Updates on Co-operative Legislation

Below, you will find regular updates on our requested changes to co-operative legislation. For any questions, please contact Erin Morgan at 519-831-0850 or [email protected].

 

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FEBRUARY 2021

OCA participated in the 2021 pre-budget consultations through an online live presentation to a panel on February 12 and a sent a full submission to the Minister of Finance. The key recommendation asks government to increase the exemption limits related to member purchases of securities and the total amount of issued securities. Read the submission


DECEMBER 2020 

On December 14, FSRA posted the final Guidance for co-operatives proposing to issue securities via high-risk offerings on its website, effective immediately. They extended a thank you to OCA and several of its members for contributing to the development of the Guidance. 


NOVEMBER 2020 

On October 5 the Financial Services Regulatory Authority (FSRA) released a draft “Interpretation and Approach Guidance” document for offering statements defined by FSRA as high risk offerings. The proposed guidance requires high risk offerings to provide enhanced disclosure as outlined in the document.

OCA invited all share capital co-operatives in Ontario to a meeting on November 3 to discuss a sector response to the draft guidelines. The result of the meeting was a letter submitted to FSRA to document questions and concerns with the high risk offering disclosure requirements.

Ontario’s co-operatives first thanked FSRA for their commitment to a level of oversight that protects the integrity of the co-operative model and the members of our businesses. The letter (that can be read in its entirety here) then goes on to ask clarifying questions to better understand what led FSRA to develop a guidance document and how they decided on the criteria that determined which offerings were high risk.

Additionally, Ontario’s co-operatives requested a clearer definition of high risk offerings so that interpretation could not lead to all co-operatives being seen as high risk in the future. There was also a request for a limit to the disclosure requirements that does not exceed generally accepted accounting principles and audit disclosure requirements as co-operatives may not have the capacity to produce reports beyond provincial and national guidelines.

Finally, OCA reiterated our recommendation to government to increase the exemption limits related to members purchasing securities and the total amount of issued securities to the following:

  1. A member purchases securities for a total price of not more than $5,000 per year and $50,000 in total.
  2. All securities issued to members are not more than $1,000,000 of issued securities.
  3. Increase the prescribed number of security holders from 35 to 50.

Share capital co-operatives met with FSRA representatives on November 9 to discuss these questions and concerns. The meeting was well attended by Ontario’s co-operatives and all of these issues were discussed in detail with FSRA staff. We expect there will be clarifications made to the guidance document as a result of our meeting. OCA looks forward to a continued positive working relationship with FSRA as the guidance document is implemented in the future.

The next step for OCA is to update our offering statement templates to meet the high risk offering requirements. These templates will be available later this fall on the OCA website. 


OCTOBER 2020 

Earlier in October, OCA submitted a budget submission to the Ministry of Finance, where we presented innovating solutions to rebuilding the economy after the COVID-19 crisis, as well as a required change for co-operative capitalization. 


APRIL 2020 

Following the legislative review of the Co-operative Corporations Act (CCA) that was completed in Summer 2019, the government announced that full authority and responsibility for the CCA would be transferred from the Minister of Finance to the Minister of Government and Consumer Services in early 2020. The transfer became effective as of April 1, 2020. The Financial Services Regulatory Authority of Ontario (FSRA) will continue to be responsible for reviewing offering statements.


JANUARY 2020 

OCA has submitted a pre-budget consultation paper to the Ministry of Finance. The document thanks the Government for its commitment to modernize the outdated Act, while highlighting that the modernization of the regulations around Offering Statement limits and exemptions are still required. Specifically, we have requested an increase to exemption thresholds for Offering Statements - last reviewed over 25 years ago. These thresholds are inadequate for today’s co-operatives, as they make it very challenging to raise the required capital for their businesses. Click on the consultation paper above to learn more. 

On January 30, Executive Director Erin Morgan addressed the Ministry at the pre-budget hearings held at the Royal Canadian Legion in Guelph ON. View her speech


DECEMBER 2019 

On December 2, 2019, OCA's Executive Director Erin Morgan addressed the Standing Committee on Finance, and thanked the Provincial Government for their commitment to modernize co-operative legislation, as detailed in Bill 138. Said Morgan:"With the modernization of our legislation, our success will most significantly be measured in economic impact. We estimate, based on the impact  modernization has had in other provinces, that we will see a 10-15% increase to annual growth in our sector. We estimate that this growth will create 5,000 new jobs and $250 million in revenue per year in Ontario." 

View her full speech.


NOVEMBER 2019 

Great news for Ontario's co-operatives...The Provincial Government's Fall Economic Statement released on November 6 announced their commitment to modernize co-operative legislation! The improvements in legislation will eliminate the requirement to do 50% of business with members to allow co-operatives to compete and innovate on a level playing field with all businesses in Ontario. The updates to audit rules will reduce administrative burdens on community-owned co-operatives and allow their income to fund increased services. View the media release. View the Fall Economic Statement (the section on co-operatives is on page 70). 


JUNE 2019 

On June 7, OCA received the following notification from FSCO that the Financial Services Regulatory Authority of Ontario (FSRA) has been delegated authority by the Minister of Finance to oversee the capital raising requirements for co-operative corporations in Ontario effective June 8, 2019. After this date, FSRA will receive, review, and receipt offering statements for co-operative corporations. The process for filing co-operative corporation offering statements will not change as a result of this delegation of authority except that fees will now be payable to the Financial Services Regulatory Authority of Ontario.


MAY 2019 

OCA recently received a letter from the Ministry of Finance in response to our request to continue moving forward in regards to modernizing the Co-operative Corporations Act (CCA). A meeting has been scheduled with Ministry of Finance and the Financial Services Regulatory Authority (FSRA) staff for mid-June to discuss next steps. The main focus of this meeting will be to ensure the smooth transition of our offering statement process from the Financial Service Commission of Ontario to FSRA, and will allow sector representatives to highlight the key concerns or priorities to the new agency. We will also take this opportunity to discuss how we can continue to move our other key legislations changes forward. We will continue to keep the sector updated as the consultation process continues. You can also follow our updates online.


APRIL 2019 

OCA was invited to sit in the provincial budget lock up on April 11, and we had the opportunity to review the 2019 Ontario Budget. It was positive that the co-operative sector was included in the budget and that Peter Cameron was quoted (see below - Section D: Open for Business, Open for Jobs, page 235). The changes to the legislation we advocated for throughout the January consultation process were not included. However, our staff are optimistic that the changes will be made to our legislation and that this process will just take a little more time than we hoped. 

The government has committed to consider the feedback from co-operatives received through the consultation process and work with our sector to propose amendments to the legislation. This is very positive.

The next steps are to consult with Minister Fedeli’s office and the Ministry of Finance to learn what work is required to finalize the legislation changes. There may be further consultation with your co-operatives or we may need your help to call MPPs and express the need for change so we do not lose our momentum at this key time.

Thank you for your support throughout this process. Ontario Co-operative Association is committed to working diligently on your behalf to make these legislative changes that will improve the business environment for Ontario’s co-operatives.

 


MARCH 2019 

Earlier this month, we received an important update regarding our efforts to save the offering Statement process from moving to the Ontario Securities Commission (OSC). The Ministry of Finance has confirmed that the government is not going to proceed with any plan to move co-operative Offering Statements to the OSC. Their plan as of right now is to add the responsibility for Offering Statements to the Finance Services Regulatory Authority’s (FSRA) articles, or have FSRA lend expertise to another ministry that will be responsible for Offering Statements. They are “working right now on the mechanics of keeping Offering Statements the same,” and our Offering Statement limit increases are still under consideration.

OCA would like to take this opportunity to sincerely thank all of the co-operatives that took the time to contact their MPPs and MPs, as we believe it made all the difference in turning this whole issue around.

As well, the government is still going ahead with changes to the 50% Rule and the Audit exeptions. They have not decided whether these changes will be in the budget bill, or whether they will wait and make all of the changes at once. However, they are “leaning toward no” on changes in this budget. OCA assured the Ministry that the 50% Rule changes and the Audit rule changes would be fully supported and celebrated by the sector, if they are included in this budget.


FEBRUARY 2019 

After many years of advocacy on the part of the co-operative sector, the Provincial Government has completed its consultations with the co-op sector on the Co-operative Corporations Act. We'd like to thank the 80+ Ontario co-operatives that provided a submission to the government. 

On February 5 an in-person meeting was held at The Co-operators, including staff from the Ministry of Finance, Ministry of Government and Consumer Services, as well as Service Canada, along with about 25 representatives from the co-operative sector. The objective was to discuss the submissions to the consultation process, and ask or answer any clarifying questions. While our asks regarding the 50% Rule and Audit exeptions seemed straight forward, the government represnetatives hinted that a move to the Ontario Securities Commission (OSC) was a possiblity with regards to our Offering Statement asks. 

This prompted a more in-depth discussion on our recommendations around Offering Statements, as well as a review of the OSC expemptions, following the meeting. All co-operatives in Ontario that currently have offering statements with FSCO, highlighted the issues with a move to OSC and the negative impact it will have on a co-operative's ability to raise capital. An initital phone conference with these co-operatives was also held to discuss the impact. The participating co-ops drafted a letter to the Ministry of Finance, outlining their issues with moving to the OSC and the challenges this would cause. OCA also drafted a response letter and included the input from all the co-operatives. The co-operatives were also provided with speaking notes on the issue which they have been using to contact their MPPs on this issue. OCA submitted their letter to the Ministry of Finance, along with all the individual letters from co-operatives. The Ministry followed up by suggesting a meeting with those co-operatives to pose clarifying questions.


DECEMBER 2018 

The Government announced that it would be conducting a consultation on the Co-operative Corporations Act, and gave us a deadline of January 31, 2019 for submissions.  


FEBRUARY 2018 

Our perseverance and efforts are paying off. Over five years of advocacy work by Ontario’s co-operatives was rewarded in Budget 2018. The Provincial Government has made a commitment to review the 44-year-old Co-operative Corporations Act. The Ministry of Finance recognized that co-operative legislation has not kept pace with other business statutes in the province, and acknowledged that a more modern legislative framework will help ensure co-operatives are able to grow, meet the needs of members and compete effectively with other businesses in Ontario.

As part of the review, the government will consider key policy issues, including restrictions on non-member business, exemptions from audit requirements, the process for offering statements, and the government body that would be most suitable to administer the legislation.  

The legislation is expected to be voted on in the House and if passed, the process toward modernization of the Act will begin. For those interested in reading more, the section of the Ontario Budget referencing Ontario’s co-operative sector can be found here.

This is very positive news for co-operatives in Ontario. A more modern legislative framework for co-operatives will help ensure they are able to grow, meet the needs of their members and compete effectively with other businesses in the province. OCA looks forward to future consultations with the co-operative sector to ensure all legislative changes enhance our sustainable and profitable business model.