What is the Co-operative Association Act?
B.C.'s new Co-operative
Association Act and Co-operative
Association Regulations, which govern the formation, structure
and operation of co-operatives in British Columbia, became effective
on January 31, 2001. [Please
read disclaimer.]
B.C. has had legislation governing co-ops since 1896.
Why were changes made to the Co-operative Association Act?
The new Act provides a modern legal framework so co-operatives
can develop and flourish in today's economic environment. It acknowledges
that the co-operative sector has matured and has shown it can
self-regulate as well as any other corporate model.
The changes were developed in consultation with B.C. co-operatives
and the Canadian Co-operative Association - BC Region.
What types of changes were made?
The new Act modernizes a number of key areas of co-operative
legislation, which:
- accommodate new understandings and definitions of membership,
meeting and voting rules;
- modernize provisions pertaining to compliance, reporting and
governance, and allow for more self-regulation by co-operatives;
and
- enable co-operatives to expand their access to equity capital.
In particular, the new Co-operative Association Act:
- reduces the minimum number of members required to form a co-op
to three from five;
- allows co-ops to issue investment shares to non-members;
- allows joint membership in all co-ops, not just housing co-ops;
- lowers to two-thirds from three-quarters the default majority
required for a special resolution to pass, except for housing
co-ops where the default majority is three-quarters;
- allows co-ops to let members vote by mail and participate
in meetings by telephone;
- allows co-ops to decide how much they need in their reserve
fund for contingencies; and
- eliminates the position of Superintendent of co-operatives
and reduces the number of documents co-ops must file with the
Registrar of Companies
Does an existing co-op have to rewrite its Memorandum because
of the new Act?
Changes are not needed if the co-op has only one class of shares
or if it has more than one class but only uses one of those classes
for membership shares. In these cases, the Act's changes are deemed
to apply and the Memorandum does not need to be rewritten.
The exception involves co-operatives with multiple classes of
membership shares where one class is not clearly understood to
be membership shares. In order to comply with the new Act, these
co-ops need to amend their Memorandum by January 31, 2003 so there
is a single class of membership shares.
Does an existing co-op have to rewrite its Rules because of
the new Act?
As long as the co-op's existing Rules do not conflict with the
Act, no changes are needed. If the co-op is making changes to
its Rules for any reason, it should review them all and make whatever
changes are needed to comply with the new Act and Regulation at
that time.
Until it is changed, any Rule that conflicts with the Act will
be of no force and effect, and the Act provision will apply. For
example, the new Act changes the process to terminate membership
in a housing co-op. If a housing co-op does not change its Rules
to comply with the new Act provisions, the Act will apply.
Has the definition of co-operative basis changed?
The new Act updates the principles of co-operative activity to
reflect changes in the internationally recognized co-operative
principles as well as current methods of doing business. For example,
co-ops no longer have to provide services at cost or primarily
to members. They do not have to keep specified amounts of surpluses,
which means they can set their own minimum surplus and pay out
the rest as patronage dividends/refunds as the management and
membership of the co-op see fit.
With the removal of the Superintendent of co-operatives, who
regulates co-ops?
The new Act removed the superintendent's quasi-regulatory powers
and streamlined the regulatory system. The remaining non-regulatory
functions were shifted to the Registrar of Companies. Co-ops are
more self-regulating now, similar to companies.
