Quebec Overhauls Co-op Rules and Housing Co-ops

Summary#

• Bill 111 updates Quebec’s cooperatives law. It modernizes how co‑ops are created, governed, financed, merged, and closed. It also adds transparency rules and clearer protections for members and assets.

• Key changes include a new “community interest” option for co‑ops, stricter rules on preferred shares, updated rules for boards and meetings, new reserve rules for patronage refunds (member rebates), and new steps for liquidation and dissolution. It also adjusts rules for housing co‑ops and updates penalties.

• Allows a co‑op to state it operates for a named community’s benefit and to use the label “cooperative d’intérêt collectif” (CIC); others cannot use “CIC.”

• Members’ number cannot fall below the minimum number of founders; producer co‑ops need at least three founders.

• Preferred shares must be registered to a named person and need board approval to transfer; holders have limited liability.

• New annual disclosure to all holders of parts (shares) about categories, value, rights, transfer and redemption rules, refund requests, and the repayment plan.

• Creates a “reserve for potential patronage refunds” to smooth rebates over time; rebates allowed only when the general reserve is positive; can be based on up to four fiscal years.

• Co‑ops that ban both patronage refunds and interest on preferred shares may declare themselves non‑profit; CIC co‑ops must ban both.

• Bans selling or transferring co‑op assets below fair market value.

• Broadens mergers (including between co‑ops with different purposes and with federations) and simplifies requirements.

• Updates audit rules (uses “auditor” who must be a Quebec CPA) and several governance rules for boards and committees.

• Integrates a full, clearer process for voluntary liquidation and forced dissolution; strengthens fines and offences.

• Housing co‑ops: a member who resigns or is expelled must leave at lease end (or within six months if near the end); clarifies lease rules and ministerial approvals for selling subsidized buildings.

What it means for you#

• Workers and members of co‑ops

  • More transparency: you will get yearly information about the co‑op’s parts (share classes, value, rights, redemption and transfer rules, refund requests, and payoff plan).
  • Patronage refunds (member rebates) may be smoothed using a new reserve and can be based on up to four fiscal years. Refunds are allowed only when the general reserve is positive.
  • If your co‑op bans refunds and interest on preferred shares, it can call itself non‑profit; CIC co‑ops must ban both.
  • Co‑ops (other than housing) must have a mediation policy; existing co‑ops have 12 months to adopt one.
  • Minimum membership: a co‑op must keep at least the minimum number of members required to found it, or risk dissolution.
  • Discipline: the board can impose monetary or other sanctions (if a bylaw allows), not only suspend or expel.

• Board members and managers

  • Boards must have at least three directors; terms are one year by default, but can be two or three with staggered rotation; co‑ops may limit reappointments.
  • New conflict‑of‑interest rule ensures votes can proceed even if some directors step out and quorum would otherwise be lost.
  • Executive and other board committees must have at least three directors; solidarity co‑ops’ committees must reflect member diversity and cap “supporting members” on the executive committee at one‑third.
  • Employees can serve as directors in more cases (with limits), and employees attending board meetings during paid hours can only receive any meeting stipend above their wage for that time.
  • AGM notices must include draft resolutions to be voted.

• Investors and holders of preferred shares

  • Preferred shares must be in a named holder’s name and transfers require board approval; characteristics and changes need strong holder approval.
  • Co‑ops must clearly disclose rights, conditions for redemption and transfer, and whether any third‑party approval is needed before capital can be repaid.
  • “Participating preferred shares” are being phased out; no new ones can be issued after the law takes effect, but existing ones can remain until redeemed.

• Residents in housing co‑ops

  • If you resign or are expelled, you must leave at the end of your lease; if that happens within six months of lease end, you must leave within six months.
  • One household with two members: only one can be elected as a director.
  • Unless a bylaw says otherwise, a member can authorize a cohabiting adult (who is not a member) to attend and vote in their place.
  • For buildings acquired or improved with housing aid, sales need approval from the municipal affairs minister; timelines and processes are clarified.

• Consumer co‑ops

  • May create a “family member” category with set rights and duties (for example, one family representative voting or being eligible as a director).
  • Each person can belong to only one member category in a consumer co‑op.
  • Boards can name people who are allowed to admit new members (except in housing co‑ops).

• Worker co‑ops and worker‑shareholder co‑ops

  • Must adopt a worker onboarding and integration policy.
  • Patronage can be based on work volume, and can cover up to the last four fiscal years.

• Starting or merging a co‑op

  • If you aim to serve a broader community, you can adopt the CIC model and signal that in your name.
  • Mergers are easier, including across different co‑op purposes and with federations; after merger, the new co‑op keeps all rights and duties.

• All co‑ops

  • You cannot sell or give away assets below fair market value.
  • Third parties are not presumed to know internal co‑op documents unless they are in the enterprise registry.
  • If members agree not to elect directors, the co‑op must disclose those members’ names and addresses in the enterprise registry.

Expenses#

No publicly available information.

Proponents' View#

• Brings the co‑ops law up to date with clearer governance, audited financials, and stronger transparency for members and investors.
• Supports community‑focused co‑ops (CIC) and protects the co‑op identity by reserving “CIC.”
• Smooths patronage refunds over time while keeping co‑ops financially sound through reserve rules.
• Protects common assets by banning below‑market sales and clarifying liquidation steps and where remaining assets go.
• Eases mergers so co‑ops can adapt and grow, including across different sectors.
• Strengthens housing co‑ops’ stability by clarifying lease and approval rules.
• Updates penalties to deter misuse of the co‑op label, false reporting, and illegal distributions.

Opponents' View#

• Adds compliance work and costs: new disclosures, CPA audits, mediation policies, and registry filings may strain small co‑ops.
• Tighter rules on preferred shares and end of “participating preferred shares” could reduce financing flexibility and liquidity for investors.
• Asset sale at fair market value only may limit certain social or community transfers at discounted values.
• Housing co‑op exit rules could lead to faster move‑outs for members who leave or are expelled.
• Stronger ministerial powers to dissolve co‑ops for low membership or missing documents may feel heavy‑handed.
• CIC co‑ops must forgo both patronage refunds and interest on preferred shares, which could make recruitment or funding harder in some cases.