Canada Cooperatives Act — C-1.7 130
Constraints on shares 130 (1) Subject to subsection 290(3), a distributing cooperative that has issued investment shares that remain outstanding and are held by more than one person may, by special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to constrain (a) the issue or transfer of investment shares of any class or series to persons who are not resident in Canada; (b) the issue or transfer of investment shares of any class or series to enable the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province (i) to obtain a licence to carry on a business, (ii) to become a publisher of a Canadian newspaper or periodical, or (iii) to acquire investment shares of a financial intermediary as defined in the regulations; (c) the issue, transfer or ownership of investment shares of any class or series to assist the cooperative or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control; (d) the issue, transfer or ownership of any investment share to assist the cooperative to comply with any prescribed law; or (e) the issue, transfer or ownership of any investment share to enable the cooperative to be a registered labour sponsored venture capital corporation under Part X.3 of the Income Tax Act . Exception in respect of paragraph (1)(c) (2) Paragraph (1)(c) does not permit a constraint on the issue, transfer or ownership of investment shares of any class or series of which any investment shares are outstanding unless the investment shares of that class or series are already subject to a constraint permitted under that paragraph. Limitation of prohibition of investment shares (3) If the ownership by a person of investment shares would adversely affect the ability of a cooperative or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in paragraph (1)(c), the cooperative may, under that paragraph, limit the number of investment shares of the cooperative that may be owned, or prohibit the ownership of investment shares, by that person. Change or removal of constraint (4) A cooperative referred to in subsection (1) may, by a special resolution of the members and by a separate special resolution of the shareholders of each class, amend its articles to change or remove any constraint on the issue, transfer or ownership of its investment shares. Termination (5) The directors may, if authorized by a special resolution effecting an amendment under subsection (1) or (4), revoke the resolution before it is acted on without further approval. Regulations (6) The Governor in Council may make regulations with respect to a cooperative that constrains the issue, transfer or ownership of its investment shares, prescribing (a) the disclosure required of the constraints in documents issued or published by the cooperative; (b) the duties and powers of the directors to refuse to issue or register transfers of investment shares in accordance with the articles; (c) the limitations on voting rights of any investment shares held contrary to the articles; (d) the powers of the directors to require disclosure of beneficial ownership of investment shares of the cooperative and the right of the cooperative and its directors, employees and agents or mandataries to rely on that disclosure and the effects of that reliance; and (e) the rights of any person owning investment shares of the cooperative at the time of an amendment to its articles constraining investment share issues or transfers. Validity of acts (7) An issue or a transfer of an investment share or an act of a cooperative is valid despite any failure to comply with this se