2020 BILL 46

	46


First Session, 49th General Assembly 69 Elizabeth II, 2020
BILL 46
AN ACT TO AMEND THE CREDIT UNION ACT, 2009
Received and Read the First Time................................................................
Second Reading............................................................................................
Committee.....................................................................................................
Third Reading...............................................................................................
Royal Assent.................................................................................................
HONOURABLE SARAH STOODLEY Minister of Digital Government and Service Newfoundland and Labrador
Ordered to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Credit Union Act, 2009 to

· clarify the powers and duties of the superintendent and the guarantee corporation;

· remove the requirement for directors to disclose their occupations when filing articles of incorporation, annual returns and amalgamation agreements;

· remove the authority for credit unions that were continued under the Credit Union Act and operating under the title or name of "Co-operative Credit Society" to continue to use that title or name;

· require a credit union to obtain written authorization from a member before including the member's name and address in the credit union's members' register and prohibiting a credit union from disclosing the name and address of a member who does not provide written authorization;

· remove the requirements relating to the issuance of shares other than equity shares and require that the shares be issued in accordance with the regulations;

· allow a credit union to approve the issuance of dividends and patronage refunds in accordance with its by-laws;

· remove the authority for a credit union to require 90 days written notice from a member who intends to withdraw money from the member's account;

· prohibit a member from withdrawing money from the member's account where there is a lien in place for an amount borrowed from the credit union;

· replace the requirements prescribed in the Act regarding payment of money in the member's account upon the death of the member with a requirement that credit unions establish policies regarding deceased members in accordance with the regulations;

· remove the requirements in relation to the enactment, amendment and repeal of by-laws of a credit union and require that the by-laws be enacted, amended and repealed in accordance with the regulations;

· allow a credit union, rather than the directors of a credit union, to refuse to accept an application for membership;

· require that a member entitled to vote at a meeting of members submit notice of a matter that the member proposes to raise at the meeting to the board of directors of the credit union;

· expand the by-law making authority of a credit union to allow for by-laws relating to voting by telephone or electronic means;

· remove the requirement that meetings of members of a credit union be held at a place within the province provided in the by-laws and allow credit unions to determine the manner of meetings of members of a credit union in accordance with the by-laws;

· require that a member calling a meeting of the members of a credit union give the guarantee corporation at least 30 days notice of the meeting;

· allow permanent residents of Canada to be eligible to be directors of a credit union;

· clarify that where there is a vacancy in the board of directors of a credit union and a quorum of directors appoints a person to fill the vacancy the person appointed to fill the vacancy holds office until an election is held and require that the election be held no later than the next annual general meeting;

· allow the guarantee corporation to extend the time period in which a credit union is required to send notice to the superintendent and guarantee corporation of a change in the directors of a credit union;

· clarify that the directors may specify the manner of meetings of the directors of a credit union;

· require that a director of a credit union immediately notify the guarantee corporation where the director becomes aware that the credit union cannot make a payment;

· require a director or an officer of a credit union to disclose to the credit union any interest the director or an officer has in a material contract or proposed material contract;

· require that a director or an officer of a credit union comply with the Act, the regulations and the articles and by-laws of the credit union and clarify that a provision in a contract, the articles, by-laws or a resolution does not relieve a director or an officer from liability for a contravention of the Act or regulations;

· require that a person applying to the court for an order approving an indemnity notify the guarantee corporation at least 15 days before the date set for the hearing of the application;

· remove the time period in which a credit union is required to complete and file a return with the guarantee corporation and require that returns be completed and filed in accordance with the regulations;

· replace all references to "Canadian generally accepted accounting principles" with the reference "International Financial Reporting Standards";

· replace all references to "19 years of age" with "age of majority";

· require that where a meeting is called for the purpose of removing an auditor from office notice of the meeting is given to the guarantee corporation at least 30 days before the date of the meeting;

· require that a director or an officer immediately notify the audit committee and auditor where the director or officer becomes aware of an error or misstatement in a financial statement that the auditor or former auditor reported on;

· require that the auditor or former auditor of a credit union immediately notify each director where the auditor or former auditor becomes aware of a material error or misstatement in a financial statement that the auditor or former auditor reported on;

· require that where an auditor or former auditor informs the directors of a credit union of an error or misstatement in a financial statement the directors prepare a letter outlining the error or misstatement and attach it to the revised financial statement;

· require that where an auditor prepares a management letter highlighting the weakness and deficiencies in the financial affairs of the credit union that the auditor provide a copy of the letter to the guarantee corporation within 14 days of completion of the audited financial statements;

· reduce the time period in which notice is required to be given to the superintendent regarding amendment of the credit union's articles;

· remove the requirement that at least 60% of the creditors of an amalgamating credit union consent to an amalgamation;

· remove the time period for which the guarantee corporation is required to retain documents and records of a dissolved credit union and require that the documents be retained in accordance with the regulations;

· allow credit unions incorporated in the province to apply for federal continuance;

· require a director or an officer of the guarantee corporation to disclose to the credit union any interest the director or an officer has in a material contract or proposed material contract;

· set the number of members of the board of directors of the guarantee corporation at 8 and require that the members of the board of directors be appointed in accordance with the regulations;

· remove the authority for the chairperson of the board of directors of the guarantee corporation to have an extra vote where there is a tied vote;

· expand the offence provisions;

· prescribe to whom the guarantee corporation is required to give notice where the guarantee corporation places a credit union under supervision;

· clarify that where a credit union has been placed under supervision, the supervisor may terminate the directors, officers, committee members, employees and agents of the credit union;

· clarify when notice sent by mail or electronic means is considered received;

· remove the prescribed time period after which the superintendent is not required to produce a document and allow the time period to be prescribed in the regulations; and

· add additional regulation making authority.

A BILL

AN ACT TO AMEND THE CREDIT UNION ACT, 2009

Analysis

1. S.2 Amdt.
Definitions

2. S.4 R&S

Prohibition

3. S.5 Amdt.

Incorporation

4. S.6 Amdt.
Articles

5. S.11 Amdt.
Name

6. S.12 Amdt.
Prohibited names

7. S.16 Amdt.
Business of credit unions

8. S.24 Amdt.
Records

9. S.24.1 Added

Authorization of members

10. S.25 Amdt.
Examination of records

11. S.26 Amdt.

Form of records

12. S.28 R&S

Shares other than members' equity shares

13. S.29 R&S

Dividend or patronage refund

14. S.35 Amdt.
Member right to withdraw deposits

15. S.36 Amdt.

Trust funds

16. Ss.37 & 38 R&S

37. Deceased members and estate policy

38. Loans

17. S.45 R&S

Interest rate risk

18. S.47.1 Added

Policy relating to services provided by external parties

19. S.48 Amdt.

Membership

20. S.52 R&S

By-laws

21. S.54 R&S
Meetings

22. S.55 R&S

Calling meetings

23. S.57 Amdt.

Notice of meetings

24. S.59 Amdt.
Member notice

25. S.61 Amdt.

Voting

26. S.62 R&S

Corporate representation

27. S.66 Rep.
Ballot

28. S.67 Amdt.
Requisition by members to call meeting

29. S.68 Amdt.

Meeting called by guarantee corporation

30. S.70 R&S

Qualifications

31. S.71 Amdt.
Terms of office

32. S.73 Amdt.
Removal of directors

33. S.74 Amdt.
Reasons

34. S.75 Amdt.
Vacancy

35. S.76 R&S

Notice of change of directors

36. S.77 Amdt.

Meetings

37. S.83 R&S

Duty to report

38. S.83.1 Added

83.1 Disclosure of interest in material contract

39. S.86 Amdt.
Duty of care

40. S.88 Amdt.
Indemnification

41. S.90 Amdt.

Annual returns

42. S.91 Amdt.
Annual financial statements

43. S.95 Amdt.
Auditor removal

44. S.98 Amdt.
Duty to attend meetings

45. S.99 Amdt.
Examinations by auditor

46. S.100 Amdt.

Guarantee corporation may enlarge scope

47. S.102 Amdt.
Auditor's report

48. S.103 Amdt.
Audit committee

49. S.104 Amdt.
Duty of auditor

50. S.109 Amdt.

Amendment of articles

51. Ss.110 & 111 R&S

110. Approval of articles

111. Certificate of amendment

52. S.113 R&S

Restated articles

53. S.115 Amdt.
Amalgamation agreement

54. S.117 Amdt.

Articles of amalgamation

55. S.119 Amdt.

Certificate and effect of amalgamation

56. S.121 Amdt.
Approval of guarantee corporation

57. S.126 Amdt.
Voluntary liquidation and dissolution

58. S.127 R&S

Articles of dissolution and certificate

59. S.128 R&S

Custody of records

60. Part IX.1 Added

PART IX.1
FEDERAL CONTINUANCE

131.1 Statement of intent to apply for federal continuance

131.2 Authorization of application

131.3 Certificate of discontinuance

131.4 No reimbursement of levies paid

61. S.134 Amdt.
Duties

62. S.136 Amdt.
Powers

63. S.137 R&S

Board

64. S.138.1 Added.
Disclosure of interest in material contract

65. Ss. 139 & 140 R&S

139. Vacancy

140. Office ceases

66. S.142 Amdt.
Quorum

67. S.144 Amdt.
Guaranteed deposit insurance

68. S.145 Amdt.
Prohibition

69. S.155 Amdt.
Report to minister

70. S.157 Amdt.
Derivative action

71. S.163 R&S
Application for direction

72. Ss. 165 & 166 R&S

165. Review and examination

166. Examination powers

73. S.169 Amdt.

Offence

74. S.170 R&S
General offence

75. S.172 R&S

Maintenance of action

76. S.173 R&S

Supervision of credit union

77. S.179 Amdt.
Notice

78. S.180 R&S

Service of notice

79. S.185 Amdt.

Verification

80. S.189 R&S
Examination of documents

81. S.190 Amdt.
Records

82. S.191 Amdt.
Superintendent

83. S.192 Amdt.
Register of credit unions

84. S.192.1 Added

Protection from liability

85. S.193 Amdt.
Regulations

86. Commencement

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

SNL2009 cC-37.2
as amended

1. (1) Paragraph 2(d) of the Credit Union Act, 2009 is repealed and the following substituted:

(d) "court" means the Supreme Court of Newfoundland and Labrador;

(2) Section 2 of the Act is amended by adding immediately after paragraph (e) the following:

(e.1) "credit union trade association" means an association whose members are credit unions and which provides services to credit unions;

(3) Paragraph 2(f) of the Act is repealed and the following substituted:

(f) "deposit" means money placed in an account in a credit union by a member;

(4) Paragraph 2(h) of the Act is repealed and the following substituted:

(h) "equity" means in relation to a credit union,

(i) the value of the consideration paid for membership shares and other shares issued by the credit union that are not redeemable within one year or another period as approved by the guarantee corporation,

(ii) the book value of surplus shares issued by the credit union,

(iii) the retained earnings of the credit union, and

(iv) other capital items approved by the guarantee corporation,

unless the credit union has an accumulated deficit, in which case it means the amounts determined under subparagraphs (i), (ii) and (iv) minus the accumulated deficit;

(5) Section 2 of the Act is amended by adding immediately after paragraph (h) the following:

(h.1) "federal continuance" means continuance as a federal credit union under the Bank Act (Canada);

(h.2) "federal credit union" means a federal credit union as defined in the Bank Act (Canada);

(h.3) "financial central" means a body corporate organized on cooperative principles by or under an Act of a province or of Canada, one of whose principal purposes is to receive deposits from and provide liquidity support to credit unions, and whose

(i) membership consists solely or primarily of credit unions, and

(ii) directors are wholly or primarily persons elected or appointed by credit unions;

(6) Section 2 of the Act is amended by adding immediately after paragraph (i) the following:

(i.1) "individual" means a natural person;

(i.2) "material contract" includes a contract under which a credit union

(i) employs a person as a full-time employee,

(ii) retains the services of a person otherwise than as an employee, or

(iii) disposes of or acquires property whether by sale, purchase, lease or otherwise, for consideration that exceeds $5,000 in value;

(7) Section 2 of the Act is amended by adding immediately after paragraph (k) the following:

(k.1) "officer" in respect of a credit union means

(i) the president, vice-president, secretary or treasurer,

(ii) a person who performs functions for the credit union normally performed by a person mentioned in subparagraph (i), or

(iii) another person designated as an officer by the by-laws or by a resolution of the directors;

2. Section 4 of the Act is repealed and the following substituted:

Prohibition

4. A person shall not carry on the business of a credit union in the province unless the credit union is

(a) incorporated under this Act;

(b) continued under this Act; or

3. Subsection 5(1) of the Act is repealed and the following substituted:

Incorporation

5. (1) Twenty or more persons who are of the age of majority or older and are bondable may incorporate as a credit union.

4. Paragraph 6(1)(c) of the Act is repealed and the following substituted:

5. (1) Subsection 11(4) of the Act is repealed and the following substituted:

(4) A person or association of persons shall not

(a) use the words "credit union" or "caisse populaire" or a derivative or abbreviation of those words as part of its name; or

(b) conduct business in the province in a manner that might lead to the belief that that person or association of persons is carrying on business as a credit union,

unless the person or association of persons is incorporated or continued under this Act or is a federal credit union.

(2) Subsection 11(6) of the Act is repealed.

6. Paragraph 12(1)(d) is repealed and the following substituted:

(d) which in the opinion of the superintendent is contrary to public interest.

7. Paragraph 16(2)(d) of the Act is amended by deleting the word "and" and substituting the word "or".

8. (1) Paragraph 24(c) of the Act is repealed and the following substituted:

(c) a register of directors, officers and committee members setting out the names and residence addresses of all persons who are or have been directors, officers or committee members of the credit union with the dates on which each became or ceased to be a director, an officer or a committee member;

(2) Paragraph 24(e) of the Act is repealed and the following substituted:

(e) the accounting records and the minutes of the meetings of the board and committees and resolutions of the directors and a committee appointed by the directors.

9. The Act is amended by adding immediately after section 24 the following:

Authorization of members

24.1 (1) A credit union shall obtain the written authorization of a member before including the member's name and address in the members' register that is available for examination in accordance with section 25.

(2) A credit union shall not disclose the name or address of a member who does not give the authorization referred to in subsection (1).

10. Subsections 25(4) and (5) of the Act are repealed and the following substituted:

(4) A person shall not use the register of members for purposes not related to the affairs of the credit union.

(5) Subject to subsection 24.1(2), a credit union shall make the members' register available at any meeting of members for examination by the members.

11. Subsection 26(1) of the Act is repealed and the following substituted:

Form of records

26. (1) All registers and records required by this Act to be prepared and maintained by a credit union shall be kept by the credit union in the form and manner prescribed in the regulations.

12. Section 28 of the Act is repealed and the following substituted:

Shares other than members' equity shares

28. In addition to member equity shares, the articles of a credit union may provide for the issuing of surplus shares and other shares in accordance with the regulations.

13. Section 29 of the Act is repealed and the following substituted:

Dividend or patronage refund

29. A credit union that has met the capital requirement prescribed in the regulations may, in accordance with its by-laws, issue a dividend or patronage refund provided that the dividend or patronage refund does not reduce capital below that prescribed in the regulations.

14. (1) Subsection 35(2) of the Act is repealed.

(2) Subsection 35(3) of the Act is repealed and the following substituted:

(3) Subsection (1) does not apply to

(a) deposits placed with a credit union for a stated term;

(b) an amount contained in a deposit account on which a bill of exchange payable on demand may be drawn; or

15. (1) Subsection 36(1) of the Act is repealed and the following substituted:

Trust funds

36. (1) Except where the credit union is the trustee, a credit union is not required to see to the execution of a trust, whether express, implied or constructive, to which a share or deposit is subject.

(2) Section 36 is amended by adding immediately after subsection (1) the following:

(1.1) Where an account is subject to a trust of which the credit union has notice, the cheque, bill of exchange, withdrawal slip, copy of electronic transaction or receipt of the person

(a) in whose name the account is held; or

(b) who is, according to the document creating the trust, entitled to deal with the trust,

is, notwithstanding the trust, sufficient authorization to and a valid and binding discharge of the credit union and the credit union is not required to see to the application of money paid in relation to that cheque, bill of exchange, withdrawal slip, electronic transaction or receipt.

16. Sections 37 and 38 of the Act are repealed and the following substituted:

Deceased members and estate policy

37. A credit union shall establish a policy relating to deceased members and their estates in accordance with the regulations.

Loans

38. A credit union shall establish loan policies in relation to the lending activities of the credit union in accordance with the regulations.

17. Section 45 of the Act is repealed and the following substituted:

Interest rate risk

45. A credit union shall manage interest rate risk in accordance with the regulations.

18. The Act is amended by adding immediately after section 47 the following:

Policy relating to services provided by external parties

47.1 A credit union shall establish a policy relating to services provided by an external party in accordance with the regulations.

19. Subsections 48(2) and (3) of the Act are repealed and the following substituted:

(2) Subject to the by-laws of the credit union and laws of general application, a credit union may refuse to accept an application for membership if it is satisfied that it is not in the interest of the credit union to accept the application.

(3) A person under the age of majority may be accepted as a member of a credit union and shares may be held and money may be received by the credit union in that person's name or in the name of a trustee for that person if the trustee is a member or is eligible to be a member of the credit union.

20. Section 52 of the Act is repealed and the following substituted:

By-laws

52. (1) Subject to the articles of a credit union, the members of a credit union may, in accordance with the regulations, enact, amend or repeal by-laws in relation to the matters authorized or required by this Act to be dealt with in the by-laws of the credit union.

(2) Notwithstanding subsection (1), the enactment, amendment or repeal of a by-law is not effective until it is approved by the guarantee corporation.

21. Section 54 of the Act is repealed and the following substituted:

Meetings

54. Meeting of the members shall be held in accordance with the by-laws of the credit union.

22. Section 55 of the Act is repealed and the following substituted:

Calling meetings

55. The directors of a credit union

(a) shall call an annual meeting of members to be held within 4 months, or another time that is approved by the guarantee corporation, after the end of the fiscal year of the credit union

(i) to consider the annual report of the directors, the financial statements of the credit union and the auditor's report,

(ii) to appoint the auditor,

(iii) to elect directors, and

(iv) to deal with other matters that may properly come before the meeting; and

(b) may call a special meeting of members.

23. Subsection 57(1) of the Act is repealed and the following substituted:

Notice of meetings

57. (1) Notice of the time of a meeting of members and the manner in which the meeting is to be held shall be given to each member entitled to vote at the meeting not less than 14 days and not more than 30 days before the meeting.

24. (1) Paragraph 59(1)(a) of the Act is repealed and the following substituted:

(a) submit to the board of directors of the credit union notice of a matter that the member proposes to raise at the meeting, afterwards referred to as a "proposal"; and

(2) Subsection 59(10) of the Act is repealed and the following substituted:

(10) An applicant under subsection (8) or (9) shall give the guarantee corporation notice of the application and the guarantee corporation is entitled to appear, be represented and be heard in person or by counsel.

25. (1) Subsection 61(1) of the Act is repealed and the following substituted:

Voting

61. (1) A member of a credit union who is the age of majority or older may vote at a meeting of members.

(2) Section 61 of the Act is amended by adding immediately after subsection (2) the following:

(3) The by-laws of a credit union may provide for the manner of voting, including the right to vote by ballot, mail, telephone or electronic means.

26. Section 62 of the Act is repealed and the following substituted:

Corporate representation

62. (1) Where a corporation or association of persons is a member of a credit union, the credit union shall recognize an individual authorized by a resolution of the directors or governing body of the corporation or association of persons to represent it at meetings of members of the credit union.

(2) Notwithstanding section 63, an individual authorized under subsection (1) may exercise, on behalf of the corporation or association that person represents, all the powers the corporation or association could exercise if it were an individual.

27. Section 66 of the Act is repealed.

28. Subsection 67(7) of the Act is repealed and the following substituted:

(7) A member calling a meeting under subsection (4) shall give the guarantee corporation at least 30 days notice of the application and the guarantee corporation is entitled to appear, to be represented and be heard in person or by counsel.

29. Subsections 68(1) and (2) of the Act are repealed and the following substituted:

Meeting called by guarantee corporation

68. (1) Where it is impractical to call a meeting of members of a credit union in the manner in which meetings of members may be called or to conduct the meeting in the manner required by this Act and the by-laws, or for another reason the guarantee corporation considers appropriate, the guarantee corporation may order a meeting to be called, held and conducted in a manner that it directs.

(2) The guarantee corporation may order that the quorum required by this Act or the by-laws be varied or dispensed with at a meeting called, held and conducted in accordance with this section.

30. Section 70 of the Act is repealed and the following substituted:

Qualifications

70. (1) An individual who

(a) is a citizen or permanent resident of Canada;

(b) is of the age of majority or older;

(d) satisfies the requirements set out in the by-laws of the credit union,

may be a director of a credit union.

(2) Notwithstanding subsection (1), the following persons are disqualified from being a director of a credit union:

(a) an undischarged bankrupt person;

(b) an employee of a credit union or the guarantee corporation;

(d) an auditor of the credit union or a member of the auditor's firm;

(e) a parent, child, grandchild, spouse, brother or sister or an in-law of an employee of the credit union, not necessarily living in the same residence of that employee;

(f) the solicitor of the credit union;

(g) a director or employee of a bargaining agent for the employees of the credit union; or

(h) a public employee whose official duties are concerned with the affairs of credit unions.

31. Subsection 71(3) of the Act is repealed.

32. Subsection 73(3) of the Act is repealed and the following substituted:

(3) Where a vacancy is not filled under subsection (2), the guarantee corporation may appoint a director to fill that vacancy.

33. Subsections 74(2) and (3) of the Act are repealed and the following substituted:

(2) Where a director resigns under paragraph (1)(a), he or she may request that the credit union send to members of the credit union and the guarantee corporation, a copy of the statement referred to in subsection (1) and where a request is made, the credit union shall immediately comply with that request.

(3) Where a director receives a notice under paragraphs (1)(b) or (c), the credit union shall immediately send a copy of the statement referred to in subsection (1) to members of that credit union and to the guarantee corporation.

34. Subsection 75(5) of the Act is repealed and the following substituted:

(5) Where a vacancy among the directors is filled in accordance with subsection (1), the director shall hold office until an election is held, which election shall be held no later than the next annual general meeting.

35. Section 76 of the Act is repealed and the following substituted:

Notice of change of directors

76. (1) Where there is a change in the directors of a credit union, the credit union shall send to the superintendent and the guarantee corporation a notice setting out the change and the superintendent shall file the notice.

(2) A credit union shall send the notice referred to in subsection (1) to the superintendent and the guarantee corporation

(a) within 30 days after the change of directors; or

(b) on or before the time specified by the guarantee corporation where the guarantee corporation has approved an extension of the 30 day period referred to in paragraph (a).

(3) A person, the superintendent or the guarantee corporation may apply to the court for an order requiring a credit union to comply with subsection (1), and on the application the court may make the order and any further orders it thinks appropriate.

(4) A director named in the articles or in a notice sent by the credit union to the superintendent and the guarantee corporation under subsection (1) is presumed for the purposes of this Act to be a director of the credit union.

36. Subsection 77(1) of the Act is repealed and the following substituted:

Meetings

77. (1) Unless the articles or by-laws otherwise provide, the directors of a credit union may meet in a manner and on the notice that the directors may determine.

37. Section 83 of the Act is repealed and the following substituted:

Duty to report

83. Where a director becomes aware that the credit union is unable to make a payment that it is required to make, the director shall immediately give written notice of the matter to the guarantee corporation.

38. The Act is amended by adding immediately after section 83 the following:

Disclosure of interest in material contract

83.1 A director or an officer of a credit union shall disclose to the credit union the nature and extent of his or her interest in a material contract or proposed material contract in accordance with the regulations.

39. (1) Subsection 86(2) of the Act is repealed and the following substituted:

(2) A director and an officer of a credit union shall comply with this Act, the regulations and the articles and by-laws of the credit union.

(2) Section 86 of the Act is amended by adding immediately after subsection (2) the following:

(2.1) A provision in a contract, the articles, the by-laws or a resolution shall not relieve a director or an officer from

(a) the duty to act in accordance with this Act or the regulations; or

(b) from liability for a contravention of this Act or the regulations.

40. Subsection 88(5) of the Act is repealed and the following substituted:

(5) An applicant under subsection (4) shall give the guarantee corporation notice of the application at least 15 days before the date set for the hearing of the application and the guarantee corporation is entitled to appear, to be represented and be heard in person or by counsel.

41. Subsections 90(1) to (3) of the Act are repealed and the following substituted:

Annual returns

90. (1) A credit union shall, within the time period prescribed in the regulations, complete and file a return with the guarantee corporation showing, as of the end of the preceding fiscal year,

(a) the name of the credit union;

(b) the address of the registered office of the credit union;

(d) the names and residence addresses of the directors of the credit union;

(e) the names and residence addresses of officers of the credit union and the most senior employee of the credit union; and

(f) other information in relation to the credit union that may be required by this Act or the guarantee corporation.

(2) The return shall be on a form provided by the guarantee corporation and shall be signed and the contents of it shall be certified to be true by a director or an officer of the credit union.

(3) In addition to the return required under subsection (1), the guarantee corporation may require a credit union to file, within a time that it specifies, an additional return containing other information that the guarantee corporation may require.

42. Subsection 91(2) of the Act is repealed and the following substituted:

(2) The financial statements required under subsection (1) shall, except as otherwise required by this Act or the guarantee corporation, be prepared in accordance with International Financial Reporting Standards.

43. Subsection 95(3) of the Act is repealed and the following substituted:

(3) Where a meeting is called for the purpose of removing an auditor from office, notice of the meeting shall be given to the guarantee corporation at least 30 days before the meeting and the guarantee corporation is entitled to be represented and heard at the meeting.

44. Subsection 98(4) of the Act is repealed.

45. Subsection 99(2) of the Act is repealed and the following substituted:

(2) The auditor's examination referred to in subsection (1) shall, except as otherwise required by this Act or the guarantee corporation, be conducted in accordance with International Financial Reporting Standards.

46. Subsection 100(1) of the Act is repealed and the following substituted:

Guarantee corporation may enlarge scope

100. (1) The guarantee corporation may enlarge or extend the scope of the audit or direct that another or a particular examination be made or procedure be established in a particular case where it is believed that the public interest or the interest of the members requires.

47. Paragraph 102(2)(b) of the Act is repealed and the following substituted:

(b) the examination has been made in accordance with International Financial Reporting Standards; and

48. (1) Subsections 103(4) and (5) are repealed and the following substituted:

(4) Where a director or an officer becomes aware of an error or misstatement in a financial statement that the auditor or former auditor reported on, the director or officer shall immediately notify the audit committee and the auditor.

(5) Where an auditor or former auditor of a credit union is notified or becomes aware of an error or misstatement in a financial statement that the auditor reported on, the auditor or former auditor shall immediately inform each director where, in the auditor's opinion, the error or misstatement is material.

(2) Subsection 103(6) of the Act is amended by deleting the word "and" at the end of paragraph (a) and adding immediately after paragraph (a) the following:

(a.1) prepare a letter outlining the error or misstatement and attach it to the revised financial statement referred to in paragraph (a); and

(3) Subsection 103(7) is repealed.

49. Subsection 104(4) of the Act is repealed and the following substituted:

(4) Where as a result of an audit an auditor prepares a management letter highlighting weaknesses and deficiencies in the financial affairs of the credit union and other matters which may affect the well being of the credit union, he or she shall provide a copy to the guarantee corporation within 14 days of completion of the audited financial statements.

50. Subsection 109(1) of the Act is repealed and the following substituted:

Amendment of articles

109. (1) Subject to the approval of the guarantee corporation under section 110, the articles of a credit union may be amended by special resolution of the members.

51. Sections 110 and 111 of the Act are repealed and the following substituted:

Approval of articles

110. (1) Where a credit union amends its articles under section 109, the articles of amendment shall, within 3 months of the date of the resolution of the members authorizing the amendment, be sent to the guarantee corporation for approval.

(2) The guarantee corporation shall refuse to accept articles of amendment that are not submitted to the guarantee corporation within the 3 month period referred to in subsection (1).

(3) Where the guarantee corporation is satisfied that the articles of amendment are advisable, the guarantee corporation may approve the articles of amendment and forward them to the superintendent for filing.

Certificate of amendment

111. On receipt of the articles of amendment, the superintendent shall file the articles of amendment and issue a certificate of amendment in accordance with section 182.

52. Section 113 of the Act is repealed and the following substituted:

Restated articles

113. (1) A credit union may, and shall when directed by the guarantee corporation, restate the articles of incorporation as amended.

(2) Restated articles of incorporation in the required form shall be sent to the guarantee corporation for approval.

(3) Where the guarantee corporation approves the restated articles of incorporation, the guarantee corporation shall forward the restated articles of incorporation to the superintendent for filing.

(4) On receipt of the restated articles of incorporation, the superintendent shall file the restated articles of incorporation and issue a restated certificate of incorporation in accordance with section 182.

(5) Restated articles of incorporation are effective on the date shown in the restated certificate of incorporation and supersede the original articles of incorporation and all amendments to them.

53. (1) Paragraph 115(c) of the Act is repealed and the following substituted:

(2) Paragraph 115(d) of the Act is repealed.

54. (1) Subsections 117(1) and (2) of the Act are repealed and the following substituted:

Articles of amalgamation

117. (1) Subject to subsection 116(4), after an amalgamation has been adopted under subsection 116(3), articles of amalgamation shall be sent to the guarantee corporation for approval.

(2) The articles of amalgamation shall have attached to them an affidavit made under oath or affirmation of a director or an officer of each amalgamating credit union that establishes to the satisfaction of the guarantee corporation that

(a) there are reasonable grounds for believing that

(i) each amalgamating credit union is and the amalgamated credit union will be able to pay its liabilities as they become due, and

(ii) the realizable value of the assets of the amalgamated credit union upon completion of the amalgamation will not be less than the aggregate of its liabilities and its equity other than retained earnings; and

(b) there are reasonable grounds for believing that

(i) a creditor or member of the amalgamating credit unions will not be prejudiced by the amalgamation, or

(ii) adequate notice has been given to all known creditors of the amalgamating credit unions with a claim against the credit union in an amount that exceeds $1,000.

(2) Paragraph 117(4)(b) of the Act is repealed and the following substituted:

(b) each notice states that the credit union proposes to amalgamate with one or more specified other credit unions in accordance with this Act.

(3) Section 117 of the Act is amended by adding immediately after subsection (4) the following:

(5) Where the guarantee corporation is satisfied that the amalgamation is advisable, the guarantee corporation may approve the articles of amalgamation and forward them to the superintendent for filing.

55. Subsection 119(1) of the Act is repealed and the following substituted:

Certificate and effect of amalgamation

119. (1) On receipt of articles of amalgamation, the superintendent shall file the articles of amalgamation and issue a certificate of amalgamation in accordance with section 182.

56. Subsections 121(2) and (3) of the Act are repealed and the following substituted:

(2) An approval shall not be granted under subsection (1) unless the guarantee corporation has received an affidavit made under oath or affirmation of a director or an officer from the credit union proposing to sell, lease or exchange its property establishing, to the satisfaction of the guarantee corporation, that there are reasonable grounds for believing that

(a) the sale, lease or exchange of the property will not increase the likelihood of a claim upon the guarantee corporation; and

(b) creditors, including shareholders of the credit union who are not members, will not be prejudiced by the sale, lease or exchange of the property.

(3) For the purpose of subsection (2), adequate notice is given if

(a) a notice is published once in the Gazette and once in a newspaper published or distributed in the place where the credit union has its registered office; and

(b) each notice states that the credit union proposed to sell, lease or exchange all, or substantially all of its property under section 120.

57. (1) Subsection 126(4) of the Act is repealed and the following substituted:

(4) A statement of intent to dissolve in the required form shall be sent to the guarantee corporation for approval.

(2) Section 126 of the Act is amended by adding immediately after subsection (4) the following:

(4.1) Where the guarantee corporation is satisfied that the credit union is able to discharge all of its obligations and liabilities before dissolution, the guarantee corporation shall approve the statement of intent to dissolve and forward it to the superintendent for filing.

(3) Subsection 126(5) of the Act is repealed and the following substituted:

(5) On receipt of a statement of intent to dissolve, the superintendent shall file the statement of intent to dissolve and issue a certificate of intent to dissolve in accordance with section 182.

(4) Subsection 126(8) of the Act is repealed and the following substituted:

(8) A certificate of intent to dissolve may be revoked where

(a) the revocation is approved in the same manner as the resolution under subsection (3); and

(b) the credit union sends a statement of revocation of intent to dissolve in the required form to the guarantee corporation for approval before a certificate of dissolution has been issued.

(5) Section 126 of the Act is amended by adding immediately after subsection (8) the following:

(8.1) Where the guarantee corporation is satisfied with the statement of revocation of intent to dissolve, the guarantee corporation shall approve the statement of revocation of intent to dissolve and forward it to the superintendent for filing.

58. Section 127 of the Act is repealed and the following substituted:

Articles of dissolution and certificate

127. (1) Articles of dissolution shall be sent to the guarantee corporation for approval.

(2) Where the guarantee corporation is satisfied with the articles of dissolution, the guarantee corporation shall approve the articles of dissolution and forward them to the superintendent for filing.

(3) On receipt of articles of dissolution, the superintendent shall file the articles of dissolution and issue a certificate of dissolution in accordance with section 182.

(4) The credit union ceases to exist on the date shown in the certificate of dissolution.

59. Section 128 of the Act is repealed and the following substituted:

Custody of records

128. The guarantee corporation shall retain the documents and records of a dissolved credit union for the period prescribed in the regulations.

60. The Act is amended by adding immediately after section 131 the following:

PART IX.1
FEDERAL CONTINUANCE

Statement of intent to apply for federal continuance

131.1 (1) A credit union that satisfies the requirements of this Part may apply to the Minister of Finance of Canada for federal continuance.

(2) The directors of a credit union that is proposing to apply for federal continuance shall provide to the guarantee corporation a statement of intent to apply for federal continuance on a form provided by the guarantee corporation at least 60 days before sending a notice of a meeting of the members of the credit union for the purposes of seeking their approval for federal continuance.

(3) A notice of meeting of members shall be sent in accordance with section 57 and shall include the information and documentation prescribed in the regulations.

Authorization of application

131.2 (1) An application for federal continuance is not authorized until it is approved by

(a) the members of the credit union by special resolution; and

(b) the guarantee corporation in writing.

(2) The guarantee corporation may approve an application for federal continuance only where

(a) the guarantee corporation is satisfied that the federal continuance is advisable and will not adversely affect

(i) the members, shareholders or creditors of the credit union; or

(ii) other credit unions in the province; and

(b) the credit union has filed a declaration verifying compliance with the Bank Act (Canada).

(3) Where the guarantee corporation is advised of a material change in the circumstances that supported the approval of the application for federal continuance, the guarantee corporation may revoke the approval at any time before the issuance of letters patent continuing the credit union as a federal credit union under the Bank Act (Canada).

(4) Where authorized by the members of the credit union at the time they approved the application for federal continuance, the directors of the credit union may abandon the application without further approval of the members.

Certificate of discontinuance

131.3 (1) On receipt of a notice that establishes to the satisfaction of the guarantee corporation that letters patent continuing a credit union as a federal credit union under the Bank Act (Canada) have been issued, the guarantee corporation shall notify the superintendent and the superintendent shall file the notice and issue a certificate of dissolution in accordance with section 127.

(2) A notice referred to in subsection (1) shall be considered to be articles of dissolution required to be filed with the superintendent for the purposes of section 127.

(3) A credit union is considered to have been dissolved and this Act ceases to apply to it on the date set out in the certificate of dissolution which, notwithstanding subsection 127(4), shall be the same date as the effective date of the federal continuance of the credit union set out in the letters patent issued to the credit union.

No reimbursement of levies paid

131.4 A credit union that is continued as a federal credit union is not entitled to reimbursement of any levy or any portion of a levy paid under this Act.

61. Section 134 of the Act is amended by adding immediately after paragraph (c) the following:

(c.1) to ensure that credit union by-laws comply with this Act and the regulations;

(c.2) to notify the superintendent of the matters prescribed in the regulations that may impact credit unions, credit union members or the guarantee corporation;

62. (1) Section 136 of the Act is amended by adding immediately after paragraph (i) the following:

(i.1) impose terms, conditions and restrictions on approvals granted by it under this Act;

(2) Paragraph 136(k) of the Act is repealed and the following substituted:

(k) issue directives in relation to sound business practices and sound financial policies and procedures to be followed by credit unions;

(3) Section 136 of the Act is amended by adding immediately after paragraph (p) the following:

(p.1) issue directives to credit unions with respect to the interpretation and clarification of this Act as it relates to the powers and duties of the guarantee corporation;

63. Section 137 of the Act is repealed and the following substituted:

Board

137. (1) The affairs of the guarantee corporation shall be administered by a board of directors consisting of 8 members who shall be appointed in accordance with the regulations.

(2) A person who is a citizen or permanent resident of Canada and at least the age of majority may be appointed as a director of the guarantee corporation.

(3) Notwithstanding subsection (2), an employee, a committee member or a director of a credit union trade association, a credit union or a financial central shall not be appointed as a director of the guarantee corporation.

64. The Act is amended by adding immediately after section 138 the following:

Disclosure of interest in material contract

138.1 A director or an officer of the guarantee corporation shall disclose to the guarantee corporation the nature and extent of the director's or officer's interest in a material contract or proposed material contract in accordance with the regulations.

65. Sections 139 and 140 of the Act are repealed and the following substituted:

Vacancy

139. Where a vacancy occurs in the board of directors of the guarantee corporation, the vacancy shall be filled in accordance with the regulations.

Office ceases

140. A member of the board of directors of a guarantee corporation ceases to hold office upon

(a) death or resignation;

(b) becoming disqualified from holding the office; or

66. Subsection 142(3) of the Act is repealed.

67. (1) Subsection 144(2) of the Act is repealed and the following substituted:

(2) Where the guarantee corporation is obligated to make a payment in accordance with paragraph 146(a), the guarantee corporation shall, as soon as possible after the obligation arises, make the payment to the person who appears entitled to the payment according to the records of the credit union holding the deposit.

(2) Section 144 of the Act is amended by adding immediately after subsection (2) the following:

(2.1) A payment under this section is limited to the amount prescribed in the regulations.

68. Subsection 145(2) of the Act is repealed.

69. Subsection 155(2) of the Act is repealed and the following substituted:

(2) The guarantee corporation shall, upon the request of a credit union, provide a copy of its financial statements and auditor's report to the credit union.

70. Subsection 157(2) of the Act is repealed and the following substituted:

(2) A complainant who applies to the court under subsection (1) shall give the superintendent and guarantee corporation 30 days notice of the application and the superintendent and guarantee corporation are entitled to appear and be heard in person or by counsel.

71. Section 163 of the Act is repealed and the following substituted:

Application for direction

163. The superintendent or guarantee corporation may apply to the court for direction in relation to a matter concerning the superintendent's or guarantee corporation's duties and powers under this Act and, on that application, the court may give direction and make another order it thinks appropriate.

72. Sections 165 and 166 of the Act are repealed and the following substituted:

Review and examination

165. The guarantee corporation

(a) shall review information and returns received from credit unions and their directors, officers, committee members or employees;

(b) may examine the business and affairs of a credit union;

(d) may make those inquiries that are necessary to ascertain whether a credit union has complied with this Act, or an order or direction.

Examination powers

166. (1) For the purpose of the examination referred to in section 165, a credit union shall prepare and submit to the guarantee corporation, the information with respect to its business and affairs, in addition to the returns required under Part VII, that the guarantee corporation may require.

(2) Upon an examination, the guarantee corporation or a person that the guarantee corporation may authorize has the powers of a commissioner appointed under the Public Inquiries Act, 2006.

73. (1) Subsection 169(1) of the Act is repealed and the following substituted:

Offence

169. (1) A person who does, or assists in doing, any of the following commits an offence, and is liable on conviction, for each offence, in the case of an individual, to a fine of not less than $1,000 and not more than $25,000 or to imprisonment for a term of not more than 6 months, or to both and in the case of a corporation, to a fine of not less than $10,000 and not more than $50,000:

(a) makes a statement in any information or material submitted, sent, provided, produced, delivered or given to or filed with the superintendent, the guarantee corporation or any person acting under the authority of the superintendent or the guarantee corporation that is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading;

(b) makes a statement in any information or material required to be submitted, sent, provided, produced, delivered, given or filed under this Act or the regulations that is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading; or

(c) withholds, destroys, conceals, alters or refuses to produce any information or thing reasonably required for the purpose of an administrative action or proceeding under this Act or the regulations.

(2) Subsection 169(3) of the Act is repealed and the following substituted:

(3) Without limiting the availability of other defences, a person does not commit an offence under paragraph (1)(a) or (b) where

(a) the person did not know and in the exercise of due diligence could not have known that the statement was misleading or untrue or that it omitted to state a fact that was required to be stated or that was necessary to make the statement not misleading in light of the circumstances in which it was made; and

(b) on becoming aware that the statement was misleading or untrue or that it omitted to state a fact that was required to be stated or that was necessary to make the statement not misleading, the person notified the superintendent or guarantee corporation.

74. Section 170 of the Act is repealed and the following substituted:

General offence

170. A person who does any of the following commits an offence, and is liable on conviction, for each offence, in the case of an individual, to a fine of not less than $1,000 and not more than $25,000 and in the case of a corporation, to a fine of not less than $10,000 and not more than $50,000:

(a) contravenes or fails to comply with provision of this Act or the regulations;

(b) contravenes or fails to comply with a decision, ruling, interim order or direction of the superintendent or the guarantee corporation made or given under this Act or the regulations; or

(c) contravenes or fails to comply with a written undertaking made by the person to the superintendent or the guarantee corporation under this Act or the regulations.

75. Section 172 of the Act is repealed and the following substituted:

Maintenance of action

172. (1) Notwithstanding anything contained in this Part, where an action could be brought against a person by a credit union for loss or damage suffered by or an accounting due to the credit union by reason of the negligence of the person or the failure of the person to comply with this Act, the regulations, the articles or the by-laws of the credit union or orders, directions or notices of the superintendent or the guarantee corporation, the superintendent or the guarantee corporation may where

(a) an action has not been brought, bring and maintain an action without leave; or

(b) where an action has been brought, apply to the court to be added as a plaintiff and to be given conduct of the action.

(2) Money recovered by the superintendent or the guarantee corporation under subsection (1) shall be held for the benefit of the credit union or, where a grant, loan or advance has been made by the guarantee corporation, the money shall be held for the benefit of the guarantee corporation.

76. Section 173 of the Act is repealed and the following substituted:

Supervision of credit union

173. (1) Where the guarantee corporation is satisfied that a credit union is carrying on its business in a manner that contravenes this Act or the regulations, sound business or financial practices or is financially unsound, including those situations where

(a) a credit union is unable to pay its liabilities as they become due;

(b) the realizable value of the assets of a credit union is less than the aggregate of its liabilities and the capital account of all classes of shares of the credit union, other than the equity of members;

(d) a credit union fails to file a report or document required to be filed by this Act within the time fixed for filing by this Act; or

(e) a credit union has failed to comply with an order of the superintendent or of the guarantee corporation,

the guarantee corporation may place the credit union under the supervision of the guarantee corporation or another person appointed by the guarantee corporation.

(2) Where the guarantee corporation has placed a credit union under supervision under subsection (1), the guarantee corporation shall notify

(a) the superintendent;

(b) the auditor of the credit union;

(d) other entities the guarantee corporation determines require notice of the supervision.

77. Paragraph 179(1)(b) of the Act is repealed and the following substituted:

(b) in the case of a director, at the latest residence address of the director, as shown in the records of the credit union, or in the last notice filed under section 76.

78. Section 180 of the Act is repealed and the following substituted:

Service of notice

180. A notice or document required to be sent to or served upon a credit union may be sent to the registered office of the credit union shown in the last prescribed notice filed with the superintendent,

(a) by regular mail and, if so sent, it is considered to have been received or served on the fifth business day from the date it was postmarked;

(b) electronically, and if so sent, the notice is considered to have been received on the day of transmission, if the document is transmitted on or before 4 p.m., or the next business day, if the document is transmitted after 4 p.m.; and

unless the superintendent determines that there are reasonable grounds to believe that the credit union did not receive the notice or the document at that time or at all.

79. Subsection 185(1) of the Act is repealed and the following substituted:

Verification

185. (1) The superintendent or the guarantee corporation may require that a document or a fact stated in a document required by this Act to be sent to the superintendent or the guarantee corporation be verified in accordance with subsection (2).

80. Section 189 of the Act is repealed and the following substituted:

Examination of documents

189. (1) A person who has paid the required fee is entitled, during usual business hours, to examine

(a) orders of the superintendent and notices, articles and by-laws of a credit union filed with the superintendent; and

(b) orders of the guarantee corporation and annual returns filed with the guarantee corporation.

(2) The superintendent shall provide a copy of a document referred to in paragraph (1)(a) and the guarantee corporation shall provide a copy of a document referred to in paragraph (1)(b) to a person where the person

(a) requests a copy of the document; and

(b) pays the required fee for the copying of the document.

81. Subsection 190(3) of the Act is repealed and the following substituted:

(3) The superintendent is not required to produce a document, other than a certificate and attached articles or statement filed under section 186 after the time period prescribed in the regulations.

82. Subsections 191(2) and (3) of the Act are repealed and the following substituted:

(2) The superintendent shall

(a) act under the instructions of the minister;

(b) direct the board of the guarantee corporation to complete an external review of the guarantee corporation activities satisfactory to the superintendent at least every 5 years and provide the report to the superintendent; and

(3) The superintendent may

(a) make inquiries and request documentation as necessary to ensure that the guarantee corporation is in compliance with this Act, the regulations or an order;

(b) issue directives with respect to the interpretation and clarification of this Act and the regulations as it relates to the powers and duties referred to in this section; and

83. Subsection 192(2) of the Act is repealed.

84. The Act is amended by adding immediately after section 192 the following:

Protection from liability

192.1 An action for damages does not lie against the minister, the superintendent, the guarantee corporation, the supervisor or a person directed by them, for anything done or omitted to be done in good faith under this Act or the regulations.

85. (1) Section 193 of the Act is amended by adding immediately after paragraph (h) the following:

(h.1) prescribing the form and manner in which records are to be kept;

(h.2) respecting the issuance of surplus shares and other shares;

(2) Section 193 of the Act is amended by adding immediately after paragraph (k) the following:

(k.1) respecting policies to be established by a credit union in relation to deceased members and their estates and the terms, conditions, restrictions or limitations in relation to those policies;

(3) Paragraph 193(r) of the Act is repealed and the following substituted:

(r) respecting interest rate risk under section 45;

(4) Section 193 of the Act is amended by adding immediately after paragraph (r) the following:

(r.1) respecting policies to be established by a credit union in relation to services provided by external parties and the terms, conditions, restrictions or limitations in relation to those policies;

(r.2) respecting the enactment, amendment and repeal of the by-laws of a credit union;

(5) Section 193 of the Act is amended by adding immediately after paragraph (w) the following:

(w.1) respecting the requirement that a director or officer of a credit union disclose his or her interest in a material contract;

(6) Section 193 of the Act is amended by adding immediately after paragraph (x) the following:

(x.1) prescribing the time period in which a credit union is required to file a return for the purpose of section 90;

(7) Section 193 of the Act is amended by adding immediately after paragraph (z) the following:

(z.1) prescribing the information and documentation to be included in a notice of meeting for the purposes of subsection 131.1(3);

(z.2) prescribing the time period for which the guarantee corporation is required to retain the documents and records of a dissolved credit union;

(8) The Act is amended by adding immediately after paragraph (aa) the following:

(aa.1) prescribing matters for the purposes of paragraph 134(c.2);

(9) The Act is amended by adding immediately after paragraph (bb) the following:

(bb.1) respecting the requirement that a director or officer of the guarantee corporation disclose his or her interest in a material contract;

(10) The Act is amended by adding immediately after paragraph (ff) the following:

(ff.1) respecting vacancies in the board of directors of the guarantee corporation and removal of directors from the board of directors of the guarantee corporation;

(11) Section 193 of the Act is amended by adding immediately after paragraph (gg) the following:

(gg.1) prescribing the amount that payments are limited for the purposes of subsection 144(2.1);

(gg.2) prescribing the time period for the purpose of subsection 190(3);

Commencement

86. This Act, or a section, subsection, paragraph or subparagraph of this Act, comes into force on a day or days to be proclaimed by the Lieutenant-Governor in Council.