c-3 - Act respecting the caisses d’entraide économique

Updated to 12 February 2003

This document has official status.

chapter C-3

Act respecting the caisses d’entraide économique

1. This Act governs the savings and credit unions whose names comprise the expression “caisse d’entraide économique” and the Fédération des caisses d’entraide économique du Québec.

The Savings and Credit Unions Act (chapter C-4) applies to such unions and federation, except where otherwise provided by this Act.

In this Act, however, the word “union” means a caisse d’entraide économique and the word “federation” means the Fédération des caisses d’entraide économique du Québec.

1974, c. 68, s. 1.

2. The founding memorandum of a union must be made in accordance with form 1. It must indicate, in addition to that which is mentioned in section 6 of the Savings and Credit Unions Act,

(a)  the mode of payment of the shares subscribed;

(b)  the amount of the cost of acquisition of the shares, where provided for, and its mode of payment;

(c)  the mention that the liability of the signatories is limited to the amount they have paid on their shares and not to the amount of their subscription, in accordance with section 6;

(d)  the mention that the signatories may cancel their subscriptions in accordance with section 10.

1974, c. 68, s. 2.

3. The members of a union shall be its founders and any other person capable of contracting, who

(a)  signs an application for membership in accordance with form 2;

(b)  subscribes for the minimum number of shares determined by by-law of the union to become a member;

(c)  undertakes to comply with the by-laws of the union; and

(d)  is admitted by the board of directors.

1974, c. 68, s. 3.

4. The by-laws of the union shall, in particular, determine:

(a)  the minimum number of shares that a person must subscribe to become a member;

(b)  the mode of payment of such shares;

(c)  the rate of the cost of acquisition, where provided for, imposed on every person subscribing for shares, which may be computed on the total of the amounts subscribed;

(d)  the mode of payment and the apportionment of such cost.

1974, c. 68, s. 4.

5. The by-laws of internal management and any amendment made thereto shall come into force only from their approval by the federation.

This section shall not have for effect to exempt the by-law contemplated in section 39 of the Savings and Credit Unions Act from approval by the Minister or from deposit in the register instituted under the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45).

1974, c. 68, s. 5; 1975, c. 76, s. 11; 1981, c. 9, s. 24; 1982, c. 52, s. 84; 1993, c. 48, s. 167.

6. The liability of a member of a union is limited to the amount he has paid on his shares and not to that of his subscription.

1974, c. 68, s. 6.

7. A union shall not require from a new member or from any member, in addition to the cost of acquisition of shares, an initiation fee or any other administrative cost.

However, it may require from any member who applies for a loan guaranteed by hypothec on landed property or equipment, administrative costs or fees the amount of which shall be determined by the by-laws of the union.

1974, c. 68, s. 7; 1992, c. 57, s. 453; 1999, c. 40, s. 43.

8. A union may, through persons remunerated, solicit subscriptions for shares which shall, however, be subject to acceptance by the board of directors of the union.

1974, c. 68, s. 8.

9. If the form of subscription for shares used by a union provides that the amount subscribed and the cost of acquisition of the shares is payable by periodic instalments, the latter are first posted to the payment of the cost of acquisition, then to the payment of the shares subscribed so as to pay for each unit in full as and when the instalments are received.

1974, c. 68, s. 9.

10. Any person subscribing for shares may, at his sole discretion, cancel his subscription within thirty days of the signature of such subscription by giving a written notice to that effect to the union.

The subscription shall be cancelled of right from the date the notice is received.

Within seven days following the cancellation of the subscription, the parties shall return what they have received from each other, including the cost of acquisition.

1974, c. 68, s. 10.

11. A union shall pay interest on shares only out of the annual operating surplus or out of the surplus account contemplated in section 14.

1974, c. 68, s. 11.

12. The members of the union, at the annual meeting, after considering the recommendations of the board of directors and in accordance with the statement of the last fiscal year, shall divide the amount of the annual operating surplus by first allocating it to the establishment of a general reserve in accordance with section 13. The balance, if any, shall be allocated

(a)  to the payment of interest on paid-up shares;

(b)  to the payment of rebates to depositers or borrowers; or

(c)  to the establishment of the surplus account contemplated in section 14.

1974, c. 68, s. 12.

13. Every union must establish and maintain a general reserve. It shall not be divided among the members in whole or in part.

An amount representing not less than six per cent of the gross annual income of the union must be allocated thereto. However, before such allocation, the following may be deducted from such amount:

(a)  the amount by which the reserve for bad debts on loans to members was increased, at a rate of not more than one-half of one per cent per year of the total amount of the loans to the members, up to the amount which increases the total of the reserve to one and one-half per cent of the total amount of such loans;

(b)  the amount by which the reserve for possible losses on investments contemplated in subparagraphs a to e of section 83 of the Savings and Credit Unions Act was increased, at a rate of not more than one-half of one per cent per year of the total amount of such investments, up to the amount which increases the total of the reserve to one and one-half per cent of the total amount of such investments.

The percentage of six per cent of the annual gross income to be allocated to the general reserve may be reduced to three per cent when such reserve becomes greater than five per cent of the amount represented by the savings, deposits, borrowings of the union and sums paid on shares, as computed at the end of the last fiscal year.

1974, c. 68, s. 13.

14. A union may, by by-law, order the establishment of a surplus account out of the annual operating surplus.

The operating losses of the last fiscal year, if any, shall first be debited to such account.

The annual meeting may allocate the balance of such account, in whole or in part, to the payment of interest on shares. The transfer for such purpose shall, however, be limited to the amount which has for effect to increase the rate of interest on shares to the average rate of the last three years.

In case of dissolution of a union, the balance of such account shall devolve to the federation.

1974, c. 68, s. 14.

15. A member shall not draw orders to pay on his union.

1974, c. 68, s. 15.

16. A union shall not borrow except only for temporary needs of the treasury.

Such borrowings shall only be made from the federation unless the union is specially authorized by it to borrow from another financial institution and up to the limit fixed by the federation.

A union shall not borrow from another union.

1974, c. 68, s. 16.

17. The total of the amounts borrowed by a union must not, at any time, except with the authorization of the Régie de l’assurance-dépôts du Québec, exceed 10 % of the amount represented by the savings of the members, the paid-up and unimpaired capital and the general reserve contemplated in section 13.

For the purposes of this section, the savings deposited in a union by its members and the borrowings fully secured by hypothec on securities or made for transitional requirements of liquid assets from the federation are not regarded as sums borrowed.

1974, c. 68, s. 17; 1977, c. 5, s. 14; 1978, c. 85, s. 30; 1992, c. 57, s. 454.

18. The available assets of a union less its borrowings from the federation or a financial institution contemplated in section 16, shall always be at least equal to

(a)  ten per cent of the paid-up capital; and

(b)  fifteen per cent of the amounts represented by the savings of the members.

For the purposes of this section, available assets comprise cash in hand, deposits in a bank or an authorized foreign bank listed in Schedule I, II or III of the Bank Act (Statutes of Canada, 1991, chapter 46), with a trust company or the federation or in a savings and credit union other than a caisse d’entraide économique, and the investments contemplated in subparagraphs a and b of section 83 of the Savings and Credit Unions Act.

1974, c. 68, s. 18; 2002, c. 45, s. 245; 2002, c. 70, s. 186.

19. The by-laws of the union may prescribe that certain loans authorized in accordance with section 64 of the Savings and Credit Unions Act must be approved by the board of directors of the union. These by-laws determine the classes and amounts of such loans.

1974, c. 68, s. 19; 1978, c. 85, s. 31.

20. Every loan granted by a union to a member, secured by hypothec on landed property or equipment used for industrial or commercial purposes and which exceeds 3% of the assets of the union, must be approved by the committee on credit of the federation.

In no case, however, shall such approval be required for loans of less than $30,000.

The restriction contemplated in the first paragraph does not apply if the payment in principal and interest is guaranteed by the Government of Canada or of Québec or by an enterprise thereof.

1974, c. 68, s. 20; 1992, c. 57, s. 455; 1999, c. 40, s. 43.

21. The federation must adopt a handbook of procedure relating to hypothecary loans and it must be followed by its affiliated unions.

1974, c. 68, s. 21.

22. Every loan owing from an executive officer of a union or from a person entitled to authorize loans, except in the case of a loan on acknowledgement of debt or a loan guaranteed by hypothec on his personal residence, must be disclosed within sixty days to the Régie de l’assurance-dépôts du Québec with mention of the name of each borrower, the amount of the loan granted and the rate of interest.

1974, c. 68, s. 22; 1977, c. 5, s. 14; 1978, c. 85, s. 32.

23. The rules contemplated in sections 64.1 and 64.2 of the Savings and Credit Unions Act and in section 22 apply to every loan granted

(a)  to an officer, the spouse or children of an officer, of a member of the board of directors, of the committee on credit or of the board of supervision of the union;

(b)  to a legal person in which one of the persons contemplated in paragraph a or a member of the board of directors, of the committee on credit or of the board of supervision holds directly or indirectly more than 10% of the voting shares of the share capital of such legal person;

(c)  to a legal person in which more than 50% of the share capital is held, directly or indirectly, by a group exclusively composed of persons contemplated in paragraph a or of the members of the board of directors, of the committee on credit or of the board of supervision of the union.

1974, c. 68, s. 23; 1978, c. 85, s. 33; 1999, c. 40, s. 43.

24. Every member of the board of directors of a union who has applied for a loan must abstain from sitting at the meeting when his application is being considered and decided upon.

1974, c. 68, s. 24.

25. A union shall not receive deposits from another union.

1974, c. 68, s. 25.

26. The annual meeting shall appoint an auditor to audit the annual report of the union contemplated in section 81 of the Savings and Credit Unions Act. Such audit must be made by a chartered accountant who shall sign the report thereof. The Minister may determine the form of such annual report.

1974, c. 68, s. 26; 1975, c. 76, s. 11; 1981, c. 9, s. 24; 1982, c. 52, s. 84.

27. The duties of the committee on credit are, in particular,

(a)  to authorize loans to affiliated unions and the signing of releases, discharges or waivers of priority; and

(b)  to approve any loan granted by its affiliated unions and contemplated in sections 64.1 and 64.2 of the Savings and Credit Unions Act and in sections 20 and 23.

The approval of the federation does not engage its liability.

1974, c. 68, s. 27; 1978, c. 85, s. 34.

28. The board of directors of the federation shall appoint the members of the committee on credit, who may be chosen among the employees of the federation or the members of the affiliated unions.

Only members of the board of directors and of the board of supervision of the federation shall not become members of the committee on credit.

The by-laws of the federation shall determine the number of commissioners, their terms of office, the qualifications required to perform their duties, the mode of their remuneration, the quorum, the manner in which to fill vacancies and the scope and conditions of exercise of the duties of the committee on credit.

1974, c. 68, s. 28.

29. The provisions of this Act relating to unions do not apply to the federation.

1974, c. 68, s. 29.

30. The Caisse d’épargne et d’entraide économique de Québec is deemed to be a union within the meaning of this Act except that section 5, the last paragraph of section 14, the second and third paragraphs of section 16, the words “from the federation or a financial institution contemplated in section 16,” following the word “borrowing” in the second line of section 18 and section 20 do not apply to it unless it becomes affiliated with the Fédération des caisses d’entraide économique du Québec.

1974, c. 68, s. 30; 1978, c. 85, s. 35.

31. The Inspector General of Financial Institutions is responsible for carrying out the administration of this Act.

1982, c. 52, s. 83.

32. The Minister of Finance is responsible for the administration of this Act.

1982, c. 52, s. 83.

The Minister for Finance exercises, under the supervision of the Minister of Finance, the functions related to the administration of this Act. Order in Council 930-2011 dated 14 September 2011, (2011) 143 G.O. 2 (French), 4152.

33. (This section ceased to have effect on 17 April 1987).

1982, c. 21, s. 1; U. K., 1982, c. 11, Sch. B, Part I, s. 33.

SCHEDULE I

FORM 1

Founding memorandum of a caisse d’entraide économique

The undersigned declare that they wish to form a caisse d’entraide économique with limited liability, under the name of “Caisse d’entraide économique de ..............” with its head office at .............. in the electoral district of .............. and that they undertake, in order to become members thereof, to subscribe for the numbers of shares indicated opposite their names and payable in the manner there indicated.

They also undertake to pay the amount of the cost of acquisition of the shares subscribed indicated opposite their names, payable in the manner there indicated.

The liability of the signatories shall be limited to the amount they have paid on their shares and not to that of their subscription.

The signatories may cancel their subscriptions within 30 days of their signing them by giving written notice to that effect to the provisional secretary of the union or the union in conformity with section 10 of the Act.

The territory in which the union will recruit its members shall be ..............

Mr. ..............

(surname) (given names)

..............

(occupation) (address)

is appointed provisional secretary to the union to forward this memorandum to the Minister of Finance and to call the organization meeting by ..............

(indicate mode of calling)

within 60 days of publication of the notice of approval in the Gazette officielle du Québec.

The union will be affiliated with the Fédération des caisses d’entraide économique du Québec.

Dated at ..............

this .............. 20..............

                                                         APPROVAL
                                                       
                                                         Minister
SEAL                                                    of Finance

__________________________________________________________________________________
                          |         |           |         |           |           |
             (In block    |         | Number of | Mode of | Amount of |  Mode of  |
              letters or, |         |   $5.00   | payment |  cost of  |  payment  |
              preferably, |SIGNATURE|  shares   |of shares|acquisition|  of cost  |
                  in      |         | subscribed|         |           |     of    |
              typewriting)|         |           |         |           |acquisition|
__________________________|_________|___________|_________|___________|___________|
            |             |         |           |         |           |           |
Surname     |             |         |           |         |           |           |
____________|_____________|         |           |         |           |           |
            |             |         |           |         |           |           |
Given names |             |         |           |         |           |           |
____________|_____________|         |           |         |           |           |
            |             |         |           |         |           |           |
Address     |             | founder |           |         |           |           |
____________|_____________|         |           |         |           |           |
            |             |         |           |         |           |           |
Occupation  |             | Witness |           |         |           |           |
____________|_____________|_________|___________|_________|___________|___________|

EXTRACT FROM THE GAZETTE OFFICIELLE DU QUÉBEC

Volume:       Number:       Page:       Date:                

1974, c. 68, Schedule I, form 1; 1975, c. 76, s. 11; 1981, c. 9, s. 24; 1982, c. 52, s. 85; 1999, c. 40, s. 43.

FORM 2

Application for membership in a caisse d’entraide économique

I, the undersigned, apply for membership in ..............

..............

(name of the union)

the head office of which is at ..............

I undertake to comply with the by-laws of the union and I subscribe for .............. shares of $5 each payable as follows: ..............

I also undertake to pay the sum of .............. as the amount of the cost of acquisition of the shares I have subscribed for, payable as follows: ..............

My liability as a member is limited to the amount I shall have paid on my shares, not to the amount I have subscribed for.

I may cancel my subscription for shares within 30 days of the signature of this application by giving a written notice to that effect to the union in accordance with section 10 of the Act.

Signed in duplicate at .............. this .............. 20..............

Witness ..............

(signature)

..............

(signature)

Address ..............

Occupation ..............

Accepted by the board of directors, this .............. 20..............

..............

(signature of authorized person)

1974, c. 68, Schedule I, form 2; 1999, c. 40, s. 43.

REPEAL SCHEDULE

In accordance with section 17 of the Act respecting the consolidation of the statutes (chapter R-3), chapter 68 of the statutes of 1974, in force on 31 December 1977, is repealed, except section 31, effective from the coming into force of chapter C-3 of the Revised Statutes.