The federal government is trying once again to update the rules governing federally regulated co-operatives, increasing their ability to attract investment capital from outside the co-op sector.
Legislation introduced last week to the House of Commons also would allow co-ops to offer up to one-third of board of directors seats to non-members.
One in five could represent outside investors.
“It really is an attempt to give co-ops some of the operating flexibility enjoyed by corporations and to make it easier for them to raise capital,” said Lynden Hillier, executive director of Agriculture Canada’s co-operatives secretariat.
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He said the need for more capital has put pressure on many co-ops to change their structure into a corporation because of limitations on outside investment in existing co-op legislation.
Raise capital
The need for more flexibility in raising investment capital often was cited as United Grain Growers, and then Saskatchewan Wheat Pool, moved away from their original pure co-op rules to become publicly traded companies.
“We think these changes will reduce pressure on co-ops to transform themselves in order to raise money,” Hillier said.
The 221-page bill tabled in the Commons two weeks ago by industry minister John Manley also changes many of the rules governing how co-ops can operate in the market. It gives them the flexibility available to corporations through the Canada Business Corporations Act.
And like corporations, the new legislation will give the courts, rather than a federal minister, the power to authorize re-organization.
“It gives them an array of modern corporate tools,” said Hillier.
He said the legislation, similar to a bill introduced into the last Parliament but killed when an early election was called in April, should not cause much commotion.
No strong opposition
“It has the support of the opposition and the sector, which helped prepare it,” said the former Canadian Co-operatives Association official now working for the federal government to prepare the new legislation. “It should not be controversial.”
However, that does not mean it will win quick approval.
Because it is non-controversial, debate and study of Bill C-5 likely will take second place to other, higher-priority government bills including changes to the Canada Pension Plan and the Canadian Wheat Board Act.
“It may not pass quickly but on the other hand, if a time slot does open, it should not take long to get through,” he said.
