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Having an impact with your portfolio:

You have questions, we have the answers.

Disclaimer

Please note that we have simplified many of the answers to help you better understand our securities. In all cases, investors should review our Offering Statement which provides all material facts relating to the offering of the CoEnergy’s securities.

General Information

What does CoEnergy do?

CoEnergy Ontario Co-operative Inc. (CoEnergy)’s mission is to enable development of a low carbon economy using a democratic business model that generates wealth, jobs, and other social and environmental benefits through the ownership and management of energy.

CoEnergy finances local green energy projects by selling securities to individuals and other co-operatives.  The first round of investments is expected to finance five projects in the Ottawa area.

CoEnergy also develops commercial green energy projects in partnership with local businesses and institutions.  These services can lower consumers’ carbon emissions and energy bills without up-front cost for them.

Who owns CoEnergy?

CoEnergy is a multi-class service co-op that is owned by its members.  There are two classes of membership:

Community Members made up of individuals and other local co-operatives who support the work of the co-op. Community Members are focused on creating low carbon jobs and economic development in their communities. They benefit from a more resilient and sustainable local community. They are entitled to elect, and remove, the balance of the Board of Directors, in the manner set out in the Bylaws of the Co-operative, from time to time.

Consumer Members use the co-op’s services, giving them more choice and control over the energy they use. They are entitled to elect, and remove, at least one, and no more than one third of the Board of Directors, in the manner set out in the Bylaws of the Co-operative, from time to time.

Both classes of members own and operate the business in a democratic process guaranteed by the co-operative model.

What is impact investing?
Impact investing describes a strategy to invest in companies that generate positive social and environmental benefits in addition to financial gain.
Are ethical mutual funds considered an impact investment?
Ethical mutual funds and other similar types of securities fall into the category of responsible investing.

Investing with the CoEnergy

What types of investments does CoEnergy offer?

CoEnergy makes investment securities available to its members on a regular basis. Preference Shares, available in 2019, provide investors a variable annual dividend over 10 years and an opportunity to diversify their portfolio with local clean tech projects. There is a minimum investment of $5,000.

Who can invest?

The Co-operative offers investment opportunities to individuals residing in Canada and businesses/institutions with whom it is providing energy services. Investors must become a member in order to purchase Preference Shares. Any resident of Canada can become a member of the Co-operative by purchasing a $50 lifetime membership share.

Our current investors include retirees looking to diversify their portfolio, millennials making their first investment, and everyone in between.

Where can I find your offering documents?

Right here.  Click to download the following documents (more will be added shortly)CoEnergy Class A Series 1 Offering Statement (1 MB PDF) (incl.the business plan and financial statements)

How does CoEnergy generate revenue?

Revenue is generated through an equipment lease model whereby energy saving equipment is purchased by CoEnergy and leased to a local business and institution.  The terms of the lease are specifically formulated for CoEnergy to realize a profit for its investors and provide energy savings for the client.

How are administrative costs covered?

As much as possible, administrative costs are covered with grants. A small percentage (about 5%) of capital raised from preference share offerings may be set aside to cover these expenses until revenues are sufficient to cover them.

Investing in CoEnergy Preference Shares

Who can invest in CoEnergy Preference Shares?

Preference Shares are available to any resident of Canada at a minimum of $5,000.

Our current investors include retirees looking to diversify their portfolio, millennials making their first investment, and everyone in between.

A membership in the Co-operative is required and can be purchased for $50 at the same time as Preference Shares.

Is there a minimum investment?

The minimum investment amount in CoEnergy Preference Shares is $5,000 for both unregistered and registered shares.  This minimum limit allows CoEnergy to offer a no-fee investment option for unregistered accounts.

Each Class A Preference Share is valued at $1 in blocks of 500.  Existing investors can purchase as little as one additional block for $500.

What kind of return will I earn with CoEnergy Preference Shares?

Preference Share holders will earn a variable annual dividend.  Initial projections indicate annual dividends of 4-5%. The amount of the declared dividend will depend on the Co-op’s performance and cash flow. 

It is important to note that returns during the first and final years of the investment will be prorated based on the date that Preference Shares are issued. With CoEnergy’s fiscal year running from September 1 to August 31, shares will be prorates based on the financial quarter that they are purchased within. This means that if you invest during the second quarter (between Dec. 1 and Feb. 28), you will receive a 3/4 dividend (75% of declared dividend.)

Read more in the full offering statement.

How and when will I see my returns on my Preference Share investment?

Dividends are issued at least once annually (typically in the late fall or early winter) based upon the residual share value at the time.  All Class A Preference Share holders receive the same dividend, prorated if shares are held for less than 1 year, at the same time, regardless of the series in which shares were issued.

All investors receive an investor statement annually.  Statements are emailed or mailed depending on the investor’s stated preference.

For unregistered shares: dividend payments will be deposited directly into the bank account on file or a cheque will be mailed to the address on file, depending on the investor’s stated preference. 

In February, a T5 is issued for income tax purposes, which is either emailed or mailed, depending on the investor’s preference.

For shares held within an RRSP & TFSA: dividends are held as cash within the account until the holder purchases additional shares (when available), transfers the cash to another RRSP (fees may apply), or withdraws the cash (fees may apply).

How and when will my capital be returned?

It is the intention of the Co-operative to return the full capital value of a Member’s Class A (Series 1) Preference Shares in one lump sum ten years after the share issuance.

Are dividends cumulative?

No, dividends on CoEnergy Preference Share are non-cumulative.

How are dividends treated for tax purposes?

CoEnergy Preference Share dividends qualify for the basic tax credit but are ineligible for an “enhanced” tax credit.  You will receive a T5 for every tax year that sets out your dividend information for the year in the “other than eligible” boxes:  total dividends for the year (Box 10), the grossed-up taxable amount (Box 11), and your tax credit (Box 12).

Can OREC preference shares be held in an RRSP/TFSA/RRIF/RESP?

Absolutely.  Read more about this option here.

Are owners of preference shares liable for any other costs in the case of bankruptcy?

No, only the value of the residual share balance. CoEnergy has Directors and Officers, Liability, and Equipment Insurance.

Will investment opportunities be available each year?

It is CoEnergy’s intention to have new projects and share offerings each year in the January to March window, but this is not guaranteed and is dependent on project availability, energy policy, and Financial Services Commission of Ontario approval.

Can my dividend be paid in shares rather than cash?

Not currently. Previous investors will always have the option to purchase as little as one block of shares for $500 when Preference Shares are available.

Can shares be sold or traded?

There is no market mechanism for selling shares.  However, shares are transferable among existing and new investors.  CoEnergy can facilitate a transfer at no cost to the seller or buyer.  The Board of Directors may consider buying back shares if there is sufficient cash flow at the time of request.

What happens if CoEnergy is dissolved?

In the very unlikely situation that CoEnergy dissolves, all debts and liabilities are paid out first. Following this, member capital is returned in an equal way, proportional to each member’s preference share value at that time.

What happens to the investment if the member dies?

The value of outstanding Membership and Preference Shares will be paid back to the Estate.  Dividends would be paid as appropriate based on the outstanding capital.  The executor also has the option of transferring shares to a different co-op member.

What happens to my shares if I move out of Canada?

You will be able to maintain any purchased securities but your membership share will be refunded.  You will no longer have voting rights and you will not be able to purchase new securities.

Investing through an RRSP, TFSA, RRIF and RESP

What are the RRSP options?

CoEnergy Preference Shares can be held inside a self-directed RRSP Plan offered through the Canadian Workers Co-operative Federation (CWCF) or through Caldwell Securities Ltd.

For RRSP plans with CWCF:

A $55 annual fee is charged for each registered account you hold with CWCF, which can be automatically deducted from your dividend payment.

More on investing with CWCF here.

For RRSP plans with Caldwell Securities

A $65 annual fee is charged for each registered account you hold with Caldwell, which can be automatically deducted from your dividend payment.

Members may purchase shares within their annual RRSP Deduction Limit or transfer funds in from another RRSP to purchase shares. Finally, a member may buy preference shares outside of an RRSP and then decide to put them in their self-directed RRSP in a subsequent year. Members may also purchase shares within a RRSP spousal account. Investors are only taxed on the income earned when they choose to withdraw money from the RRSP tax shield.

What are the TFSA options?

CoEnergy Preference shares can be held inside of a TFSA offered through the Canadian Workers Co-operative Federation (CWCF) or through Caldwell Securities Ltd.

For TFSA plans with CWCF:

A $55 annual fee is charged for each registered account you hold with CWCF, which can be automatically deducted from your dividend payment.

More on investing with CWCF here.

For TFSA plans with Caldwell Securities

A $65 annual fee is charged for each registered account you hold with Caldwell, which can be automatically deducted from your dividend payment.

Members may purchase shares within their annual TFSA limit or transfer funds in from another TFSA to purchase shares. Finally, a member may buy preference shares outside of a TFSA and then decide to put them in their self-directed TFSA in a subsequent year. Dividends earned on shares inside the TFSA are not taxed.

What are the RESP options?

CoEnergy Preference Shares can be held inside of a self-directed Registered Education Savings Plan (RESP) offered through Caldwell Securities Ltd. A $65 annual fee is charged by Caldwell, which can be automatically deducted from your returns.

There is no annual limit for RESP contributions, yet the lifetime limit for contributions to a RESP is $50,000. Every year, the Canadian Government can also contribute 20% of your annual contribution (up to $500) as well. Finally, a member may buy preference shares outside of a RESP and then decide to put them in their self-directed RESP in a subsequent year. Dividends earned on shares inside the RESP are not taxed.

For more, see the Canadian Revenue Agency’s website.

What happens when my RRSP matures at 71 years of age?

According to rules set out by the Canada Revenue Agency, your RRSP holdings must be converted to a RRIF, annuity, or paid out in a lump sum by the end of the calendar year that you turn age 71.

If you currently hold Preference Shares in an RRSP that is coming to maturity, you have the option of converting those shares to a RRIF with Caldwell Securities Ltd.   If you shares are currently held with CWCF, CoEnergy can help facilitate the transfer to Caldwell Securities

If you do not wish to convert your shares, you have two options:

Option 1: Withdraw shares from the RRSP, pay income tax on the withdrawn amount, and maintain the now unregistered shares in CoEnergy.

Option 2: Sell shares back to CoEnergy or another member, transfer the funds out of CWCF to an RRSP account at another institution that can convert the funds into a RRIF. On the other hand, cash accumulated from dividends and return of capital in your CoEnergy RRSP can be transferred to a RRIF account with another institution as described above.

What is the recommended preference share investment to hold in an RRSP, TFSA or RESP?

The minimum purchase within a registered account is $5,000.  We recommended investing at least $10,000 in order to offset the annual account fees charged by CWCF ($55) or Caldwell Securities Ltd. ($65) to the account holder.

What are my options when dividends are issued or capital is returned within a registered account?

When the Co-operative issues a dividend or returns a portion of your share capital, a cheque is sent directly to CWCF or Caldwell (depending on who is holding your account) and deposited into your account.  That money is considered “cash” in your account behind the tax shield but it is not earning a return. The options available to you depend on the financial institution holding your investments.

Your options with CWCF are to:

  1. Continue earning a return by purchasing as little as one share for $500 (when available) without incurring fees.  You can top up by making a new contribution to your account in the event that you do not have $500 in your account.
  2. Purchase shares in other co-operatives that employ the services of CWCF.  Contact CWCF for a list of such options.
  3. Make a partial withdrawal from you CWCF account.  You will be charged $50 by CWCF for this option and you will be required to claim the withdrawal as income for that taxation year.

To withdraw funds your CWCF account, you will need to make a request, in writing, to the Canadian Workers Co-operative Federation (CWCF) who administers your self-directed account. This request needs to include your name, account number, current mailing address and the amount you wish to withdraw. You should also state you are aware of the required Canadian Revenue Agency withholding tax as well as the CWCF withdraw fee ($50 partial withdraw/$75 to close your account) which will be taken from the amount you are requesting prior to the cheque being sent to you. Questions can be directed to: Josh Dyke, RRSP Program Manager #1 – 41 Aberdeen St., Kentville, NS B4N 2M9 Tel: 902-678-1683

Email: josh@canadianworker.coop

Website: www.canadianworker.coop

Can I transfer the cash in my CWCF account to a registered account held by another institution?

Yes. Have the other institution complete a ‘Transfer Out’ form (T2033) to request the amount of cash you are looking to transfer out. Upon receiving this request, CWCF will process it and forward the amount to the other institution.

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Last updated: October 2018