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Class "A" Shares FAQ

1. What are Investment Shares?

Investment shares are another form of capital a credit union can utilize. Membership shares, retained earnings and Class A Shares from three previous issues (So-use 1999 Series, 65th Anniversary Series, 2010 Series) are the types of capital UCU has on its balance sheet. Investment shares would form a third form of capital. For members, it is another type of investment offered by the credit union, for a limited time only.

2. Why are we offering them?

UCU has grown significantly in past 18 months and continues to do so. To provide for future growth, development and stability, while maintaining a prudent cushion in the amount of capital above regulatory requirements, investment shares are being offered to supplement the existing forms of capital.

3. Why should members subscribe to these shares?

These shares offer potential for a higher return then regular deposits and provide a way for members to diversify their investment portfolio.

4. Why 75th Anniversary?

2019 marks the 75th anniversary of Ukrainian Credit Union and since these shares are being offered on the eve of the anniversary, it is appropriate to name them accordingly.

5. Who can subscribe to (purchase) them?

Only members of Ukrainian Credit Union in good standing, over 18 years of age can purchase investment shares. Corporations, partnerships and trust accounts are eligible to subscribe to these shares.

6. How much are we trying to sell?

The price of each 75th Anniversary Share will be $1. The minimum amount we need to sell is 2,000,000 shares ($2,000,000) and the maximum amount we can sell is 15,000,000 ($15,000,000).

7. Is there a minimum or maximum amount a member can purchase?

Yes. The minimum number of shares is 1,000 ($1,000) and the maximum is 750,000 ($750,000).

8. Are these shares guaranteed?

No. These types of shares are not guaranteed by FSRA (formerly DICO). Deposits are insured, but membership shares and investment shares are not.

9. What kind of return can members expect?

The investment shares pay an annual dividend, which is not guaranteed. The Board will declare a dividend every year in which there are sufficient profits to do so while fulfilling all other regulatory capital, liquidity and operational requirements. The intended dividend rate for these shares is the simple average of the posted rates offered by UCU on its 5-year non-cashable term deposits plus 100 basis points (1%).

10. Can the credit union buy these shares back from the member?

After 5 years, the credit union can buy back these investment shares with 21 days’ notice to the shareholders. The credit union may buy back a portion of the outstanding investment shares, which would be done on a pro-rata basis from all shareholders.

11. Can investment shares be bought or sold by members?

There is no open market for these shares. They may be transferred to another member of the credit union, subject to the approval of the Board. No member, through transfers from other members, will be allowed to hold more than the member would otherwise have been able to subscribe for in the initial offering (750,000 shares).

12. Are they eligible for RRSPs or RRIFs?

The shares can be held within an RRSP, but not a RRIF. Only members that are 66 years of age or younger can hold these shares within an RRSP, due to the limited ability to redeem these investments in a given year.

13. How are the dividends paid?

Dividends will be declared by the Board and paid quarterly. The amount is based on the dividend policy referred to in question #9.

14. How are dividends classified for tax purposes?

Dividends on 75th Anniversary Shares are considered interest income for tax purposes, not dividend income, qualifying for the dividend tax credit.

15. How long can we sell investment shares?

We have 6 months from the date of the Offering Statement to sell anywhere from the minimum to the maximum amount if investment shares. The Offering Statement expires on June 30, 2020. We have until then to sell them.

16. What happens if we do not sell the minimum amount?

The investment share offering is closed and any funds held for members who have subscribed are refunded. The Board may request the Financial Services Regulatory Authority of Ontario (FSRAO) to extend the selling period.

17. What is an Offering Statement?

An Offering Statement is a legal document outlining the terms of the investment shares, detailed operational and financial (audited) information about the credit union, risks associated with the shares and subscription forms. It is very similar to prospectuses issued by publicly traded companies or mutual fund companies. It is a requirement that each member subscribing (or considering subscribing) to investment shares receive and read this document. It is the main tool for the member to make an informed decision about investing in these shares.

18. How do members subscribe to these shares?

Members interested in these shares should receive an Offering Statement, which they will sign for and provide contact information (in case material changes to the Offering Statement need to be communicated). The member should read (or have their advisor read) the Offering Statement to make a fully informed decision. The member would then sign a Subscription Form (appearing in the Offering Statement) which details the amount and type of subscription. They then should complete an Authorization to Place Funds on Hold (for funds already at the credit union) or an Authorization to Place Funds in Escrow (for funds coming from outside the credit union). Both these forms are in the Offering Statement.

These funds are held until the successful closure of the Offering at which time the funds are used to purchase the subscribed number of shares. If the Offering is unsuccessful, the funds will be released back to the member, with interest. For shares held within an RRSP, further forms require to be completed. An RRSP application form with the appropriate trust agreement, a UCU deposit form and a designation of beneficiary form.

19. Who at UCU can sell these shares?

Due to the unique nature of these investments, only Branch Managers and Special Accounts Officer (Marika Dmytriak) will be able sell these investments. Members inquiring about these shares should be directed to one of these individuals.

20. Can members cancel their subscription?

Yes. They have 2 business days from the date of signing the subscription form to notify the credit union, in form outlined on the cover of the Offering Statement, their desire to cancel their subscription.

21. Do investment shareholders have any special voting rights?

Investment shareholders are non-voting for the purpose of annual or special meetings of the members of the credit union. In the event of a proposed dissolution, amalgamation, purchase of assets representing a substantial portion of UCU’s assets or a proposed resolution affecting the rights attaching to the investment shares, a special separate meeting will be held for these members. At this meeting, investment shareholders will have 1 vote for each share held.

22. Can 75th Anniversary Shares be pledged as collateral?

No, these shares cannot be pledged as collateral to the credit union. The Act does not allow credit unions to own its own shares. Of course, if members want to borrow to invest in these shares, they can still do so as long as they qualify without these shares as security for the loan.

23. What happens if a member dies?

Upon death, the estate may request the redemption of these investment shares.

24. What if a member leaves the credit union?

If a member withdraws their membership, these investment shares may be redeemed at the request of the member.

25. Is there a deadline on purchasing the shares?

Yes. The Share Offering is open just until June 30, 2020. If you are interested in purchasing Class A Shares, 75th Anniversary Series, you must do so by that date.