C-6.1 - Act constituting Capital régional et coopératif Desjardins

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chapter C-6.1
Act constituting Capital régional et coopératif Desjardins
CAPITAL RÉGIONAL ET COOPÉRATIF DESJARDINSJune 21 2001July 1 2001
The Minister of Finance is responsible for the administration of this Act. Order in Council 412-2016 dated 25 May 2016, (2016) 148 G.O. 2 (French), 2923.
WHEREAS Mouvement des caisses Desjardins has proposed the constitution of an investment entity devoted mainly to fostering investment in the resource regions of Québec and meeting the capital needs of cooperatives;
Whereas, to achieve those objectives, a share offering will be made to the Québec public;
Whereas it is expedient to accede to the request of Mouvement des caisses Desjardins;
Whereas the establishment of an entity of this type requires the enactment of special legislation as regards both its organization and the protection of investors;

THE PARLIAMENT OF QUÉBEC ENACTS AS FOLLOWS:
CHAPTER I
CONSTITUTION AND ORGANIZATION
1. “Capital régional et coopératif Desjardins” is hereby constituted, hereinafter called “the Société”.
The Société is a legal person with share capital.
2001, c. 36, s. 1.
2. The Société is deemed to have been constituted by the filing of articles on 1 July 2001.
2001, c. 36, s. 2.
3. The head office of the Société shall be established in the territory of Ville de Lévis.
2001, c. 36, s. 3.
4. The affairs of the Société are managed by a board of directors consisting of
(1)  eight persons appointed by the president of Mouvement des caisses Desjardins;
(2)  two persons elected by the general meeting of shareholders;
(3)  two persons appointed by the members referred to in paragraphs 1 and 2 from among the persons considered by those members to be representative of the eligible entities described in subparagraph 1 of the first paragraph of section 18 in the case of one of those persons, and in subparagraph 2 of that paragraph for the other person; and
(4)  the chief executive officer of the Société.
2001, c. 36, s. 4.
5. The members of the board of directors shall appoint the chief executive officer of the Société.
The Société may, by by-law, designate the chief executive officer by a different title.
2001, c. 36, s. 5.
6. If a vacancy occurs among the members of the board of directors referred to in paragraph 1 of section 4, the president of the Mouvement des caisses Desjardins may appoint a person for the unexpired portion of the term.
2001, c. 36, s. 6.
7. Any director having an interest in an economic activity causing the director’s personal interest to conflict with that of the Société shall, under pain of forfeiture of office, disclose the interest and abstain from voting on any decision involving the activity in which the director has an interest.
A director is deemed to have an interest in any economic activity in which the director’s spouse or child has an interest.
2001, c. 36, s. 7.
8. The main functions of the Société are
(1)  to raise venture capital for the benefit of the resource regions and the cooperative sector;
(2)  to promote the economic development of the resource regions through investment in eligible entities operating in those regions;
(3)  to support the cooperative movement throughout Québec by investing in eligible cooperatives;
(4)  to support eligible entities in their start-up phase and in their development;
(5)  to stimulate the Québec economy through investments in all parts of the territory of Québec.
2001, c. 36, s. 8.
CHAPTER II
SHARE CAPITAL
8.1. For the purposes of this Act, capitalization period means
(1)  a period that is
(a)  the period that begins on 1 July 2001 and ends on 31 December 2001,
(b)  the period that begins on 1 January 2002 and ends on 28 February 2003,
(c)  the period that begins on 1 March 2003 and ends on 29 February 2004,
(d)  the period that begins on 31 March 2004 and ends on 28 February 2005,
(e)  the period that begins on 1 March 2005 and ends on 28 February 2006, or
(f)  the period that begins on 24 March 2006 and ends on 28 February 2007; or
(2)  a period that begins on 1 March of a year subsequent to 2006 and ends on the last day of February of the following year.
2004, c. 21, s. 1; 2006, c. 36, s. 5; 2011, c. 6, s. 11.
9. Subject to section 10, the Société is authorized to issue shares without par value, carrying the rights defined in section 123.40 of the Companies Act (chapter C-38), the right to elect two directors and the right of redemption defined in sections 12 and 14.
The Société is also authorized, subject to section 10, to issue fractional shares without par value, carrying proportionately the same rights as shares, except the voting rights attached to such shares.
2001, c. 36, s. 9.
10. The total amount of the subscription for the issued and outstanding shares and fractional shares of the Société may not exceed, at the end of a capitalization period described in paragraph 1 of section 8.1, the amount provided for in Schedule 1 in respect of that capitalization period.
The total amount of the subscription for the shares and fractional shares of the Société issued during a capitalization period described in paragraph 2 of section 8.1 may not exceed
(1)  $100,000,000, if the capitalization period is the period that ends on 29 February 2008;
(2)  subject to subparagraphs 3 and 4, either of the following amounts, if the capitalization period begins after 29 February 2008:
(a)  $150,000,000, if the total amount of the subscription for the issued and outstanding shares and fractional shares of the Société is less than $1,250,000,000 at the end of any earlier capitalization period, and
(b)  the lesser of $150,000,000 and the amount referred to in the third paragraph, in any other case;
(3)  $150,000,000, if the capitalization period is the period that ends on 29 February 2016;
(4)  $135,000,000, if the capitalization period is the period that ends on 28 February 2017 or the period that ends on 28 February 2018.
The amount referred to in subparagraph b of subparagraph 2 of the second paragraph corresponds to the reduction in the total amount of the subscription for the issued and outstanding shares and fractional shares of the Société that is attributable to the aggregate of the shares and fractional shares that were redeemed or purchased by agreement by the Société during the preceding capitalization period.
2001, c. 36, s. 10; 2004, c. 21, s. 2; 2011, c. 6, s. 12; 2015, c. 21, s. 29; 2017, c. 1, s. 20.
11. Only a natural person may acquire or hold shares or fractional shares of the Société. The holder of shares or fractional shares may not alienate them and such shares or fractional shares, subject to section 123.56 of the Companies Act (chapter C-38), may not be purchased by agreement by the Société, except with the authorization of the board of directors or a committee composed of persons designated by the board for that purpose.
The Société may purchase by agreement shares or fractional shares only in the cases and to the extent provided in a policy adopted by the board of directors and approved by the Minister of Finance and only at a price not exceeding the redemption price determined in accordance with section 15.
2001, c. 36, s. 11.
12. A share or fractional share is redeemable by the Société only in the following cases:
(1)  at the request of a person who acquired the share or fractional share from the Société at least seven years prior to redemption;
(2)  at the request of a person to whom the share or fractional share has devolved by succession;
(3)  at the request of a person who acquired the share or fractional share from the Société, if the person applies to the Société therefor in writing within 30 days after subscribing for the share or fractional share;
(4)  at the request of a person who acquired the share or fractional share from the Société, if the person is declared, in the manner prescribed by by-law of the board of directors, to be suffering from a severe and permanent mental or physical disability which prevents the person from working.
2001, c. 36, s. 12.
13. For the purposes of paragraph 4 of section 12, a disability is severe only if by reason thereof the person is regularly incapable of holding any substantially gainful occupation.
However, in the case of a person 60 years of age or over, a disability is severe if by reason thereof the person is regularly incapable of carrying on the substantially gainful occupation the person held at the time he or she ceased to work owing to the disability.
A disability is permanent only if it is likely to result in death or to be of indefinite duration.
2001, c. 36, s. 13.
14. Subject to the second paragraph of section 123.54 of the Companies Act (chapter C-38), the Société is bound to redeem any share or fractional share at the request of a person pursuant to section 12 of this Act.
2001, c. 36, s. 14.
15. The price of redemption of the shares or fractional shares shall be fixed by the board of directors twice a year, on dates six months apart, on the basis of the value of the Société as established by experts under the responsibility of an independent firm of chartered accountants according to generally accepted accounting principles and adjusted, if necessary, to reflect the fair value of investments in enterprises the Société controls, in joint ventures and in enterprises on which it has significant influence or in which it holds variable interests.
The board of directors may also fix the price of redemption referred to in the first paragraph at any other time in the year, on the basis of an internal valuation which, in each case, must be the subject of a special report of independent chartered accountants confirming continued adherence to the principles and methods used to value the Société.
The Société may, however, accept the offer of a shareholder to receive the last price of redemption so determined rather than the subsequent one. The redemption shall be made within a reasonable time after the date of the request therefor.
However, in the case described in paragraph 3 of section 12, the Société is bound to redeem the share or fractional share at the price at which it was acquired from the Société and to make the payment not later than 30 days after the date of receipt of the request.
2001, c. 36, s. 15; 2009, c. 13, s. 1.
16. Each shareholder is entitled to receive written confirmation of the number of shares or fractional shares he or she holds and of the amount paid thereon.
The confirmation shall be provided annually to the shareholder free of charge in the form and according to the procedure prescribed by by-law of the Société.
Where a mode of confirmation other than a share certificate is prescribed, the document sent to the shareholder stands in lieu of a certificate issued pursuant to section 53 of the Companies Act (chapter C-38).
Moreover, at the request of the holder of fractional shares, the Société shall exchange the fractional share certificates, or documents standing in lieu thereof, for certificates, or documents standing in lieu thereof, representing the corresponding whole shares.
2001, c. 36, s. 16.
CHAPTER III
INVESTMENTS
17. For the purposes of this Act, an investment includes any financial assistance granted in the form of a loan, guarantee, security, the acquisition of bonds or other debt securities, an interest in share capital, capital stock or any other form.
2001, c. 36, s. 17.
18. For the purposes of this Act, eligible entity means
(1)  an eligible cooperative;
(2)  a partnership or a legal person actively operating an enterprise, the majority of whose employees are resident in Québec and whose assets are less than $100,000,000 or whose net equity is less than $50,000,000, other than an eligible cooperative or a partnership or legal person whose activities consist mainly in investing.
For the purposes of subparagraph 1 of the first paragraph, an eligible cooperative is a legal person governed by the Cooperatives Act (chapter C‐67.2) or a legal person governed by the Canada Cooperatives Act (Statutes of Canada, 1998, chapter 1) having its head office in Québec, or in respect of which half of the salaries paid to its employees, during its fiscal year ended before the date on which the investment is made, was paid to the employees of an establishment situated in Québec, and the legal persons controlled by one or several cooperatives or controlled by one or several cooperatives and the Société.
For the purposes of this Act, the assets or net equity of an entity in which the Société makes an investment are the assets or net equity shown in its financial statements for the fiscal year ended before the date on which the investment is made, minus the write-up surplus of its property and the incorporeal assets. In the case of an entity which has not completed its first fiscal year, the fact that the assets or net equity, as the case may be, of the entity are, immediately before the investment, under the limits prescribed in this chapter in relation to such an investment must be confirmed in writing to the Société by a chartered accountant.
2001, c. 36, s. 18; 2005, c. 1, s. 2; 2005, c. 38, s. 2; 2012, c. 8, s. 25.
19. The Société may make investments with or without a guarantee or security.
However, for a particular fiscal year, the Société shall comply with the following requirements:
(1)  its eligible investments must represent, on the average, at least the following percentage of its average net assets for the preceding fiscal year:
(a)  60%, if the particular fiscal year ends on 31 December 2015,
(b)  61%, if the particular fiscal year ends on 31 December 2016,
(c)  62%, if the particular fiscal year ends on 31 December 2017,
(d)  63%, if the particular fiscal year ends on 31 December 2018,
(e)  64%, if the particular fiscal year ends on 31 December 2019, or
(f)  65%, if the particular fiscal year begins after 31 December 2019; and
(2)  its eligible investments made in entities situated in the resource regions of Québec referred to in Schedule 2 or in eligible cooperatives must represent, on the average, at least 35% of the percentage applicable under subparagraph 1.
For the purposes of this section, the following rules apply:
(1)  the average net assets for a fiscal year must be determined by adding the net assets at the beginning of that year to the net assets at the end of that year and by dividing the sum so obtained by 2;
(2)  the net assets do not include the movable or immovable property used by the Société to carry on its operations; and
(3)   the average eligible investments for a fiscal year must be determined by the formula
(A + B + C + D) / 2.
In the formula in subparagraph 3 of the third paragraph,
(1)  A is the Société’s eligible investments at the beginning of the fiscal year;
(2)  B is the Société’s eligible investments at the end of the fiscal year;
(3)  C is the amount by which an amount that is the total of the eligible investments already made by the Société that were disinvested in the fiscal year, exceeds an amount equal to 2% of the Société’s average net assets for the preceding fiscal year; and
(4)  D is the amount determined under subparagraph 3 for the preceding fiscal year.
For the purposes of this section, investments that entail no security or hypothec and consist in any of the following investments are eligible investments:
(1)  investments made by the Société in eligible entities;
(2)  investments made by the Société otherwise than as first purchaser for the acquisition of securities issued by an eligible entity;
(3)  investments that are made by the Société in addition to an investment entailing no security or hypothec already made in an entity that was, at the time of the investment, an eligible entity, and that are made in an entity that would be an eligible entity under subparagraph 2 of the first paragraph of section 18 if the amounts of “$100,000,000” and “$50,000,000” mentioned in that subparagraph were replaced by the amounts of “$350,000,000” and “$150,000,000”, respectively;
(4)  strategic investments made by the Société after 11 March 2003, in accordance with an investment policy adopted by the board of directors of the Société and approved by the Minister of Finance, in an entity whose assets are less than $500,000,000 or whose net equity is not over $200,000,000;
(5)  an investment made after 11 March 2003 in an eligible entity through a limited partnership in which the Société holds an interest, directly or through another limited partnership, not exceeding the proportion of the Société’s direct or indirect interest in the limited partnership that made the investment;
(6)  investments made by the Société in a partnership or legal person that consist of an initial capital outlay of at least $25,000,000 or an additional capital outlay, provided that the strategic value of the initial capital outlay and, where applicable, of the additional capital outlay has been recognized, after 21 April 2005, by the Minister of Finance, and that those investments are not otherwise eligible investments;
(7)  investments made by the Société in the period beginning on 22 April 2005 and ending on 31 May 2021 in a local venture capital fund established and managed in Québec or in a local fund recognized by the Minister of Finance, provided that the investments are made with the expectation that the local fund invest an amount at least equal to 150% of the aggregate of the sums received from the Société, the Fonds de solidarité des travailleurs du Québec (F.T.Q.) and Fondaction, le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l’emploi, in Québec partnerships or legal persons pursuing economic objectives and whose assets are less than $100,000,000 or whose net equity is less than $50,000,000 and the investments are not already taken into account as eligible investments for the purposes of the second paragraph;
(8)  investments made by the Société after 21 March 2005 in FIER Partenaires, s.e.c.;
(9)  investments made by the Société after 30 March 2010 in Capital Croissance PME S.E.C.;
(10)  investments made by the Société after 10 November 2011 in Fonds Relève Québec, s.e.c.;
(11)  investments made by the Société in Société en commandite Essor et Coopération; and
(12)  investments made by the Société in Capital Croissance PME II S.E.C.
For the purposes of this section, investments entailing a security that are made by the Société in an enterprise that is a partnership or a legal person pursuing economic objectives and whose assets are less than $100,000,000 or whose net equity is less than $50,000,000 are also eligible investments, provided those investments are part of a financing package, in which Fonds Relève Québec, s.e.c. participates, for the succession of the enterprise.
For the purposes of the fifth and sixth paragraphs, the investments that the Société has agreed to make, for which it has committed but not yet disbursed sums at the end of a fiscal year, and that would have been described in any of subparagraphs 1 to 4, 6 and 11 of the fifth paragraph or in the sixth paragraph had they been made by the Société, are deemed to have been made by the Société. However, for a particular fiscal year, the aggregate of those deemed investments may not exceed 12% of the Société’s net assets at the end of the preceding fiscal year.
For the purposes of the fifth paragraph, the investments that the Société has agreed to make, for which it has committed but not yet disbursed sums at the end of a fiscal year, and that would have been described in any of subparagraphs 7 to 10 and 12 of that paragraph had they been made by the Société, are deemed to have been made by the Société.
For the purposes of subparagraph 2 of the fifth paragraph, a dealer acting as an intermediary or firm underwriter is not considered to be a first purchaser of securities.
For the application of the fifth paragraph to a particular fiscal year, the following rules apply:
(0.1)  the investments described in subparagraph 1 of that paragraph that are made, after 31 December 2013 and before 1 January 2018, in an eligible entity situated in a territory referred to in Schedule 3, up to $500,000 per investment, are deemed to be increased by 100%;
(1)  the aggregate of the investments described in subparagraphs 2 and 3 of that paragraph may not exceed 20% of the Société’s net assets at the end of the preceding fiscal year;
(2)  the aggregate of the investments described in subparagraph 4 of that paragraph may not exceed 7.5% of the Société’s net assets at the end of the preceding fiscal year;
(2.1)  the Société’s share in an investment described in subparagraph 5 of that paragraph that is made, after 31 December 2013 and before 1 January 2018, in an eligible entity situated in a territory referred to in Schedule 3, up to $500,000, is deemed to be increased by 100%;
(2.2)  the amount of the investments described in that paragraph, other than those described in subparagraph 5 of that paragraph, made by the Société in a limited partnership is deemed to be increased by the Société’s share in any investment of the limited partnership that entails no security or hypothec made, after 31 December 2013 and before 1 January 2018, in an eligible entity situated in a territory referred to in Schedule 3, up to $500,000 per investment;
(3)  the aggregate of the investments described in subparagraph 6 of that paragraph may not exceed 10% of the Société’s net assets at the end of the preceding fiscal year;
(4)  if the particular fiscal year ends before 1 January 2022, the investments described in subparagraph 7 of that paragraph, up to 5% of the Société’s net assets at the end of the preceding fiscal year, are deemed to be increased by 50%;
(5)  (subparagraph repealed);
(6)  if the particular fiscal year ends before 1 January 2012, the portion of the investments described in subparagraph 8 of that paragraph that, taking into account the participation of the Société in FIER Partenaires, s.e.c., is dedicated to the creation of seed investment funds after 21 September 2006 is deemed to be increased by 50%;
(7)  the investments described in subparagraph 10 of that paragraph are deemed to be increased by 50%;
(8)  the aggregate of the investments described in subparagraph 11 of the fifth paragraph may not exceed $85,000,000.
For the purposes of this section, the following rules apply:
(1)  the eligible investments described in subparagraph 4 of the fifth paragraph are not considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2;
(1.1)  a portion of the eligible investments described in subparagraph 6 of the fifth paragraph that are made in a corporation acting as an investment fund is considered, in the proportion determined by the Minister of Finance, to have been made in entities situated in the resource regions of Québec referred to in Schedule 2 if, in the opinion of the Minister, the concentration of that corporation’s capital in those resource regions is satisfactory;
(2)  the eligible investments described in subparagraph 6 of the fifth paragraph that are made in a corporation or legal person are considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2 if, in the opinion of the Minister of Finance, the investments have an impact on the economic activity of those regions;
(3)  the eligible investments described in subparagraph 7 of the fifth paragraph are considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2 if, in the opinion of the Minister of Finance, it is reasonable to believe that the local fund will have an impact on the economic activity of those regions or on the cooperative sector;
(4)  the eligible investments described in subparagraph 8 of the fifth paragraph are considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2;
(5)  a portion representing 35% of the eligible investments described in subparagraph 9 of the fifth paragraph is considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2;
(6)  a portion representing 35% of the eligible investments described in subparagraph 10 of the fifth paragraph is considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2;
(7)  the eligible investments described in subparagraph 11 of the fifth paragraph are considered to have been made in eligible cooperatives;
(8)  a portion representing 35% of the eligible investments described in subparagraph 12 of the fifth paragraph is considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2; and
(9)  the eligible investments made, after 31 December 2013 and before 1 January 2018, in an entity situated in a regional county municipality referred to in Schedule 4 are considered to have been made in entities situated in the resource regions of Québec referred to in Schedule 2.
The third paragraph of section 18 applies, with the necessary modifications, in relation to the determination of the assets or net equity of a Québec partnership or legal person described in subparagraph 7 of the fifth paragraph.
The requirement set out in the second paragraph applies from the fiscal year that began on 1 January 2006.
2001, c. 36, s. 19; 2004, c. 21, s. 3; 2005, c. 38, s. 3; 2006, c. 36, s. 6; 2011, c. 6, s. 13; 2012, c. 8, s. 26; 2015, c. 21, s. 30; 2017, c. 1, s. 21; 2017, c. 292017, c. 29, s. 5.
19.0.1. If, for a particular fiscal year, the Société fails to comply with any of the requirements of the second paragraph of section 19, the Société may not issue shares or fractional shares in the capitalization period that begins in the following fiscal year for a total consideration exceeding one of the following amounts or, in the case where two of the following amounts apply, the lesser of the two:
(1)  87.5% of the total amount of the subscription for the Société’s shares and fractional shares that is authorized for that capitalization period under section 10 if
(a)  the percentage that, on the average, the Société’s eligible investments for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is
i.  less than 61%, but not less than 51%, if the particular fiscal year ends on 31 December 2016,
ii.  less than 62%, but not less than 52%, if the particular fiscal year ends on 31 December 2017,
iii.  less than 63%, but not less than 53%, if the particular fiscal year ends on 31 December 2018,
iv.  less than 64%, but not less than 54%, if the particular fiscal year ends on 31 December 2019, or
v.  less than 65%, but not less than 55%, if the particular fiscal year begins after 31 December 2019, or
(b)  the percentage that, on the average, the investments described in subparagraph 2 of the second paragraph of section 19 for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is
i.  less than 21.35%, but not less than 17.85%, if the particular fiscal year ends on 31 December 2016,
ii.  less than 21.7%, but not less than 18.2%, if the particular fiscal year ends on 31 December 2017,
iii.  less than 22.05%, but not less than 18.55%, if the particular fiscal year ends on 31 December 2018,
iv.  less than 22.4%, but not less than 18.9%, if the particular fiscal year ends on 31 December 2019, or
v.  less than 22.75%, but not less than 19.25%, if the particular fiscal year begins after 31 December 2019;
(2)  75% of the total amount of the subscription for the Société’s shares and fractional shares that is authorized for that capitalization period under section 10 if
(a)  the percentage that, on the average, the Société’s eligible investments for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is
i.  less than 51%, but not less than 41%, if the particular fiscal year ends on 31 December 2016,
ii.  less than 52%, but not less than 42%, if the particular fiscal year ends on 31 December 2017,
iii.  less than 53%, but not less than 43%, if the particular fiscal year ends on 31 December 2018,
iv.  less than 54%, but not less than 44%, if the particular fiscal year ends on 31 December 2019, or
v.  less than 55%, but not less than 45%, if the particular fiscal year begins after 31 December 2019, or
(b)  the percentage that, on the average, the investments described in subparagraph 2 of the second paragraph of section 19 for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is
i.  less than 17.85%, but not less than 14.35%, if the particular fiscal year ends on 31 December 2016,
ii.  less than 18.2%, but not less than 14.7%, if the particular fiscal year ends on 31 December 2017,
iii.  less than 18.55%, but not less than 15.05%, if the particular fiscal year ends on 31 December 2018,
iv.  less than 18.9%, but not less than 15.4%, if the particular fiscal year ends on 31 December 2019, or
v.  less than 19.25%, but not less than 15.75%, if the particular fiscal year begins after 31 December 2019;
(3)  62.5% of the total amount of the subscription for the Société’s shares and fractional shares that is authorized for that capitalization period under section 10 if
(a)  the percentage that, on the average, the Société’s eligible investments for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is
i.  less than 41%, but not less than 31%, if the particular fiscal year ends on 31 December 2016,
ii.  less than 42%, but not less than 32%, if the particular fiscal year ends on 31 December 2017,
iii.  less than 43%, but not less than 33%, if the particular fiscal year ends on 31 December 2018,
iv.  less than 44%, but not less than 34%, if the particular fiscal year ends on 31 December 2019, or
v.  less than 45%, but not less than 35%, if the particular fiscal year begins after 31 December 2019, or
(b)  the percentage that, on the average, the investments described in subparagraph 2 of the second paragraph of section 19 for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is
i.  less than 14.35%, but not less than 10.85%, if the particular fiscal year ends on 31 December 2016,
ii.  less than 14.7%, but not less than 11.2%, if the particular fiscal year ends on 31 December 2017,
iii.  less than 15.05%, but not less than 11.55%, if the particular fiscal year ends on 31 December 2018,
iv.  less than 15.4%, but not less than 11.9%, if the particular fiscal year ends on 31 December 2019, or
v.  less than 15.75%, but not less than 12.25%, if the particular fiscal year begins after 31 December 2019; or
(4)  50% of the total amount of the subscription for the Société’s shares and fractional shares that is authorized for that capitalization period under section 10 if
(a)  the percentage that, on the average, the Société’s eligible investments for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is less than
i.  31%, if the particular fiscal year ends on 31 December 2016,
ii.  32%, if the particular fiscal year ends on 31 December 2017,
iii.  33%, if the particular fiscal year ends on 31 December 2018,
iv.  34%, if the particular fiscal year ends on 31 December 2019, or
v.  35%, if the particular fiscal year begins after 31 December 2019, or
(b)  the percentage that, on the average, the investments described in subparagraph 2 of the second paragraph of section 19 for the particular fiscal year are of the Société’s average net assets for the preceding fiscal year is less than
i.  10.85%, if the particular fiscal year ends on 31 December 2016,
ii.  11.2%, if the particular fiscal year ends on 31 December 2017,
iii.  11.55%, if the particular fiscal year ends on 31 December 2018,
iv.  11.9%, if the particular fiscal year ends on 31 December 2019, or
v.  12.25%, if the particular fiscal year begins after 31 December 2019.
2017, c. 1, s. 22.
19.1. (Repealed).
2005, c. 38, s. 4; 2006, c. 36, s. 7.
20. The Société may not make an investment in an entity that would cause the total amount of its investment in the entity and any other entity associated with it at that time to exceed 5% of the assets of the Société, as established on the basis of the latest valuation by the chartered accountants referred to in the first paragraph of section 15.
The percentage may be increased up to 10% to enable the Société to acquire securities in an entity carrying on business in Québec but that is not an eligible entity within the meaning of section 18. In such a case, the Société may not, directly or indirectly, acquire or hold shares carrying more than 30% of the voting rights attached to the shares of the entity that may be exercised under any circumstances.
Where the Société avails itself of the second paragraph as regards an entity in which it already holds, directly or indirectly, shares carrying more than 30% of the voting rights attached to the shares of the entity that may be exercised under any circumstances, the Société has five years from the date of the investment to bring its shareholding in the entity into conformity with that paragraph.
These restrictions do not apply, however, where the Société makes an investment in
(1)  securities guaranteed by the Government of Québec or of Canada or a Canadian province or territory;
(2)  securities guaranteed by an undertaking made to a trustee by Québec to pay sufficient subsidies to pay the interest and principal on their respective maturity dates;
(3)  bills of exchange accepted or certified by a bank listed in Schedule I or II to the Bank Act (Statutes of Canada, 1991, chapter 46) and registered with the Canada Deposit Insurance Corporation or a financial institution registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act (chapter A-26).
2001, c. 36, s. 20; 2002, c. 45, s. 704; 2002, c. 70, s. 186; 2004, c. 37, s. 90.
21. For the purposes of the first paragraph of section 20, an entity is associated with another entity at any time where those entities are, at that time, corporations associated with each other in accordance with the provisions of Chapter IX of Title II of Book I of Part I of the Taxation Act (chapter I-3) and, for that purpose,
(1)  an entity that is an individual carrying on an enterprise is deemed to carry on the enterprise through a corporation all of whose shares of the capital stock carrying voting rights belong to the individual at that time;
(2)  an entity that is a partnership is deemed to be a corporation all of whose shares of the capital stock carrying voting rights belong to each member of the partnership, at that time, in the proportion represented by the ratio between the share of the member in the income or loss of the partnership for the fiscal period ending on or before that time and the income or loss of the partnership for that fiscal period, assuming that if the income and loss of the partnership for that fiscal period are nil, the income of the partnership for that fiscal period is equal to $1,000,000;
(3)  an entity that is a trust, within the meaning of section 1 of the Taxation Act, is deemed to be a corporation all of whose shares of the capital stock carrying voting rights belong to each beneficiary of the income, at that time, in the proportion represented by the ratio between the share of the beneficiary in the income or loss of the trust for its fiscal period ending on or before that time and the income or loss of the trust for that fiscal period, assuming, if the income and loss of the trust for that fiscal period are nil, that the income of the trust for that fiscal period is equal to $1,000,000.
2001, c. 36, s. 21.
22. Where the Société makes an investment in the form of a guarantee or security, it shall establish and maintain for the term of the guarantee or security a reserve equivalent to not less than 50% of the amount of the guarantee or security.
The Société may invest the money deposited in the reserve in the manner provided in paragraphs 2, 3, 4, 5 and 10 of article 1339 of the Civil Code.
2001, c. 36, s. 22.
CHAPTER IV
LOANS
23. The Société may not contract any loan that will cause the current principal of its total debt to exceed 100% of the total consideration paid for its shares or fractional shares.
For the purposes of this section, total debt means the amount obtained by applying the following equation:
x = the debt of the Société + y1 [debt of any subsidiary of the Société + y2 (debt of any subsidiary of the particular subsidiary of the Société)]
where
x = the total debt of the Société; and
y1 = the percentage of the shares carrying voting rights held, directly or indirectly, by the Société in the capital stock of its particular subsidiary; and
y2 = the percentage of the shares carrying voting rights held, directly or indirectly, by the particular subsidiary of the Société in the capital stock of the particular subsidiary of that subsidiary of the Société.
Furthermore, the debt of a subsidiary does not include the principal of a loan granted to the subsidiary by the parent legal person, either directly or by subscription for any evidence of indebtedness.
This equation, with the necessary modifications, applies to any subsidiary of a subsidiary, in descending line.
2001, c. 36, s. 23.
CHAPTER V
CONFLICTS OF INTEREST
24. The Société may not make an investment for the benefit of one of its officers or directors, his or her spouse or a child of either.
Officer and director have the meanings assigned by the Securities Act (chapter V-1.1).
2001, c. 36, s. 24; 2006, c. 50, s. 119, s. 120.
25. The Société may not invest in an entity in which a director referred to in paragraph 1, 2 or 4 of section 4 or an officer other than a director has a major or controlling interest.
2001, c. 36, s. 25; 2006, c. 50, s. 120.
26. A person is considered to have a major interest in an entity if the person holds more than 10% of the stock or shares of the entity.
Such person is deemed to control an entity if the person holds securities enabling the person under all circumstances to elect a majority of its directors.
2001, c. 36, s. 26.
27. Any contract made in contravention of section 24 or 25 may be cancelled within one year of the date on which it is made.
The senior executives of the Société who made the contract or consented thereto are solidarily liable for the resulting losses to the Société.
2001, c. 36, s. 27.
28. A contract in contravention of section 24 or 25 is not subject to cancellation and the second paragraph of section 27 does not apply if the contravention results from the opening of a succession or from a gift and if the beneficiary renounces the property concerned or disposes of it with dispatch.
2001, c. 36, s. 28.
CHAPTER VI
MISCELLANEOUS PROVISIONS
29. Notwithstanding section 125 of the Companies Act (chapter C-38), the provisions of that Act which are applicable to legal persons constituted by the filing of articles, with the necessary modifications, apply to the Société where they are not inconsistent with this Act, except the second paragraph of section 46, paragraph 1 of section 53, sections 54, 123.9 to 123.11, 123.22 to 123.24, 123.26, 123.27, 123.27.1 to 123.27.6, 123.55, 123.72, 123.82, 123.91 to 123.93, 123.95, 123.96, 123.98 to 123.100, the second paragraph of section 123.114 and sections 123.115 to 123.136, 123.138 and 123.139.
Sections 123.77 to 123.79 of the said Act apply only in the case of the directors elected under paragraph 2 of section 4.
2001, c. 36, s. 29.
30. The articles of the Société may be amended but the filing of articles shall not operate to amend any provision of this Act.
2001, c. 36, s. 30.
31. A shareholder may, on payment of the fee prescribed by by-law of the board of directors, obtain a copy of the articles and by-laws of the Société.
2001, c. 36, s. 31.
32. Notwithstanding section 472 of the Act respecting financial services cooperatives (chapter C-67.3), the Société is deemed to be a legal person that is not controlled by the Fédération des caisses Desjardins du Québec for the purposes of sections 473 to 486, section 556 and sections 567 and 688 of the said Act.
2001, c. 36, s. 32.
33. In addition to the other statutory functions it may exercise regarding the operations of the Société, the Autorité des marchés financiers shall be charged with inspecting the internal affairs and the operations of the Société annually to ascertain whether this Act is being complied with.
For the purposes of the inspection, the Authority has the powers vested in it by Chapters I and II of Title IX of the Securities Act (chapter V-1.1).
The Authority shall make a report upon each inspection to the Minister of Finance and shall include therein any other information or document the Minister determines.
2001, c. 36, s. 33; 2002, c. 45, s. 705; 2004, c. 37, s. 90.
CHAPTER VII
AMENDING PROVISIONS
COOPERATIVES ACT
34. (Amendment integrated into c. C-67.2, s. 49.4).
2001, c. 36, s. 34.
35. (Amendment integrated into c. C-67.2, s. 76).
2001, c. 36, s. 35.
36. (Amendment integrated into c. C-67.2, s. 143).
2001, c. 36, s. 36.
37. (Amendment integrated into c. C-67.2, s. 144).
2001, c. 36, s. 37.
38. (Amendment integrated into c. C-67.2, s. 146).
2001, c. 36, s. 38.
39. (Amendment integrated into c. C-67.2, s. 163).
2001, c. 36, s. 39.
40. (Amendment integrated into c. C-67.2, s. 172).
2001, c. 36, s. 40.
ACT RESPECTING FINANCIAL SERVICES COOPERATIVES
41. (Amendment integrated into c. C-67.3, heading of Division V of Chapter VIII).
2001, c. 36, s. 41.
CHAPTER VIII
TRANSITIONAL AND FINAL PROVISIONS
42. The first persons appointed under paragraph 1 of section 4 shall appoint two persons for a period not exceeding one year to act as directors until the election of persons under paragraph 2 of the said section.
2001, c. 36, s. 42.
43. Upon the appointment of the directors under paragraphs 1 and 2 of section 4, two copies of a list of their full names and addresses shall be filed with the Autorité des marchés financiers, which shall send a copy to the enterprise registrar who shall deposit it in the enterprise register. The directors come into office on the date of the filing of the list.
2001, c. 36, s. 43; 2002, c. 45, s. 706; 2004, c. 37, s. 90; 2010, c. 40, s. 92.
44. (Omitted).
2001, c. 36, s. 44.
SCHEDULE 1
(Section 10)
TOTAL AMOUNT OF THE SUBSCRIPTION FOR THE ISSUED AND OUTSTANDING SHARES AND FRACTIONAL SHARES AT THE END OF EACH CAPITALIZATION PERIOD

– $150,000,000 on 31 December 2001;

– $300,000,000 on 28 February 2003;

– $375,000,000 on 29 February 2004;

– $475,000,000 on 28 February 2005;

– $575,000,000 on 28 February 2006;

– $725,000,000 on 28 February 2007.
2001, c. 36, Schedule 1; 2004, c. 21, s. 4; 2005, c. 38, s. 5; 2011, c. 6, s. 14.
SCHEDULE 2
(Section 19)
RESOURCE REGIONS OF QUÉBEC
The regions of Abitibi-Témiscamingue, Bas-Saint-Laurent, Côte-Nord, Gaspésie–Îles-de-la-Madeleine, Mauricie, Nord-du-Québec and Saguenay–Lac-Saint-Jean as described in the Décret concernant la révision des limites des régions administratives du Québec (chapter D-11, r. 1).
2001, c. 36, Schedule 2.
SCHEDULE 3
(Section 19)
TERRITORIES IDENTIFIED AS FACING ECONOMIC DIFFICULTIES
The territories of the following entities:
Kativik Regional Government, constituted by the Act respecting Northern villages and the Kativik Regional Government (chapter V-6.1);
Urban agglomeration of La Tuque, as described in section 8 of the Act respecting the exercise of certain municipal powers in certain urban agglomerations (chapter E-20.001);
Urban agglomeration of Îles-de-la-Madeleine, as described in section 9 of the Act respecting the exercise of certain municipal powers in certain urban agglomerations;
Eeyou Istchee James Bay Regional Government, established by the Act establishing the Eeyou Istchee James Bay Regional Government (chapter G-1.04);
Municipalité régionale de comté d’Abitibi-Ouest;
Municipalité régionale de comté d’Acton;
Municipalité régionale de comté d’Antoine-Labelle;
Municipalité régionale de comté d’Argenteuil;
Municipalité régionale de comté d’Avignon;
Municipalité régionale de comté de Bonaventure;
Municipalité régionale de comté de Coaticook;
Municipalité régionale de comté de Kamouraska;
Municipalité régionale de comté de La Côte-de-Gaspé;
Municipalité régionale de comté de La Haute-Côte-Nord;
Municipalité régionale de comté de La Haute-Gaspésie;
Municipalité régionale de comté de La Matanie;
Municipalité régionale de comté de La Matapédia;
Municipalité régionale de comté de La Mitis;
Municipalité régionale de comté de La Vallée-de-la-Gatineau;
Municipalité régionale de comté de L’Islet;
Municipalité régionale de comté Maria-Chapdelaine;
Municipalité régionale de comté de Maskinongé;
Municipalité régionale de comté de la Matawinie;
Municipalité régionale de comté de Mékinac;
Municipalité régionale de comté de Montmagny;
Municipalité régionale de comté de Papineau;
Municipalité régionale de comté de Pontiac;
Municipalité régionale de comté des Appalaches;
Municipalité régionale de comté des Basques;
Municipalité régionale de comté des Etchemins;
Municipalité régionale de comté des Sources;
Municipalité régionale de comté de Témiscamingue;
Municipalité régionale de comté de Témiscouata;
Municipalité régionale de comté du Domaine-du-Roy;
Municipalité régionale de comté du Golfe-du-Saint-Laurent;
Municipalité régionale de comté du Granit;
Municipalité régionale de comté du Haut-Saint-François;
Municipalité régionale de comté du Haut-Saint-Laurent;
Municipalité régionale de comté du Rocher-Percé;
Ville de Shawinigan.
2015, c. 21, s. 31.
SCHEDULE 4
(Section 19)
REGIONAL COUNTY MUNICIPALITIES OUTSIDE RESOURCE REGIONS FACING ECONOMIC DIFFICULTIES
Municipalité régionale de comté d’Acton;
Municipalité régionale de comté d’Antoine-Labelle;
Municipalité régionale de comté d’Argenteuil;
Municipalité régionale de comté de Coaticook;
Municipalité régionale de comté de La Vallée-de-la-Gatineau;
Municipalité régionale de comté de L’Islet;
Municipalité régionale de comté de Matawinie;
Municipalité régionale de comté de Montmagny;
Municipalité régionale de comté de Papineau;
Municipalité régionale de comté de Pontiac;
Municipalité régionale de comté des Appalaches;
Municipalité régionale de comté des Etchemins;
Municipalité régionale de comté des Sources;
Municipalité régionale de comté du Granit;
Municipalité régionale de comté du Haut-Saint-François;
Municipalité régionale de comté du Haut-Saint-Laurent.
2015, c. 21, s. 31.
REPEAL SCHEDULE
In accordance with section 9 of the Act respecting the consolidation of the statutes and regulations (chapter R-3), chapter 36 of the statutes of 2001, in force on 1 April 2002, is repealed, except section 44, effective from the coming into force of chapter C-6.1 of the Revised Statutes.