FirstOntario’s Class B Investment Share Offering

Membership shares must be purchased in order to become a member of FirstOntario – every member must have at least one membership share. Investment shares are an optional investment opportunity exclusively for FirstOntario members.

Yes, these shares can be held in a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP). It is possible to hold investment shares in a Registered Income Fund (RIF), but due to RRIF withdrawal requirements and the limited liquidity of the investment shares, the investor should carefully consider this decision.

No, they cannot be held in a LIRA or LIF.

No, they cannot be held in an FHSA.

Investment shares are equity securities and backed by the strength of FirstOntario. However, they are not deposits and they are not covered by the Deposit Insurance Reserve Fund (DIRF) administered by Financial Services Regulatory Authority of Ontario (FSRA). They do not offer any other form of guarantee of principal or dividends. They are not secured by any assets of the credit union.

Investment shares offer the opportunity to earn a higher return, while strengthening your credit union and your community, but it is important that you review the offering statement and understand the benefits and risks. Contact your local branch or our Member Service Centre to determine if this is the right investment for you. Investment shares may not be suitable for all members. Consider your financial situation, investment time horizon, need for liquidity, and risk tolerance.

No, investment shares are not convertible.

Members are encouraged to connect with our branch staff or Member Solutions Team for these inquiries.

No, investment shares do not mature. However, some restrictions on redeeming shares exist.

Dividend payments are not guaranteed. FirstOntario’s Board must approve the dividend payment annually based on the credit union’s performance over that fiscal year. The decision considers profits, liquidity and operational and regulatory requirements. FirstOntario has consistently paid the annual dividend on all its existing investment share series, but past payment of dividends is no guarantee that dividends will be paid in the future or at any particular rate.

Annually, if declared by the Board, the dividend is calculated on the balance of your investment shares as of December 31 and paid to the investment shares the following March.

Canada Revenue Agency requires the return on investment shares be reported as interest income, despite the fact a return on these shares series is legally a dividend. Dividends on investment shares are considered interest income for tax purposes if held outside of registered products.

Another difference between investment shares and typical shares of a company is that investment shares do not ordinarily change in value. They are issued at a price of $1 and do not increase or decrease, unless the credit union is liquidated and there are insufficient assets to repurchase all the investment shares that are issued and outstanding. Please consult a qualified tax advisor regarding the implications of this investment.

This series of shares is non-redeemable for five years after the issue date unless the shareholder dies or is expelled from membership in FirstOntario. Once that five-year non-redeemability period ends, members can request redemption at any time. Redemption requests are considered twice each year, at the Board meetings in March and September. Redemptions are limited to 10% of the shares issued and outstanding at the end of the preceding fiscal year and are granted on a first-come, first-served basis.

Members are able to transfer (sell) their shares to another member at any time, provided there is an interested buyer.

Members can choose to transfer (sell) their investment shares to other members interested in purchasing. Since sales requests are processed based on whether other members have expressed interest in purchasing, FirstOntario cannot guarantee that any shares can be sold in any given time frame. FirstOntario maintains lists of potential sellers and buyers and matches these lists to facilitate the transfer of ownership. Investment shares are not liquid and may be difficult or impossible to sell on short notice. You should not rely on these shares for access to cash.

Contact your branch or our Member Service Centre to learn more about transferring investment shares.

Your investment share offering statement outlines all the details on how members can request redemption of their investment shares. Requests must be received by February 28 or August 31. The Board considers redemption requests at its meetings in March and September each year and if approved, redemption requests will be processed no later than April 1 and October 1, respectively. A maximum of 5% of the shares outstanding at the end of the previous fiscal year will be redeemed at these intervals (the later redemption limit may exceed 5% of the shares outstanding at the end of the preceding fiscal year so that redemptions in the aggregate during the fiscal year are 10% of the shares issued and outstanding at the end of the preceding fiscal year), so any requests in excess of the redemption limit will be reviewed at the following meeting on a first come, first served basis.

Contact your branch or our Member Service Centre to learn more about redeeming investment shares.

Visit your local branch or call our Member Service Centre to discuss this opportunity and obtain an offering statement. To book an appointment, please call our Member Service Centre at 1-800-616-8878.