operative associations may be incorporated: either an association with capital split up into shares, termed as “an association limited by shares”, or an association without capital split up into shares, termed as “an association limited by membership”. It includes provisions regarding democratic management (meetings, board of directors, sub-committees), the financial structure, membership terms and conditions, audit and procedures governing amalgamation, dissolution and liquidation. The contents of by-laws are described in the Co-operative Associations Regulation - Co-operative Associations Act.

A co-operative is an association of persons who have willingly associated themselves for the purpose of meeting their aspirations and common economic, social and cultural needs by establishing a shared enterprise with democratic control. A co-operative association operates on a co-operative basis as follows:

• Each member owns a least 1 share or, depending on the case, pays a membership fee.
• Members and delegates are entitled to only one vote regardless of the number of shares they own.
• No member may vote by proxy.
• Interest or dividends on share or loan capital are limited to a percentage established in the letters of incorporation or by-laws of the association. Interest or dividends are calculated on the amount paid.
• The association is operated as nearly as possible at cost after providing for reasonable reserves and the payment or crediting of interest or dividends on share or loan capital.
• The co-operative must have a “legal” reserve fund (5% of annual savings until this reserve fund is equal to 30% of paid-up share capital).
• Surpluses are paid into the reserve fund and distributed, where applicable, in whole or in part, among the members or among the members and clients of the association according to the volume of business they have carried on with or through the association.

• Any group of three people of majority age or group of three co-operatives may apply for incorporation.
• At least three directors are required for incorporation.
• The letters of incorporation must indicate the name of the association, which is to include the word “co-operative” and end in “limited” or its abbreviation “ltd", the purpose of the association, the limited nature of the members' responsibility, the names and addresses of each member, and the par value of each share or the amount of the membership fee.
• The applicants must also submit the association's by-laws.

• To be a member, a written membership application must be submitted to and approved by the board of directors, as set out in the by-laws.
• The applicant becomes a full member only after paying an instalment on the subscribed shares or on the membership fee, as the case may be.
• Only one of the joint holders of a share or membership may vote, according to how the joint holders decide. If one of the joint holders is elected a director, then that person exercises the vote.
• The board of directors may expel a member who fails to make the agreed payments.
• A member may resign in the manner prescribed by the by-laws and with the approval of the board of directors.

• The capital of an association limited by shares is composed of share capital, retained earnings including that segregated in reserves, loan capital and contributed surplus.
• The capital of an association limited by membership is the same as that for an association limited by shares, except that it has no share capital.
• Shares are issued at par value.
• The maximum number of shares that a member may hold is set out in the by-laws.
• Non-members may own shares when a member resigns, is expelled or dies if the shares could not be refunded because of the financial stability criterion in the Act.
• The board of directors is authorized to redeem shares at a price not exceeding par value or book value, whichever is less.
• The board of directors can suspend a refund if it would compromise the financial stability of the co-operative.

• The qualifications required to be a director are set out in the by-laws.
• The number of directors is established in the by-laws, but it should never be less than three directors with the required qualifications.
• Non-members are not allowed to hold a position on the board of directors.
• Members must be at least 16 years old to be able to hold a position and vote at meetings.

• None

Resources and Support

The Financial Institutions Division of the Financial and Consumer Services Commission is responsible for administering the Co-operative Associations Act through the Inspector of Co-operatives.  Forms for incorporating co-operative associations are available on the websites of Service New Brunswick and the Commission.

To incorporate an association, an application for letters of incorporation must be submitted to the Inspector of Co-operatives. The Inspector ensures that the documents comply with the provisions of the Act and issues the letters of incorporation attesting to the incorporation of the association.

The following steps are required to incorporate a cooperative:

• Search the name (NUANS report) to ensure that it is not identical or similar to the name of another business and submit the report.
• Submit two copies of an application for letters of incorporation. Form 1 is used for associations limited by shares and Form 2 is used for associations limited by membership.
• The application must include the objectives of the co-operative association, information about the applicants, the number of shares subscribed for, where applicable, and information about the provisional directors.
• Each copy must include original signatures. The applicants' signatures must be witnessed. The witness (es) and one of the applicants must sign a declaration.
• Submit the by-laws (two copies), which must be approved by the Inspector.
• Pay the required fees.

Financial and Consumer Services Commission
Financial Institutions Division
Kings Place
440 King Street, Room 637, Floor 6
Fredericton, New Brunswick
E3B 5H8
Telephone: 506-453-2315
Fax: 506-453-7474
Email: info@fcnb.ca

The following provincial organizations can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in New Brunswick. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Coopérative de développement régional-Acadie (CDR-Acadie) (French only)
220-212, St. Pierre Boulevard West
Caraquet, New Brunswick
E1W 1A5
Telephone: 506-727-6377
Fax: 1-866-264-6405
Email: info@cdracadie.ca

Co-operative Enterprise Council of New Brunswick (CECNB)
P.O. Box 1105
Salisbury, New Brunswick
E4J 3E2
Telephone: 506-227-9607
Email: info@cecnb.ca

This guide provides general information on co-operatives.  The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Nova Scotia

The requirements and procedures for the incorporation and operation of co-operatives in Nova Scotia are laid out in the Co-operative Associations Act, Chapter 98 R.S.N.S., 1989 which governs all types of co-operatives in Nova Scotia except credit unions.

The purpose of this Act is to provide for the incorporation, inspection, examination and supervision of co-operatives whose primary purpose is to provide services to its members and which belongs to the people who use the service, the control of which rests equally with all the members, and the gains from which are distributed among the members in proportion to their use of the co-operative services. The Act also provides for by-laws, withdrawal, exclusion, meetings of members, contracts, borrowing, distribution of earnings, audits, amalgamation, dissolution, liquidation and offences.

An organization must be incorporated under the Co-operative Associations Act of 1989, in order to be called a co-operative. The key minimum legal requirements to incorporate and operate as a co-operative in Nova Scotia include the following:

• Each member or delegate has only one vote at a members' meeting.
• Each member must cast his or her own vote as there is no proxy voting (voting by another person on your behalf).
• The interest or dividends on loan or share capital is limited to a fixed percentage of their dollar value in the articles of incorporation or bylaws.
• The operations of the enterprise are to be operated as nearly as possible at cost. Although this doesn't exclude generating surpluses, this makes it clear that ‘profit' is not the primary goal for a co-operative.
• Any surpluses that are generated are used to make provision for reserves and for the payment of dividends or interest on share or loan capital and for distribution to members in proportion to patronage.
• The surpluses may also be used to develop the co-operative or improve its services as well as for donation for the general community's benefit.

• Any three or more persons of the age or majority or two or more associations may form a co-operative, either with share capital or with a one-time or an annual membership fee.
• The articles of incorporation state the objectives of the co-op and that the liability of the members is limited to the amount of subscribed shares (i.e. the number of shares a member committed to purchase) or to the amount of membership fees which are payable to the co-op by the member.
• For co-operatives with share capital, the articles state the par value of shares and for a membership fee-based co-op, the amount of the annual or period membership fee.
• The co-operative can be incorporated as either a for-profit or not-for-profit co-op.

• The co-op determines within its bylaws the requirements for membership.
• All applications for membership must be approved by the board of directors.
• The co-op must keep a share register which records the details for all members. This includes the name and address, the date of their acceptance into membership and the date they cease to be members.
• The co-op must also keep a record for each member of their shares or member loans.
• Joint memberships are allowed although the joint membership includes only one vote.
• Members may voluntarily withdraw from the co-op.
• A person's membership may also be terminated by the board of directors if the member no longer meets the membership requirements. A member may appeal the termination as provided for in Section 29 of the Act.

• A co-operative can secure members' capital as either member shares or member loans.
• Non-share co-operatives are by definition limited to capital from member loans.
• A co-operative may also issue non-voting preferred shares whose terms and conditions are set out in the bylaws.
• All member capital and preferred shares can only be redeemed by the co-op should the redemption not imperil the financial viability of the co-operative—its capacity to meet its financial obligations to its creditors.

• To be eligible for the board of directors, a person must be a member of the co-operative.
• The co-operative may also state additional requirements within its bylaws.
• A minimum of three directors is required for any co-operative.
• The number of directors, terms and the election of directors is provided for within the bylaws.
• The Act prevents a co-op's employees from being members of the board of directors unless approved by the Inspector.

• None

Resources and Support

 

The requirements for incorporation, outlined in the Act, are administered by Service Nova Scotia and Municipal Relations, through the Co-operatives Administration Branch.

To assist with incorporation, the Nova Scotia Co-operatives Branch provides online templates for the articles of incorporation and bylaws for the various types of co-ops, i.e. share-based, membership fee, for profit and non-profit. For Profit Incorporation Template[PDF document] - Not-For-Profit Incorporation Template [PDF document].

Prior to incorporation a name search and name approval is required. The forms for the NUANS name search are available on the website of the Co-operatives Branch. Once the name is approved, the articles and bylaws are submitted to the Inspector of Co-operatives with the required fees. On approval by the Inspector of Co-operatives, the Registrar issues a certificate of incorporation to the co-op.

Co-operatives Administration
Service Nova Scotia and Municipal Relations
15 Alderbrook Drive
Truro Heights, Nova Scotia
B6L 0C4
Telephone: 902-893-6190
Fax: 902-893-6264
Email: nscoop@gov.ns.ca

The following provincial organizations can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in Nova Scotia. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Conseil Coopératif Acadien de la N.-É.
15122 Cabot Trail
P.O. Box 667
Cheticamp, Nova Scotia
B0E 1H0
Telephone: 902-224-2205
Email: coopacadien@ns.sympatico.ca

Nova Scotia Co-operative Council
P.O. Box 1872
347C Willow Street
Truro, Nova Scotia
B2N 6C7
Telephone: 902-893-8966
Fax: 902-895-0109
Email: info@novascotia.coop

This guide provides general information on co-operatives. The specific policies, regulations and laws are briefly explained and accurate as of August 2014. Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Prince Edward Island

The requirements and procedures for the incorporation and operation of co-operatives in Prince Edward Island are laid out in the Co-operative Associations Act, RSPEI 1988, Chapter C-23, which governs all types of co-operatives in PEI except credit unions.

The Act provides for the incorporation, examination, supervision and inspection of enterprises whose primary purpose is to provide services to member/owners on a co-operative basis and whose gains are distributed to members in proportion to their patronage of the co-operative.

An organization must be incorporated under the Co-operative Associations Act of 1988, in order to be called a co-operative. The key minimum legal requirements to incorporate and operate as a co-operative in Prince Edward Island include the following:

• Each member or delegate has only one vote at a members' meeting.
• A member must cast the vote in person as there is no proxy voting (voting by another person on your behalf).
• The operations of the enterprise are to be operated as nearly as possible at cost after providing for reasonable reserves and the payment of crediting of interest or dividends on share or loan capital.
• The interest or dividends on loan or share capital does not exceed the rate prescribed by the co-operative's articles or bylaws.
• Any surpluses that are generated are used to create a reserve, and for distribution to members in proportion to patronage. The surpluses may also be used to develop the co-operative or improve its services; to educate members, employees and the general public in the principles of co-operation; as well as for donation for the general community's benefit.

• Any three or more persons of the age or majority, or two or more associations, may form a co-operative either with share capital or with a one-time or an annual membership fee.
• If the co-operative to be formed is to provide housing, it requires a minimum of 5 persons to incorporate.
• The incorporators must submit to the inspector of co-operatives two copies of the articles of incorporation, two copies of the bylaws and the required fee.
• The articles of incorporation must state the name of the co-operative, its objectives, that the member's liability is limited, and the par value of shares. In a fee-based co-operative, the articles state, instead of the par value of shares, the amount of the annual or period fees.
• On approval by the inspector of co-operatives of the articles and bylaws, the registrar shall register the co-operative and issue a certificate of incorporation.

• The co-op determines within its bylaws the requirements for membership.
• A member may include a person, association, society, partnership, corporation or an institution.
• Application for membership is made to the board of directors.
• The co-op must keep a share register which records the details of all members. This includes the name and address, the date of their acceptance into membership and the date they cease to be members.
• The co-op must also keep a record for each member of their shares or member loans.
• Members may voluntarily withdraw from the co-op by following the terms and conditions set out in the bylaws.
• A person's membership may also be terminated by the board of directors. A member may appeal the termination as provided for in Section 27(2) of the Act.

• A co-operative can secure members' capital as either co-op shares or member loans.
• A co-operative may also issue preferred shares whose terms and conditions are set out in the bylaws.
• Maximum annual interest on shares is stated in the bylaws but must not exceed 9%.
• Share capital can only be redeemed at par value or book value whichever is the lesser amount.
• All member capital and preferred shares can only be redeemed by the co-op should the redemption not imperil the financial viability of the co-operative as set out in Section 27(1) of the Act.

• A minimum of three directors is required for any co-operative.
• The qualifications for directors are set out in the bylaws and Regulations.
• The number of directors, terms and the election of directors is provided for within the bylaws which must conform to the requirement of the Regulations that one third are elected each year, for terms of three years.
• Regulations also requires that a director can serve only two consecutive terms and then must have a least a one-year lapse before being re-elected.
• Employees of a co-operative with the exception of worker co-operatives may not be directors.

• There are special provisions for housing co-operatives, in Regulations 41-48.

Resources and Support

 

The requirements for incorporation, outlined in the Act, are administered by the Inspector/Registrar of Co-operatives, with Consumer, Labour and Financial Services. Please see below for contact information for the Inspector/Registrar and for the Corporations Officer and for organizations that can provide you with more specialized information about starting up your co-operative as well as general information on incorporating as a co-operative in Prince Edward Island.

To assist with incorporation, the Corporations Officer can provide samples for the bylaws and other information on the incorporation requirements. Once the co-operative has satisfied the requirements, the Registrar will issue a certificate of incorporation. The Act and Regulations can also be obtained online or through the following contacts.

Inspector and Registrar of Co-operatives
Katharine Tummon
Telephone: 902-368-4542
Fax:  902-368-5283
Email: kptummon@gov.pe.ca

Corporations Officer
Joan MacKay
Telephone: 902-368-4509
Fax: 902-368-5283
Email:  jmmackay@gov.pe.ca

Consumer, Labour and Financial Services
Fourth Floor, Shaw Building, South
95 Rochford Street
P.O. Box 2000
Charlottetown, Prince Edward Island
C1A 7N8
Telephone: 902-368-4550
Fax: 902-368-5283

Please see the section on Corporations for government staff who registers co-operatives.  There is no general government web site available regarding co-operatives.

The following provincial organizations can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in Prince Edward Island. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Prince Edward Island Co-operative Council
40 Enman Cresent, Suite A338
Charlottetown, Prince Edward Island
C1E 1E6
Telephone: 902-569-7322
Fax: 902-569-7337

Le Conseil de développement coopératif de l'Î.-P.-E. (French only)
C/o RDÉE Île-du-Prince-Édouard Inc.
48, chemin Mill, C.P. 7
Wellington, Prince Edward Island
C0B 2E0
Telephone: (902) 854-3439 (Toll Free) 866- 494-3439
Fax: (902) 854-3099

This guide provides general information on co-operatives. The specific policies, regulations and laws are briefly explained and accurate as of August 2014. Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.

---

Newfoundland and Labrador

The requirements and procedures for the incorporation and operation of co-operatives in Newfoundland and Labrador are laid out in the Co-operatives Act, SNL, 1998, Chapter C-35.1, which governs all types of co-operatives in Newfoundland and Labrador except credit unions.

This province's current Co-operatives Act was declared in 1998 and amended in 2001. The Act provides for the incorporation, registration and inspection of enterprises whose primary purpose is to provide services to member/owners on a co-operative basis. The Act also contains sections for by-laws, meetings of members, termination of directors or members, director disclosure, borrowing, allocation of surplus, audits, amalgamation, dissolution, and liquidation.

An organization must be incorporated under the Co-operatives Act in order to be called a co-operative. 

The Act defines ‘Co-operative Nature' as follows:

• Each member or delegate has only one vote at a members' meeting.
• A member must cast his or her own vote as there is no proxy voting.
• The business is carried on primarily for the benefit of members.
• The membership in the co-operative is voluntary and available, without artificial restriction or unlawful discrimination, to a person who can use its services and is willing to accept the responsibilities of membership.
• The limit on the interest or dividends on share capital does not exceed the rate prescribed by regulation or in the co-operative's bylaws.
• Any surpluses that are generated are used to eliminate a deficit, to create a reserve, and for distribution to members in proportion to patronage. The surpluses may also be used to develop the co-operative or improve its services; to educate members, employees and the general public in the principles of co-operation; as well as for donation for the general community's benefit.

• Any three or more persons nineteen years or older may form a co-operative.
• The articles of incorporation submitted to the Registrar must state the name of the co-operative, its objectives, place of business, its fiscal year, the minimum and maximum number of directors, and any restrictions applied to its business. The articles may also set out any provision which must be included in the co-operative's bylaws.
• For co-operatives with share capital, the par value of shares is indicated, and the number of shares which can be issued (can be a limited or unlimited number) is stated. If there are common and preferred shares, the articles must state the par value of each share and special preferences, rights, conditions or restrictions attaching to each class of shares.
• In addition to the articles, the co-operative must also submit to the Registrar its bylaws, business plan, the name of the co-operative for approval, and its registered address along with the required fee.
• It is important to note that the Registrar may not incorporate a co-operative if the co-operative will not benefit its members or if the business plan does not demonstrate the viability of the co-op.

• The co-op determines within its bylaws the requirements for membership.
• Although the individual incorporators of a co-operative must be at least 19 years of age, members of a co-operative may be less than 19 years of age.
• The co-op must keep a share register which records the details for all members. This includes the name and address, the date of their acceptance into membership and the date they cease to be members. The co-op must also keep a record for each member of their shares or member loans.
• Joint memberships are allowed although the joint membership includes only one vote.
• Members may voluntarily withdraw from the co-op by following the terms and conditions set out in the bylaws.
• A person's membership may also be terminated by the board of directors. A member may appeal the termination as provided for in Section 85 of the Act.

• A co-operative can secure members' capital as either member shares or member loans.
• The shares of a co-operative shall have a par value fixed by the articles at an amount not less than $5 per share.
• A co-operative may also issue non-voting preferred shares whose terms and conditions are set out in the articles.
• All member capital and preferred shares can only be redeemed by the co-op should the redemption not imperil the financial viability of the co-operative—its capacity to meet its financial obligations to its creditors, as set out in Section 60 of the Act.

• To be eligible for the board of directors, a person must be a member of the co-operative who is at least 19 years of age, a natural person or a representative of a corporate member.
• A minimum of three directors is required for any co-operative.
• The number of directors, terms and the election of directors is provided for within the bylaws but no term can be longer than three years or as stated in the bylaws. Directors can be re-elected for additional terms.
• The holders of preferred shares who do not also hold common shares are not permitted to vote in an election to elect directors unless the co-operative's articles of incorporation provide for the exclusive right of preferred shareholder members to elect a director.

• There are special provisions in the Act for the following types of co-operatives:
• Consumer Co-operatives Part XVIII
• Community Service Co-operatives Part XIX
• Housing Co-operatives Part XX
• Worker Co-operatives Part XXI

Resources and Support

 

The requirements for incorporation or extra-provincial registration, outlined in the Act, are administered by the Registrar of Co-operatives, with the Registry of Co-operatives, Service NL.

The Registry of Co-operatives provides online information on incorporation or extra-provincial registration requirements including the links to required forms. Once the co-operative has satisfied the requirements, the Registrar will issue a certificate of incorporation or extra-provincial registration.

Registry of Co-operatives
Service NL
Commercial Registrations Division
59 Elizabeth Avenue
P.O. Box 8700
St. Johns's, Newfoundland and Labrador
A1B 4J6
Tel: 709-729-3317
Fax: 709-729-0232

The following provincial organizations can provide you with specialized information about starting up and growing your co-operative as well as general information on incorporating as a co-operative in Newfoundland and Labrador. In addition, a list of national organizations providing additional information and services can be found in the Federal co-operative section of the guide.

Co-operative Developers' Network

In 2005 the Department of Innovation, Business and Rural Development and the Newfoundland-Labrador Federation of Co-operatives announced a partnership to advance co-operative development in the province. A key component of the partnership is a regional co-operative developers' network, comprised of seven departmental staff with extensive experience working within rural communities. These staff members were given co-op development training which helps them to identify co-operative opportunities, initiate regional projects, and promote the co-op model for business. Network members also assist existing co-ops with funding proposals and provide advice about by-laws, co-op legislation, board training, and business planning.

Newfoundland-Labrador Federation of Co-operatives
19 Crosbie Place, Suite 203 (Co-operators Bldg)
P.O. Box 13369, Station A
St. John's, Newfoundland and Labrador
A1B 4B7
Tel: 877-726-9431
Fax: 709-726-9433

This guide provides general information on co-operatives.  The specific policies, regulations and laws are briefly explained and accurate as of August 2014.  Please refer to the actual policy, regulation or law for the most up-to-date information and if there is any disagreement between the guide and the policy, regulation or law.