Dissolving a Co-operative

How to Dissolve a Co-operative Corporation


In some cases, a co-operative will choose to cease operations and terminate its existence. This is referred to as winding up or dissolution, and the Co-operative Corporations Act has specific steps that need to be followed when this is carried out.


The co-op is going to dissolve. What needs to be done?


Co-operatives may terminate their existence in one of two ways: (1) using the winding-up procedures incorporated into the Co-operative Corporations Act from the Ontario Business Corporations Act or (2) applying for Articles of Dissolution.


Winding up is chosen when there are many assets or liabilities. In this case, the assistance of a receiver is necessary to carefully liquidate the remaining assets of the co-op and ensure that the parties entitled to receive these assets actually do receive them. A court application will often be necessary for this to take place. Actions and procedures for winding up co-operatives are set out in sections 190-236 of the Business Corporations Act, excluding section 221.


More commonly, co-ops cease to exist by submitting an application to the Ministry of Government and Consumer Services (MGCS) for Articles of Dissolution Application for dissolution. More information on the process can be found here.


To dissolve voluntarily, the co-op must call a general members’ meeting, and the majority of members (or whatever higher level of approval is required by the Articles) must vote in favor of the dissolution. Alternatively, all the members entitled to vote may provide their consent to the dissolution in writing. To view the section of the Co-operative Corporations Act on Dissolution, click here.


In order to make the dissolution effective, the co-op must complete and submit Articles of Dissolution to the Ministry of Government and Consumer Services (MGCS) in duplicate along with a cover letter and consent to the dissolution from the Ministry of Finance.  The Articles of Dissolution will be slightly different, depending on whether the co-op being dissolved was actually operational. In the case of a co-op that was operational, the Articles of Dissolution will include the following information:


The name of the co-op and date of incorporation

A statement that the dissolution has been properly authorized

A statement it has no debts, obligations or liabilities (or if it does, that the creditors or people that have an interest in its debts have approved the dissolution)

A statement that the co-op has satisfied the interests of its creditors and either that there is no remaining property to distribute or that this property has already been distributed according to the rules outlined in the section “Distribution of remaining property” below

A statement that there are no court actions or proceedings currently pending against the co-op


How to obtain consent from the Ministry of Finance

 

Articles must be accompanied by written consent to the dissolution from the Ministry of Finance, and must be submitted within 60 days after the Ministry of Finance provides consent. To obtain this consent, please submit your request to the Ministry of Finance at the following address:


Ministry of Finance

Account Management and Collections Branch

33 King Street West

PO Box 622

Oshawa ON L1H 8H5


Or by fax to: 905-433-5418 or by email to: TaxRoll.Management@ontario.ca




What if the co-operative has never actually started operating?


In some cases, a co-op will be incorporated but will never start operating—that is, it has not commenced business or issued shares or accepted any membership fees or loans. If a co-op is in this situation, the incorporators or their personal representatives must authorize the dissolution.


In the case of a co-op that was never operational, the Articles of Dissolution will include the following information:


The name of the co-op

The date of incorporation as listed on the Certificate of Incorporation

A statement that the co-op has not commenced businesses, it has not issued any shares and it has not received any membership fees or loans

A statement that the dissolution has been duly authorized by the incorporators or their personal representatives

A statement that the co-op has satisfied the interests of its creditors for all debts and obligations and, if it has any remaining property, that this property has been properly distributed

A statement that there are no court proceedings currently pending against the co-op

A statement that the co-op has given notice of its intention to dissolve (through the appropriate internal decision-making process of the co-operative) by publishing a notice to that effect in The Ontario Gazette and once in a local paper that has circulation in a place where the co-op primarily does its business or where it has its head office


Locating creditors and shareholders


In some cases, it will not be possible to locate a creditor to whom the co-op owes money, or the co-op may not be able to locate a shareholder. If dissolution is authorized and the co-op cannot find these individuals or corporations, the co-op may pay the amount owed to the creditor to the Public Trustee (an official of the Ontario government). The amount will then be held in trust for the creditor or shareholder, in satisfaction of the co-op’s obligation to that party.


In this case, if the property given to the Public Trustee is in a form other than cash, the Public Trustee may convert it to cash at any point within 10 years of receiving the property. The creditor or shareholder may claim this amount from the Public Trustee within 10 years of its being deposited, and if it is not claimed, the government of Ontario may make use of the funds. If, after the 10 years is up, a creditor or shareholder comes forward and can establish her claim to the amount, the Public Trustee may pay the creditor or shareholder an amount equal to the original amount given to them.


When does the dissolution go into effect?


Once the Articles of Dissolution (submitted in duplicate) are reviewed and approved, MGCS will return one copy to the co-op, attached to a Certificate of Dissolution. The date on the certificate is the effective date of the co-op’s dissolution.


Additional information:

Where responsibility as to custody of books, etc., to cease

(2)After the lapse of five years from the date of the dissolution of the corporation, no responsibility rests on it or the liquidator, or anyone to whom the custody of such books, accounts and documents has been committed by reason that the same or any of them are not forthcoming to any person claiming to be interested therein. R.S.O. 1990, c. C.38, s. 269.