Changes to Alberta’s Credit Union Act


On November 23, 2016, the provincial Minister of Finance, the Honourable Joe Ceci, tabled Bill C-32, which is entitled the Credit Union Amendment Act, 2016, for Introduction and First Reading. Bill C-32 received Royal Assent by Alberta’s Lieutenant Governor on December 14, 2016, and will come into force on various dates, including by proclamation. This Bill amends Alberta’s Credit Union Act, which is the statute that governs Alberta’s credit unions.

Alberta’s credit unions are a vital part of the provincial economy, with more than 625,000 members across the province and more than $24 billion in assets under management. These credit unions operate via 208 branches in 129 communities across Alberta.

In 2016, the provincial government engaged in public consultations in respect of potential amendments to the Credit Union Act. In response to such consultations, the Credit Union Act was amended to revise certain technical requirements for credit unions under the Act, but also, notably, to clarify membership rules to create more opportunity for small- and medium-sized businesses to access loans, allow for subsidiaries and affiliates of credit unions to act as brokers for all types of insurance, and introduce compensation disclosure requirements for the highest paid executive positions of Alberta’s credit unions.

Membership for Small- and Medium-Sized Businesses

Bill C-32 amends section 61 of the Credit Union Act to change membership rules applicable to credit unions. This amendment is currently in force and allows certain small- and medium-sized businesses to become members of a credit union if their headquarters are in Alberta, or if they have material business interests in the province. According to the provincial government, this change is intended to increase the borrowing opportunities for small- and medium-sized businesses in an effort to help them grow.

In addition, the previous requirement of the Credit Union Act that membership of a credit union consist wholly or substantially of individuals has been repealed.

Insurance Services

Bill C-32 also amends section 46 of the Credit Union Act, and affects the provision of insurance services. This amendment has not yet come into force. However, once the amendment is proclaimed, a credit union’s subsidiary or affiliate will now have the ability to engage in the business of acting as a broker for all types of insurance. Previously this ability was limited to the provision of limited categories of insurance, including life insurance. Ostensibly, this change to the Credit Union Act is intended to increase consumer choice in respect of insurance services.

It is important to note that this amendment will require the insurance business, premises and communication systems used by the subsidiary or affiliate to be kept separate and distinct from all business carried on by the credit union.

Compensation Disclosure Requirements

Finally, Bill C-32 introduces a requirement for the largest credit unions in Alberta to disclose in their annual financial statements the compensation paid to their five highest remunerated executive managers, of and as between that credit union and its subsidiaries. This amendment comes into force on January 1, 2018, and goes a step further than the current requirement for credit unions to place before its members at every fifth annual general meeting a resolution respecting the disclosure of the credit union’s executive managers.

This amendment to the Credit Union Act aligns with the trend in Canada of expanding disclosure requirements applicable to both private and public entities. For example, although Canadian public companies have been subject to compensation disclosure requirements for many years, a recent amendment by the Canadian Securities Administrators now requires such companies to, among other things, also identify risks that may arise due to their compensation policies, provide enhanced disclosure in respect of the company’s compensation committee, and provide details of any agreements the company may have with a compensation consultant or adviser.

Concluding Comments

Alberta’s Credit Union Act has not been significantly amended in over 30 years. As such, in a recent Speech from the Throne, the provincial government committed to amending the Credit Union Act in an effort to modernize the legislation. Bill C-32 appears to go a long way in achieving this objective.

As of the date of this writing, none of the amendments in Bill C-32 awaiting proclamation have been proclaimed into force by the provincial government. We will monitor the progress of these amendments to the Credit Union Act and provide updated information as available.       

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.