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Class A Share FAQ

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 four share issues (So-use 1999 Series, 65th Anniversary Series, 2010 Series, 75th Anniversary Series) are the types of capital UCU has on its balance sheet. For members, it is another type of investment offered by the credit union, for a limited time only. UCU has offered Class A Shares at  various times in the past to supplement our existing forms of capital to provide for future growth, development and stability, while maintaining a prudent cushion in the amount of capital above regulatory requirements.

2. Why should members own these shares?

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

3. Who can own 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. As of the end of June 30, 2020, members can not purchase the Class A Shares directly from the credit union. Members can however transfer shares to other members. UCU endeavours to maintain a list of members who wish to buy or sell Class A shares (or any of the outstanding series) in order to facilitate the sale of shares between members. 

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

Yes. The minimum number of shares is 1,000 ($1,000). There is a maximum number of shares a member can own of each of the outstanding series of Class A Shares: 

  • 750,000 shares of the 75th Anniversary Series ( $ 750,000)
  • 250,000 shares of the 65th Anniversary Special Shares ($250,000)
  • 200,000 shares of the 2010 Special Shares ($200,000)
  • 140,000 shares of the So-Use Special Shares ($140,000)

5. 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.

6. 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%).

7. 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.

8. 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).

9. 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.

10. 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 #6.

11. 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.

12. 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.

13. Can Class A Shares 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.

14. What happens if a member dies?

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

15. 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.

16. 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. If you want to purchase Class A Shares after that date, you will need to find another member who is willing to sell their shares to you. UCU endeavours to maintain a list of interested buyers and sellers, but cannot guarantee that you will be able to find a match.