Know the needs and status of the cooperative

Before embarking on a preferred share issuance process with a cooperative, you will need to assess the cooperative’s condition to better understand its capitalization rate and needs. A capitalization plan and a share repayment plan should be drawn up according to the cooperative’s repayment capacity.

In this step, don’t forget to inform the company of the existence and benefits of the L’ampli Fund.

Validate the cooperative’s regulations

The cooperative must include in its by-laws a provision authorizing the board of directors to issue shares. The board thus becomes empowered to determine the amounts, privileges, rights and restrictions of the issued units as well as the conditions of their redemption or transfer.

You will therefore have to check that this provision is included in the by-laws.

If an amendment to the by-laws is necessary, it must be made at an annual or special general meeting. Proposed changes must be sent in advance to all members.

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Determine the shares’ characteristics and adopt a resolution

To create a preferred class of shares, the board of directors must pass a resolution that sets out the characteristics of the class. This resolution will be forwarded to shareholders.

Generally, the privileges, rights and restrictions provided by the characteristics of preferred shares relate to several aspects, such as the right to acquire, the holder’s right to receive interest, the holding period, and the terms and priorities for redemption.

The shares’ characteristics may vary depending on the needs of the co-operative and the expectations of the members who will acquire them. This method of capitalization has real flexibility, as there can be as many categories of shares as necessary, but it must be part of a more global reflection by the cooperative on its capitalization needs.

Produce the register and certificate

• The register

The membership register must be rigorously maintained by the directors. It can be consulted by all members and constitutes the records of the cooperative.

The Cooperatives Act (CQLR, chapter C-67.2) imposes several requirements regarding the register’s content. It should include a comprehensive section of information on members and share capital, including:

1. a list of members, auxiliary members and other shareholders, including their names, addresses and the number of membership, preferred and participating preferred shares held by each;
2. the dates of subscription, redemption or transfer of each shares, as well as the amount due on such shares, if any.

• The certificate

Le certificat doit indiquer le montant, le nom du détenteur, la date d’émission et énoncer l’ensemble des caractéristiques des parts ou être accompagné d’une copie de la résolution qui les détermine.

Une coopérative n’a pas l’obligation de produire un certificat lors de l’émission de parts. Par contre, la coopérative a la responsabilité de bien informer les détenteurs de parts en fournissant une copie de la résolution qui détermine les caractéristiques des parts, le montant et la date d’émission.

Learn more about the steps required for the issuance of preferred units

The Collective Entrepreneurship Department of Quebec’s Ministry of Economy and Innovation has put together a wealth of useful information (in French only).

Parcourez le site du ministère