My colleague says “Especially the NDP”. I am glad he is with us.
This support was continued in committee. I thank members of the Standing Committee on Industry for their work in preparing the bill for third reading.
The bill has three overall objectives. The first is to revitalize corporate governance rules in relation to co-operatives. It does this by providing access to modern corporate tools that other businesses already have through framework legislation such as the Canada Business Corporations Act, the Bank Act or the Co-operative Credit Associations Act which governs financial co-ops.
Bill C-5 enables co-operatives to incorporate as a right. This eliminates ministerial discretion as well as the current complex procedures that now govern incorporation of co-ops. It reduces the cost of incorporation for both co-operatives and the government. It places co-operatives and business corporations on the same level playing field.
The bill gives co-operatives the capacity, rights, powers and privileges of a natural person similar to what business corporations now have. Co-operatives no longer have to specify their fundamental purpose in their articles or to abide by the limited list of powers set out in the current act. This helps co-operatives compete fairly. It simplifies incorporation procedures and clarifies the boundaries within which a co-operative may act.
The bill before us also changes the rules concerning the nomination and the election of directors as well as the duties and liabilities of those directors. For example, the existing act requires a fixed number of directors and specifies there may be no less than three. Bill C-5 gives co-operatives the right to establish the number of directors in their articles although it still specifies there may be no less than three.
The current act requires that a director must be a member of the co-operative. The bill requires that two-thirds of directors must be representatives of the members. This allows more flexibility by the co-operatives to make their own decisions within boundaries.
In today's competitive economy it is important for co-operatives to recruit the best possible people, to serve directors and to help guide co-operatives. These changes were requested by the co-operative sector to help it attract the expertise it required to the board of directors.
Bill C-5 makes the statutory duties and the fiduciary duties of directors of co-operatives consistent with the statutory duties of directors found in other corporate legislation. It provides a due diligence defence for directors in situations where they may be personally liable.
The second overall objective of the bill is to provide co-operatives with new financing opportunities, something the co-operatives were restricted in, in the past.
The co-operatives will be able to compete in capital markets with entities that already have access to equity investment. Under the bill membership shares can be issued with or without par value. This is a change from the existing act where membership shares can only be issued at par.
The bill allows flexibility so co-operatives can choose to maintain traditional co-operative practices such as par value membership shares or to realize a gain through no par value membership shares. This allows the flexibility for co-operatives to decide how they want to operate within the boundaries.
Bill C-5 gives co-ops the ability to issue investment shares to the public. Investment shareholders are given rights and protections similar to those provided under the Canada Business Corporations Act. This gives co-operatives the flexibility they need to raise capital and puts them on a level playing field with other business entities.
For example, although incorporated in the province of Saskatchewan, the Saskatchewan Wheat Pool is now listed on the Toronto Stock Exchange. I remind the House that SaskPool shares have been available for over a year now. The equity investment the wheat pool has acquired in capital markets has enabled it to embark on a very aggressive and visionary expansion plan.
A third overall objective of Bill C-5 is to strengthen the features that define and distinguish co-operatives. We do not seek to change the principles that have provided the foundation for the co-op movement in Canada. Rather we want to protect the differences between co-ops and business corporations.
Under Bill C-5 co-operatives must satisfy the test of being organized, operated and administered on a co-operative basis before they can incorporate. This incorporation test protects the uniqueness of the co-operative enterprise in Canada.
One of the most fundamental principles of a co-op is that its members control its decisions. Under the bill before us members continue to make the bylaws as they do in the current act. This is different from the Canada Business Corporations Act where directors make the bylaws.
Members have considerable power to restrict the power of directors. They have remedies in cases of acts of corporate oppression and a right of dissent in the face of fundamental changes to the structure of the co-operative. Members have rights to call special meetings and they have rights to make proposals at the meetings.
Let me summarize by saying that three objectives guide the bill before us. First, we want to revitalize corporate governance rules. Second, we want to provide access to new ways for co-ops to raise financing. Third, we want to do all this without compromising the principles of co-operatives. Indeed we want to strengthen their distinctive features.
Bill C-5 strikes a balance among all three of these objectives. It was originally designed by the co-op sector. It has seen a number of improvements, both in consultation with other stakeholders and in committee.
The co-operation of members of the standing committee in terms of hearing from stakeholders, especially stakeholders who helped in designing the bill, and of helping us to proceed with the bill in committee is very important. It preserves the intent and the fundamental foundation of co-ops, yet allows them to participate in the marketplace on a level playing field.
The bill deserves the support of the House. I hope this afternoon we will continue to debate Bill C-5 and to support it to completion.