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November 15, 2004 / PETER I. INGLISDIRECT DIAL: (780) 423-8168
EMAIL:
OUR FILE #: 63391.1
Alberta Agriculture, Food and Rural Development,
Business Management Innovations Branch
201 Provincial Building,
5030 - 50 Street
Olds, AB T4H 1S1
Attention: Merle Good
Dear Sir:
Re: / Contract #: 2004-04 (the “Agreement”) between Parlee McLaws llp (“PM”) and Rural Education and Development Association (“R.E.D.A.”) re New Generation Cooperative (“NGC”) developmentFurther to our letter of September 17, 2004 and various communications with yourself and Graham Gilchrist with regard to this matter we are please to report on our progress and provide you with the following documents:
1. Sample Articles of Incorporation;
2. Sample Summary Articles of Incorporation;
3. Sample Bylaws;
4. Summary form paper regarding fundraising/securities laws issues;
5. Sample Offering Memorandum Subscription Agreement;
6. Sample General Private Placement Subscription Agreement; and
7. Terms of Use document to be used with the presentation of the above noted documents on the Alberta Agriculture business website (“Ropin’ the Web”).
We will of course be pleased to work with you in terms of the presentation and arrangement of the documents on the Ropin’ the Web site as well as assisting you further with NGC issues as you see fit. Our basic views on how our documents ought to be presented follow below.
Incorporation Documents
As you are no doubt aware, most of the documents required for the incorporation of a cooperative under the Cooperatives Act, S.A. 2001, c. C-28.1 (the “Act”) are available on the Government Services ministry’s website[1]. The documents we have been asked to provide samples of are the few documents that are not provided as true sample documents in that location. We would suggest presenting our documents as well as the documents available on the Government Services site as follows:
“To incorporate an Alberta-based NGC you need to provide the following documents:
- Articles of Incorporation – See the document Articles of Incorporation Requirements (pdf-91kb) for information about what must be and what may be included in Articles. See also a sample form ofArticlesof Incorporation based on those of an existing Alberta-based NGC.
- Summary of Articles of Incorporation - This summary is for department use. You must still provide the Articles of Incorporation from step 1. See also a sample form of Summary of Articles of Incorporation based on those of an existing Alberta-based NGC.
- Statutory Declaration (pdf-569kb) (last two pages) - signed by the incorporators declaring that after incorporation the cooperative will be organized, operated and will carry on business on a cooperative basis and will comply with the provisions of division 4 of Part 18 of the Cooperatives Act. A cooperative will be complying with the first set of “cooperative basis” rules if it satisfies all the requirements of section 2 of the Cooperatives Act. [2].
- A completed NUANS report (Newly Upgraded Automated Name Search) The report must be no more than 91 days old and must contain all 6 pages. Either the original or the carbon copy is acceptable. In Alberta, NUANS reports are available at any Alberta Registries agency at a cost of approximately $42. NOTE: Pursuant to the Cooperatives Act cooperatives must have a cooperative identifier as part of their name (i.e. “cooperative”, “co-operative”, “coop”, “co-op”, “united” or “pool”). There is an exception made for NGCs which may be exempted from this requirement by the Director of Cooperatives. If you would like to take advantage of this exemption with a new NGC you should include a request similar to that found in the following paragraph in your covering letter to the Director of Cooperatives used to deliver your incorporation materials:
[TD1]“In addition, please accept this letter as a request pursuant to s. 423 of the Cooperatives Act made on behalf <name of proposed NGC>to exempt<name of proposed NGC>as a new generation cooperative from the requirement to have any of the words referred to in s. 16(1)(a) of the Cooperatives Act as part of the name of<name of proposed NGC>.”
- A completed copy of Notice of Address/Change of Address (pdf-213kb) form.
- A completed copy of Notice of Directors/Change of Directors/Change of Director's Address (pdf-660kb) form.
- An incorporation fee of $100. Your cheque must be made payable to the Minister of Finance. If you are applying in person, you may also pay using cash, VISA or MasterCard.
An Alberta-based NGC must complete, approve and submit bylaws governing its operation to the Director of Cooperatives within 180 days of the NGC being officially incorporated (the date of the issuance of the Certificate of Incorporation).
The Cooperatives Act does not have standard bylaws. The Cooperatives Act and the regulation identify what must be and what may be included in the bylaws. Please refer to the document Bylaw Requirements (pdf-101kb) for this. See also a sample form of bylaws based on those of an existing Alberta-based NGC.
Within 180 days of the issuance of the Certificate of Incorporation, the directors must hold a members' meeting to make and adopt the bylaws. These bylaws come into force on the day they are made or on any later date specified in the bylaws or in the resolution adopting them.
Bylaws must be filed with the Director of Cooperatives within 60 days of the date they come into force. They must be signed by the directors of the NGC and must have an attached Affidavit of Execution verifying the signatures of the directors. Every member and investment shareholder is entitled to receive a copy of the NGC's bylaws free of charge once a calendar year.”
Fundraising Documents
As you are will be aware, and pursuant to the terms of the Agreement we have agreed to provide documents to be used in the initial raising of capital with the express exception of disclosure documents. This type of fundraising falls under the category of securities law and is regulated in Alberta by the Securities Act, R.S.A. 2000, c. S-4 and administered by the Alberta Securities Commission (the “ASC”). Information on the Securities Act and the ASC are available on the ASC’s website[3]. The paper and sample subscription agreement we are providing ought to be provided on the Ropin’ the Web site along with links to the ASC’s website as well as particular documents thereon. We would suggest presenting our documents as well as the documents available on the ASC site as follows:
“Whenever a cooperative, corporation or other organization wants to raise capital by issuing shares or other securities, they need to be aware that such fundraising is regulated in Canada by securities laws and administered in each province and territory by a local securities commission or securities registrar. In Alberta the primary law affecting securities is the Securities Act, R.S.A. 2000, c. S-4, which is administered by the Alberta Securities Commission (the “ASC” see the ASC’s website for more detailed information). The purpose of securities laws is generally to protect the investing public and to maintain the integrity of the capital markets.
Securities laws can be very detailed and complex. Adding to this complexity is the fact that securities laws vary in each province and territory within Canada. As a result, if an organization is seeking to raise capital by issuing shares or other securities in Canada they must ensure they are complying with the securities laws of each and every province in which they intend to sell securities.
We encourage you to review the document “New Generation Cooperatives and Securities Exemptions” for more information on securities laws and ways to raise initial or start-up capital for NGCs.
Please note that we intend that the links to our subscription agreement and the specific ASC documents should be embedded as part of our paper.
Conclusion
As noted above we will of course be pleased to work with you in terms of the presentation and arrangement of the documents on the Ropin’ the Web site including providing MS Word or pdf versions of the documents as required. We do require that the Terms of Use document be used prominently in conjunction with our materials on the Ropin’ the Web site. Our first suggestion is that the Terms of Use be included as a clickwrap or clickthrough pop-up window on the site such that users of the site will have to acknowledge acceptance of the Terms of Use immediately prior to accessing our documents.
To date, it has been our pleasure to be involved in this project with REDA and as noted we look forward to assisting you further with NGC issues as you see fit.
Yours truly,
PARLEE McLAWS llp
Per:
PETER I. INGLIS
PII/va
cc: Graham Gilchrist
Alberta Agriculture, Food and Rural Development
304-7000 113 Street
J.G. O'Donoghue Building
Edmonton, AB T6H 5T6
cc: Michelle Aasgard
Rural Education and Development Association
Suite 220, 10403 - 172 Street
Edmonton, AB T5S 1K9
{E4246984.DOC;1}
[1]See
[2]Cooperative principles
2(1) For the purposes of this Act, a cooperative is organized and operated, and carries on business, on a cooperative basis if
(a)membership is available to persons who can use the services of the cooperative and who are willing and able to accept
the responsibilities of and abide by the terms of membership,
(b)each member or delegate has only one vote,
(c)no member or delegate may vote by proxy,
(d)interest on any member loan is limited to a maximum rate fixed in the articles,
(e)dividends on any membership share are limited to the maximum rate fixed in the articles,
(f)to the extent feasible, members provide the capital required by the cooperative,
(g)surplus funds arising from the cooperative's operations are used
(i)to develop its business,
(ii)to provide or improve common services to members,
(iii)to provide for reserves or the payment of interest on member loans or dividends on shares,
(iv)for community welfare or the propagation of cooperative enterprises, or
(v)as a distribution among its members as a patronage return,
and
(h)it provides education on the principles of cooperative enterprises.
(2) Subsection (1)(a) is subject to any restrictions set out in the articles so long as the restrictions are consistent with applicable
laws with respect to human rights.
[3]See
[TD1]1 I don’t know where this doc is???