A member of Coast Capital Savings is seeking a BC Supreme Court judicial review of Coast’s application to become a bank, specifically the provincial regulatory approval. Coast is pursuing plans to convert to a ‘federal credit union’ under the Bank Act (Canada), which is defined as a bank that is cooperatively owned. But to do so the provincially chartered credit union is required to get consent of member-owners and the Financial Institutions Commission (‘FICOM’). The commission approved the application in August, but that decision is being challenged.
The proposal from Coast to ‘be continued as a federal credit union’ is subject to the Credit Union Incorporation Act (BC), and statutory provisions were only added in recent years after the federal legislation was changed to include ‘federal credit unions’. No other credit union in BC has ever applied to go federal and the regulatory approval process was largely invented to deal with this case. As it sets the precedents for any future applications, there is a need to ‘get it right’.
The challenge is based on many things, however two stand out; that the commission failed to discharge its duties as one might expect under Canadian administrative law, and that the preceding approval of the member-owners had been obtained through a vote where (1) inadequate information was provided to member-owners and (2) a biased process.
Coast Capital Savings has about 550,000 members, mostly in Greater Vancouver and Victoria. It was formed in the last several years with the merger of Surrey Metro, Richmond Savings and the then Victoria based Pacific Coast Savings’, and Coast now has over $18 billion in assets under administration; making it BC’s second largest credit union.
The submission calls for the court to appoint independent legal counsel to represent the interests of member-owners and facilitate the fair review of the commission decision by the court. The petition includes a substantial review of the facts, events and history.
I have noted here before that the existing information disclosure requirements under the Credit Union Incorporation Act are exceptionally modest, given this is a multi-billion dollar transaction. In other similar major corporate changes that require shareholder consent, the disclosures pursuant to securities legislation is far more complete. This blog has also noted that current practices for votes in large credit unions provide no constructive way for dissenting views to be shared with voters and debated.
The petition was filed pursuant to the Judicial Review Procedures Act by a long time Coast Capital Savings member, Martin Duhamel, on October 13th. Mr. Duhamel was also active in another member initiative in the recent past related to director compensation. Many members objected to the generous remuneration arrangements that had been proposed by directors. He has maintained a website at governancewatch.ca where he has documented many of his concerns with the conduct of the board and management at Coast Capital.