N.B. planning to modernize its co-op laws

A report prepared by the N.B. Co-operative Legislation Working Group, established in 2012, which includes English and French co-ops, credit unions and caisses populaires, calls for a regulatory shift that will give co-operatives greater control over their operations and require fewer reporting requirements. According to the 129-page report, the proposed role of the FCNB would be quasi-judicial and the regulator would step in only when there is a problem. And rather than giving the FCNB a supervising role to ensure a co-op’s viability, the report recommended effective disclosure requirements be put in place to protect the investing public.

The report also recommended that administrative duties come under one level of authority, the registrar. Filing requirements for financial statements, bylaws and extraordinary resolutions would continue.

However, there would be no appointment of an administrator by the regulator, as the current co-operative statute requires.

Under the proposed new regulatory framework, issuing investment shares and classes of shares other than membership shares would be permitted. The government is not waiting for comprehensive new co-op legislation to be in place to make this recommendation a reality.

In fact, legislative changes have been proposed to other statutes that would allow for the creation of community economic development corporations, which will offer investors in approved co-ops, companies and associations a 50% non-refundable New Brunswick income tax credit on their investment.

The new co-op legislation, when enacted, will be substantively different from the existing statute, says Wendy Keats, executive director of the Co-operative Enterprise Council in Salisbury, N.B.: “It’s a brand new act and a much bigger act.”

Time has taken a toll on the relevancy of the Co-operative Associations Act, which has not had a major update or revision since it received royal assent almost 40 years ago.

At the beginning of 1996, a draft proposal was circulated by New Brunswick’s Department of Justice to the co-operative movement and other stakeholders for comment. Proposed amendments to the legislation were included in a revised version of the proposal in 1997, but no further action was taken.

Many people believe that it’s now time for a change, says Hancox: “Industry and co-operative stakeholders have said this [legislation] hasn’t kept pace.”

The provincial government has made a public commitment to introduce updated legislation. Two forces are at play: pressure from the co-op industry, which is being buffeted by new market realities; and a rapidly changing economic landscape is being matched by the political will to see modernized legislation in place that will strengthen the co-op industry.

Still, the process will take time, says Hancox: “The new framework is in the early stages of research and development.”

The Co-operative Associations Act was given royal assent in New Brunswick on May 30, 1978. The seeds for legislative review were sown four years ago, when the province’s co-op industry formed the Co-op Ambassador Committee of N.B. to push for updates.

Marie-Claude Blais, the province’s justice minister at the time, wrote to the committee confirming her intent to “inform Cabinet of the challenges facing co-operatives and the need for new legislation.”

Many of the recommendations and the overall approach recommended in the legislative working group’s report was drawn from the Model Act, developed by the Canadian Co-operative Association and le Conseil canadien de la co-operation et de la mutualité, as well as co-operative legislation being proposed in Newfoundland and Labrador and the Ontario Co-operative Corporations Act.

In 2013, New Brunswick had almost 250 co-operatives, with more than 375,000 members and 4,200 employees.

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