Canada

The legal framework analysis aims to provide general knowledge of the national cooperative legislation and of its main characteristics and contents, with particular regard to those aspects of regulation regarding the identity of cooperatives and its distinction from other types of business organisations, notably the for-profit shareholder corporation.

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for Canada.

Canada is a ‘federation’ with a federal government (the ‘Canadian’ government), provincial governments and territorial governments.  The powers available to each level of government are divided in the Canadian Constitution between the Federal Government and the governments of each province (each province basically having the same powers).  At this point in time the three territories effectively have powers derived from the Federal government. Each province and territory have their own specific cooperative legislation separate from the Canada Cooperatives Act (“CCA”) at the federal level.

Cooperative Friendliness

It is likely true that legislation in Canada with respect to co-operatives is ‘more in favour of co-operatives than against’.  But this should be measured against the challenge which co‑operatives generally face that there is very poor understanding of co-operatives among politicians and governments generally, and with the few exceptions which exist, particularly in Quebec, governments and politicians do not understand why there should be any legislation favouring co‑operatives over other forms of business organization.

Key recommendations for improvement

• Consistent with the priorities of Cooperatives and Mutuals Canada, initiate a full review of the Canada Cooperatives Act.
• In future statutory reform, include the recognition and support of the cooperative movement and the cooperative form of enterprise, where appropriate, as a way to accomplish public policies in certain sectors or for joint co-operative/public enterprises.
• Remove corporate and for-profit share corporation concepts and remedy provisions from the Canada Cooperatives Act and provincial cooperative legislation containing similar provisions, most notably the ‘dissent’ right, the ‘investigation right’ with respect to alleged oppression and the ‘oppression’ remedy.
• Allow similar organizations (mutual, cooperatives, fraternal benefit associations, reciprocals) to merge without the need for the dissolution or sale of any of them similar to the effect achieved by the Butterfills amendment in the United Kingdom.
• Adopt legislation to support the capitalization of cooperatives, especially where they have adopted indivisible reserves which are distributed for further cooperative development when a cooperative dissolves or is sold.
• Ensure cooperative education to be included in the different levels of teaching with adaptation to the various characteristics of each of them.

Conclusions

• Indivisible reserves are more than just nice to have.  Indivisible reserves are essential to ensure the long-term success of co-operatives.
• Co-operatives, especially large co-operatives, are extremely vulnerable to the ‘group think’ approach of policy-makers, legislators, and regulators to the form or forms which business corporations can take.
• The slow ‘creep’ of ‘for profit corporate principles’ into the democratic cooperative form of enterprise needs to be stopped now otherwise the damage may be irreparable.
• It is perfectly appropriate for the cooperative form of enterprise, where it has adopted indivisible reserves and is focussed on the social economy, to be given preference and special treatment as an integral part of public policy initiatives.

_{The legal frameworks analysis is a tool developed under the ICA-EU Partnership #coops4dev. It is an overview of the national legal frameworks at the time of writing. The views expressed within are not necessarily those of the ICA, nor does a reference to any specific content constitute an explicit endorsement or recommendation by the ICA.}