Cooperative Energy Act

An Act to establish the Cooperative Energy Corporation and the Cooperative Energy Development Corporation Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: Short title This Act may be cited as the Cooperative Energy Act. Definitions In this Act, Agreement means the Canada/Cooperative Energy Investment Agreement entered into between certain cooperatives and Her Majesty The Queen in right of Canada, represented by the Minister, bearing the formal date of the 18th day of December, 1981, tabled in the House of Commons on May 17, 1982 as Sessional Paper No. 321 — 7/53 and all amendments thereto made from time to time that are not inconsistent with the purpose, intent and objectives set out therein; (Entente) central cooperative credit society means a cooperative organization incorporated or organized by or pursuant to an Act of Parliament or of the legislature of a province, the membership or shareholders of which consist wholly or substantially of local cooperative credit societies and the principal purpose of which is to provide services to its members or shareholders; (société coopérative de crédit centrale) cooperative means any organization incorporated, continued or organized by or pursuant to an Act of Parliament or of the legislature of a province as a cooperative or a cooperative society, association or federation, including, without limiting the generality of the foregoing, a wheat pool, a grain trading cooperative or an agricultural product trading cooperative, and a local cooperative credit society, central cooperative credit society or federation of cooperative credit societies, a financial service corporation or an insurance corporation, incorporated by or pursuant to an Act of Parliament or of the legislature of a province, the principal purpose of which is to provide financial services to, or to insure, cooperatives and members of cooperatives, and any corporation, incorporated by or pursuant to an Act of Parliament or of the legislature of a province, all of the issued shares of which, other than the minimum number of shares of the corporation, if any, that are required to be held by directors thereof, are owned by cooperatives; (coopérative) Corporation means the corporation incorporated by Part I; (Société) Development Corporation means the corporation incorporated by Part II; (Société de développement) Director has the same meaning as in the Canada Business Corporations Act; (Directeur) Equity Debenture means a debenture of the Corporation, described on its face as an Equity Debenture, issued, pursuant to the Agreement, to Her Majesty in right of Canada as represented by the Minister or to a cooperative; (débenture à participation) federation of cooperative credit societies means a federation, league or corporation incorporated or organized by or pursuant to an Act of Parliament or of the legislature of a province, the membership or the shareholders of which include two or more central cooperative credit societies; (fédération de sociétés coopératives de crédit) local cooperative credit society means a cooperative organization incorporated or organized by or pursuant to an Act of Parliament or of the legislature of a province, the membership or the shareholders of which consist wholly or substantially of natural persons and the principal purpose of which is to receive deposits from its members or shareholders and make loans to its members or shareholders; (société coopérative de crédit locale) Minister means the Minister of Natural Resources. (Ministre) Words and expressions Unless otherwise provided, words and expressions used in this Act have the same meaning as in the Canada Business Corporations Act. Cooperative Energy Corporation incorporated A corporation is hereby incorporated, to be known as the “Cooperative Energy Corporation” in English and “Société coopérative de l’énergie” in French. Dissolution of Corporation The Corporation may be dissolved under the Canada Business Corporations Act. Express authorization to use word “cooperative” The Corporation may use the words “cooperative” and “co-op” or either of them or any abbreviation or derivation of either of them as part of its corporate name or in any other manner in connection with the conduct of its business during such period of time as there are no holders of any class of shares of the Corporation, other than cooperatives; or cooperatives and Her Majesty in right of Canada as represented by the Minister. Authorization to use word “Société” The word “Société” or the abbreviation “S.” may be part of the name of the Corporation in its French form instead of any other word or abbreviation mentioned in subsection 10(1) of the Canada Business Corporations Act. Capitalization The classes of shares that the Corporation is authorized to issue and the rights, privileges, restrictions and conditions attaching to each such class of shares are set out in the schedule. Partly paid shares permitted Shares of a class of the Corporation may be issued as partly paid or with no payment having been made thereon, on the terms of payment determined by the directors of the Corporation, if the rights, privileges, restrictions and conditions attaching to the shares of that class so provide. First directors The first directors of the Corporation shall be such persons as may be appointed by the Governor in Council. Idem Each director appointed pursuant to subsection (1) holds office until the first meeting of shareholders of the Corporation. Application of Canada Business Corporations Act Except where inconsistent with this Act, the Canada Business Corporations Act and any regulations made thereunder apply to the Corporation, with such modifications as the circumstances require, as if it were a corporation incorporated under that Act. Articles of incorporation Where a provision of the Canada Business Corporations Act or any other Act of Parliament or any Act of the legislature of a province or any regulation made under any such Act that applies in respect of the Corporation makes reference or has application to articles of incorporation, the provision shall be construed in relation to the Corporation as a reference to the schedule. Agreement is unanimous shareholder agreement In the application of this Act and the Canada Business Corporations Act and any regulations made thereunder to the Corporation, the Agreement is deemed to be a unanimous shareholder agreement within the meaning of the Canada Business Corporations Act. Issue of certain certificates conditional on Act of Parliament No certificate of amendment, restated certificate of incorporation or certificate of amalgamation, in relation to the Corporation, shall be issued by the Director pursuant to the Canada Business Corporations Act, unless an Act of Parliament expressly authorizes the Director to issue the certificate. [Repealed, 2009, c. 23, s. 321] Not agent of Her Majesty The Corporation is not an agent of Her Majesty, or a Crown Corporation within the meaning of the Financial Administration Act, and its officers and employees are not part of the federal public administration. Cooperative Energy Development Corporation incorporated A corporation is hereby incorporated, to be known as the “Cooperative Energy Development Corporation” in English and “Société coopérative de développement énergétique” in French. Dissolution of Development Corporation The Development Corporation may be dissolved under the Canada Business Corporations Act. The Development Corporation may use the words “cooperative” and “co-op” or either of them or any abbreviation or derivation of either of them as part of its corporate name or in any other manner in connection with the conduct of its business during such period of time as the Corporation is authorized pursuant to this Act to use those words as part of its corporate name; and the sole holder of all of the issued and outstanding shares of the Development Corporation of the class referred to in subparagraph 14(4)(b)(i). Authorization to use the word “Société” The word “Société” or the abbreviation “S.” may be part of the name of the Development Corporation in its French form instead of any other word or abbreviation mentioned in subsection 10(1) of the Canada Business Corporations Act. Filing of articles of incorporation Any two of the first directors of the Corporation shall, within one hundred and eighty days after this Part comes into force, sign and send to the Director, in respect of the Development Corporation, articles of incorporation in accordance with subsection (4) and section 6 of the Canada Business Corporations Act. [Note: Part II in force July 9, 1982, see SI/82-148.] Effect of articles of incorporation On receipt of articles of incorporation, the Director shall not issue a certificate of incorporation and sections 8 and 9 of the Canada Business Corporations Act do not apply to the Development Corporation. Where articles of incorporation are sent to the Director pursuant to subsection (1) within the period of time set out therein, the articles shall have effect from the date this Part comes into force. Mandatory rights, privileges, restrictions and conditions The articles of incorporation in relation to the Development Corporation that are sent to the Director pursuant to subsection (1) shall, in respect of the classes of shares that the Development Corporation is authorized to issue, provide for the restrictions that are permitted under paragraphs 15(1)(a) and (b); and provide that one of the classes of shares shall not be issued to, transferred to or registered on the books of the Development Corporation in the name of, or owned or held legally or beneficially by any person other than the Corporation, and that the Corporation, as the holder of the class of shares referred to in subparagraph (i), has the exclusive right, voting separately as a class, to elect a majority of the directors of the Development Corporation. Constraints on shares Whether or not any of the issued shares of the Development Corporation are or were part of a distribution to the public and remain outstanding and are held by more than one person, the Development Corporation may have a restriction on the issue, transfer or ownership of its shares of any class or series by way of a constraint permitted under section 168 of the Canada Business Corporations Act or by way of a constraint on the issue, transfer or ownership of shares of any class or series in order to limit the maximum aggregate number of shares of any class or series of voting shares of the Development Corporation that may be beneficially owned or controlled, directly or indirectly, by any person and by any person who is an affiliate or associate of that person to such percentage, not lower than three per cent, as is specified in its articles, of the aggregate number of issued and outstanding voting shares of that class or series; or assist the Development Corporation or any of its affiliates or associates to qualify under any law of Canada or a province prescribed by the regulations for the purposes of this paragraph, or a law of Canada respecting petroleum incentives prescribed by the regulations for the purposes of this paragraph or, where no such law is so prescribed, a document entitled “Proposed Outline For Regulations Respecting The Petroleum Incentives Program”, published under the authority of the Minister in April, 1982, to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control. Exception in respect of paragraph (1)(a) or (b) Paragraph (1)(a) or (b) does not permit a constraint on the issue, transfer or ownership of shares of any class or series of which any shares are outstanding unless in the case of a constraint in respect of a class, the shares of the class, or in the case of a constraint in respect of a series, the shares of the series are already subject to a constraint permitted under that paragraph. Limitation on ownership of shares The Development Corporation may, pursuant to paragraph (1)(b), limit the number of shares of the Development Corporation that may be owned, or prohibit the ownership of shares, by any person whose ownership would adversely affect the ability of the Development Corporation or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in paragraph (1)(b). Application of subsections (2) and (3), paragraph (1)(b) and section 16 Paragraph (1)(b), subsections (2) and (3) and section 16 apply to the Development Corporation, subject to any provisions of the Canada Business Corporations Act, in respect of constraints on the issue, transfer or ownership of shares of any class or series, for the purpose of assisting a corporation or any of its affiliates or associates to qualify under any law of Canada or a province prescribed pursuant to the Canada Business Corporations Act to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control. Sale of constrained shares Where the Development Corporation has constraints on the issue, transfer or ownership of its shares of any class or series for a purpose referred to in paragraph (1)(a) or (b), the Development Corporation may, for that purpose, or, in the case of a constraint permitted under paragraph (1)(b), for the purpose of attaining or maintaining a level of Canadian ownership or control specified in its articles, and under such conditions and after giving such notice, in respect of the sale of constrained shares, as may be prescribed pursuant to the Canada Business Corporations Act or, where no such condition or notice is so prescribed, after giving the notice referred to in its articles and on the condition that the constrained shares are not disposed of in accordance with the notice, sell, as if it were the owner thereof, any of such constrained shares that are owned, or that the directors determine in such manner as may be prescribed pursuant to the Canada Business Corporations Act may be owned, contrary to the constraints. Obligations of directors in sale Where shares are to be sold by the Development Corporation pursuant to subsection (5), the directors of the Development Corporation shall select the shares for sale in good faith and, where applicable, in a manner that is not unfairly prejudicial to, and does not unfairly disregard the interests of, the holders of the shares in the constrained class or series taken as a whole. Effect of sale Where shares are sold by the Development Corporation under subsection (5), the owner of the shares immediately prior to the sale shall by that sale be divested of any interest in the shares, and the person who, but for the sale, would be the registered owner of the shares or a person who satisfies the Development Corporation that, but for the sale, that person could properly be treated as the registered owner or registered holder of the shares under section 47 of the Canada Business Corporations Act shall, from the time of the sale, be entitled to receive only the net proceeds of the sale, together with any income earned thereon from the beginning of the month next following the date of the receipt by the Development Corporation of the proceeds of the sale, less any taxes thereon and any costs of administration of a trust fund constituted under subsection (9) in relation thereto. Subsections 47(4) to (6) of the Canada Business Corporations Act apply Subsections 47(4) to (6) of the Canada Business Corporations Act apply in respect of the person who is entitled under subsection (7) to receive the proceeds of a sale of shares under subsection (5) as if the proceeds were a security and the person were a registered holder or owner of the security. Proceeds of sale to be trust fund The proceeds of a sale by the Development Corporation under subsection (5) constitute a trust fund in the hands of the Development Corporation for the benefit of the person entitled under subsection (7) to receive the proceeds of the sale, and any such trust fund may be commingled by the Development Corporation with other such trust funds and shall be invested in such manner as may be prescribed by the regulations. Costs of administration Reasonable costs of administration of a trust fund referred to in subsection (9) may be deducted from the trust fund and any income earned thereon. Appointment of trust company Subject to this section, the Development Corporation may transfer any trust fund referred to in subsection (9), and the administration thereof, to a trust company in Canada registered as such under the laws of Canada or a province, and the Development Corporation is thereupon discharged of all further liability in respect of the trust fund. Discharge of corporation and trust company A receipt signed by a person entitled under subsection (7) to receive the proceeds of a sale that constitute a trust fund under subsection (9) shall be a complete discharge of the Development Corporation and of any trust company to which a trust fund is transferred under subsection (11), in respect of the trust fund and income earned thereon paid to such person. Vesting in Crown A trust fund described in subsection (9), together with any income earned thereon, less any taxes thereon and costs of administration, that has not been claimed by a person entitled under subsection (7) to receive the proceeds of a sale that constitute the trust fund for a period of ten years after the date of the sale vests in Her Majesty in right of Canada. Escheats Act applies Sections 3 to 5 of the Escheats Act apply in respect of a trust fund that vests in Her Majesty in right of Canada under subsection (13). Application of subsections (6) to (14) Subsections (6) to (14) apply to a sale of shares pursuant to subsection (5), and the proceeds of such sale subject to any provisions in respect of the sale of constrained shares set out in, or prescribed pursuant to, the Canada Business Corporations Act. Amendments to articles relating to constraints on shares Whether or not any of the issued shares of the Development Corporation are or were part of a distribution to the public and remain outstanding and are held by more than one person, the Development Corporation may, by special resolution, amend its articles to constrain the issue, transfer or ownership of its shares of any class or series as permitted under section 168 of the Canada Business Corporations Act; or section 15. The first directors of the Development Corporation shall be such persons as may be appointed by the directors of the Corporation. Each director appointed pursuant to subsection (1) holds office until the first meeting of shareholders of the Development Corporation. Except to the extent that they are inconsistent with or excluded by this Act, the provisions of the Canada Business Corporations Act and any regulations made thereunder apply to the Development Corporation, with such modifications as the circumstances require, as if it were a corporation incorporated under that Act. Act continues to apply on amalgamation, etc. For greater certainty, where a certificate of amendment, restated certificate of incorporation, certificate of amalgamation or certificate of revival, in relation to the Development Corporation, is issued by the Director pursuant to the Canada Business Corporations Act, this Part, in the case of a certificate of amalgamation, applies to the amalgamated corporation as if it were the Development Corporation; and in the case of any certificate referred to in this section, other than a certificate of amalgamation, continues to apply to the Development Corporation. Canada Corporations Act not applicable Part IV of the Canada Corporations Act does not apply to the Development Corporation. The Development Corporation is not an agent of Her Majesty, or a Crown Corporation within the meaning of the Financial Administration Act, and its officers and employees are not part of the federal public administration. Corporation and Development Corporation qualified as members of cooperative associations Notwithstanding the Cooperative Credit Associations Act, the Corporation and the Development Corporation are qualified to become members of an association to which the Cooperative Credit Associations Act applies. Application to Crown This Act is binding on Her Majesty in right of Canada and any agent thereof. Acquisition of shares by Her Majesty The Minister, on behalf of Her Majesty in right of Canada, may subscribe for, acquire and hold shares and Equity Debentures of the Corporation in accordance with the Agreement and may, for that purpose, make payments out of the Consolidated Revenue Fund in an amount not exceeding in the aggregate one hundred million dollars. Regulations The Governor in Council may make regulations prescribing anything that is by this Act to be prescribed by the regulations. Amendments to Agreement referred to Committee of House of Commons Any amendment to the Agreement shall be deemed to be referred, for review and report, to the first sitting of the Committee of the House of Commons that normally considers oil and gas matters, following the day on which the amendment is made. Coming into force This Act or any provision thereof shall come into force on a day or days to be fixed by proclamation. [Note: Act in force July 9, 1982, see SI/82-148.] Name of the Corporation The name of the Corporation is the “Cooperative Energy Corporation” in English and “Société coopérative de l’énergie” in French. Unlimited number of authorized shares The Corporation is authorized to issue an unlimited number of Class A Shares, Class B Shares, Class C Shares and Class D Shares. Restrictions The right to issue, transfer or own Class A Shares is restricted in the manner set out in this schedule. Class A Shares shall not be issued to, transferred to or registered on the books of the Corporation in the name of, or owned or held legally or beneficially by, any person other than a cooperative. No transfer, sale or assignment of a Class A Share is valid unless it is approved by the directors of the Corporation. Voting rights Each holder of a Class A Share is entitled to receive notice of and to attend all meetings of shareholders of the Corporation, except class meetings of other classes of shareholders. Each Class A Share entitles the holder thereof to three votes at a meeting of shareholders. Representatives Each holder of a Class A Share may appoint, in accordance with the by-laws of the Corporation, one or more representatives, not exceeding five, to represent it at meetings of shareholders of the Corporation. Issuance as fully paid Subject to subsection (2), a Class A Share shall not be issued until the consideration for the share is fully paid. Partly paid converted shares Class A Shares issued on the conversion of Class C Shares, Class D Shares or Equity Debentures of the Corporation (in this section referred to as “converted securities”), to the extent that such converted securities were not fully paid at the time of conversion, may be issued as partly paid shares. Application of section 24 Class A Shares issued as partly paid shares pursuant to subsection (2) are issued subject to section 24 of this schedule and payment therefor shall be made on the same terms as would apply if the Class A Shares were the converted securities. Rights to participate Except as otherwise provided in this schedule, in all respects, whether as to dividends, distribution of assets on dissolution or otherwise, Class A Shares rank equally, share for share, with Class B Shares. Special provisions on dissolution The rights of the holders of Class A Shares in the circumstances described in section 28 of this schedule are as stipulated in that section. First lien on shares The Corporation has a first and preferential lien on all Class A Shares, whether fully paid or partly paid, registered in the name of a shareholder or the legal representative of that shareholder for any amount unpaid by that shareholder to the Corporation in respect of partly paid shares or Equity Debentures issued by the Corporation. Enforcement of lien The lien referred to in subsection (1) may be enforced in accordance with section 24 of this schedule. The right to issue, transfer or own Class B Shares is restricted in the manner set out in this schedule. Class B Shares shall not be issued except to Her Majesty in right of Canada as represented by the Minister and shall not be transferred to any person, other than a cooperative or registered on the books of the Corporation in the name of, or owned or held legally or beneficially by, any person other than a cooperative or Her Majesty in right of Canada. Each holder of a Class B Share is entitled to receive notice of and to attend all meetings of shareholders of the Corporation, except class meetings of other classes of shareholders. Each Class B Share entitles the holder thereof to one vote at a meeting of shareholders. Each holder of Class B Shares may appoint, in accordance with the by-laws of the Corporation, one or more representatives, not exceeding ten, to represent the holder at meetings of shareholders of the Corporation. A Class B Share shall not be issued until the consideration for the share is fully paid. Except as otherwise provided in this schedule, in all respects, whether as to dividends, distribution of assets on dissolution or otherwise, Class B Shares rank equally, share for share, with Class A Shares. The rights of the holders of Class B Shares in the circumstances described in section 28 of this schedule are as stipulated in that section. The right to issue, transfer or own Class C Shares is restricted in the manner set out in this schedule. Issuance Class C Shares may only be issued instead of payment of interest on outstanding Equity Debentures and shall be issued in such numbers and at such times as the directors of the Corporation may determine to be required to satisfy the obligations of the Corporation in respect of interest on its outstanding Equity Debentures. Ownership Class C Shares shall not be issued to, transferred to or registered on the books of the Corporation in the name of, or owned or held legally or beneficially by, any person other than a cooperative or Her Majesty in right of Canada as represented by the Minister. Except as otherwise specifically provided in the Canada Business Corporations Act, Class C Shares do not carry any voting rights and the holders thereof, as such, are not entitled to receive notice of or to attend any meetings of the shareholders of the Corporation. Class C Shares do not carry any rights to dividends or to any distribution of assets (whether by way of return of capital or otherwise) on liquidation, dissolution, winding-up, insolvency, bankruptcy or in any other case. Conversion Class C Shares are subject to the automatic conversion described in section 29 of this schedule. The Corporation has a first and preferential lien on all Class C Shares, registered in the name of a shareholder that is a cooperative or the legal representative of that shareholder for any amount unpaid by that shareholder to the Corporation in respect of partly paid shares or Equity Debentures issued by the Corporation. The right to issue, transfer or own Class D Shares is restricted in the manner set out in this schedule. Class D Shares shall not be issued to, transferred to or registered on the books of the Corporation in the name of, or owned or held legally or beneficially by, any person other than a cooperative or Her Majesty in right of Canada as represented by the Minister. Except as otherwise specifically provided in the Canada Business Corporations Act, Class D Shares do not carry any voting rights and the holders thereof, as such, are not entitled to receive notice of or to attend any meeting of the shareholders of the Corporation. Issuance as Partly Paid Class D Shares may be issued as fully paid or as partly paid or with no payment having been made thereon, in the discretion of the directors of the Corporation, on the terms of payment determined by the directors of the Corporation. Demand for payment The directors of the Corporation may demand that the shareholders pay the whole or any part of the amount unpaid on shares held by them, at such times and places, and in such payments or instalments, as the terms of issue of such shares require or allow. A demand for payment shall state that if the demand is not paid in accordance with its terms, all of the securities whether fully paid or partly paid, of the holder of the shares in respect of which the demand is made are liable to be forfeited. Interest Where a shareholder fails to make a payment in accordance with a demand therefor on or before the day appointed for the payment, the shareholder is liable to pay interest on the amount thereof at a rate established by the directors of the Corporation from the day appointed for payment to the day of payment. Forfeiture of unpaid securities Where a demand for payment is not paid in accordance with its terms, the directors of the Corporation may declare forfeited all of the securities, whether fully paid or partly paid, of the holder of the shares in respect of which the demand is made. Disposition of unpaid securities Any securities declared forfeited pursuant to subsection (5) become the property of the Corporation on the forfeiture, and may be cancelled, sold or otherwise dealt with as determined by the directors of the Corporation. Liability of shareholders Notwithstanding the forfeiture of any securities, the holder of the shares in respect of which the demand is made continues to be liable for the full amount unpaid on the securities at that time, less any amounts that are subsequently received by the Corporation in respect thereof. Excess on sale of forfeited securities Where the Corporation receives on the sale of forfeited securities an amount in excess of the full amount unpaid thereon at the time of forfeiture together with interest, the person who, immediately prior to the forfeiture, was the registered owner of the securities or a person who satisfies the Corporation that, immediately prior to the forfeiture, that person could properly have been treated as the registered owner or holder of the securities under section 47 of the Canada Business Corporations Act shall, from the time of the sale, be entitled to receive the net proceeds of the sale, together with any income earned thereon from the beginning of the month next following the date of the receipt by the Corporation of the proceeds of the sale, less the full amount unpaid on the securities at the time of forfeiture together with interest thereon calculated in accordance with subsection (4); and any taxes thereon and any costs of administration of a trust fund constituted in relation thereto. Application of certain subsections Subsection (8) and subsections 15(8) to (14) of this Act apply, with such modifications as the circumstances require, in respect of a person who is entitled under subsection (8) to receive a portion of the proceeds of a sale of securities of the Corporation under subsection (6), and to such portion of the proceeds, Right of action The directors of the Corporation may, in addition to declaring forfeited any securities, enforce payment of all demands and interest thereon by action in any court of competent jurisdiction. Definition In this section, security means a share of any class of shares of the Corporation or an Equity Debenture. Class D Shares do not carry any rights to dividends or to any distribution of assets (whether by way of return of capital or otherwise) on liquidation, dissolution, winding-up, insolvency, bankruptcy or in any other case. Class D Shares are subject to the automatic conversion described in section 29 of this schedule. The Corporation has a first and preferential lien on all Class D Shares, whether fully paid or partly paid, registered in the name of a shareholder that is a cooperative or the legal representative of that shareholder for any amount unpaid by that shareholder to the Corporation in respect of partly paid shares or Equity Debentures issued by the Corporation. Definition of insolvency In this section and section 29 of this schedule, insolvency means, in relation to the Corporation, that the liabilities of the Corporation exceed the realizable value of its assets; or the Corporation is unable to pay its debts as they become due. Subject to subsection (4), if the commencement of a liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or if the insolvency or bankruptcy of the Corporation occurs at any time prior to the expiration of three years from the first issuance by the Corporation of any of its shares, any distribution of capital to holders of Class A Shares or Class B Shares of the Corporation shall be effected as follows: first, fifty per cent of the aggregate amount subscribed, except premiums, by holders of Class A Shares or their predecessors in title in respect of their Class A Shares, for shares of all classes and Equity Debentures of the Corporation shall be returned to holders of Class A Shares from the capital of the Corporation as and when the capital is paid in and available for distribution and regardless of the class of shares or Equity Debentures in respect of which, or by whom, it has been paid, prorated among such holders on the basis of the percentage of Class A Shares held by each such holder, and in amounts not exceeding a maximum returned amount of fifty per cent of the aggregate amount so subscribed by such holders, but no such holder shall receive an amount in excess of the aggregate amount it has paid in respect of its subscriptions for shares of all classes and Equity Debentures of the Corporation; secondly, after the payment in full of fifty per cent of the aggregate amount subscribed by holders of Class A Shares is made in accordance with paragraph (a), thirty-five per cent of the aggregate amount subscribed by holders of Class B Shares for shares of all classes and Equity Debentures of the Corporation shall be returned to the holders of Class B Shares from the capital of the Corporation as and when the capital is paid in and available for distribution and regardless of the class of shares or Equity Debentures in respect of which, or by whom, it has been paid, in amounts not exceeding a maximum returned amount of thirty-five per cent of the aggregate amount so subscribed by such holders; thirdly, after the payment in full of thirty-five per cent of the aggregate amount subscribed by holders of Class B Shares is made in accordance with paragraph (b), any balance then or from time to time subsequently available for distribution to shareholders shall be distributed in the following manner: on a share for share basis, in respect of Class A Shares and Class B Shares, as if such classes were the same in all respects, with distributions being made concurrently on Class A Shares and Class B Shares as payments are made in respect of Class A Shares, until such time as all of the holders of Class A Shares have received the aggregate amount subscribed by them or their predecessors in title for shares of all classes and Equity Debentures of the Corporation, except premiums, subsequently, to Her Majesty in right of Canada as represented by the Minister, until such time as the aggregate amount subscribed by Her Majesty in right of Canada for shares of all classes and Equity Debentures of the Corporation has been received, and finally, on a share for share basis, in respect of Class A Shares and Class B Shares of the Corporation as if such classes were the same in all respects. Subject to subsection (4), if any of the circumstances described in subsection (2) occurs on or after the expiration of three years from the first issuance by the Corporation of any of its shares, the Class A Shares and Class B Shares of the Corporation shall, as to their respective entitlement to return of capital, be treated as if such classes were the same in all respects and distributions shall be made concurrently on Class A Shares and Class B Shares of the Corporation as payments are made in respect of Class A Shares. Exceptions Subsections (2) and (3) do not apply to the extent otherwise provided in the Agreement. Conversion of Class C and Class D Shares and Equity Debentures On the earlier of the expiration of five years from the first issuance by the Corporation of any of its shares, and the commencement of a liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or the occurrence of the insolvency or bankruptcy of the Corporation, (in this section, referred to as the “conversion date”) all issued and outstanding Class C Shares, Class D Shares and Equity Debentures of the Corporation held by holders of Class A Shares of the Corporation shall be automatically converted into Class A Shares and all issued and outstanding Class C Shares, Class D Shares and Equity Debentures of the Corporation held by holders of Class B Shares of the Corporation shall be automatically converted into Class B Shares in accordance with subsection (2). Number of shares to be issued on conversion The number of Class A Shares or Class B Shares of the Corporation, as the case may be, issued on conversion to each holder of Class C Shares, Class D Shares or Equity Debentures of the Corporation shall be such number as results in an aggregate holding by each holder of Class A Shares or Class B Shares, as the case may be, equal to the number of Class A Shares or Class B Shares, as the case may be, that such holder would have held had such holder, or in the case of a Class A holder, its predecessors in title in respect of its Class A Shares, subscribed for and been issued, Class A Shares or Class B Shares, as the case may be, rather than Class D Shares and Equity Debentures. Surrender of share certificates On the conversion date, each holder of a Class C Share, a Class D Share or an Equity Debenture shall deliver to the Corporation or its transfer agent, for surrender, the certificate representing the Class C Share, Class D Share or Equity Debenture, whereupon the Corporation or its transfer agent shall, if it receives certificates representing all Class C Shares, Class D Shares and Equity Debentures of such holder, issue to such holder a certificate representing the appropriate number of Class A Shares or Class B Shares, as the case may be, determined in accordance with subsection (2). Automatic conversion Notwithstanding the failure of any holder of a Class C Share, a Class D Share or an Equity Debenture to deliver and surrender its certificate pursuant to subsection (3), on the conversion date, all Class C Shares, Class D Shares and Equity Debentures of that holder are automatically converted pursuant to subsection (1) and the holder thereof shall cease to have any rights in respect thereof, except the right to receive certificates for Class A Shares or Class B Shares, as the case may be, on complying with subsection (3). Directors There shall be a minimum of twelve and a maximum of thirteen directors of the Corporation. Registered Office The registered office of the Corporation shall be situated in the city of Calgary in the Province of Alberta.