Basic definitions help avoid confusion in the interpretation of articles of the by-laws. We should strive to clearly define the most frequently used terms and all terms in the by-laws whose meaning may vary from one context or person to another.
Note: The number of qualifying shares may vary according to the nature of operations in which the member participates and by service volume that the cooperative is able to offer the member.
This is to determine the minimum level of financial commitment required to obtain membership status; that is to say the minimum amount to invest to become a member. This financial involvement has two functions: to consolidate the membership of the member in the cooperative ("I've invested, I want it to work") and increase the company's capitalization and, in doing so, the available liquidity the cooperative.
Qualifying shares may be of two types: only common shares or common shares and preferred shares. It is recommended that the minimum common shares ($10.00) and the rest in preferred shares since the latter are eligible for significant tax advantages and may bear interest (this interest should be limited), which is not the case for the common shares.
Common share represents one's engagement in the co-op, granting the right to be notified of general assemblies, vote at such meetings, etc. Preferred shares represent an investment in the co-op, but don't grant such rights; ref: Section 49 of the Law.
We distinguish between the purchase price of the shares, and an acceptable payment schedule. The minimum qualifying investment is currently set at $500, but we allow a couple payment options, so as not to unnecessarily burden new members' cashflows.
Qualifying shares may be paid in several ways: in full upon admission to membership or fixed payments. Although full payment upon admission proves a real commitment to the cooperative, requiring it could limit the admission of interesting candidates who do not have the necessary funds.
Preferred shares are transferable under the conditions set by the Board in accordance with Section 46 of the Law.
Reimbursement of shares is done upon departure of a member, but the board may determine priorities among the items listed in the law.
The board determines the amount, privileges, rights and restrictions of the shares and the conditions of their redemption, repayment or transfer.
The Cooperative Department provides a template for Board resolutions. This template is made based on the eligibility of preferred shares to the Cooperative Investment Plan (CIP), which provides a tax deduction of up to 125% to the cooperative members or workers who invest in preferred shares.
The Board may establish rules in this area. However, if members wish to use CIP, the board has to stick to the framework provided by the Cooperative Department, which sets the rules of redemption and repayment.
The date of 14 February 1997, cited in the law, refers to the old law which required that these rules are subject to a regulation adopted in General Assembly.
The Board may provide conditions of refund based on priority classes. It is thus necessary to distinguish the origin of the shares. Those from staff member investments could be repaid in priority, those from the payment of a dividend could be reimbursed next.
The law does not require the cooperative to implement a process of integration of members through the auxiliary member status. If the cooperative does not determine such a process, the producer is a full member as of the first day for which he fulfills a mandate for the cooperative (unless otherwise specified by the producer).
However, we strongly suggest setting up good integration processes, to ensure, on the one hand, that new partners share the values and vision of the organization and on the other, that the person or entity understands the duties and responsibilities which become incumbent upon it as a member.
To formalize this new relationship between the producer and the cooperative, it is advisable to sign an application for admission as an auxiliary member - APPENDIX 1.
This is to determine the time after which the board has enough information to properly assess the admission of an auxiliary member as a permanent member. If you want to keep a quality team, the selection of members should not be done lightly. However, excessively strict criteria involving a long and arduous selection process may result in alienating the person wishing to become a member.
We must not forget that membership is an important factor of motivation. This motivation is manifested in particular by an increased level of involvement in the cooperative. So be careful not to unduly extend the evaluation period. This could create an alienating effect in auxiliary members and a stagnant or even decreasing involvement of these.
However, if one is looking for a very specific profile (high specialization, specific values, etc.), it may be appropriate to set a longer probationary period and stricter criteria to ensure the highest quality member possible. The maximum period permitted by law is 12 months (art 193.4).
If a minimum test period is planned, this may allow in some cases to speed up the admissions process as a member, especially if the person is already well known to the team.
In any case, a first associative evaluation could be systemized after the minimum period. If the auxiliary member meets the criteria of the coop, administrators could accept immediately. Otherwise, the auxiliary member is invited to continue the probationary period to its maximum term.
Other admission requirements may also be added: positive assessment of professional competence, level of voluntary involvement, etc. (Cooperatives Act, RSC., C. C-67.2., Article 3.1. C)
The cooperative may establish additional conditions for admission.
(This section is optional.)
There is no requirement for a cooperative to convoke auxiliary members. However, their presence at meetings can promote integration and training.
The General Assembly of members is the highest decision making body of the cooperative. It elects the Board of Directors, adopts the regulations, rules on the allocation of surplus and appoints the auditor. It has critical political and legal functions. It is particularly important that the convocation and holding follow specific procedures to avoid any confusion or misunderstanding. Some cooperatives (particularly those with significant membership) adopt a code of procedure known as the Morin code or the CSN code to hold their assemblies.
This article confirms the Board of Directors' power to convene the General Assembly. However, the law allows members of the cooperative to convene an Extraordinary General Assembly.
In determining the rules of convocation, we make sure to avoid disputes and thus ensure the official nature of the decisions taken.
The notice must be in writing to members at least five days before the date fixed for the meeting.
(This section is optional)
For some delicate decisions, the members desire not to express their views publicly. For example, a person to vote against the interests of its work or coordinating its partners could, if the vote is by show of hands, suffer the blow-cons in his working relationships. It is important to respect that right.
(This section is optional)
By law, the mere fact of being a member of the cooperative allows one to be eligible for a position on the board. Since the members of the Board are accountable to the assembly and the law for the proper administration of the cooperative, their selection must be made, however rigorously. Other eligibility criteria (allowed by law) may therefore be registered in the bylaws.
- By setting a minimum transaction with the cooperative, ensures that the candidate has sufficient experience in the cooperative to participate in its administration.
- Payment in due form of qualifying shares demonstrates compliance with the administrative procedure which is essential to a good administrator. Maturities on qualifying shares are those who are late according to the regulation.
The number of directors, including non-members, is a minimum of three and a maximum of fifteen. An odd number is recommended to avoid ties in voting. However, in case of equality (if a member fails, for example) the chairman has a casting vote 1. The board size is usually determined by the number of members of the cooperative. Other considerations such as the effectiveness of the board or the centralization of power (or de-centralization) are often among the items discussed.
This is the period for which the director is elected. The maximum duration is three years. Directors whose term expires shall remain in office until they are replaced or re-elected.
If no duration is indicated herein, the term is one year.
This is an operation through which, each year, some of the positions on the Board are re-elected. For two-year terms, all posts have been put in election after two years. For terms of three years, the rotation will be done over three years. The first posts to be re-election are drawn. By this rotation mode, it allows the assembly to elect new directors every year and at the same time, ensure better monitoring of records keeping a certain permanence to the Board. The directors whose term expires may of course be re-elected. The Council will then retain the same structure for the coming year.
For terms of one year, no rotation will be needed for all positions will be elected each year. The annual mandates allow the Assembly to renew the board more regularly but this can create some instability if a large part or all of the board is replaced.
(This section is optional)
If the General Assembly of the cooperative registered in the Regulations, or a non-member directors can be elected.
Sections (1) and (3) are derived from the law while articles (2), (4) and (5) offer procedures.
For small cooperatives, it may not be possible to appoint a returning officer, an election clerk and two scrutineers, making it impossible to apply the usual election procedure. Giving the option to choose a procedure avoids the problem. One can, for example, appoint a secretary and a deputy Chairman, can nominate a block team simple proposition, etc. It is suggested to prepare this alternative procedure to save time meeting.
The presented procedure allows, if the number of members is sufficient, to ensure the conduct of a transparent and democratic election.
Written resolutions, signed by all directors have the same value in terms of the law as if they had been adopted during a meeting of the Board.
This article helps to avoid confusion and ensure the legal validity of decisions taken in council meeting.
We suggest to hold meetings at a regular interval to ensure constant monitoring of the Board on the conduct of affairs of the cooperative.
The mode of meeting must be clear and effective. A reduced time for emergency meetings allows greater speed of reaction. The law sets deadlines are five (5) days. The members, however, may decide otherwise in the regulations.
Written resolutions, signed by all directors can be used for isolated and relatively urgent issues that require debate.
Only the positions of President, Vice President and Secretary are prescribed by law. Others are created by regulation. These other items may be necessary depending on the size of the cooperative or by the type of democracy desired by members.
The officers (president, vice-president, secretary, etc.) are appointed from among the directors (members of the board) who are elected in General Assembly.
In a small cooperative where decisions can be made quickly in the collective, it is less useful to centralize powers. Leaders may benefit from limited power efficiency without being affected.
In a larger cooperative, it is useful, sometimes even necessary, to better define the powers necessary to centralize and create more leadership positions. However, it is important that the distribution of powers is done according to a balance of two elements: democracy and economic efficiency.
Committees may also be created by the Board of Directors to support specific aspects of the cooperative financing, training, promotion, etc. Some standing committees can also be integrated in Regulation (executive committee, for example).
The president, in addition to her statutory role, usually has a leading function at associations. This is the person who should look after the interests of members and that members could refer.
The Vice President often has personal characteristics approximating those of the president. He is also her right arm.
The secretary and treasurer are the only positions on the Board that may be paid for work related to the board since they are the only ones to produce work such as minutes or summaries of financial statements. They are, however, not paid for meetings. It should be noted that the secretary and the treasurer, because of the large amount of information processed, also involves a lot of power. It is therefore important to choose the right holders.
(This section is optional)
Often the choice of the term reflects the ideology behind the post. Thus, a manager or a general manager will often have a decision-making approach a coordinator who will try to seek consensus and applies the collective decisions. In all cases, it is responsible for the management of business operations. It is somehow complement or weight against the president.
The law and the most cooperative partners (financial institutions, landlords, etc.) require the cooperative is ensured.
The financial year is often different from the calendar year (calendar). It depends on the date of commencement of operations, the seasonal cycle (you may want to close the year in a period less busy) or simultaneously with the fiscal year (March 31).
Date of adoption of the Regulation. You can also register each modification dates.