Canada Cooperatives Act — C-1.7 40
Termination of membership by directors 40 (1) This section sets out the rights and procedures that apply to termination of membership. The by-laws of a cooperative may derogate from this section, but only in respect of the manner in which the membership of members may be terminated. Special resolution of directors (2) The directors may by special resolution order the termination of the membership of a member but, if the cooperative is in breach of section 149 — or if making the payment referred to in subsection (7) would put the cooperative in breach of section 149 — the termination is not effective until the cooperative is no longer in breach. Written notice (3) Not more than ten days after the date on which a special resolution is made, the secretary of the cooperative must give written notice to the member of the termination and the reasons for it. Subject to subsections (4) and (5), the effective date of the termination is the later of the date specified in the written notice and thirty days after the member receives the notice. Appeal (4) A member whose membership has been terminated may appeal from the decision of the directors to the next meeting of members by giving written notice to the secretary of the member’s intention to appeal no later than thirty days after receiving notice of the special resolution. Effect of notice of appeal (5) If a member gives a notice of appeal, the effect of the special resolution is suspended until the vote of the members under subsection (6). Resolution of members (6) If a member appeals the termination of membership, a vote of members must be taken at the next meeting of members as to whether the member’s membership should be terminated as of the effective date referred to in subsection (3). The vote is by majority of the members present at the meeting, unless a greater proportion is specified in the articles, the by-laws or a unanimous agreement. Effect of termination of membership (7) Subject to section 149, if a member’s membership is terminated, a cooperative must, no later than one year after the date of the special resolution, redeem all membership shares held by the member at the redemption price determined in accordance with section 146, and repay to the member all member loans and all other amounts held to the member’s credit and all amounts outstanding on loans made to the cooperative by the member, together with any interest accrued on those amounts up to the date of the payment. Termination of membership not to have certain effects (8) Unless the directors determine otherwise, the termination of the membership of a member does not release the member from any debt or obligation to the cooperative or contract with the cooperative. If address of member unknown (9) If the address of a member whose membership has been terminated by the directors is unknown to the cooperative after all reasonable efforts have been made to ascertain it and two years have elapsed since the effective date referred to in subsection (3), the cooperative must transfer all amounts owing under subsection (7) to a reserve fund, but those amounts do not, despite subsection (7), include any interest that would have accrued after the end of the two years. Amounts paid to entitled persons (10) If any amounts are transferred to a reserve fund under subsection (9), the cooperative must pay those amounts to any person who, no later than ten years after the transfer, shows evidence of entitlement satisfactory to the cooperative. If no person appears to show that evidence within the ten years, the amounts become the property of the cooperative.