Alterna Savings Class A Investment Shares, Series 3

“Investment Shares"

Investment Shares are an exclusive equity investment in Alterna Savings offered only to our members, providing the ideal opportunity to earn an attractive rate of return. As an equity investment, there is an element of risk, explained in the Offering Statement (PDF), which is offset by our past record of performance.

Why is Alterna Savings selling Investment Shares?

Funds raised through the sale of Investment Shares strengthen the capital base, or financial foundation, of Alterna Savings. These funds will help the credit union continue to exceed financial reserve regulations and have the necessary capital to invest in new technology which we can use to offer expanded services to our membership.

Are Investment Shares eligible for Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA)?

Yes, Alterna Savings’ Investment Shares are eligible to be held in member non-registered, RRSP or TFSA portfolios.

How are Investment Shares different from the Membership Shares I already have?

Membership Shares are the class of shares required to be able to do business with Alterna Savings. Your membership generally begins with the purchase of a $15 Membership Share, which entitles you to have one vote at Alterna Savings Annual General Meeting.

Investment Shares are an investment made available exclusively to members, and are only available through special, time-limited offerings. In certain cases and limited circumstances as outlined in Alterna Savings’ Articles of Incorporation and in the Credit Unions and Caisses Populaires Act, 1994, there can be shareholders’ meetings for holders of Investment Shares, at which time the voting would be on a one-share, one-vote basis. The direction of the Credit Union and election of the Board, however, are still controlled through democratic votes by members at the Annual General Meeting.

Who may purchase Investment Shares?

The sale of Investment Shares is restricted to members of Alterna Savings who are age 18 or over and who reside in Ontario or Quebec.

What type of investor should consider Investment Shares?

Investment Shares are suitable for people who are seeking a long-term investment, looking for ways to diversify their investments, and willing to accept a moderate level of risk for potentially higher returns, and who believe in the future of Alterna Savings.

What type of investor should not consider Investment Shares?

Investment Shares are not suitable for those who will need or may need access to their funds in the short-term or those who prefer minimal risk. Investment Shares will not be sold in RRSPs to investors who have reached 66 years of age, as those members will be required to convert their RRSPs to RRIFs before redemption of these shares is legally possible.

What is the purchase price of an Investment Share?

Each Investment Share is priced at $1.00.

What is the selling period? How many Shares will be sold?

The sales period for these special shares began on October 3, 2011, and continued until subscriptions reached the maximum issue of $35 million. the final day of sales was February 29, 2012. The day sales cease is referred to as the “closing date”.

Are there minimum and maximum investment limits? If so, why?

Yes. The minimum investment is $1,000 and the maximum is $200,000. The purpose of the limits is to make the Investment Shares easily accessible and widely available, without unduly restricting those who wish to make larger investments.

What is the minimum dividend rate?

Dividends are not cumulative, which means, if a dividend is not paid in a given year, it’s not added to the next dividend. Important note: dividends are not guaranteed and must be approved on an annual basis by the Board of Directors. Dividends are legally prohibited if Alterna Savings fails to comply with minimum capital and liquidity levels. The dividend rate for 2018 has been declared by the Board of Directors as 3.50%.

For a full list of historical dividend rates please refer here.

When will the Shares be issued and the dividends paid?

The Investment Shares will be issued within 60 days after the closing of the offering. Dividends, if declared, will be declared by the Board after each fiscal year-end and before the Annual General Meeting. Any dividend paid regarding the fiscal year in which the shares are issued may be pro-rated.

What are the risks?

Investments in the “Class A Investment Shares, Series 3”, are subject to a number of risks both on the investment principal and the payment of dividends.

We recommend reviewing page 21 of the Offering Statement (PDF) for complete details on the risks associated with the purchase of these shares.

When can I redeem my Investment Shares?

The Credit Union will begin accepting redemption requests six months before the end of the fifth year–following the fiscal year in which the shares were issued. Alterna Savings will accept requests until the end of that period, and will repeat this process in subsequent years.

The total amount of redemptions by members, in any year, is limited to a maximum of 10% of the total amount of Investment Shares outstanding at the beginning of that year. In order of priority, ongoing redemptions will be processed because of death or estate fulfilments, expulsion from membership, and then on a first-come, first-served basis, up to the annual 10% limit.

What if I have funds at another institution that I wish to invest?

If the funds are in demand accounts (savings, chequing, variable rate RRSPs) or in mutual funds or other accessible investments, Alterna Savings can arrange for the transfer of the funds immediately with your written authorization. If you have a fixed term RRSP or GIC maturing in the near future, you can also sign a transfer form to bring the funds to Alterna Savings upon maturity, as long as the funds can be received prior to the closing date of the Investment Shares offering.

Can I sell my shares to another member?

Investment Shares are not publicly traded and there is no secondary market. Alterna Savings will help facilitate transfers between members when possible, if one member wishes to sell his or her Investment Shares and another member wishes to purchase the Shares. There is no guarantee that such a transfer will be possible when requested.

How will Canada Revenue Agency treat my dividend income?

According to the Canada Revenue Agency, the dividends from Investment Shares will be treated as interest income from a Canadian source, which must be reported on the investor’s income tax return. Alterna Savings will issue and mail to each investor the appropriate T5 form for this purpose.

How do I invest?

Visit your local Alterna Savings branch to pick up a copy of our Offering Statement (PDF), call to arrange an appointment with an Investment Shares salesperson, or call 1.877.560.0100 for more information.

If you intend to purchase Investment Shares, you’ll be asked to sign a Subscription Form which states that you’ve read the Offering Statement, and have determined the suitability of this investment for your financial situation.

Dividends on these securities are not guaranteed. There is no market through which these securities may be sold. The prospective purchaser of these securities should carefully review the offering statement and any other documents it refers to. This is not an offering statement.