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Friday, February 12, 2016
Saskatchewan Justice

The New Generation Co-operatives Act provides for the creation of a new kind of co-operative that:

  • produces, processes or markets agricultural products; and/or
  • provides services to persons engaged in those undertakings.

Other types of permitted businesses may be added by regulation.

Provincial and extra-provincial co-operatives incorporated, continued, or amalgamated under this Act share some of the same principles found in traditional co-operatives (e.g., one member, one vote). However, there are some differences as well.

New generation co-operatives are allowed to issue investment shares to non-members, subject to restrictions, in addition to members providing capital to the co-operative through share financing proportional to their future delivery commitments. In this way, new generation co-operatives overcome some of the difficulties traditional co-operatives have had in raising new capital.

Further, unlike traditional co-operatives, these co-operatives can restrict membership.

The major provisions of the Act:

  • allow other co-operatives and corporations to amalgamate, continue, or register, provided that they engage in permitted businesses;
  • require that participation in the co-operative be based on membership, and a capital structure composed of common or preferred shares, or a special class of preferred shares issued only to members as specified in the articles;
  • provide for par value common shares issued only to members who are entitled to receive dividends and who may share in any surplus on winding-up of the co-operative;
  • provide for classes of non-par value preferred shares that may have the following features:
    • entitled to receive dividends and fully transferable;
    • elect a maximum of 20 per cent of the board of directors where the articles provide;
    • vote with regard to changes to preferred shares;
    • vote separately from members;
    • dissent rights; and
    • allow individuals to hold a maximum of ten per cent of the issued preferred shares that elect directors;
  • provide for a class of non-voting preferred shares issued to members associated with the obligation to supply key inputs to the co-operative and a corresponding obligation on the co-operative to accept the inputs;
  • provide members and preferred shareholders with voting rights and remedies in the event of fundamental changes;
  • provide that only members vote to enact or change bylaws; and
  • authorize the Co-operative Securities Board to review a proposed issue of securities to members of the public unless the Board elects to refer the matter to the Financial and Consumer Affairs Authority or allows the co-operative to elect to deal directly with the Authority.

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