A guide to incorporating a new credit union in Alberta
Thinking of incorporating a new credit union? Sometimes individuals, groups or associations consider applying for incorporation if they want to create a grassroots, democratic financial institution that is responsive to the needs of that community. Other times employee groups want a savings and loan operation for their company. Whatever the reason, we’ve got a guide to walk you through the process.
Please note – the information contained in this guide is for informational purposes only and is not legal advice.
The incorporation of a new credit union in Alberta can be exciting. It also takes considerable effort on the part of the incorporators, as well as a large deposit base and member commitment. Before you proceed, have you considered other options that may be available? The services you want may already be available in or near your community.
- Is there another credit union already located in or near your community that can provide the products and/or services you need? Not sure? Use this interactive map to find a credit union near you.
- If there is a credit union in or near your community, contact Alberta Central. After discussing your needs with you, Alberta Central will contact the credit union on your behalf. If there is interest and they can meet your needs, they will contact you directly to discuss your options. Following that, if you decide that your best option is to apply for incorporation of a new credit union, contact Alberta Central to begin the process.
Sections 19 through 23 of the Credit Union Act (Alberta) deal with the process for incorporating a new credit union in Alberta. For details, read the attached pdf guide at the bottom of this page. Here is a summary:
- Proposed credit union submits application for incorporation in the form of Articles of Incorporation to the Minister.
- Credit union sends proposed bylaws, list of directors, name search, notice of address, business plan, affidavit, etc. with Articles of Incorporation to Minister.
- Credit union sends business plan to the Corporation.
- The Corporation notifies Minister they are satisfied with business plan.
- Minister approves application for incorporation.
- Minister approves application for incorporation.
- Minister enters Certificate, Articles, bylaws, etc. into register.
Financial, operating and membership requirements
Section 24 of the Credit Union Act (Alberta) deals with the commencement of business. Commencement of business can only occur after approval to incorporate has been received from the Minister and the Minister has approved the commencement of business by it. Here is a summary:
- Credit union shall send to the Minister any change in the business plan.
- The Corporation shall notify Minister that any change in business plan does not affect credit union’s viability.
- Minister must by enquiry satisfy themselves that:
- a credit union with a bond of association
- has at least 50 members
- who have collectively subscribed and paid in full for at least 10,000 common shares
- who have collectively deposited at least $30,000
- a credit union with no bond of association
- has at least 250 members
- who have collectively subscribed and paid in full for at least 250,000 common shares
- who have collectively deposited at least $750,000
- the credit union has effective management
- the Certificate of Incorporation was not obtained by fraud
- the credit union will not be used for illegal purposes
- the credit union will fulfill the purposes and mode of operation of a credit union described in Section 26 of the Act
- a credit union with a bond of association
- The credit union shall deposit all share subscriptions and deposits in Alberta Central.
- The Minister shall approve the commencement of business.
The following fees should be taken into consideration within the business plan for incorporation of a new credit union. This information is being provided as a guide only – fees may be subject to change, or new fees may be added, without notice.
Credit Union Deposit Guarantee Corporation (CUDGC)
An annual assessment of 0.05 basis points of deposits and borrowings is payable to CUDGC by all credit unions. This fee is required for deposit guarantee purposes. For more information on how to calculate the assessment and/or the annual return filing fee, contact CUDGC at 780-428-6680.
Credit Union Bonding Program
A fee is required for insurance purposes. Contact CUDGC at 780-428-6680 for more information, the amount of coverage, and what the coverage encompasses, etc. There are certain security requirements for a credit union premise. For information on security, contact CUDGC prior to commencement of business.
To confirm the fee and date payable for credit union incorporation, contact the Superintendent of Financial Institutions at Alberta Treasury Board & Finance at 780-427-5064.
Alberta Central – Annual Dues
A credit union that is a member of Alberta Central (unless otherwise prescribed not to be a member as per the Act) is assessed dues on an annual basis, calculated on the basis of total membership for the credit union and the budget for dues-funded programs offered by Alberta Central during the year. The assessment rate is provided after the date of commencement of business has been determined and an approximation of membership has been agreed upon by the new credit union and Alberta Central. The regular cycle for assessing dues is January of each year. For more information, contact Relationship Management at Alberta Central at 403-258-5900.
Drafting credit union bylaws
Every credit union in Alberta is required to have a set of bylaws. The draft bylaws must be submitted to the Minister and Corporation at the same time as all other required documents for incorporation. Section 45 of the Credit Union Act (Alberta) sets out certain required elements which must be included in the bylaws. The following guidelines will assist you in drafting the bylaws for the proposed credit union.
- Where no bond of association is to be stipulated, i.e., membership open to all persons, businesses, associations, etc. in the Province of Alberta you would be silent.
- Where a bond of association is to be stipulated, three options are provided which define your membership bond of association, for example:
- Where membership is restricted by occupation or profession, etc.
- Where membership is limited to an association, club, church or similar group.
- Where membership is limited to a geographic region of less than 5,000 persons.
- The credit union’s bylaws may provide for joint membership and must set out the rights and obligations of holders of joint membership.
- The form of application is to be specified in the credit union’s bylaws.
- The Act requires a credit union to define in bylaws the rules for the approval, continuation, termination and suspension of, and expulsion from membership.
- A credit union must specify whether members or their agents are to have the right to examine the membership list (names and addresses) of the credit union and may wish to consider a bylaw which specifically restricts or prohibits the examination of the membership register.
- The number of common shares to be issued by a credit union is unlimited and, unless a bylaw restricts the number of common shares a member may hold, the credit union shall issue common shares to any member who subscribes and pays for them. Should the credit union wish to place a limit on individual shareholdings, a bylaw would be required.
- Redemption of credit union shares must comply with Section 111 of the Act and applicable regulations. Credit unions are required to establish redemption guidelines within their bylaws.
- Transfer of credit union shares must comply with Section 110 of the Act and applicable regulations. Credit unions are required to establish transfer guidelines within their bylaws.
- A credit union may, on the basis set out in the bylaws, by resolution of the board pay a share dividend or patronage rebate by issuing shares or by paying money or both. Bylaws must define the methods to be used for distribution of dividends or rebates.
- The Act sets out specific means of communication with members to provide notice of general meetings. Notice by email is permitted in certain circumstances.
- If specified in the bylaws, a credit union can treat holders of a joint membership as one and need only provide notice of meetings to any one of them.
- The Act sets out what constitutes a minimum for a quorum at a general meeting. If a higher number is desired, a bylaw is required.
- Where a quorum is present at the opening of a general meeting, the meeting may proceed to adjournment even though a quorum is not present throughout the entire meeting. If your credit union chooses otherwise, you will require a bylaw to that effect.
- A bylaw regarding the manner and form of voting is required.
- Bylaws must specify what constitutes a spoiled ballot.
- A bylaw to address who is entitled to attend membership meetings should be considered.
- The Act deals with the basic requirements of general membership and board of directors meetings. The bylaws must, however, provide the details and/or modifications to the Act where the credit union deems this appropriate.
- Joint memberships are an accepted feature of a credit union. Rules to deal with such members, the joint shareholders rights, privileges and obligations should be defined in the bylaws.
For more details on bylaws including board of directors, divisional directors, committees, auditors and more, read the full pdf guide found here.