An Act to revise and amend the law governing federal trust and loan companies and to provide for related and consequential mattersTrust and Loan Companies ActTrust and Loan Companies1991December
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T-19.8451991Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:SHORT TITLE
Short titleThis Act may be cited as the Trust and Loan Companies Act.
INTERPRETATION AND APPLICATIONDefinitions
DefinitionsIn this Act,affairsaffaires internesaffairs, with respect to a company, means the relationships among the company and its affiliates and the shareholders, directors and officers of the company and its affiliates, but does not include the business of the company or any of its affiliates;affiliategroupeaffiliate means an entity that is affiliated with another entity within the meaning of section 6;AgencyAgenceAgency means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act;annual statementrapport annuelannual statement means the annual financial statement of a company within the meaning of paragraph 313(1)(a);assetsactifassets, in respect of a company that is a trust company pursuant to subsection 57(2), includes assets held by the company in respect of guaranteed trust money;auditorvérificateurauditor includes a firm of accountants;bank holding companysociété de portefeuille bancairebank holding company means a body corporate that is incorporated or formed under Part XV of the Bank Act;bearerporteurbearer, in relation to a security, means the person in possession of a security payable to bearer or endorsed in blank;bearer formtitre au porteurbearer form, in respect of a security, means a security in bearer form as determined in accordance with subsection 86(2);beneficial ownershipvéritable propriétaire et propriété effectivebeneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries;body corporatepersonne moralebody corporate means an incorporated body wherever or however incorporated;branchbureaubranch, in respect of a company, means an agency, the head office and any other office of the company;Canadian financial institutioninstitution financière canadienneCanadian financial institution means a financial institution that is incorporated or formed by or under an Act of Parliament or of the legislature of a province;central securities register or securities registerregistre central des valeurs mobilières ou registre des valeurs mobilièrescentral securities register or securities register means the register referred to in section 253;CommissionercommissaireCommissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act;common-law partnerconjoint de faitcommon-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year;companysociétécompany means a body corporate to which this Act applies;complainantplaignantcomplainant, in relation to a company or any matter concerning a company, meansa registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a company or any of its affiliates,a director or an officer, or a former director or officer, of a company or any of its affiliates, orany other person who, in the discretion of a court, is a proper person to make an application under section 339, 343 or 537;consumer provisiondisposition visant les consommateursconsumer provision means a provision referred to in paragraph (d) or (d.1) of the definition consumer provision in section 2 of the Financial Consumer Agency of Canada Act; courttribunalcourt meansin the Province of Ontario, the Superior Court of Justice,in the Province of Quebec, the Superior Court of the Province,in the Provinces of Nova Scotia and British Columbia, the Supreme Court of the Province,in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province,in the Provinces of Prince Edward Island and Newfoundland, the trial division of the Supreme Court of the Province, andin Yukon and the Northwest Territories, the Supreme Court, and in Nunavut, the Nunavut Court of Justice;court of appealcour d’appelcourt of appeal means the court to which an appeal lies from a decision or order of a court;creditorcréanciercreditor, in respect of a company that is a trust company pursuant to subsection 57(2), includes a person who has money deposited with the company as guaranteed trust money;debt obligationtitre de créancedebt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured;depositdépôtdeposit, in respect of money received by a company that is a trust company pursuant to subsection 57(2), means money received as guaranteed trust money;deposit liabilitiesdettedeposit liabilities, in respect of a company that is a trust company pursuant to subsection 57(2), means liabilities of the company in respect of guaranteed trust money;director, board of directors or directorsadministrateur, conseil d’administration ou conseildirector means a natural person occupying the position of director, by whatever name called, of a body corporate, and board of directors or directors refers to the directors of a body corporate as a body;entityentitéentity means a body corporate, trust, partnership, fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof;equitycapitaux propresequity, in respect of a company, means its equity as determined in accordance with the regulations;federal credit unioncoopérative de crédit fédéralefederal credit union has the same meaning as in section 2 of the Bank Act;federal financial institutioninstitution financière fédéralefederal financial institution meansa company,a bank,an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, oran insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act;fiduciaryreprésentantfiduciary means any person acting in a fiduciary capacity and includes a personal representative of a deceased person;financial institutioninstitution financièrefinancial institution meansa company,a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act,an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,a trust, loan or insurance corporation incorporated by or under an Act of the legislature of a province,a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities, including portfolio management and investment counselling, anda foreign institution;foreign institutioninstitution étrangèreforeign institution means an entity that isengaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, andincorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province;former Actloi antérieureformer Act means the Trust Companies Act or the Loan Companies Act;former-Act companysociété antérieureformer-Act company means a body corporate referred to in paragraph 12(b) or (c);form of proxyformulaire de procurationform of proxy means a written or printed form that, when completed and executed by or on behalf of a shareholder, constitutes a proxy;going-private transactiontransaction de fermeturegoing-private transaction means a going-private transaction as defined in the regulations;guaranteegarantieguarantee includes a letter of credit;guaranteed trust moneyfonds en fiducie garantieguaranteed trust money means money that is received in trust for investment by a company that is a trust company pursuant to subsection 57(2) and that is subject to a guarantee by the company in respect of the payment of interest or repayment of the principal or both;head officesiègehead office means the office required to be maintained by a company pursuant to section 242;holderdétenteurholder meansin respect of a security certificate, the person in possession of the certificate issued or endorsed to that person or to bearer or in blank, andin respect of the ownership of a share, the shareholder of the share within the meaning of section 7;holding body corporatesociété mèreholding body corporate means a holding body corporate within the meaning of section 4;incorporatedconstitué en personne moraleincorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, also refers to a body corporate that is continued by or under any such Act;incorporating instrumentacte constitutifincorporating instrument means the special Act, letters patent, instrument of continuance or other constating instrument by which a body corporate was incorporated or continued and includes any amendment to or restatement of the constating instrument;incorporatorfondateurincorporator, in relation to a company, means a person who applied for letters patent to incorporate the company;insurance holding companysociété de portefeuille d’assurancesinsurance holding company means a body corporate that is incorporated or formed under Part XVII of the Insurance Companies Act;issuerémetteurissuer, in respect of a security, means the entity that issues or issued the security;letters patentlettres patentesletters patent, in respect of an instrument authorized to be issued under this Act, means letters patent in a form approved by the Superintendent;MinisterministreMinister means the Minister of Finance;minormineurminor has the same meaning as in the applicable provincial law and in the absence of any such law has the same meaning as the word “child” in the United Nations Convention on the Rights of the Child adopted in the United Nations General Assembly on November 20, 1989;non-WTO Member foreign institutioninstitution étrangère d’un non-membre de l’OMCnon-WTO Member foreign institution means a foreign institution that is not controlled by a WTO Member resident;officerdirigeantofficer meansin relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, andin relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members thereof or otherwise;order formtitre à ordreorder form, in respect of a security, means a security in order form as determined in accordance with subsection 86(3);ordinary resolutionrésolution ordinaireordinary resolution means a resolution passed by a majority of the votes cast by or on behalf of the shareholders who voted in respect of that resolution;personpersonneperson means a natural person, an entity or a personal representative;personal representativereprésentant personnelpersonal representative means a person who stands in place of and represents another person and, without limiting the generality of the foregoing, includes, as the circumstances require, a trustee, an executor, an administrator, a committee, a guardian, a tutor, a curator, an assignee, a receiver, an agent or an attorney of any person;prescribedVersion anglaise seulementprescribed means prescribed by regulation;propertybiensproperty, in respect of a company that is a trust company pursuant to subsection 57(2), includes property held by the company in respect of guaranteed trust money;proxyprocurationproxy means a completed and executed form of proxy by means of which a shareholder appoints a proxyholder to attend and act on the shareholder’s behalf at a meeting of shareholders;proxyholderfondé de pouvoirproxyholder means the person appointed by proxy to attend and act on behalf of a shareholder at a meeting of shareholders;real propertybiens immeublesreal property includes a leasehold interest in real property;recorded addressadresse enregistréerecorded address meansin relation to a person who is a shareholder of a company, the latest postal address of the person according to the central securities register of the company, andin relation to a person in any other respect, the latest postal address of the person according to the records of the branch concerned;registered formtitre nominatifregistered form, in respect of a security, means a security in registered form as determined in accordance with subsection 86(4);regulatory capitalcapital réglementaireregulatory capital, in respect of a company, has the meaning given that expression by the regulations;resident Canadianrésident canadienresident Canadian means a natural person who isa Canadian citizen ordinarily resident in Canada,a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, ora permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship;residential propertyimmeuble résidentielresidential property means real property consisting of buildings that are used, or are to be used, to the extent of at least one half of the floor space thereof, as one or more private dwellings;securities underwritersouscripteur à forfaitsecurities underwriter means a person who, as principal, agrees to purchase securities with a view to the distribution of the securities or who, as agent for a body corporate or other person, offers for sale or sells securities in connection with a distribution of the securities, and includes a person who participates, directly or indirectly, in a distribution of securities, other than a person whose interest in the distribution of securities is limited to receiving a distributor’s or seller’s commission payable by a securities underwriter;securitytitre » ou « valeur mobilièresecurity meansin relation to a body corporate, a share of any class of shares of the body corporate or a debt obligation of the body corporate, and includes a warrant of the body corporate, but does not include a deposit with a financial institution or any instrument evidencing such a deposit, andin relation to any other entity, any ownership interest in or debt obligation of the entity;security interestsûretésecurity interest means an interest in or charge on property by way of mortgage, lien, pledge or otherwise taken by a creditor or guarantor to secure the payment or performance of an obligation;sendenvoyersend includes deliver;seriessérieseries, in respect of shares, means a division of a class of shares;significant interestintérêt substantielsignificant interest means a significant interest determined in accordance with section 8;special resolutionrésolution extraordinairespecial resolution means a resolution passed by a majority of not less than two thirds of the votes cast by or on behalf of the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution;squeeze-out transactiontransaction d’évictionsqueeze-out transaction means a transaction by a company that is not a distributing company that requires an amendment to a by-law referred to in subsection 222(1) and that would directly or indirectly result in the interest of a holder of shares of a class of shares being terminated without their consent and without substituting an interest of equivalent value in shares issued by the company that have rights and privileges equal to or greater than those of the shares of the affected class;subordinated indebtednesstitre secondairesubordinated indebtedness means an instrument evidencing an indebtedness of a company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the company, be subordinate in right of payment to all deposit liabilities of the company and all other liabilities of the company except those that, by their terms, rank equally with or are subordinate to such indebtedness;subsidiaryfilialesubsidiary means an entity that is a subsidiary of another entity within the meaning of section 5;substantial investmentintérêt de groupe financiersubstantial investment means a substantial investment determined in accordance with section 10;SuperintendentsurintendantSuperintendent means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act;tradeopérationtrade, in respect of securities, means any sale or disposition of securities for valuable consideration;transfertransferttransfer, in respect of securities, includes a transmission by operation of law;voting shareaction avec droit de votevoting share means a share of any class of shares of a body corporate carrying voting rights under all circumstances or by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled;WTO Member residentrésident d’un membre de l’OMCWTO Member resident means a WTO Member resident within the meaning of section 11.1.
  • 1991, c. 45, s. 2, c. 47, s. 753, c. 48, s. 493;
  • 1992, c. 51, s. 66;
  • 1998, c. 30, ss. 13(F), 15(E);
  • 1999, c. 3, s. 84, c. 28, s. 136;
  • 2000, c. 12, s. 298;
  • 2001, c. 9, s. 478, c. 27, s. 272;
  • 2002, c. 7, s. 248(E);
  • 2005, c. 54, s. 368;
  • 2010, c. 12, s. 2123;
  • 2012, c. 5, s. 162.
Previous Version
Interpretation
Major shareholderFor the purposes of this Act, a person is a major shareholder of a body corporate ifthe aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; orthe aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.
  • 2001, c. 9, s. 479.
Widely heldFor the purposes of this Act, a body corporate is widely held if it has no major shareholder.
  • 2001, c. 9, s. 479.
Regulations — distributing companyThe Governor in Council may make regulations respecting the determination of what constitutes a distributing company for the purposes of this Act.Exemption — companyOn the application of a company, the Superintendent may determine that it is not or was not a distributing company if the Superintendent is satisfied that the determination would not prejudice any of its security holders.Exemption — class of companiesThe Superintendent may determine that members of a class of companies are not or were not distributing companies if the Superintendent is satisfied that the determination would not prejudice any security holder of a member of the class.
  • 2005, c. 54, s. 369.
ControlFor the purposes of this Act,a person controls a body corporate if securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate;a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;the general partner of a limited partnership controls the limited partnership; anda person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.Deemed controlA person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.Deemed controlA person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate ofany securities of the entity that are beneficially owned by that person, andany securities of the entity that are beneficially owned by any entity controlled by that personis such that, if that person and all of the entities referred to in paragraph (b) that beneficially own securities of the entity were one person, that person would control the entity.GuidelinesThe Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.
  • 1991, c. 45, s. 3;
  • 2001, c. 9, s. 480.
Holding body corporateA body corporate is the holding body corporate of any entity that is its subsidiary.
  • 1991, c. 45, s. 4;
  • 2001, c. 9, s. 481.
SubsidiaryAn entity is a subsidiary of another entity if it is controlled by the other entity.
  • 1991, c. 45, s. 5;
  • 2001, c. 9, s. 481.
Affiliated entitiesOne entity is affiliated with another entity if one of them is controlled by the other or both are controlled by the same person.Affiliated entitiesDespite subsection (1), for the purposes of subsections 270(1) and 288(1), one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.
  • 1991, c. 45, s. 6;
  • 2001, c. 9, s. 482.
ShareholderFor the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of one or more shares of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of the share or shares.Holder of a shareA reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or like record of the body corporate as the holder of that share.
Significant interestA person has a significant interest in a class of shares of a company where the aggregate ofany shares of that class beneficially owned by the person, andany shares of that class beneficially owned by entities controlled by the personexceeds 10 per cent of all of the outstanding shares of that class of shares of the company.Increasing significant interestA person who has a significant interest in a class of shares of a company increases that significant interest in the class of shares where the person or any entity controlled by the personacquires beneficial ownership of additional shares of that class, oracquires control of any entity that beneficially owns shares of that class,in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.
Acting in concertFor the purposes of Part VII, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect ofshares of a company that they beneficially own,shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a company, orshares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a company,those persons shall be deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the company or shares or ownership interests of the entity that are beneficially owned by them.IdemWithout limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),whereby any of them or their nominees may veto any proposal put before the board of directors of the company, orpursuant to which no proposal put before the board of directors of the company may be approved except with the consent of any of them or their nominees,shall be deemed to be an agreement, commitment or understanding referred to in subsection (1).ExceptionsFor the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact thatone is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); orthey vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.DesignationWhere in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Superintendent may designate those persons as persons who have agreed to act jointly or in concert.ContraventionA person contravenes a provision of Part VII if the person agrees to act jointly or in concert with one or more other persons in such a manner that a deemed single person contravenes the provision.
  • 1991, c. 45, s. 9;
  • 2001, c. 9, s. 483;
  • 2007, c. 6, s. 337.
Previous Version
Substantial investment in body corporateA person has a substantial investment in a body corporate wherethe voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate; orthe aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the shareholders’ equity of the body corporate.Increasing substantial investment in body corporateA person who has a substantial investment in a body corporate pursuant to paragraph (1)(a) increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person.IdemA person who has a substantial investment in a body corporate pursuant to paragraph (1)(b) increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.New substantial investmentFor greater certainty,where a person has a substantial investment in a body corporate pursuant to paragraph (1)(a) and the person, or any entity controlled by the person,purchases or otherwise acquires beneficial ownership of shares of the body corporate, oracquires control of any entity that beneficially owns shares of the body corporate,in such number as to cause the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25 per cent of the shareholders’ equity of the body corporate, orwhere a person has a substantial investment in a body corporate pursuant to paragraph (1)(b) and the person or any entity controlled by the personpurchases or otherwise acquires beneficial ownership of voting shares of the body corporate, oracquires control of any entity that beneficially owns voting shares of the body corporate,in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate,the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.Substantial investment in unincorporated entityA person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of all of the ownership interests into which the entity is divided.Increasing substantial investment in unincorporated entitiesA person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.
[Repealed, 2005, c. 54, s. 370]Previous Version
WTO Member residentFor the purposes of this Act, a WTO Member resident isa natural person who is ordinarily resident in a country or territory that is a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada;a body corporate, association, partnership or other organization that is incorporated, formed or otherwise organized in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada, and that is controlled,directly or indirectly, by one or more persons referred to in paragraph (a), orby a government of a WTO Member, whether federal, state or local, or an agency of one of those governments;a trust established by one or more persons referred to in paragraph (a) or (b) or a trust in which one or more of those persons have more than 50 per cent of the beneficial interest; ora body corporate, association, partnership or other organization that is controlled, directly or indirectly, by a trust referred to in paragraph (c).InterpretationFor the purposes of subsection (1),a body corporate is controlled by one or more persons ifsecurities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person or persons, andthe votes attached to those securities are sufficient to elect a majority of the directors of the body corporate;an association, partnership or other organization is controlled by one or more persons ifmore than 50 per cent of the ownership interests, however designated, into which the association, partnership or other organization is divided are beneficially owned by the person or persons, andthe person or persons are able to direct the business and affairs of the association, partnership or other organization;a body corporate, association, partnership or other organization is controlled by one or more persons if the person or persons have, directly or indirectly, control in fact of the body corporate, association, partnership or other organization; anda body corporate, association, partnership or other organization that controls another body corporate, association, partnership or other organization is deemed to control any body corporate, association, partnership or other organization that is controlled or deemed to be controlled by the other body corporate, association, partnership or other organization.
  • 1999, c. 28, s. 137.
Application
Application of ActThis Act applies to every body corporatethat is incorporated or continued under this Act,to which the Trust Companies Act applied immediately before the coming into force of this section, orto which the Loan Companies Act applied immediately before the coming into force of this section,and that is not discontinued under this Act.
Conflicting provisionsWhere there is a conflict or inconsistency between a provision of this Act and a provision of the incorporating instrument of a former-Act company, the provision of this Act prevails.
STATUS AND POWERS
Corporate powersA company has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.Powers restrictedA company shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.Business in CanadaA company may carry on business throughout Canada.Powers outside CanadaSubject to this Act, a company has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.
No invalidityNo act of a company, including any transfer of property to or by a company, is invalid by reason only that the act or transfer is contrary to the company’s incorporating instrument or this Act.
By-law not necessaryIt is not necessary for a company to pass a by-law in order to confer any particular power on the company or its directors.
No personal liabilityThe shareholders of a company are not, as shareholders, liable for any liability, act or default of the company except as otherwise provided by this Act.
No constructive noticeNo person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a company by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at a branch of the company.
Authority of directors and officersNo company and no guarantor of an obligation of a company may assert against a person dealing with the company or against a person who has acquired rights from the company thatthe company’s incorporating instrument or any by-laws of the company have not been complied with;the persons named as directors of the company in the most recent return sent to the Superintendent under section 499 are not the directors of the company;the place named in the incorporating instrument or by-laws of the company is not the place where the head office of the company is situated;a person held out by the company as a director, officer or representative of the company has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the company or usual for a director, officer or representative; ora document issued by any director, officer or representative of the company with actual or usual authority to issue the document is not valid or not genuine.Exception — knowledgeSubsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the company.
  • 1991, c. 45, s. 19;
  • 2005, c. 54, s. 371.
Previous Version
Sunset provisionSubject to subsections (2) and (4), companies shall not carry on business after the day that is the fifth anniversary of the day on which this section comes into force.ExtensionThe Governor in Council may, by order, extend by up to six months the time during which companies may continue to carry on business. No more than one order may be made under this subsection.Order not a regulationThe order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.ExceptionIf Parliament dissolves on the fifth anniversary of the day on which this section comes into force, on any day within the six-month period before that anniversary or on any day within an extension under subsection (2), companies may continue to carry on business until the end of 180 days after the first day of the first session of the next Parliament.
  • 1991, c. 45, s. 20;
  • 1997, c. 15, s. 341;
  • 2001, c. 9, s. 484;
  • 2006, c. 4, s. 202;
  • 2007, c. 6, s. 338;
  • 2012, c. 5, s. 163.
Previous Version
INCORPORATION, CONTINUANCE AND DISCONTINUANCEFormalities of Incorporation
Incorporation of companyOn the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a company.
Restrictions on incorporationLetters patent incorporating a company may not be issued if the application therefor is made by or on behalf ofHer Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;the government of a foreign country or any political subdivision thereof;an agency of the government of a foreign country or any political subdivision thereof; oran entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.
Subsidiary of foreign institutionIf a proposed company would be a subsidiary of a foreign institution that is engaged in trust or loan business and the application for letters patent to incorporate the company is made by a non-WTO Member foreign institution, letters patent to incorporate the company may not be issued unless the Minister is satisfied that treatment as favourable for companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.
  • 1991, c. 45, s. 23;
  • 1999, c. 28, s. 138;
  • 2001, c. 9, s. 485.
Application for incorporationAn application for letters patent to incorporate a company setting out the names of the first directors of the company shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.Publishing notice of intentBefore filing an application referred to in subsection (1), the applicant or one of the applicants, as the case may be, shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the company is to be situated.
Objections to incorporationAny person who objects to the proposed incorporation of a company may, within thirty days after the date of the last publication under subsection 24(2) in respect of the proposed company, submit the objection in writing to the Superintendent.Minister to be informedOn receipt of an objection under subsection (1), the Superintendent shall inform the Minister of the objection.Inquiry into objection and reportOn receipt of an objection under subsection (1), and if the application for the issuance of the letters patent to which the objection relates has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.Report to be made availableWithin thirty days after receiving a report under subsection (3), the Minister shall make the report available to the public.Rules governing proceedingsSubject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.
Matters for considerationBefore issuing letters patent to incorporate a company, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the company;the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the company;the business record and experience of the applicant or applicants;the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;whether the company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations of the applicant or applicants with those of the company on the conduct of those businesses and operations; andthe best interests of the financial system in Canada.
  • 1991, c. 45, s. 26;
  • 2001, c. 9, s. 486.
Contents of letters patentThere shall be set out in the letters patent incorporating a companythe name of the company;the province in which the head office of the company is to be situated; andthe date that the company came, or is to come, into existence.Provisions in letters patentThe Minister may set out in the letters patent incorporating a company any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed company.Terms and conditionsThe Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a company as the Minister considers necessary or appropriate.
  • 1991, c. 45, s. 27;
  • 2005, c. 54, s. 372.
Previous Version
Notice of issue of letters patentThe Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a company.
First directorsThe first directors of a company are the directors named in the application for letters patent to incorporate the company.
Effect of letters patentA company comes into existence on the date provided therefor in its letters patent.
Continuance
Federal corporationsA body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, other than a federal credit union, may apply to the Minister for letters patent continuing the body corporate as a company under this Act.Other corporationsA body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a company under this Act.
  • 1991, c. 45, s. 31;
  • 1994, c. 24, s. 34(F);
  • 2010, c. 12, s. 2124.
Previous Version
Application for continuanceWhere a body corporate applies for letters patent under subsection 31(1) or (2), sections 22 to 26 apply in respect of the application, with such modifications as the circumstances require.Special resolution approvalWhere a body corporate applies for letters patent under subsection 31(1) or (2), the application must be duly authorized by a special resolution.Copy of special resolutionA copy of the special resolution referred to in subsection (2) shall be filed with the application.
Power to issue letters patentOn the application of a body corporate under subsection 31(1) or (2), the Minister may, subject to this Part, issue letters patent continuing the body corporate as a company under this Act.Issue of letters patentWhere letters patent are issued to a body corporate under subsection (1), section 27 applies in respect of the issue of letters patent, with such modifications as the circumstances require.
Effect of letters patentOn the day set out in the letters patent continuing a body corporate as a company under subsection 33(1),the body corporate becomes a company as if it had been incorporated under this Act; andthe letters patent are deemed to be the incorporating instrument of the continued company.
Copy of letters patentWhere a body corporate is continued as a company under this Part, the Superintendent shall forthwith send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Act.Notice of issuance of letters patentThe Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a company under this Act.
Effects of continuanceWhere a body corporate is continued as a company under this Part,the property of the body corporate continues to be the property of the company;the company continues to be liable for the obligations of the body corporate;an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the company;a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the company;a person who, on the day the body corporate becomes a company, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect thereof, but any such right or privilege may be exercised only in accordance with this Act; andthe by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the company.
TransitionalNotwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a company in respect of which letters patent were issued under subsection 33(1) permission toengage in a business activity specified in the order that a company is not otherwise permitted by this Act to engage in and that the body corporate continued as the company was engaging in at the time the application for the letters patent was made;continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;[Repealed, 1994, c. 47, s. 202]hold assets that a company is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the company at the time the application for the letters patent was made;acquire and hold assets that a company is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the company was obliged, at the time the application for the letters patent was made, to acquire those assets; andmaintain outside Canada any records or registers required by this Act to be maintained in Canada.DurationThe permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any activity described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraph (1)(d) to (f), two years.Non-applicationParagraph (2)(a) does not apply to a company if the body corporate continued as the company was, at any time before the coming into force of this subsection, engaged in any personal property leasing activity in which a financial leasing entity, as defined in subsection 449(1), is not permitted to engage.RenewalSubject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission granted by order under subsection (1) with respect to any matter described in paragraphs (1)(b) to (e) for such further period or periods as the Minister considers necessary.LimitationThe Minister shall not grant to a company any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the company to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the company that the company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters referred to in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of the approval for the company to commence and carry on business.
  • 1991, c. 45, s. 37;
  • 1994, c. 47, s. 202;
  • 1997, c. 15, s. 342;
  • 1999, c. 31, s. 213(F);
  • 2007, c. 6, s. 339;
  • 2009, c. 2, s. 288.
Previous Version
Discontinuance
Transferring to other federal ActsA company mayapply, under the Bank Act, for letters patent continuing the company as a bank or a bank holding company under that Act, or amalgamating and continuing the company as a bank or a bank holding company under that Act;apply, with the approval in writing of the Minister, under the Canada Business Corporations Act, for a certificate of continuance as a corporation under that Act;apply, with the approval in writing of the Minister, under the Canada Cooperatives Act, for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act;apply, under the Cooperative Credit Associations Act, for letters patent continuing the company as an association under that Act, or amalgamating and continuing the company as an association under that Act; orapply, under the Insurance Companies Act, for letters patent continuing the company as a company (other than a mutual company) or an insurance holding company under that Act, or amalgamating and continuing the company as a company (other than a mutual company) or an insurance holding company under that Act.Conditions for approvalThe approval referred to in paragraph (1)(b) or (c) may be given only if the Minister is satisfied thatthe company has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the company is situated, a notice of its intention to apply for the approval;the company is not carrying on any of the fiduciary activities referred to in section 412;unless the company is a subsidiary of another company and it uses the name of the other company in its name as permitted by section 48, the company will not use the word “fiduciaire”, “fiduciary”, “fiducie”, “loan”, “loanco”, “prêt”, “trust” or “trustco” in its name after the certificate referred to in that paragraph is issued;the company does not hold deposits, other than deposits that are made by a person who controls the company or by a person who has a significant interest in a class of shares of the company and that are not insured by the Canada Deposit Insurance Corporation; andthe application has been authorized by a special resolution.Withdrawing applicationIf a special resolution authorizing the application for the certificate or letters patent so states, the directors of the company may, without further approval of the shareholders, withdraw the application before it is acted on.Restriction on other transfersA company may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1).
  • 1991, c. 45, ss. 38, 559;
  • 1994, c. 24, s. 34(F);
  • 1997, c. 15, s. 343;
  • 2001, c. 9, s. 487;
  • 2007, c. 6, s. 340.
Previous Version
Act ceases to applyIf a company applies for a certificate or letters patent referred to in section 38 in accordance with that section and the certificate is given or the letters patent are issued, this Act ceases to apply to the company as of the day the certificate or the letters patent take effect.
  • 1991, c. 45, s. 39;
  • 1994, c. 24, s. 34(F);
  • 2007, c. 6, s. 340.
Previous Version
[Repealed, 2007, c. 6, s. 340]Previous Version
Corporate Name
Prohibited namesA company may not be incorporated under this Act with a namethat is prohibited by an Act of Parliament;that is, in the opinion of the Superintendent, deceptively misdescriptive;that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existingtrade-mark or trade name, orcorporate name of a body corporate,except where the trade-mark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trade-mark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; orthat is reserved under section 45 for another company or a proposed company.ExceptionParagraph (1)(a) does not apply with respect to any former-Act company incorporated by or under an Act of Parliament that expressly authorizes the use of any name that would otherwise be prohibited.
  • 1991, c. 45, s. 41;
  • 1996, c. 6, s. 112;
  • 1997, c. 15, s. 344.
Trust companyA company that is a trust company pursuant to subsection 57(2) must have the word “fiduciaire”, “fiduciary”, “fiducie”, “trust” or “trustco” included in its name.
Affiliated companyDespite section 41, a company that is affiliated with another entity may, with the consent of that entity, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.
  • 1991, c. 45, s. 43;
  • 1996, c. 6, s. 113;
  • 2001, c. 9, s. 488;
  • 2007, c. 6, s. 341.
Previous Version
French or English form of nameThe name of a company may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the company may use and be legally designated by any such form.Alternate nameA company may identify itself outside Canada by its name in any language and the company may use and be legally designated by any such form of its name outside Canada.Other nameSubject to subsection (4) and section 260, a company may carry on business under or identify itself by a name other than its corporate name.DirectionsWhere a company is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the company not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 41(1)(a) to (e).
  • 1991, c. 45, s. 44;
  • 1996, c. 6, s. 114.
Reserved nameThe Superintendent may, on request, reserve for ninety days a name for a proposed company or for a company that intends to change its name.
Directing change of nameIf through inadvertence or otherwise a companycomes into existence or is continued with a name, oron an application to change its name, is granted a namethat is prohibited by section 41, the Superintendent may, by order, direct the company to change its name and the company shall comply with that direction.Revoking nameIf a company has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the company and assign to it a name and, until changed in accordance with section 220 or 222, the name of the company is thereafter the name so assigned.
  • 1991, c. 45, s. 46;
  • 1996, c. 6, s. 115;
  • 2001, c. 9, s. 489.
Restriction re trust company nameNo entity incorporated or formed by or under an Act of Parliament other than this Act shall use the word “fiduciaire”, “fiduciary”, “fiducie”, “trust” or “trustco” or any word or words of import equivalent to any of those words in its name.Restriction re loan company nameNo entity incorporated or formed by or under any Act of Parliament other than this Act shall use the word “loan”, “loanco” or “prêt” or any word or words of import equivalent to any of those words in its name.ExceptionSubsections (1) and (2) do not apply toan entity the business of which is not financial activities; oran entity that was, on the day immediately preceding the day on whichsubsection (1) comes into force, using the word “fiduciaire”, “fiduciary”, “fiducie”, “trust” or “trustco” or any word or words of import equivalent to any of those words in its name, orsubsection (2) comes into force, using the word “loan”, “loanco” or “prêt” or any word or words of import equivalent to any of those words in its name.
  • 1991, c. 45, s. 47;
  • 1996, c. 6, s. 115.
SubsidiariesDespite subsections 47(1) and (2), a subsidiary of a company may use the company’s name in its name.
  • 1991, c. 45, s. 48;
  • 1996, c. 6, s. 115;
  • 2001, c. 9, s. 490.
Definition of “reserved name”In this section, reserved name means a name that includes as part thereof the word “assurance”, “assurances”, “insurance”, “lifeco”, “fiduciaire”, “fiduciary”, “fiducie”, “trust”, “trustco”, “loan”, “loanco” or “prêt” or any word or words of import equivalent to any of those words.Termination of control required in certain casesNo person, other than a financial institution, whois carrying on business in Canada under a reserved name, andhas control or acquires control of a company,shall control the company on the later ofone year after this section comes into force, andone year after the date of acquisition of the control.ProhibitionNo person, other than a financial institution, whocontrols an entity that is not a financial institution that carries on business in Canada under a reserved name, andhas control or acquires control of a company,shall control the company on the later ofone year after this section comes into force, andone year after the date of the acquisition of the control.Continuing control prohibitedNotwithstanding subsection (3), where a financial institution controls an entity thatis not a financial institution,carries on business in Canada under a reserved name, andhas control or acquires control of a company,the entity shall not control the company on the later ofone year after this section comes into force, andone year after the date on which the entity acquires control of the company.ExceptionsSubsections (2) to (4) do not apply with respect to a person or entity that was carrying on business in Canada under a reserved name on the day immediately preceding the day on which those subsections come into force.
  • 1996, c. 6, s. 115.
ORGANIZATION AND COMMENCEMENTOrganization Meetings
First directors’ meetingAfter letters patent incorporating a company are issued, a meeting of the directors of the company shall be held at which the directors may, subject to this Part,make by-laws;adopt forms of share certificates and corporate records;authorize the issue of shares of the company;appoint officers;appoint an auditor to hold office until the first meeting of shareholders;make banking arrangements; anddeal with any other matters necessary to organize the company.Calling directors’ meetingAn incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 185(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the company.
Calling shareholders’ meetingIf at least five million dollars, or any greater amount that the Minister may specify, has been received by a company in respect of which letters patent were issued under section 21 from the issue of its shares, the directors of the company shall without delay call a meeting of the shareholders of the company.Meeting of shareholdersThe shareholders of a company shall, by resolution at the meeting of shareholders called pursuant to subsection (1),approve, amend or reject any by-law made by the directors of the company;subject to section 172, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; andappoint an auditor to hold office until the close of the first annual meeting of shareholders.
  • 1991, c. 45, s. 50;
  • 2001, c. 9, s. 491.
Term of first directorsA director named in the application for letters patent to incorporate a company holds office until the election of directors at the meeting of shareholders called pursuant to subsection 50(1).
Commencement and Carrying on of Business
Order to commence and carry on businessA company shall not carry on any business until the Superintendent has, by order, approved the commencement and carrying on of business by the company.Former-Act companies — Loan Companies ActA licence that was issued to a company under section 76 of the Loan Companies Act and that is in effect immediately before the coming into force of this Part is deemed to be an order of the Superintendent of indeterminate duration under subsection 53(1) and the company remains subject to any and all other restrictions and conditions in the licence.Former-Act companiesA licence that was issued to a company under section 87 of the Trust Companies Act or under section 112 of the Loan Companies Act and that is in effect immediately before the coming into force of this Part is deemed to be an order of the Superintendent of indeterminate duration under subsection 53(1) containing the authorization referred to in subsection 57(1) or the designation referred to in subsection 57(3), as the case may be, and the company remains subject to any and all other restrictions and conditions contained in the licence.Continued companyExcept in respect of a body corporate that is continued as a company under this Act for the purposes of forthwith amalgamating with one or more bodies corporate and continuing as a company under this Act, where letters patent continuing a body corporate as a company under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the company.Amalgamated companyWhere letters patent amalgamating and continuing two or more bodies corporate as a company under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the company.Subsection 53(2) and section 56 do not applyFor greater certainty, subsection 53(2) and section 56 do not apply in respect of a company referred to in subsections (4) and (5).
Authority to make orderOn application by a company, the Superintendent may make an order approving the commencement and carrying on of business by the company.Statement of paymentsAn application by a company for an order under subsection (1) must contain a statement setting out the amounts paid or to be paid by the company in connection with its incorporation and organization.
No payments before orderUntil an order approving the commencement and carrying on of business is made for a company, the company shall not make any payment on account of incorporation or organization expenses out of moneys received from the issue of the shares of the company and interest thereon, except reasonable sumsfor the remuneration of not more than two officers;for the payment of costs related to the issue of shares of the company; andfor the payment of clerical assistance, legal services, accounting services, office accommodation at one location, office expenses, advertising, stationery, postage and travel expenses.
Deposits and investments before orderWhere a company comes into existence but no order approving the commencement and carrying on of business is made for the company, the company may onlydeposit, in Canada, paid-in capital of the company in another deposit-taking Canadian financial institution; orinvest paid-in capital of the company in unencumbered securities of the Government of Canada or the government of any province.
Conditions for orderThe Superintendent shall not make an order approving the commencement and carrying on of business by a company until it has been shown to the satisfaction of the Superintendent thatthe meeting of shareholders of the company referred to in subsection 50(1) has been duly held;the company has paid-in capital of at least five million dollars or any greater amount that is specified by the Minister under subsection 50(1);the expenses of incorporation and organization to be borne by the company are reasonable; andall other relevant requirements of this Act have been complied with.Time limitThe Superintendent shall not make an order approving the commencement and carrying on of business by a company more than one year after the day on which the company comes into existence.
  • 1991, c. 45, s. 56;
  • 2001, c. 9, s. 492.
Authorization in orderAn order approving the commencement and carrying on of business by a company may, at the discretion of the Superintendent, contain the authorization for the company to carry on the activities referred to in section 412.Trust companyWhere an order approving the commencement and carrying on of business by a company contains the authorization referred to in subsection (1), subsection 52(3) or paragraph 58(1)(a), the company is a trust company under this Act.Mortgage investment companyAn order approving the commencement and carrying on of business by a company, other than a company that is a trust company pursuant to subsection (2), may, at the discretion of the Superintendent, contain a designation that the company is a mortgage investment company under this Act.Conditions of orderAn order approving the commencement and carrying on of business by a company may contain such conditions or limitations that are consistent with this Act and relate to the business of the company as the Superintendent deems expedient and necessary.
VariationsIn respect of the order approving the commencement and carrying on of business by a company, the Superintendent may at any time, by further order,add to the order the authorization for the company to carry on the activities referred to in section 412, or the designation referred to in subsection 57(3),make the order subject to such conditions or limitations that are consistent with this Act and that relate to the business of the company as the Superintendent deems expedient and necessary,amend or revoke any authorization contained in the order or any condition or limitation to which the order is subject, orrevoke any designation contained in the order,but before making any such further order the Superintendent shall provide the company with an opportunity to make representations regarding that further order.[Repealed, 1996, c. 6, s. 116]
  • 1991, c. 45, s. 58;
  • 1996, c. 6, s. 116.
Public noticeOn the making of an order approving the commencement and carrying on of business by a company, the company shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where the head office of the company is located.Notice in Canada GazetteThe Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order approving the commencement and carrying on of business by a company.Non-application to former-Act companyFor greater certainty, this section does not apply to a company referred to in subsections 52(2) and (3).
Cessation of existenceExcept for the sole purpose of winding up the company’s affairs, a company ceases to exist one year after the day on which its incorporating instrument became effective if it does not obtain an order approving the commencement and carrying on of business within that year.
Allowed disbursementsWhere an order approving the commencement and carrying on of business is not made for a company, no part of the moneys of the company shall be used for the payment of incorporation and organization expenses, other than remuneration and costs referred to in section 54, unless the payment has been approved by a special resolution.Application to court to settle disbursementsIf the amount allowed by a special resolution for the payment of any incorporation and organization expenses referred to in subsection (1) is considered insufficient by the directors or if no special resolution for the payment of such expenses is passed, the directors may apply to any court having jurisdiction in the place where the head office of the company is situated to settle and determine the amounts to be paid out of any moneys of the company before distribution of the balance to the shareholders or, where there are no shareholders, to the incorporators.Notice of application to courtThe directors shall, at least twenty-one days prior to the date fixed for the hearing of the application referred to in subsection (2), send to the shareholders or incorporators, as the case may be, a notice of the application, which notice shall contain a statement of the amounts that are proposed to be settled and determined by the court.Ratio payableIn order that the amounts paid and payable under this section may be equitably borne by the shareholders or incorporators, as the case may be, the directors shall, after the amounts of the payments have been approved by special resolution or settled and determined by a court, fix the proportionate part thereof chargeable to each shareholder or incorporator as the ratio of the amount paid in by the shareholder or incorporator to the aggregate of all the amounts paid in by the shareholders or incorporators.Return of excessAfter the amounts referred to in this section have been paid, the directors shall pay, with any interest earned thereon, to the shareholders or incorporators, the respective balances of the moneys paid in by them, less the amount chargeable to each shareholder or incorporator under subsection (4).
CAPITAL STRUCTUREShare Capital
Power to issue sharesSubject to this Act and the by-laws of the company, shares of a company may be issued at such times and to such persons and for such consideration as the directors of the company may determine.SharesShares of a company shall be in registered form and shall be without nominal or par value.Shares of former-Act companyShares with nominal or par value of a former-Act company are deemed to be shares without nominal or par value.Shares of continued companyWhere a body corporate is continued as a company under this Act, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.Deemed share conditionsWhere any right of a holder of a share with nominal or par value of a former-Act company or a body corporate continued as a company under this Act, other than a voting right, was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this Part or the continuance under this Act, as the case may be, that right is thereafter deemed to be the same right stated or expressed without reference to the nominal or par value of the share.
Common sharesA company shall have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights includethe right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;the right to receive dividends declared on those shares; andthe right to receive the remaining property of the company on dissolution.Designations of sharesNo company shall designate more than one class of its shares as “common shares” or any variation of that term.[Repealed, 2012, c. 5, s. 164]Continued companyA body corporate continued as a company under this Act that is not in compliance with subsection (2) on the date letters patent continuing it as a company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.ExceptionSubsections (1) and (2) do not apply in respect of a former-Act company whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.
  • 1991, c. 45, s. 63;
  • 2012, c. 5, s. 164.
Previous Version
Classes of sharesThe by-laws of a company may provide for more than one class of shares and, if they so provide, shall set outthe rights, privileges, restrictions and conditions attaching to the shares of each class; andthe maximum number, if any, of shares of any class that the company is authorized to issue.Shareholder approvalWhere a by-law referred to in subsection (1) is made, the directors of the company shall submit the by-law to the shareholders at the next meeting of shareholders.Effective dateA by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).
  • 1991, c. 45, s. 64;
  • 2001, c. 9, s. 493.
Shares issued in seriesThe by-laws of a company may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and mayfix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; andauthorize the directors to do anything referred to in paragraph (a).Series participationIf any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.Voting rightsWhere voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.Restriction on seriesNo rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.Material to SuperintendentIf the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.
  • 1991, c. 45, s. 65;
  • 2005, c. 54, s. 373;
  • 2007, c. 6, s. 342(E).
Previous Version
One share, one voteWhere voting rights are attached to a share of a company, the voting rights may confer only one vote in respect of that share.ExceptionSubsection (1) does not apply in respect ofa share of a former-Act company issued on or before September 27, 1990 that entitled the holder to more than one vote, or to a fraction of a vote, in respect of that share; andany share of a former-Act company that is issued after September 27, 1990 pursuant to the conversion of a security of the former-Act company that was issued with such a conversion privilege prior to that date.
Shares non-assessableShares issued by a company after the coming into force of this section are non-assessable and the shareholders are not liable to the company or to its creditors in respect thereof.
Consideration for shareNo share of any class of shares of a company shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.TransitionalWhere any share of a company is not fully paid for on the day this Part comes into force, the provisions of the Trust Companies Act or the Loan Companies Act that applied to the company immediately prior to that day and that relate tothe liability of holders of shares of a company that are not fully paid for and the enforcement of that liability,the forfeiture of the share, andthe forfeiture of the right to vote the sharecontinue to apply in respect of that share.Other currenciesWhen issuing shares, a company may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.
Stated capital accountA company shall maintain a separate stated capital account for each class and series of shares it issues.Addition to stated capital accountA company shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.ExceptionDespite subsection (2), a company may, subject to subsection (2.2), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues sharesin exchange forproperty of a person who immediately before the exchange did not deal with the company at arm’s length within the meaning of that expression in the Income Tax Act,shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the company at arm’s length within the meaning of that expression in the Income Tax Act, orproperty of a person who immediately before the exchange dealt with the company at arm’s length within the meaning of that expression in the Income Tax Act if the person, the company and all of the holders of shares in the class or series of shares so issued consent to the exchange;under an agreement referred to in subsection 229(1); orto shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated company.Limit on addition to a stated capital accountOn the issuance of a share, a company shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.Constraint on addition to a stated capital accountWhere a company that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the company as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 80(4).Stated capital of former-Act companyOn the coming into force of this Part, a former-Act company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate ofthe aggregate amount paid up on the shares of each class and series of shares immediately before the coming into force of this Part, andthe amount of the contributed surplus of the company that is attributable to those shares.Contributed surplus entryThe amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (3)(b) shall be deducted from the contributed surplus account of the company.Share issued before coming into forceAny amount unpaid in respect of a share issued by a former-Act company before the coming into force of this Part and paid after the coming into force of this Part shall be recorded in the stated capital account maintained by the company for the shares of that class or series.
  • 1991, c. 45, s. 69;
  • 1997, c. 15, s. 345;
  • 2005, c. 54, s. 374.
Previous Version
Stated capital of continued companyWhere a body corporate is continued as a company under this Act, the company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate ofthe aggregate amount paid up on the shares of each class and series of shares immediately before the body corporate was so continued, andthe amount of the contributed surplus of the company that is attributable to those shares.Contributed surplus entryThe amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the company.Shares issued before continuanceAny amount unpaid in respect of a share issued by a body corporate before it was continued as a company under this Act and paid after it was so continued shall be recorded in the stated capital account maintained by the company for the shares of that class or series.
Pre-emptive rightWhere the by-laws of a company so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.ExceptionNotwithstanding the existence of a pre-emptive right, a shareholder of a company has no pre-emptive right in respect of shares of a class to be issuedfor a consideration other than money;as a share dividend; orpursuant to the exercise of conversion privileges, options or rights previously granted by the company.IdemNotwithstanding the existence of a pre-emptive right, a shareholder of a company has no pre-emptive right in respect of shares to be issuedwhere the issue of shares to the shareholder is prohibited by this Act; orwhere, to the knowledge of the directors of the company, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.
Conversion privilegesA company may issue conversion privileges, options or rights to acquire securities of the company, and shall set out the conditions thereofin the documents that evidence the conversion privileges, options or rights; orin the securities to which the conversion privileges, options or rights are attached.Transferable rightsConversion privileges, options and rights to acquire securities of a company may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.Reserved sharesWhere a company has granted privileges to convert any securities issued by the company into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the company shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.
Holding of own sharesExcept as provided in sections 74 to 77, or unless permitted by the regulations, a company shall nothold shares of the company or of any body corporate that controls the company;hold any ownership interests of any unincorporated entity that controls the company;permit any of its subsidiaries to hold any shares of the company or of any body corporate that controls the company; orpermit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the company.
Purchase and redemption of sharesSubject to subsection (2) and to its by-laws, a company may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares issued by it, or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or the conditions attaching to the shares.Restrictions on purchase and redemptionA company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that the company is, or the payment would cause the company to be, in contravention of any regulation referred to in subsection 473(1) or (2) or any direction made pursuant to subsection 473(3).Donated sharesA company may accept from any shareholder a share of the company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 78.
Holding as personal representativeA company may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares of the company or of any body corporate that controls the company or ownership interests in any unincorporated entity that controls the company, but only where the company or the subsidiary does not have a beneficial interest in the shares or ownership interests.Security interestA company may, and may permit its subsidiaries to, by way of a security interesthold shares of the company or of any body corporate that controls the company, orhold any ownership interests of any entity that controls the company,where the security interest is nominal or immaterial when measured by criteria established by the company that have been approved in writing by the Superintendent.SavingNothing in subsection (2) precludes a former-Act company or any of its subsidiaries from holding any security interest held immediately prior to the coming into force of this Part.
  • 1991, c. 45, s. 75;
  • 2005, c. 54, s. 375(F).
Previous Version
Exception — conditions before acquisitionA company may permit any of its subsidiaries to acquire shares of the company through the issuance of those shares by the company to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.Conditions after acquisitionAfter a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.Non-compliance with conditionsIf a company permits any of its subsidiaries to acquire shares of the company under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 15 and subsection 69(2), the company must comply with the prescribed requirements.
  • 2007, c. 6, s. 343.
Cancellation of sharesSubject to subsection (2), where a company purchases shares of the company or fractions thereof or redeems or otherwise acquires shares of the company, the company shall cancel those shares.Requirement to sellWhere a company or any of its subsidiaries, through the realization of security, acquires any shares of the company or of any body corporate that controls the company or any ownership interests in an unincorporated entity that controls the company, the company shall, or shall cause its subsidiaries to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.
Subsidiary holding sharesSubject to the regulations, a former-Act company shall cause any subsidiary of the company that holds shares of the company, or of any body corporate that controls the company, or any ownership interests of any unincorporated entity that controls the company to sell or otherwise dispose of those shares or ownership interests within six months after the day this section comes into force.
Reduction of capitalThe stated capital of a company may be reduced by special resolution.LimitationA company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the company is, or the reduction would cause the company to be, in contravention of any regulation referred to in subsection 473(1) or (2) or any direction made pursuant to subsection 473(3).Contents of special resolutionA special resolution to reduce the stated capital of a company shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.Approval by SuperintendentA special resolution to reduce the stated capital of a company has no effect until it is approved in writing by the Superintendent.ExceptionSubsection (4) does not apply ifthe reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 313(4); andthere is to be no return of capital to shareholders as a result of the reduction.Conditions for approvalNo approval to reduce the stated capital of a company may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.Statements to be submittedIn addition to evidence of the passing of a special resolution to reduce the stated capital of a company and of the publication thereof, statements showingthe number of the company’s shares issued and outstanding,the results of the voting by class of shares of the company,the company’s assets and liabilities, andthe reason why the company seeks the reduction of capitalshall be submitted to the Superintendent at the time of the application for approval of the special resolution.
  • 1991, c. 45, s. 78;
  • 2007, c. 6, s. 344.
Previous Version
Recovery by actionWhere any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 78, a creditor of the company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the company.Shares held by personal representativeNo person holding shares in the capacity of a personal representative and registered on the records of the company as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.LimitationAn action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.Remedy preservedThis section does not affect any liability that arises under section 212.
Adjustment of stated capital accountOn a purchase, redemption or other acquisition by a company of shares or fractions thereof issued by it, other than shares acquired pursuant to section 75 or acquired through the realization of security and sold pursuant to subsection 76(2), the company shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.IdemA company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 78.Shares converted to another classOn a conversion of outstanding shares of a company into shares of another class or series, or on a change of outstanding shares of the company into shares of another class or series, the company shalldeduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; andrecord the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.Stated capital of convertible sharesFor the purposes of subsection (3) and subject to the company’s by-laws, where a company issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.Conversion or change of sharesShares issued by a company and converted into shares of another class or series, or changed under subsection 222(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.
Addition to stated capital accountOn a conversion of any debt obligation of a company into shares of a class or series of shares, the company shalldeduct from the liabilities of the company the nominal value of the debt obligation being converted; andrecord the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.
Declaration of dividendThe directors of a company may declare and a company may pay a dividend by issuing fully paid shares of the company or options or rights to acquire fully paid shares of the company and, subject to subsection (4), the directors of a company may declare and a company may pay a dividend in money or property, and where a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.Notice to SuperintendentThe directors of a company shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.Share dividendIf shares of a company are issued in payment of a dividend, the company shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.When dividend not to be declaredThe directors of a company shall not declare and a company shall not pay a dividend if there are reasonable grounds for believing that the company is, or the payment would cause the company to be, in contravention of any regulation referred to in subsection 473(1) or (2) or any direction made pursuant to subsection 473(3).[Repealed, 2007, c. 6, s. 345]
  • 1991, c. 45, s. 82;
  • 2001, c. 9, s. 494;
  • 2007, c. 6, s. 345.
Previous Version
Subordinated Indebtedness
Restriction on subordinated indebtednessA company shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.References to subordinated indebtednessA person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.Deemed not to be a depositSubordinated indebtedness issued by a company is deemed not to be a deposit.Other currenciesWhen issuing subordinated indebtedness, a company may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.
Security Certificates and Transfers
DefinitionsIn this section and sections 85 to 138,adverse claimoppositionadverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security;bona fide purchaseracheteur de bonne foibona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank;clearing agencyagence de compensation et de dépôtclearing agency means a person designated as a recognized clearing agency by the Superintendent;deliverylivraison ou remisedelivery means voluntary transfer of possession;fungiblefongiblesfungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit;genuineauthentiquegenuine means free of forgery or counterfeit;good faithbonne foigood faith means honesty in fact in the conduct of the transaction concerned;over-issueémission excédentaireover-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue;purchaseracquéreurpurchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction;securities brokercourtiersecurities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer;security or security certificatevaleur mobilière ou certificat de valeur mobilièresecurity or security certificate means an instrument issued by a company that isin bearer, order or registered form,of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,one of a class or series or by its terms divisible into a class or series of instruments, andevidence of a share, participation or other interest in or obligation of a company,but does not include an instrument evidencing a deposit;trust indentureacte de fiducietrust indenture has the meaning given that expression by section 299;unauthorizednon autoriséunauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery;uncertificated securityvaleur mobilière sans certificatuncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered or recorded in records maintained for that purpose by or on behalf of a company;validvalidevalid means issued in accordance with the applicable law or validated under section 100.
Provisions governing transfers of securitiesThe transfer of a security is governed by sections 86 to 138.
Security a negotiable instrumentA security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.Bearer formA security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.Order formA security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.Registered formA security is in registered form ifit specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; orit bears a statement that it is in registered form.
Status of guarantorA guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.
Rights of holderSubject to Part VII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from a company in respect of the securities of that company held by the security holder.Fee for security certificateA company may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.Joint holdersA company is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.
  • 1991, c. 45, s. 88;
  • 1999, c. 31, s. 214.
SignaturesA security certificate shall be signed by or bear the printed or otherwise mechanically reproduced signature of at least one of the following:a director or officer of the company;a registrar or transfer agent of the company or a branch transfer agent or a natural person on their behalf; ora trustee who certifies it in accordance with a trust indenture.Continuation of validity of signatureIf a security certificate contains a person’s printed or mechanically reproduced signature, the company may issue the security certificate even if the person has ceased to be a director or officer of the company. The security certificate is as valid as if the person were a director or officer at the date of its issue.
  • 1991, c. 45, s. 89;
  • 2005, c. 54, s. 377.
Previous Version
Contents of share certificateThere shall be stated on the face of each share certificate issued by a company after the coming into force of this sectionthe name of the company;a statement that the company is subject to the Trust and Loan Companies Act;the name of the person to whom the share certificate is issued; andthe number and class of shares and the designation of any series that the certificate represents.
Restrictions and chargesNo charge in favour of a company and no restriction on transfer other than a constraint under Part VII is effective against a transferee of a security issued by the company if the transferee has no actual knowledge of the charge or restriction unless it or a reference to it is noted conspicuously on the security certificate.No restrictionIf any of the issued shares of a distributing company remain outstanding and are held by more than one person, the company may not restrict the transfer or ownership of its shares except by way of a constraint under Part VII.ContinuanceIf a body corporate that is continued as a company under this Act has outstanding security certificates and the words “private company” or “private corporation” appear on the certificates, those words are deemed to be a notice of a charge or restriction for the purposes of subsection (1).
  • 1991, c. 45, s. 91;
  • 2005, c. 54, s. 378.
Previous Version
Particulars of classThere shall be stated legibly on a share certificate issued after the coming into force of this section by a company that is authorized to issue shares of more than one class or seriesthe rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; orthat the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the company will furnish a shareholder, on demand and without charge, with a full copy ofthe text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, andthe text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.DutyWhere a share certificate issued by a company contains the statement mentioned in paragraph (1)(b), the company shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).
Fractional shareA company may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.
Scrip certificatesThe directors of a company may attach conditions to any scrip certificate issued by the company, including conditions thatthe scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; andany shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the company to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.
Holders of fractional sharesA holder of a fractional share issued by a company is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.Holders of scrip certificatesA holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.
Dealings with registered ownerA company or a trustee within the meaning of section 299 may, subject to subsections 140(5) to (7) and sections 141 to 144 and 148, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.Constructive registered holderNotwithstanding subsection (1), a company may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the company with evidence as described in subsection 130(4) that the person isthe heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; ora liquidator of, or a trustee in bankruptcy for, a registered security holder.Permissible registered holderIf a person on whom the ownership of a security of a company devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the company that is not registered in the person’s name, the company shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.Immunity of companyA company is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.
  • 1991, c. 45, s. 96;
  • 2005, c. 54, s. 379.
Previous Version
MinorsIf a minor exercises any rights of ownership in the securities of a company, no subsequent repudiation or avoidance is effective against the company.
  • 1991, c. 45, s. 97;
  • 2005, c. 54, s. 380(E).
Previous Version
Joint shareholdersA company may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the company receives proof satisfactory to it of the death of any of the joint holders.
Transmission of securitiesSubject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 96(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 96(2)(a) delivers to the company or its transfer agentthe original grant of probate or of letters of administration, or a copy thereof certified to be a true copy bythe court that granted the probate or letters of administration,a company that is a trust company pursuant to subsection 57(2) or a trust company incorporated by or under the laws of a province, ora lawyer or notary acting on behalf of the person referred to in paragraph 96(2)(a), orin the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,together withan affidavit or declaration of transmission made by the person referred to in paragraph 96(2)(a) that states the particulars of the transmission, andthe security certificate that was owned by the deceased holderin the case of a transfer to the person referred to in paragraph 96(2)(a), with or without the endorsement of that person, andin the case of a transfer to any other person, endorsed in accordance with section 114,and accompanied by any assurance the company may require under section 130.Excepted transmissionsNotwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the company or its transfer agent the following documents, namely,the security certificate that was owned by the deceased holder; andreasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.Right of company to treat as ownerSubject to Part VII, delivery of the documents referred to in this section empowers a company or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 96(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.
Over-issueThe provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, butif a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; orif a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.Retroactive validationWhere an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.Payment not a purchase or redemptionA purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 74 or 80 applies.
Burden of proofIn any action on a security,unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; andif the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.
Securities fungibleUnless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.
Notice of defectEven against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.Purchaser for valueA security is valid in the hands of a purchaser for value without notice of any defect going to its validity.Lack of genuinenessExcept as provided in section 104, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.Ineffective defencesAll defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.Staleness as defect noticeAfter an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuerif the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; orif the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.
Unauthorized signatureAn unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done byan authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; oran employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.
Completion or alterationWhere a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,any person may complete it by filling in the blanks in accordance with the person’s authority; andnotwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.EnforceabilityA completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.
Warranties of agentsA person signing a security, as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice thatthe security is genuine;the person’s acts in connection with the issue of the security are within the person’s authority; andthe person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.Limitation of liabilityUnless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.
Title of purchaserSubject to Part VII, on delivery of a security the purchaser acquires the rights in the security that the purchaser’s transferor had or had authority to convey, except that the position of a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim is not improved by taking from a later bona fide purchaser.Title of bona fide purchaserA bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.Limited interest purchaserA purchaser of a limited interest acquires rights only to the extent of the interest purchased.
Deemed notice of adverse claimA purchaser of a security, or any securities broker for a seller or purchaser, is deemed to have notice of an adverse claim ifthe security, whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; orthe security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.
Notice of fiduciary dutyNotwithstanding that a purchaser, or any securities broker for a seller or purchaser, has notice that a security is held for a third person by, or is registered in the name of or endorsed by, a fiduciary, neither the purchaser nor the securities broker has any duty to inquire into the rightfulness of the transfer or any notice of an adverse claim, except that if the purchaser or securities broker for the seller or purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty, the purchaser or securities broker is deemed to have notice of an adverse claim.
Staleness as noticeAn event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchasemade more than one year after any date set for such a presentation or surrender; ormade more than six months after any date set for payment of money against such a presentation or surrender if funds are available for payment on that date.
Warranties to issuerA person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.Warranties to purchaserA person by transferring a security to a purchaser for value warrants only thatthe transfer is effective and rightful;the security is genuine and has not been materially altered; andthe person knows of nothing that might impair the validity of the security.Warranties of intermediaryWhere a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against that delivery, the intermediary by that delivery warrants only the intermediary’s own good faith and authority even if the intermediary has purchased or made advances against the draft or other claim to be collected against the delivery.Warranties of pledgeeA pledgee or other holder for purposes of security who redelivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).Warranties of securities brokerA securities broker gives to the broker’s customer, to the issuer and to a purchaser, as the case may be, the warranties provided in subsections (1) to (4) and has the rights and privileges of a purchaser under those subsections, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the broker’s customer and warranties given in favour of the broker’s customer.
Right to compel endorsementWhere a security in registered form is delivered to a purchaser without a necessary endorsement, the purchaser may become a bona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.
Definition of appropriate personIn this section, section 114, subsections 121(1), 124(4) and 129(1) and section 133, appropriate person meansthe person specified by the security or by special endorsement to be entitled to the security;if a person described in paragraph (a) is described as a fiduciary but is no longer serving in the described capacity, either that person or that person’s successor;if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed;if a person described in paragraph (a) is a natural person and is without capacity to act by reason of death, incompetence, minority or other reason, the person’s fiduciary;if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;a person having power to sign under any applicable law or a power of attorney; orto the extent that a person described in any of paragraphs (a) to (f) may act through an agent, the person’s authorized agent.Determining an appropriate personWhether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by such a person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.
EndorsementAn endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more on the back of the security.Special or blankAn endorsement may be special or in blank.Blank endorsementAn endorsement in blank includes an endorsement to bearer.Special endorsementA special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.Right of holderA holder may convert an endorsement in blank into a special endorsement.
Immunity of endorserUnless otherwise agreed, the endorser by the endorsement assumes no obligation that the security will be honoured by the issuer.
Partial endorsementAn endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.
Effect of failure by fiduciary to complyFailure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.
Effect of endorsement without deliveryAn endorsement of a security, whether special or in blank, does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.
Endorsement in bearer formAn endorsement of a security in bearer form may give notice of an adverse claim under section 108 but does not otherwise affect any of the holder’s rights.
Effect of unauthorized endorsementThe owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim, who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the ownerhas ratified an unauthorized endorsement of the security; oris otherwise precluded from impugning the effectiveness of an unauthorized endorsement.Liability of issuerAn issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.
Warranties of guarantor of signatureA person who guarantees the signature of an endorser of a security warrants that, at the time of signing,the signature was genuine;the signer was an appropriate person to endorse; andthe signer had legal capacity to sign.Limitation of liabilityA person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.Warranties of guarantor of endorsementA person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.Extent of warrantor’s liabilityThe warranties referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to such a person for any loss resulting from breach of warranty.
Constructive delivery of a securityDelivery to a purchaser occurs whenthe purchaser or a person designated by the purchaser acquires possession of a security;the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; orin respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.
Constructive ownership of securityA purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases referred to in paragraphs 122(b) and (c).Ownership of part of fungible bulkIf a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest in the fungible bulk.Notice to securities broker of adverse claimNotice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.
Delivery of securityUnless otherwise agreed, if a sale of a security is made on a stock exchange or otherwise through securities brokers,the selling customer fulfils the customer’s duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or causes an acknowledgement to be made to the selling securities broker that it is held for the selling securities broker; andthe selling securities broker, including a correspondent broker, acting for a selling customer fulfils the securities broker’s duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.Duty to deliverExcept as otherwise provided in this section and unless otherwise agreed, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.Delivery to securities brokerA sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.Transfer through clearing agencyIf a security shown in the records of a clearing agency is evidenced bya security certificate in the custody of the clearing agency or a custodian, or a nominee of either, subject to the instructions of the clearing agency, and is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing agency or a custodian, or of a nominee of either, oran uncertificated security registered or recorded in records maintained by or on behalf of the company in the name of the clearing agency or a custodian, or of a nominee of either, subject to the instructions of the clearing agency,then, in addition to other methods, a transfer or pledge of the security or any interest therein may be effected by the making of an appropriate entry in the records of the clearing agency.Interest in fungible bulkUnder subsections (4) to (10), entries may be in respect of like securities or interests therein as part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number or the like and, in appropriate cases, may be on a net basis taking into account other transfers or pledges of the same security.Constructive endorsement and deliveryA transfer or pledge under subsections (4) to (10) has the effect of a delivery of a security in bearer form or duly endorsed in blank representing the amount of the obligation or the number of shares or rights transferred or pledged.IdemIf a pledge or the creation of a security interest is intended, the making of entries has the effect of a taking of delivery by the pledgee or a secured party and the pledgee or secured party shall be deemed to have taken possession for all purposes.HolderA person depositing a security certificate or an uncertificated security with a clearing agency, or a transferee or pledgee of a security under subsections (4) to (10), is a holder of the security and shall be deemed to have possession of the security so deposited, transferred or pledged, as the case may be, for all purposes.Not registrationA transfer or pledge under subsections (4) to (10) does not constitute a registration of transfer under sections 129 to 136.Error in recordsThat entries made in the records of the clearing agency as provided in subsection (4) are not appropriate does not affect the validity or effect of the entries nor the liabilities or obligations of the clearing agency to any person adversely affected thereby.
Right to reclaim possessionA person against whom the transfer of a security is wrongful for any reason, including the person’s incapacity, may, against anyone except a bona fide purchaser,reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights; orclaim damages.Recovery where unauthorized endorsementIf the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a bona fide purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 120.RemediesThe right to reclaim possession of a security may be specially enforced, its transfer may be restrained and the security may be impounded pending litigation.
Right to requisites for registrationUnless otherwise agreed, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for a transferor to prove authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.Rescission of transferIf a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.
Seizure of securityNo seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.
No conversion if good faith deliveryAn agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a company, has received securities and sold, pledged or delivered them according to the instructions of the agent’s or bailee’s principal is not liable for conversion or for participation in breach of fiduciary duty even though the principal has no right to dispose of the securities.
Duty to register transferSubject to Part VII, where a security in registered form is presented for transfer, the issuer shall register the transfer ifthe security is endorsed by an appropriate person;reasonable assurance is given that the endorsement is genuine and effective;the issuer has no duty to inquire into adverse claims or has discharged any such duty;all applicable laws relating to the collection of taxes have been complied with;the transfer is rightful or is to a bona fide purchaser; andthe fee, if any, referred to in subsection 88(2) has been paid.Liability for delayWhere an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from the failure or refusal to register the transfer.
Assurance of endorsementsAn issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiringif the endorsement is by an agent, reasonable assurance of authority to sign;if the endorsement is by a fiduciary, evidence of appointment or incumbency;if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; andin any other case, assurance that corresponds as closely as practicable to the foregoing.Definition of guarantee of the signatureFor the purposes of subsection (1), guarantee of the signature means a guarantee signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.StandardsAn issuer may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).Definition of evidence of appointment or incumbencyFor the purposes of paragraph (1)(b), evidence of appointment or incumbency meansin the case of a fiduciary appointed by a court and referred to in subsection 99(1), a copy of the certified court order referred to in subsection 99(1) and dated not earlier than sixty days before the day a security is presented for transfer; orin the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.StandardsAn issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).No notice to issuerAn issuer is deemed not to have notice of the contents of any document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.
Notice from additional documentationIf an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 130(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.
Limited duty of inquiryAn issuer to whom a security is presented for registration has a duty to inquire into adverse claims ifthe issuer receives written notice of an adverse claim at a time and in a manner that provides the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; orthe issuer is deemed to have notice of an adverse claim from a document that it obtained under section 131.Discharge of dutyAn issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, within thirty days after the date of mailing of the notice, eitherthe issuer is served with a restraining order or other order of a court, orthe issuer is provided with an indemnity bond sufficient in the issuer’s judgment to protect the issuer and any registrar, transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.
Inquiry into adverse claimsUnless an issuer is deemed to have notice of an adverse claim from a document that it obtained under section 131 or has received notice of an adverse claim under subsection 132(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; andan issuer is deemed not to have notice of the contents of any court record or any registered document even if the record or document is in the issuer’s possession and even if the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.
Duration of notice of adverse claimA written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.
Limitation on issuer’s liabilityExcept as otherwise provided in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security ifthe necessary endorsements were on or with the security; andthe issuer had no duty to inquire into adverse claims or had discharged any such duty.Duty of issuer on defaultIf an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unlessthe issuer is not liable by virtue of subsection (1);the owner is precluded by subsection 136(1) from asserting any claim; orthe delivery would result in over-issue in respect of which section 100 applies.
Lost or stolen securityWhere a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of the owner’s adverse claim within a reasonable time after the owner knows of the loss, destruction or taking, then, if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.Duty to issue new securityWhere the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the ownerso requests before the issuer has notice that the security has been acquired by a bona fide purchaser;provides the issuer with a sufficient indemnity bond; andsatisfies any other reasonable requirements imposed by the issuer.Duty to register transferIf, after the issue of a new security under subsection (2), a bona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in over-issue in respect of which section 100 applies.Right of issuer to recoverIn addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a bona fide purchaser.
Authenticating agent’s dutyAn authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,a duty to the issuer to exercise good faith and reasonable diligence; andthe same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.
Notice to agentNotice to an authenticating trustee, registrar, transfer agent or other agent of an issuer is notice to the issuer in respect of the functions performed by the agent.
CORPORATE GOVERNANCEShareholders
Place of meetingsMeetings of shareholders of a company shall be held at the place within Canada provided for in the by-laws of the company or, in the absence of any such provision, at the place within Canada that the directors determine.Participation by electronic meansUnless the by-laws provide otherwise, any person who is entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the company makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Act to be present at the meeting.RegulationsThe Governor in Council may make regulations respecting the manner of and conditions for participating in a meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.
  • 1991, c. 45, s. 139;
  • 2005, c. 54, s. 381.
Previous Version
Calling meetingsThe directors of a companyshall, after the meeting called pursuant to subsection 50(1), call the first annual meeting of shareholders of the company, which meeting must be held not later than six months after the end of the first financial year of the company, and subsequently call an annual meeting of shareholders, which meeting must be held not later than six months after the end of each financial year; andmay at any time call a special meeting of shareholders.Order to delay calling annual meetingDespite subsection (1), the company may apply to the court for an order extending the time for calling an annual meeting.Obligation to notify SuperintendentThe company shall give notice of the application to the Superintendent before any hearing concerning the application and shall provide the Superintendent with a copy of any order that is issued.Superintendent’s right to appearThe Superintendent is entitled to appear and be heard in person or by counsel at any hearing concerning the application.Authority to fix record dateThe directors may in advance fix a record date, that is within the prescribed period, for the determination of shareholders for any purpose, including for a determination of which shareholders are entitled toreceive payment of a dividend;participate in a liquidation distribution;receive notice of a meeting of shareholders; orvote at a meeting of shareholders.Determination of record dateIf no record date is fixed,the record date for the determination of shareholders who are entitled to receive notice of a meeting of shareholders isat the close of business on the day immediately preceding the day on which the notice is given, orif no notice is given, the day on which the meeting is held; andthe record date for the determination of shareholders for any other purpose, other than to establish a shareholder’s right to vote, is at the close of business on the day on which the directors pass a resolution in respect of that purpose.Notice of record dateIf a record date is fixed and unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day on which the directors fix the record date, notice of the record date shall be given within the prescribed period byadvertisement in a newspaper in general circulation in the place where the company’s head office is situated and in each place in Canada where the company has a transfer agent or where a transfer of its shares may be recorded; andwritten notice to each stock exchange in Canada on which the company’s shares are listed for trading.
  • 1991, c. 45, s. 140;
  • 2005, c. 54, s. 382.
Previous Version
Notice of meetingNotice of the time and place of a meeting of shareholders of a company shall be sent within the prescribed period toeach shareholder entitled to vote at the meeting;each director;the auditor of the company; andthe Superintendent.ExceptionIn the case of a company that is not a distributing company, notice may be sent within any shorter period specified in its by-laws.Publication in newspaperIn addition to the notice required under subsection (1), where any class of shares of a company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of a meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the head office of the company is situated and in each place in Canada where the company has a transfer agent or where a transfer of the company’s shares may be recorded.
  • 1991, c. 45, s. 141;
  • 2005, c. 54, s. 383
Previous Version
Notice not requiredNotice of a meeting is not required to be sent to shareholders who are not registered on the records of the company or the company’s transfer agent on the record date fixed under paragraph 140(5)(c) or determined under paragraph 140(6)(a).Effect of defaultFailure to receive a notice of a meeting of shareholders does not deprive a shareholder of the right to vote at the meeting.
  • 1991, c. 45, s. 142;
  • 2005, c. 54, s. 384.
Previous Version
Notice of adjourned meetingIf a meeting of shareholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.Notice of continuation of meetingIf a meeting of shareholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 160.04(1) does not apply.
  • 1991, c. 45, s. 143;
  • 1997, c. 15, s. 346.
Special businessAll matters dealt with at a special meeting of shareholders and all matters dealt with at an annual meeting of shareholders, except consideration of the financial statements, auditor’s report, election of directors, remuneration of directors and reappointment of the incumbent auditor, are deemed to be special business.Notice of special businessNotice of a meeting of shareholders at which special business is to be transacted muststate the nature of the special business in sufficient detail to permit a shareholder to form a reasoned judgment thereon; andcontain the text of any special resolution to be submitted to the meeting.
Waiver of noticeA shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders.IdemAttendance at a meeting of shareholders is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
  • 1991, c. 45, s. 145;
  • 2001, c. 9, s. 495(F).
ProposalsSubject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares that may be voted at an annual meeting of shareholders maysubmit to the company notice of any matter that they propose to raise at the meeting (in this section and section 147 referred to as a “proposal”); anddiscuss at the meeting any matter in respect of which they would have been entitled to submit a proposal.Eligibility to submit proposalTo be eligible to submit a proposal a person shallfor at least the prescribed period be the registered holder or beneficial owner of at least the prescribed number of the company’s outstanding shares; orhave the support of persons who, in the aggregate and including or not including the person who submits the proposal, have for at least the prescribed period been the registered holders or beneficial owners of at least the prescribed number of the company’s outstanding shares.Information to be providedA proposal is to be accompanied by the following information:the name and address of the person submitting the proposal and the names and addresses of their supporters, if any; andthe number of shares held or owned by the person and their supporters, if any, and the date that the shares were acquired.Information not part of proposalThe information provided under subsection (1.2) does not form part of a proposal or of the supporting statement referred to in subsection (3) and is not to be included for the purpose of the prescribed maximum number of words referred to in subsection (3).Proof may be requiredIf the company requests within the prescribed period that a person provide proof that they are eligible to submit a proposal, the person shall within the prescribed period provide proof that they meet the requirements of subsection (1.1).Management proxyA company that solicits proxies shall, in the management proxy circular required by subsection 160.05(1), set out any proposal of a shareholder submitted for consideration at a meeting of shareholders or attach the proposal to the management proxy circular.Supporting statementAt the request of the person who submits a proposal, the company shall set out in the management proxy circular or attach to it the person’s statement in support of the proposal and their name and address. The statement and proposal together are not to exceed the prescribed maximum number of words.Nomination of directorsA proposal may include nominations for the election of directors if it is signed by one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5% of the shares of the company or 5% of the shares of a class of its shares entitled to vote at the meeting at which the proposal is to be presented.ExemptionA company is not required to comply with subsections (2) and (3) ifthe proposal is not submitted to the company at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders in respect of the previous annual meeting of shareholders;it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal griev­ance against the company or its directors, officers or security holders;it clearly appears that the proposal does not relate in a significant way to the business or affairs of the company;the person submitting the proposal failed within the prescribed period before the company receives their proposal to present, in person or by proxy, at a meeting of shareholders a proposal that at their request had been set out in or attached to a management proxy circular;substantially the same proposal was set out in or attached to a management proxy circular or dissident’s proxy circular relating to, and presented to shareholders at, a meeting of shareholders held within the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting; orthe rights conferred by subsections (1) to (4) are being abused to secure publicity.Company may refuse to include proposalIf a person who submits a proposal fails to continue to hold or own shares in accordance with paragraph (1.1)(a) or, as the case may be, does not continue to have the support of persons who are in the aggregate the registered holders or beneficial owners of the prescribed number of shares in accordance with paragraph (1.1)(b) until the end of the meeting, the company is not required to set out any proposal submitted by that person in or attach it to a management proxy circular for any meeting held within the prescribed period after the day of the meeting.Immunity for proposal and statementNo company or person acting on behalf of a company incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).
  • 1991, c. 45, s. 146;
  • 1997, c. 15, s. 347;
  • 2005, c. 54, s. 385.
Previous Version
Notice of refusalIf a company refuses to include a proposal in a management proxy circular, it shall in writing notify the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal. It shall notify the person within the prescribed period after either the day on which it receives the proposal or, if it has requested proof under subsection 146(1.4), the day on which it receives the proof.Application to courtOn the application of a person submitting a proposal who claims to be aggrieved by a company’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order that it thinks fit.IdemA company or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the company to omit the proposal from the management proxy circular, and the court, if it is satisfied that subsection 146(5) applies, may make such order as it thinks fit.Notice to SuperintendentAn applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.
  • 1991, c. 45, s. 147;
  • 2005, c. 54, s. 386.
Previous Version
List of shareholders entitled to noticeA company shall prepare an alphabetical list of shareholders entitled to receive notice of a meeting showing the number of shares held by each shareholderif a record date is fixed under paragraph 140(5)(c), no later than 10 days after that date; andif no record date is fixed, on the record date determined under paragraph 140(6)(a).Voting listThe company shall prepare an alphabet­ical list of shareholders entitled to vote as of the record date showing the number of shares held by each shareholderif a record date is fixed under paragraph 140(5)(d), no later than 10 days after that date; andif no record date is fixed under paragraph 140(5)(d), no later than 10 days after a record date is fixed under paragraph 140(5)(c) or no later than the record date determined under paragraph 140(6)(a), as the case may be.Entitlement to voteA shareholder whose name appears on a list prepared under subsection (2) is entitled to vote the shares shown opposite their name.Examination of listA shareholder may examine the list of shareholdersduring usual business hours at the head office of the company or at the place where its central securities register is maintained; andat the meeting of shareholders for which the list was prepared.
  • 1991, c. 45, s. 148;
  • 2001, c. 9, s. 496;
  • 2005, c. 54, s. 387.
Previous Version
QuorumUnless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.IdemIf a quorum is present at the opening of a meeting of shareholders, the shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.IdemIf a quorum is not present at the opening of a meeting of shareholders, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business.
One shareholder meetingIf a company has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.
One share — one voteWhere a share of a company entitles the holder thereof to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.ExceptionNotwithstanding subsection (1), a share of a former-Act company issuedon or before September 27, 1990 that entitled the holder to more than one vote, or to a fraction of a vote, at a meeting of shareholders in respect of that share, orafter September 27, 1990 pursuant to the conversion of a security of the former-Act company that was issued with such conversion privilege prior to that datecontinues to entitle that holder or any subsequent holder of the share to exercise such voting rights.
Representative shareholderIf an entity is a shareholder of a company, the company shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders of the company.IdemA natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were a natural person as well as a shareholder.
Joint shareholdersUnless the by-laws otherwise provide, if two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares jointly held by them.
Voting by hands or ballotUnless the by-laws otherwise provide, voting at a meeting of shareholders shall take place by show of hands except when a ballot is demanded by either a shareholder or proxyholder entitled to vote at the meeting.BallotA shareholder or proxyholder may demand a ballot either before or after any vote by show of hands.Electronic votingDespite subsection (1) and unless the by-laws provide otherwise, any vote referred to in that subsection may be held entirely by means of a telephonic, electronic or other communication facility if the company makes one available.Voting while participating electronicallyUnless the by-laws provide otherwise, any person who is participating in a meeting of shareholders under subsection 139(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the company has made available for that purpose.RegulationsThe Governor in Council may make regulations respecting the manner of and conditions for voting at a meeting of shareholders by means of a telephonic, electronic or other communication facility.
  • 1991, c. 45, s. 154;
  • 2005, c. 54, s. 388.
Previous Version
Resolution in lieu of meetingExcept where a written statement is submitted by a director under section 178 or by an auditor under subsection 326(1),a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; anda resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of shareholders, and signed by all the shareholders entitled to vote at that meeting, satisfies all the requirements of this Act relating to meetings of shareholders.Filing resolutionA copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.
  • 1991, c. 45, s. 155;
  • 2005, c. 54, s. 389.
Previous Version
Requisitioned meetingShareholders who together hold not less than 5 per cent of the issued and outstanding shares of a company that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition.FormA requisition referred to in subsection (1)must state the business to be transacted at the meeting and must be sent to each director and to the head office of the company; andmay consist of several documents of like form, each signed by one or more shareholders.Directors calling meetingOn receipt of a requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition, unlessa record date has been fixed under paragraph 140(5)(c) and notice of it has been given under subsection 140(7);the directors have called a meeting of shareholders and have given notice thereof under section 141; orthe business of the meeting as stated in the requisition includes matters described in paragraphs 146(5)(b) to (e).Shareholders’ powerIf the directors do not call a meeting within twenty-one days after receiving the requisition referred to in subsection (1), any shareholder who signed the requisition may call the meeting.ProcedureA meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Act.ReimbursementUnless the shareholders otherwise resolve at a meeting called under subsection (4), the company shall reimburse the shareholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.
  • 1991, c. 45, s. 156;
  • 2005, c. 54, s. 390
Previous Version
Court may order meeting to be calledA court may, on the application of a director, a shareholder who is entitled to vote at a meeting of shareholders or the Superintendent, order a meeting to be called, held or conducted in the manner that the court directs ifit is impracticable to call the meeting within the time or in the manner in which it is to be called;it is impracticable to conduct the meeting in the manner required by this Act or the by-laws; orthe court thinks that the meeting ought to be called, held or conducted within the time or in the manner that it directs for any other reason.Varying quorumWithout restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted pursuant to this section.Valid meetingA meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders of the company duly called, held and conducted.
  • 1991, c. 45, s. 157;
  • 2005, c. 54, s. 391.
Previous Version
Court review of electionA company or a shareholder or director of a company may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the company.Powers of courtOn an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;an order declaring the result of the disputed election or appointment;an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the company until a new election is held or the new appointment is made; andan order determining the voting rights of shareholders and of persons claiming to own shares.
Notice to SuperintendentA person who makes an application under subsection 157(1) or 158(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.Superintendent representationThe Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).
Pooling agreementA written agreement between two or more shareholders may provide that in exercising voting rights the shares held by them will be voted as provided in the agreement.
Proxies
DefinitionsThe definitions in this section apply in this section and in sections 160.02 to 160.08.intermediaryintermédiaireintermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includesa securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;a securities depositary;a financial institution;in respect of a clearing agency, a securities dealer, trust company, association within the meaning of section 2 of the Cooperative Credit Associations Act, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominee holds securities of an issuer;a trustee or administrator of a self-administered retirement savings plan, retirement income fund or education savings plan or another similar self-administered savings or investment plan that is registered under the Income Tax Act;a nominee of a person referred to in any of paragraphs (a) to (e); anda person who performs functions similar to those performed by a person referred to in any of paragraphs (a) to (e) and holds a security registered in their name, or in the name of their nominee, on behalf of another person who is not the registered holder of the security.registrant[Repealed, 2005, c. 54, s. 392]solicit or solicitationsollicitationsolicit or solicitation includesa request for a proxy, whether or not accompanied by or included in a form of proxy,a request to execute or not to execute a form of proxy or to revoke a proxy,the sending of a form of proxy or other communication to a shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, andthe sending of a form of proxy to a shareholder under section 160.04,but does not includethe sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,the performance of administrative acts or professional services on behalf of a person soliciting a proxy,the sending by a registrant of the documents referred to in section 160.07, ora solicitation by a person in respect of shares of which that person is the beneficial owner.solicitation by or on behalf of the management of a companysollicitation effectuée par la direction d’une société ou pour son comptesolicitation by or on behalf of the management of a company means a solicitation by any person pursuant to a resolution or instruction of, or with the acquiescence of, the directors or a committee of the directors of the company.
  • 1997, c. 15, s. 348;
  • 2005, c. 54, s. 392.
Previous Version
Appointing proxyholderA shareholder who is entitled to vote at a meeting of shareholders may, by executing a form of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.Execution of proxyA form of proxy shall be executed by a shareholder or by a shareholder’s attorney authorized in writing to do so.Limit on authorityNo appointment of a proxyholder provides authority for the proxyholder to act in respect of the appointment of an auditor or the election of a director unless a nominee proposed in good faith for the appointment or election is named in the form of proxy, a management proxy circular, a dissident’s proxy circular or a proposal under subsection 146(1).Required informationA form of proxy must indicate, in bold-face type, that the shareholder by whom or on whose behalf it is executed may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the shareholder’s behalf at a meeting to which the proxy relates, and must contain instructions as to the manner in which the shareholder may do so.Validity of proxyA proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.Revocation of proxyA shareholder may revoke a proxyby depositing an instrument in writing executed by the shareholder or by the shareholder’s attorney authorized in writing to do soat the head office of the company at any time up to and including the last business day before the day of a meeting, or a continuation of the meeting after an adjournment, at which the proxy is to be used, orwith the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; orin any other manner permitted by law.
  • 1997, c. 15, s. 348.
Deposit of proxiesThe directors may specify, in a notice calling a meeting of shareholders or a continuation of a meeting of shareholders after an adjournment, a time before which executed forms of proxy to be used at the meeting or the continued meeting must be deposited with the company or its transfer agent. The time specified must not be more than forty-eight hours, excluding Saturdays and holidays, before the meeting or the continued meeting.
  • 1997, c. 15, s. 348.
Mandatory solicitationSubject to subsection 143(2) and subsection (2), the management of a company shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder entitled to receive notice of the meeting.ExceptionThe management of a company is not required to send a form of proxy under subsection (1) if the companyis not a distributing company; andhas 50 or fewer shareholders who are entitled to vote at a meeting, two or more joint holders of a share being counted as one shareholder.
  • 1997, c. 15, s. 348;
  • 2005, c. 54, s. 393.
Previous Version
Soliciting proxiesA person shall not solicit proxies unlessin the case of solicitation by or on behalf of the management of a company, a management proxy circular in prescribed form, either as an appendix to, or as a separate document accompanying, the notice of the meeting, is sent to the auditor of the company and to each shareholder whose proxy is solicited; andin the case of any other solicitation, a dissident’s proxy circular in prescribed form stating the purposes of the solicitation is sent to the auditor of the company, to each shareholder whose proxy is solicited and to the company.Copy to SuperintendentA person who sends a management proxy circular or dissident’s proxy circular shall at the same time file with the Superintendentin the case of a management proxy circular, a copy of it together with a copy of the notice of meeting, form of proxy and any other documents for use in connection with the meeting; andin the case of a dissident’s proxy circular, a copy of it together with a copy of the form of proxy and any other documents for use in connection with the meeting.Exemption by SuperintendentOn the application of an interested person, the Superintendent may, on any terms that the Superintendent thinks fit, exempt the person from any of the requirements of subsection (1) and section 160.04, and the exemption may be given retroactive effect.Reporting exemptionsThe Superintendent shall set out in a periodical available to the public the particulars of each exemption granted under subsection (3) together with the reasons for the exemption.
  • 1997, c. 15, s. 348.
Attendance at meetingA person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend every meeting in respect of which the proxy is valid, and the proxyholder or alternate proxyholder shall comply with the directions of the shareholder who executed the form of proxy.Rights of proxyholderA proxyholder or an alternate proxyholder has the same rights as the appointing shareholder to speak at a meeting of shareholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder, to vote at the meeting in respect of any matter by way of a show of hands.Vote by show of handsDespite subsections (1) and (2) and unless a shareholder or proxyholder demands a ballot, if the chairperson of a meeting of shareholders declares to the meeting that, if a ballot were conducted, the total number of votes attached to shares represented at the meeting by proxy required to be voted against what, to the knowledge of the chairperson, would be the decision of the meeting on a matter or group of matters is less than 5% of all the votes that might be cast by shareholders in person or by proxy,the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; anda proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.
  • 1997, c. 15, s. 348;
  • 2005, c. 54, s. 395.
Previous Version
Duty of intermediaryShares of a company that are registered in the name of an intermediary or an intermediary’s nominee and not beneficially owned by the intermediary may not be voted unless the intermediary sends to the beneficial ownera copy of the notice of the meeting, annual statement, management proxy circular and dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; anda written request for voting instructions except if the intermediary has already received written voting instructions from the beneficial owner.When documents to be sentThe intermediary shall send the documents referred to in subsection (1) without delay after they receive the documents referred to in paragraph (1)(a).Restriction on votingAn intermediary or a proxyholder appointed by them may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or their nominee unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.CopiesA person by or on behalf of whom a solicitation is made shall on request and without delay provide the intermediary, at the person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).Instructions to intermediaryThe intermediary shall vote or appoint a proxyholder to vote in accordance with any written voting instructions received from the beneficial owner.Beneficial owner as proxyholderIf a beneficial owner so requests and provides an intermediary with the appropriate documentation, the intermediary shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.Effect of intermediary’s failure to complyThe failure of an intermediary to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or any action taken at the meeting.Intermediary may not voteNothing in this Part gives an intermediary the right to vote shares that they are otherwise prohibited from voting.
  • 1997, c. 15, s. 348;
  • 2005, c. 54, s. 396.
Previous Version
ExemptionThe Governor in Council may make regulations respecting the conditions under which a company is exempt from any of the requirements of sections 160.02 to 160.07.
  • 2005, c. 54, s. 396.
Restraining orderIf a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit, includingan order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;an order requiring correction of any form of proxy or proxy circular and a further solicitation; andan order adjourning the meeting.Notice of applicationWhere a person other than the Superintendent is an applicant under subsection (1), the applicant shall give notice of the application to the Superintendent and the Superintendent is entitled to appear and to be heard in person or by counsel.
  • 1997, c. 15, s. 348.
Directors and OfficersDuties
Duty to manageSubject to this Act, the directors of a company shall manage or supervise the management of the business and affairs of the company.Specific dutiesWithout limiting the generality of subsection (1), the directors of a company shallestablish an audit committee to perform the duties referred to in subsections 198(3) and (4);establish a conduct review committee to perform the duties referred to in subsection 199(3);establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);establish procedures to provide disclosure of information to customers of the company that is required to be disclosed by this Act and for dealing with complaints as required by subsection 441(1);designate a committee of the board of directors to monitor the procedures referred to in paragraph (e) and satisfy itself that they are being adhered to by the company; andestablish investment and lending policies, standards and procedures in accordance with section 450.ExceptionParagraphs (2)(a) and (b) do not apply to the directors of a company ifall the voting shares of the company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution described by any of paragraphs (a) to (d) of the definition “financial institution” in section 2; andthe audit committee or the conduct review committee of the Canadian financial institution performs for and on behalf of the company all the functions that would otherwise be required to be performed by the audit committee or conduct review committee of the company under this Act.
  • 1991, c. 45, s. 161;
  • 1997, c. 15, s. 349;
  • 2001, c. 9, s. 497(F).
Duty of careEvery director and officer of a company in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shallact honestly and in good faith with a view to the best interests of the company; andexercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.Duty to complyEvery director, officer and employee of a company shall comply with this Act, the regulations, the company’s incorporating instrument and the by-laws of the company.No exculpationNo provision in any contract, in any resolution or in the by-laws of a company relieves any director, officer or employee of the company from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.
Qualification and Number — Directors
Minimum number of directorsA company shall have at least seven directors.Residency requirementAt least one half of the directors of a company that is a subsidiary of a foreign institution or of a prescribed holding body corporate of a foreign institution and a majority of the directors of any other company must be, at the time of each director’s election or appointment, resident Canadians.
  • 1991, c. 45, s. 163;
  • 2001, c. 9, s. 498;
  • 2007, c. 6, s. 346.
Previous Version
Disqualified personsThe following persons are disqualified from being directors of a company:a person who is less than eighteen years of age;a person who is of unsound mind and has been so found by a court in Canada or elsewhere;a person who has the status of a bankrupt;a person who is not a natural person;a person who is prohibited by section 386 or 399 from exercising voting rights attached to shares of the company;a person who is an officer, director or full time employee of an entity that is prohibited by section 386 or 399 from exercising voting rights attached to shares of the company;a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of section 374.1;a person who is an agent or employee of Her Majesty in right of Canada or in right of a province;a minister of Her Majesty in right of Canada or in right of a province; anda person who is an agent or employee of the government of a foreign country or any political subdivision thereof.
  • 1991, c. 45, s. 164;
  • 1994, c. 47, s. 203;
  • 1997, c. 15, s. 350;
  • 2012, c. 19, s. 326, c. 31, s. 99.
Previous Version
No shareholder requirementA director of a company is not required to hold shares of the company.
Affiliated personThe Governor in Council may make regulations specifying the circumstances under which a natural person is affiliated with a company for the purposes of this Act.
Affiliated director determinationNotwithstanding section 166, the Superintendent may determine that a particular director is affiliated with a company for the purposes of this Act if, in the opinion of the Superintendent, the director has a significant or sufficient commercial, business or financial relationship with the company or with an affiliate of the company to the extent that the relationship can be construed as being material to the director and can reasonably be expected to affect the exercise of the director’s best judgment.Notification by SuperintendentA determination by the Superintendent under subsection (1)becomes effective on the day of the next annual meeting of the shareholders unless a notice in writing by the Superintendent revoking the determination is received by the company prior to that day; andceases to be in effect on the day of the next annual meeting of the shareholders after a notice in writing by the Superintendent revoking the determination is received by the company.
  • 1996, c. 6, s. 117.
Unaffiliated directorsAt the election of directors at each annual meeting of a company and at all times until the day of the next annual meeting, no more than two thirds of the directors may be persons affiliated with the company.ExceptionSubsection (1) does not apply where all the voting shares of a company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.Determination of affiliationFor the purposes of subsection (1), whether or not a person is affiliated with a company shall be determined as at the day the notice of the annual meeting is sent to shareholders pursuant to section 141 and that determination becomes effective on the day of that meeting, and a person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders.
Limit on directorsNo more than 15 per cent of the directors of a company may, at each director’s election or appointment, be employees of the company or a subsidiary of the company, except that up to four persons who are employees of the company or a subsidiary of the company may be directors of the company if those directors constitute not more than one half of the directors of the company.
Election and Tenure — Directors
Number of directorsSubject to subsection 163(1) and sections 172 and 222, the directors of a company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.Election at annual meetingA by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.
Election or appointment as directorThe election or appointment of a person as a director is subject to the following:the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; orthe person was not present at the meeting when the election or appointment took place butconsented in writing to hold office as a director before the election or appointment or within 10 days after it, oracted as a director after the election or appointment.
  • 2005, c. 54, s. 397.
Term of directorsExcept where this Act or the by-laws of a company provide for cumulative voting, a company may, by by-law, provide that the directors be elected for terms of one, two or three years.Term of one, two or three yearsA director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders, as the case may be, following the election of the director.No stated termA director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders following the election of the director.Tenure of officeIt is not necessary that all directors elected at a meeting of shareholders hold office for the same term.IdemIf a by-law of a company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.Composition requirementsWhere a director of a company is elected or appointed for a term of more than one year, the company shall comply with subsections 163(2) and 167(1) and section 168 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.TransitionalSubsection (6) does not apply in respect of a former-Act company until the day of the third annual meeting of shareholders after the coming into force of this section.
Determining election of directorsExcept where this Act or the by-laws of a company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a company shall be the directors thereof.IdemIf, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.
Cumulative votingWhere this Act or the by-laws provide for cumulative voting,there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;a director may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion; andthe number of directors required by the by-laws may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion.Mandatory cumulative votingWhere the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a company, the directors shall be elected by cumulative voting.ExceptionSubsection (2) does not applywhere all the voting shares of the company that are outstanding, other than directors’ qualifying shares, if any, are beneficially owned byone person,one person and one or more entities controlled by that person,one or more entities controlled by the same person; orin respect of a former-Act company whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.Transitional electionWhere this Act or the by-laws of a company provide for cumulative voting, the shareholders of the company shall,at the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, andat each succeeding annual meeting,elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.ExceptionNothing in this Act precludes the holders of any class or series of shares of a company from having an exclusive right to elect one or more directors.
  • 1991, c. 45, s. 172;
  • 1997, c. 15, s. 352;
  • 2005, c. 54, s. 398.
Previous Version
Re-election of directorsA director who has completed a term of office is, if otherwise qualified, eligible for re-election.
Incomplete Elections and Director Vacancies
Void election or appointmentIf, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 163(2) or 167(1) or section 168, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.Failure to elect minimumWhere, at the close of a meeting of shareholders of a company, the shareholders have failed to elect the number or minimum number of directors required by this Act or the by-laws of a company, the purported election of directors at the meetingis valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; oris void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.[Repealed, 1997, c. 15, s. 353]
  • 1991, c. 45, s. 174;
  • 1997, c. 15, s. 353.
Directors where elections incomplete or voidNotwithstanding subsections 170(2) and (3) and paragraphs 172(1)(f) and 176(1)(a), where subsection 174(1) or (2) applies at the close of any meeting of shareholders of a company, the board of directors shall, until their successors are elected or appointed, consist solely ofwhere paragraph 174(2)(a) applies, the directors referred to in that paragraph; orwhere subsection 174(1) or paragraph 174(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.Where there is no approved rectification planNotwithstanding subsections 170(2) and (3) and paragraphs 172(1)(f) and 176(1)(a), where a plan to rectify the non-compliance referred to in subsection 174(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.Directors to call meetingWhere subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders to fill the vacancies, where paragraph 174(2)(a) applies, or elect a new board of directors, where subsection 174(1) or paragraph 174(2)(b) applies.Shareholder may call meetingWhere the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder.
  • 1991, c. 45, s. 175;
  • 1997, c. 15, s. 354.
Ceasing to hold officeA director ceases to hold officeat the close of the annual meeting at which the director’s term of office expires;when the director dies or resigns;when the director becomes disqualified under section 164 or ineligible to hold office pursuant to subsection 208(2);when the director is removed under section 177; orwhen the director is removed from office under section 509.1 or 509.2.Date of resignationThe resignation of a director of a company becomes effective at the time a written resignation is sent to the company by the director or at the time specified in the resignation, whichever is later.
  • 1991, c. 45, s. 176;
  • 2001, c. 9, s. 500.
Removal of directorSubject to paragraph 172(1)(g), the shareholders of a company may by resolution at a special meeting remove any director or all the directors from office.ExceptionWhere the holders of any class or series of shares of a company have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.Vacancy by removalSubject to paragraphs 172(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 181 or 182.
Statement of directorA director whoresigns,receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the director from office, orreceives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,is entitled to submit to the company a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.Statement re disagreementWhere a director resigns as a result of a disagreement with the other directors or the officers of a company, the director shall submit to the company and the Superintendent a written statement setting out the nature of the disagreement.
Circulation of statementA company shall without delay on receipt of a director’s statement referred to in subsection 178(1) relating to a matter referred to in paragraph 178(1)(b) or (c), or a director’s statement referred to in subsection 178(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is included in or attached to a management proxy circular required by subsection 160.05(1).Immunity for statementNo company or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).
  • 1991, c. 45, s. 179;
  • 1997, c. 15, s. 355.
Shareholders filling vacancyThe by-laws of a company may provide that a vacancy among the directors is to be filled onlyby a vote of the shareholders; orby a vote of the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.
Directors filling vacancyDespite section 187 but subject to subsection (2) and sections 180 and 182, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the by-laws by which the number or the minimum or maximum number of directors is increased or from a failure to elect the number or minimum number of directors provided for in the by-laws.Where composition failsNotwithstanding sections 180 and 187, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 163, subsection 167(1) and section 168, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.
  • 1991, c. 45, s. 181;
  • 2005, c. 54, s. 399.
Previous Version
Class vacancyNotwithstanding section 187, where the holders of any class or series of shares of a company have an exclusive right to elect one or more directors and a vacancy occurs among those directors, then, subject to section 180,the remaining directors elected by the holders of that class or series of shares may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors for that class or series or from a failure to elect the number or minimum number of directors provided for in the by-laws for that class or series;if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 163, subsection 167(1) and section 168, the other directors may fill that vacancy; andif there are no such remaining directors and paragraph (b) does not apply, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy.
  • 1991, c. 45, s. 182;
  • 2005, c. 54, s. 400.
Previous Version
Unexpired termUnless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.AffiliationNotwithstanding subsection 167(3), the affiliation of a person to be elected or appointed to fill a vacancy shall be determined as at the date of the person’s election or appointment and that person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders.
Additional directorsThe directors may appoint one or more additional directors where the by-laws of the company allow them to do so and the by-laws determine the minimum and maximum numbers of directors.Term of officeA director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders of the company.Limit on number appointedThe total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders of the company.
  • 1997, c. 15, s. 356.
Meetings of the Board
Meetings requiredThe directors shall meet at least four times during each financial year.Place for meetingsThe directors may meet at any place unless the by-laws provide otherwise.Notice for meetingsThe notice for the meetings must be given as required by the by-laws.
  • 1991, c. 45, s. 184;
  • 1997, c. 15, s. 357.
Notice of meetingA notice of a meeting of directors shall specify each matter referred to in section 202 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.Waiver of noticeA director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.Adjourned meetingNotice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting was announced at the original meeting.
QuorumSubject to section 187, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.IdemThe number of directors constituting a quorum at any meeting of directors or a committee of directors shall bea majority of the minimum number of directors required by this Act for the board of directors or a committee of directors; orsuch greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the company.Director continues to be presentA director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 208(1), present at any particular time during the meeting is considered to be present for the purposes of this section.
  • 1991, c. 45, s. 186;
  • 2005, c. 54, s. 401.
Previous Version
Resident Canadian majorityThe directors of a company shall not transact business at a meeting of directors or of a committee of directors unless,in the case of a company that is the subsidiary of a foreign institution, at least one half, andin the case of any other company, a majorityof the directors present are resident Canadians.ExceptionNotwithstanding subsection (1), the directors of a company may transact business at a meeting of directors or of a committee of directors without the required proportion of directors who are resident Canadians ifa director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; andthere would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.
Presence of unaffiliated directorThe directors of a company shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the company is present.ExceptionDespite subsection (1), the directors of a company may transact business at a meeting of directors if a director who is not affiliated with the company and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.ExceptionSubsection (1) does not apply if all the voting shares of the company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.
  • 2001, c. 9, s. 501.
Electronic meetingSubject to the by-laws of a company, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.Deemed presentA director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Act to be present at that meeting.
Resolution outside board meetingA resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.Filing directors’ resolutionA copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.Resolution outside committee meetingA resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 198(3) or a resolution of the conduct review committee in carrying out its duties under subsection 199(3), is as valid as if it had been passed at a meeting of that committee.Filing committee resolutionA copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.
  • 1997, c. 15, s. 358;
  • 2005, c. 54, s. 402.
Previous Version
Dissent of directorA director of a company who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unlessthe director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; orthe director sends the director’s dissent by registered mail or delivers it to the head office of the company immediately after the meeting is adjourned.Loss of right to dissentA director of a company who votes for or consents to a resolution is not entitled to dissent under subsection (1).Dissent of absent directorA director of a company who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the directorcauses the director’s dissent to be placed with the minutes of the meeting; orsends the director’s dissent by registered mail or delivers it to the head office of the company.
Record of attendanceA company shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.Statement to shareholdersA company shall attach to the notice of each annual meeting it sends to its shareholders a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.
  • 1991, c. 45, s. 190;
  • 1997, c. 15, s. 359.
Meeting required by SuperintendentWhere in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a company to hold a meeting of directors of the company to consider the matters set out in the notice.Attendance of SuperintendentThe Superintendent may attend and be heard at a meeting referred to in subsection (1).
By-laws
By-lawsUnless this Act otherwise provides, the directors of a company may by resolution make, amend or repeal any by-law that regulates the business or affairs of the company.Shareholder approvalThe directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by resolution, confirm or amend the by-law, amendment or repeal.Effective date of by-lawUnless this Act otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.Effect where no shareholder approvalIf a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders, or is not submitted to the shareholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders.
Shareholder proposal of by-lawA shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 146 and 147, make a proposal to make, amend or repeal a by-law.
By-laws of former-Act companySubject to section 195, where a by-law of a former-Act company is in effect on the coming into force of this section, the by-law continues in effect until amended or repealed, unless it is contrary to a provision of this Act.
By-laws re remunerationA by-law of a company respecting the remuneration of the directors of the company, as directors, that is in effect on the coming into force of this section ceases to have effect on the day on which the first annual meeting is held following the coming into force of this section.Existing by-lawsA by-law made by the directors of a company under section 29 of the Trust Companies Act or section 29 of the Loan Companies Act as that section read immediately before the coming into force of this section, and not confirmed by the shareholders of the company in accordance with that section on or before the coming into force of this section, continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders following the coming into force of this section.Shareholder approvalA by-law referred to in subsection (2) shall be submitted to the shareholders at the first meeting of shareholders following the coming into force of this section.Existing resolutionsWhere the remuneration of directors of a former-Act company was, immediately prior to the coming into force of this section, fixed by a resolution of the directors, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders following the coming into force of this section.Application of ss. 192(3) and (4) and 193Subsections 192(3) and (4) and section 193 apply in respect of a by-law referred to in this section as if it were a by-law made under section 192.
Deemed by-lawsAny matter provided for in the incorporating instrument of a former-Act company on the coming into force of this section or of a body corporate continued as a company under this Act at the time of continuance that, under this Act, would be provided for in the by-laws of a company is deemed to be provided for in the by-laws of the company.By-law prevailsWhere a by-law of the company made in accordance with sections 192 and 193 amends or repeals any matter referred to in subsection (1), the by-law prevails.
Committees of the Board
CommitteesThe directors of a company may appoint from their number, in addition to the committees referred to in subsection 161(2), such other committees as they deem necessary and, subject to section 202, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.
Audit committeeThe audit committee of a company shall consist of at least three directors.MembershipA majority of the members of the audit committee must consist of directors who are not persons affiliated with the company and none of the members of the audit committee may be officers or employees of the company or a subsidiary of the company.Duties of audit committeeThe audit committee of a company shallreview the annual statement of the company before the annual statement is approved by the directors;review such returns of the company as the Superintendent may specify;require the management of the company to implement and maintain appropriate internal control procedures;review, evaluate and approve those procedures;review such investments and transactions that could adversely affect the well-being of the company as the auditor or any officer of the company may bring to the attention of the committee;meet with the auditor to discuss the annual statement and the returns and transactions referred to in this subsection; andmeet with the chief internal auditor of the company, or the officer or employee of the company acting in a similar capacity, and with management of the company, to discuss the effectiveness of the internal control procedures established for the company.ReportIn the case of the annual statement and returns of a company that under this Act must be approved by the directors of the company, the audit committee of the company shall report thereon to the directors before the approval is given.Required meeting of directorsThe audit committee of a company may call a meeting of the directors of the company to consider any matter of concern to the committee.
  • 1991, c. 45, s. 198;
  • 1997, c. 15, s. 360.
Conduct review committeeThe conduct review committee of a company shall consist of at least three directors.MembershipA majority of the members of the conduct review committee of a company must consist of directors who are not persons affiliated with the company and none of the members of the conduct review committee may be officers or employees of the company or a subsidiary of the company.Duties of conduct review committeeThe conduct review committee of a company shallrequire the management of the company to establish procedures for complying with Part XI;review those procedures and their effectiveness in ensuring that the company is complying with Part XI;if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the company,establish policies for entering into transactions referred to in subsection 483.1(1), andreview transactions referred to in subsection 483.3(1); andreview the practices of the company to ensure that any transactions with related parties of the company that may have a material effect on the stability or solvency of the company are identified.Company report to SuperintendentA company shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).Committee report to directorsAfter each meeting of the conduct review committee of a company, the committee shall report to the directors of the company on matters reviewed by the committee.Directors’ report to SuperintendentWithin ninety days after the end of each financial year, the directors of a company shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).
  • 1991, c. 45, s. 199;
  • 1997, c. 15, s. 361;
  • 2001, c. 9, s. 502.
Directors and Officers — Authority
Chief executive officerThe directors of a company shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 202, may delegate to that officer any of the powers of the directors.ExceptionSubsection (1) does not apply in respect of a former-Act company whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.
Appointment of officersThe directors of a company may, subject to the by-laws, designate the offices of the company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 202, to manage the business and affairs of the company.Directors as officersSubject to section 168, a director of a company may be appointed to any office of the company.Two or more officesTwo or more offices of a company may be held by the same person.
Limits on power to delegateThe directors of a company may not delegate any of the following powers, namely, the power tosubmit to the shareholders a question or matter requiring the approval of the shareholders;fill a vacancy among the directors, on a committee of directors or in the office of auditor, or appoint additional directors;issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 65, except in accordance with any authorization made by the directors;declare a dividend;authorize the redemption or other acquisition by the company pursuant to section 74 of shares issued by the company;authorize the payment of a commission on a share issue;approve a management proxy circular;except as provided in this Act, approve the annual statement of the company and any other financial statements issued by the company; oradopt, amend or repeal by-laws.
  • 1991, c. 45, s. 202;
  • 1997, c. 15, s. 362;
  • 2005, c. 54, s. 403.
Previous Version
Exercise of trustee powersWhere authorized to do so by a special resolution, the directors of a company that is a trust company pursuant to subsection 57(2) may delegate, with or without the power of sub-delegation, to the chief executive officer of the company, the exercise of all or any of the powers or authorities of the company, whether discretionary or otherwise, arising out of any will, trust, deed, contract or other instrument creating a trust.Performance by companyThe exercise of any power or authority referred to in subsection (1) by the chief executive officer or that officer’s delegate, if any, constitutes an exercise of the power or authority by the company.
Remuneration of directors, officers and employeesSubject to this section and the by-laws, the directors of a company may fix the remuneration of the directors, officers and employees of the company.By-law requiredNo remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.
  • 1991, c. 45, s. 204;
  • 1994, c. 26, s. 74.
Validity of actsAn act of a director or an officer of a company is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.IdemAn act of the board of directors of a company is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.
Right to attend meetingsA director of a company is entitled to attend and to be heard at every meeting of shareholders.
Conflicts of Interest
Disclosure of interestA director or officer of a company shall disclose to the company, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the company, whether entered into or proposed, if theyare a party to the contract or transaction;are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; orhave a material interest in a party to the contract or transaction.Time of disclosure — directorThe disclosure shall be made in the case of a directorat the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; orif a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.Time of disclosure — officerThe disclosure shall be made in the case of an officer who is not a directorimmediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;if they become interested after the contract or transaction is entered into, immediately after they become interested; orif a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.Time of disclosure — contract not requiring approvalIf the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the company’s business would not require approval by the directors or shareholders, the director or officer shall disclose to the company, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.
  • 1991, c. 45, s. 207;
  • 2005, c. 54, s. 404.
Previous Version
Director to abstainA director who is required to make a disclosure under subsection 207(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transactionrelates primarily to their remuneration as a director, officer, employee or agent of the company, an entity controlled by the company or an entity in which the company has a substantial investment;is for indemnity under section 217 or insurance under section 218; oris with an affiliate of the company.IneligibilityAny director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.Validity of actsAn act of the board of directors of a company or of a committee of the board of directors is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.
  • 1991, c. 45, s. 208;
  • 1997, c. 15, s. 363;
  • 2005, c. 54, s. 405.
Previous Version
General noticeFor the purposes of subsection 207(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:the director or officer is a director or officer of a party referred to in paragraph 207(1)(b) or (c) or a person acting in a similar capacity;the director or officer has a material interest in the party; orthere has been a material change in the nature of the director’s or officer’s interest in the party.Access to disclosuresThe shareholders of the company may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 207(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the company.
  • 1991, c. 45, s. 209;
  • 2005, c. 54, s. 406.
Previous Version
Avoidance standardsA contract or transaction for which disclosure is required under subsection 207(1) is not invalid and a director or officer is not accountable to the company or its shareholders for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it ifthe director or officer disclosed their interest in accordance with section 207 and subsection 209(1);the directors approved the contract or transaction; andthe contract or transaction was reasonable and fair to the company at the time that it was approved.Confirmation by shareholdersEven if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the company or its shareholders for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it ifthe contract or transaction is approved or confirmed by special resolution at a meeting of shareholders;disclosure of the interest was made to the shareholders in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; andthe contract or transaction was reasonable and fair to the company at the time that it was approved or confirmed.
  • 1991, c. 45, s. 210;
  • 2005, c. 54, s. 406.
Previous Version
Court may set aside or require accountingIf a director or officer of a company fails to comply with any of sections 207 to 210, a court, on application of the company or any of its shareholders, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the company for any profit or gain realized on it.
  • 1991, c. 45, s. 211;
  • 2005, c. 54, s. 406.
Previous Version
Liability, Exculpation and Indemnification
Director liabilityDirectors of a company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 68(1) or the issue of subordinated indebtedness contrary to section 83 for a consideration other than money are jointly and severally, or solidarily, liable to the company to make good any amount by which the consideration received is less than the fair equivalent of the money that the company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.Further liabilityDirectors of a company who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the company any amounts so distributed or paid and not otherwise recovered by the company and any amounts in relation to any loss suffered by the company:a redemption or purchase of shares contrary to section 74;a reduction of capital contrary to section 78;a payment of a dividend contrary to section 82;a payment of an indemnity contrary to section 217; orany transaction contrary to Part XI.
  • 1991, c. 45, s. 212;
  • 2005, c. 54, s. 407(E).
Previous Version
ContributionA director who has satisfied a judgment in relation to the director’s liability under section 212 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.RecoveryA director who is liable under section 212 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the directorany money or property that was paid or distributed to the shareholder or other person contrary to section 74, 78, 82 or 217; oran amount equal to the value of the loss suffered by the company as a result of any transaction contrary to Part XI.Court orderWhere an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 74, 78, 82 or 217 or any amount referred to in paragraph (2)(b);order a company to return or issue shares to a person from whom the company has purchased, redeemed or otherwise acquired shares; ormake any further order it thinks fit.
LimitationAn action to enforce a liability imposed by section 212 may not be commenced after two years from the date of the resolution authorizing the action complained of.
Directors liable for wagesSubject to subsections (2) and (3), the directors of a company are jointly and severally, or solidarily, liable to each employee of the company for all debts not exceeding six months wages payable to the employee for services performed for the company while they are directors.Conditions precedentA director is not liable under subsection (1) unlessthe company has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;the company has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; ora winding-up order has been issued in respect of the company under the Winding-up and Restructuring Act and a claim for the debt has been allowed or proven within six months after the issue of the winding-up order.LimitationsA director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.Amount due after executionWhere execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.Subrogation of directorWhere a director of a company pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or winding-up proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.Contribution entitlementA director of a company who has satisfied a claim under this section is entitled to a contribution from the other directors of the company who are liable for the claim.
  • 1991, c. 45, s. 215;
  • 1996, c. 6, s. 167;
  • 2005, c. 54, s. 408(E).
Previous Version
Defence — due diligenceA director, officer or employee of a company is not liable under section 212 or 215 or subsection 494(1) and has fulfilled their duty under subsection 162(2) if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith onfinancial statements of the company that were represented to them by an officer of the company or in a written report of the auditor of the company fairly to reflect the financial condition of the company; ora report of a person whose profession lends credibility to a statement made by them.Defence — good faithA director or officer of a company has fulfilled their duty under subsection 162(1) if they relied in good faith onfinancial statements of the company that were represented to them by an officer of the company or in a written report of the auditor of the company fairly to reflect the financial condition of the company; ora report of a person whose profession lends credibility to a statement made by them.
  • 1991, c. 45, s. 216;
  • 2001, c. 9, s. 503;
  • 2005, c. 54, s. 409.
Previous Version
IndemnificationA company may indemnify a director or officer of the company, a former director or officer of the company or another person who acts or acted, at the company’s request, as a director or officer of or in a similar capacity for another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by them in respect of any civil, criminal, administrative, investigative or other proceeding in which they are involved because of that association with the company or other entity.AdvancesA company may advance amounts to the director, officer or other person for the costs, charges and expenses of a proceeding referred to in subsection (1). They shall repay the amounts if they do not fulfil the conditions set out in subsection (3).No indemnificationA company may not indemnify a person under subsection (1) unlessthe person acted honestly and in good faith with a view to the best interests of, as the case may be, the company or the other entity for which they acted at the company’s request as a director or officer or in a similar capacity; andin the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that their conduct was lawful.Indemnification — derivative actionsA company may with the approval of a court indemnify a person referred to in subsection (1) or advance amounts to them under subsection (2) — in respect of an action by or on behalf of the company or other entity to procure a judgment in its favour to which the person is made a party because of the association referred to in subsection (1) with the company or other entity — against all costs, charges and expenses reasonably incurred by them in connection with that action if they fulfil the conditions set out in subsection (3).Right to indemnityDespite subsection (1), a person referred to in that subsection is entitled to be indemnified by the company in respect of all costs, charges and expenses reasonably incurred by them in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the person is subject because of the association referred to in subsection (1) with the company or other entity described in that subsection if the personwas not judged by the court or other competent authority to have committed any fault or omitted to do anything that they ought to have done; andfulfils the conditions set out in subsection (3).Heirs and personal representativesA company may, to the extent referred to in subsections (1) to (5) in respect of the person, indemnify the heirs or personal representatives of any person whom the company may indemnify under those subsections.
  • 1991, c. 45, s. 217;
  • 2001, c. 9, s. 504(F);
  • 2005, c. 54, s. 409.
Previous Version
Directors’ and officers’ insuranceA company may purchase and maintain insurance for the benefit of any person referred to in section 217 against any liability incurred by the personin the capacity of a director or an officer of the company, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the company; orin the capacity of a director or officer of another entity or while acting in a similar capacity for another entity, if they act or acted in that capacity at the company’s request, except if the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.
  • 1991, c. 45, s. 218;
  • 2005, c. 54, s. 410.
Previous Version
Application to court for indemnificationA company or a person referred to in section 217 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.Notice to SuperintendentAn applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.Other noticeOn an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.
Fundamental ChangesAmendments
Incorporating instrumentOn the application of a company duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the incorporating instrument of the company.
  • 1991, c. 45, s. 220;
  • 2001, c. 9, s. 505.
Letters patent to amendOn receipt of an application referred to in section 220, the Minister may issue letters patent to effect the proposal.Effect of letters patentLetters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.
  • 1991, c. 45, s. 221;
  • 2001, c. 9, s. 506.
By-lawsThe directors of a company may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 223 to 227, tochange the maximum number, if any, of shares of any class that the company is authorized to issue;create new classes of shares;change the designation of any or all of the company’s shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of any or all of the company’s shares, whether issued or unissued;change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;divide a class of shares, whether issued or unissued, into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;authorize the directors to divide any class of unissued shares into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;revoke, diminish or enlarge any authority conferred under paragraphs (f) and (g);increase or decrease the number of directors or the minimum or maximum number of directors, subject to subsection 163(1) and section 172;change the name of the company; orchange the province in which the head office of the company is situated.Shareholder approvalThe directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders, and the shareholders may, by special resolution, confirm, amend or reject the by-law, amendment or repeal.Effective date of by-lawA by-law, or an amendment to or a repeal of a by-law, made under subsection (1) is not effective until it is confirmed or confirmed as amended by the shareholders under subsection (2) and, in the case of by-laws respecting a change to the name of the company, approved by the Superintendent.Letters patentIf the name of a company or the province in Canada in which the head office of the company is situated is changed under this section, the Superintendent may issue letters patent to amend the company’s incorporating instrument accordingly.Effect of letters patentLetters patent issued under subsection (4) become effective on the day stated in the letters patent.
  • 1991, c. 45, s. 222;
  • 2001, c. 9, s. 507;
  • 2005, c. 54, s. 411;
  • 2007, c. 6, s. 347.
Previous Version
Class voteThe holders of shares of a class or, subject to subsection (2), of a series are, unless the by-laws otherwise provide in the case of an amendment to the by-laws referred to in paragraph (a), (b) or (e), entitled to vote separately as a class or series on a proposal to amend the by-laws toincrease or decrease any maximum number of authorized shares of that class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of that class;effect an exchange, reclassification or cancellation of all or part of the shares of that class;add, change or remove the rights, privileges, restrictions or conditions attached to the shares of that class and, without limiting the generality of the foregoing,remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,add, remove or change prejudicially redemption rights,reduce or remove a dividend preference or a liquidation preference, oradd, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of the company, or sinking fund provisions;increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class;create a new class of shares equal or superior to the shares of that class;make any class of shares having rights or privileges inferior to the shares of that class equal or superior to the shares of that class; oreffect an exchange or create a right of exchange of all or part of the shares of another class into the shares of that class.Right limitedThe holders of a series of shares of a class are entitled to vote separately as a series under subsection (1) if that series is affected by an addition or amendment to the by-laws in a manner different from other shares of the same class.Right to voteSubsections (1) and (2) apply whether or not the shares of a class otherwise carry the right to vote.
Separate resolutionsA proposed addition or amendment to the by-laws referred to in subsection 223(1) is adopted when the holders of the shares of each class or series entitled to vote separately thereon as a class or series have approved the addition or amendment by a special resolution.
Revoking resolutionWhere a special resolution referred to in subsection 222(2) so states, the directors may, without further approval of the shareholders, revoke the special resolution.
Proposal to amendSubject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of a company may, in accordance with sections 146 and 147, make a proposal to make an application referred to in section 220 or to make, amend or repeal the by-laws referred to in subsection 222(1) of the company.Notice of amendmentNotice of a meeting of shareholders at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of a company is to be considered must set out the proposal.
  • 1991, c. 45, s. 226;
  • 2001, c. 9, s. 508.
Rights preservedNo amendment to the incorporating instrument or by-laws of a company affects an existing cause of action or claim or liability to prosecution in favour of or against the company or its directors or officers, or any civil, criminal or administrative action or proceeding to which the company or any of its directors or officers are a party.
Amalgamation
Application to amalgamateOn the joint application oftwo or more companies,one or more companies and one or more bodies corporate that are incorporated by or under an Act of Parliament, other than a federal credit union, ortwo or more bodies corporate incorporated by or under an Act of Parliament, other than a federal credit union,the Minister may issue letters patent amalgamating and continuing the applicants as one company.
  • 1991, c. 45, s. 228;
  • 2010, c. 12, s. 2125.
Previous Version
Amalgamation agreementEach applicant proposing to amalgamate shall enter into an amalgamation agreement.Contents of agreementEvery amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,the name of the amalgamated company and the province in which its head office is to be situated;the name and place of ordinary residence of each proposed director of the amalgamated company;the manner in which the shares of each applicant are to be converted into shares or other securities of the amalgamated company;if any shares of an applicant are not to be converted into shares or other securities of the amalgamated company, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities of the amalgamated company;the manner of payment of money in lieu of the issue of fractional shares of the amalgamated company or of any other body corporate that are to be issued in the amalgamation;the proposed by-laws of the amalgamated company;details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated company; andthe proposed effective date of the amalgamation.Cross ownership of sharesIf shares of one of the applicants are held by or on behalf of another of the applicants, other than shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those shares when the amalgamation becomes effective without any repayment of capital in respect thereof, and no provision shall be made in the agreement for the conversion of those shares into shares of the amalgamated company.
  • 1991, c. 45, s. 229;
  • 2005, c. 54, s. 412.
Previous Version
Approval of agreement by SuperintendentAn amalgamation agreement must be submitted to the Superintendent for approval and any approval of the agreement under subsection 231(4) by the holders of any class or series of shares of an applicant is invalid unless, before the date of the approval, the Superintendent has approved the agreement in writing.
  • 1991, c. 45, s. 230;
  • 2007, c. 6, s. 348.
Previous Version
Shareholder approvalThe directors of each applicant shall submit an amalgamation agreement for approval to a meeting of the holders of shares of the applicant company or body corporate of which they are directors and, subject to subsection (3), to the holders of each class or series of such shares.Right to voteEach share of an applicant carries the right to vote in respect of an amalgamation agreement whether or not it otherwise carries the right to vote.Separate vote for class or seriesThe holders of shares of a class or series of shares of each applicant are entitled to vote separately as a class or series in respect of an amalgamation agreement if the agreement contains a provision that, if it were contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.Special resolutionSubject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant company or body corporate have approved the amalgamation by special resolution.TerminationAn amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant notwithstanding that the agreement has been approved by the shareholders of all or any of the applicant companies or bodies corporate.
  • 1991, c. 45, s. 231;
  • 2005, c. 54, s. 413.
Previous Version
Vertical short-form amalgamationA company may, without complying with sections 229 to 231, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the company andthe amalgamation is approved by a resolution of the directors of the company and of each amalgamating subsidiary; andthe resolutions provide thatthe shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated company will be the same as the incorporating instrument and the by-laws of the amalgamating company that is the holding body corporate, andno securities will be issued by the amalgamated company in connection with the amalgamation.Horizontal short-form amalgamationTwo or more bodies corporate incorporated by or under an Act of Parliament may amalgamate and continue as one company without complying with sections 229 to 231 ifat least one of the applicants is a company;the applicants are all wholly-owned subsidiaries of the same holding body corporate;the amalgamation is approved by a resolution of the directors of each of the applicants; andthe resolutions provide thatthe shares of all applicants, except those of one of the applicants that is a company, will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated company will be the same as the incorporating instrument and the by-laws of the amalgamating company whose shares are not cancelled, andthe stated capital of the amalgamating companies and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating company whose shares are not cancelled.
Joint application to MinisterSubject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 231(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 231(4) or the approval of the directors in accordance with subsection 232(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one company.Conditions precedent to applicationNo application for the issue of letters patent under subsection (1) may be made unlessnotice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; andthe application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.Application of sections 22 to 25If two or more bodies corporate, none of which is a company, apply for letters patent under subsection (1), sections 22 to 25 apply in respect of the application with any modifications that the circumstances require.Matters for considerationBefore issuing letters patent of amalgamation continuing the applicants as one company, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe sources of continuing financial support for the amalgamated company;the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated company;the business record and experience of the applicants;the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;whether the amalgamated company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses; andthe best interests of the financial system in Canada.
  • 1991, c. 45, s. 233;
  • 2001, c. 9, s. 509.
Issue of letters patentWhere an application has been made to the Minister in accordance with section 233, the Minister may issue letters patent of amalgamation continuing the applicants as one company.Letters patentWhere letters patent are issued pursuant to this section, section 27 applies with such modifications as the circumstances require in respect of the issue of the letters patent.Publication of noticeThe Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).
Court enforcementIf a company or any director, officer, employee or agent of a company is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the company or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.AppealAn appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.
  • 2001, c. 9, s. 510.
Effect of letters patentOn the day provided for in the letters patent issued under section 234the amalgamation of the applicants and their continuance as one company becomes effective;the property of each applicant continues to be the property of the amalgamated company;the amalgamated company continues to be liable for the obligations of each applicant;any existing cause of action, claim or liability to prosecution is unaffected;any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated company;any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated company;if any director or officer of an applicant continues as a director or officer of the amalgamated company, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated company; andthe letters patent of amalgamation are the incorporating instrument of the amalgamated company.MinutesAny deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated company.
TransitionalNotwithstanding any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a company in respect of which letters patent were issued under subsection 234(1) permission toengage in a business activity specified in the order that a company is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;[Repealed, 1994, c. 47, s. 204]hold assets that a company is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;acquire and hold assets that a company is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets;maintain outside Canada any records or registers required by this Act to be maintained in Canada; andwhere one or more of the applicants that applied for the letters patent was a trust company pursuant to subsection 57(2) and the amalgamated company is not a trust company pursuant to subsection 57(2), hold guaranteed trust money that was held by the trust company or companies immediately prior to the amalgamation on condition that the amalgamated companyrepay, or transfer to deposit accounts with the amalgamated company, each deposit of guaranteed trust money that is payable on demand or after notice within such period after the amalgamation as may be specified in the order of the Governor in Council, andnot renew or extend the term of any guaranteed investment certificate for which the amalgamated company has assumed liability under this section.Duration of exceptionsThe permission granted under any of paragraphs (1)(a) to (f) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any matter described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(d) to (f), two years.RenewalSubject to subsection (4), the Minister may, by order, on the recommendation of the Superintendent, renew a permission granted by order under subsection (1) with respect to any matter described in any of paragraphs (1)(b) to (e) for any further period or periods that the Minister considers necessary.LimitationThe Minister shall not grant to a company any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the company to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the company that the company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of issue of the letters patent.
  • 1991, c. 45, s. 236;
  • 1994, c. 47, s. 204;
  • 1997, c. 15, s. 364;
  • 2007, c. 6, s. 349.
Previous Version
Transfer of Business
Sale by companyA company may sell all or substantially all of its assets to a financial institution incorporated by or under an Act of Parliament or to an authorized foreign bank in respect of its business in Canada if the purchasing financial institution or authorized foreign bank assumes all or substantially all of the liabilities of the company.Sale agreementAn agreement of purchase and sale (in subsection (3), section 238, subsections 239(1) and (4) and section 241 referred to as a “sale agreement”) shall set out the terms of, and means of effecting, the sale of assets referred to in subsection (1).ConsiderationNotwithstanding anything in this Act, the consideration for a sale referred to in subsection (1) may be cash or fully paid securities of the purchasing financial institution or authorized foreign bank or in part cash and in part fully paid securities of the purchasing financial institution or authorized foreign bank or any other consideration that is provided for in the sale agreement.Meaning of authorized foreign bankIn this section, authorized foreign bank has the meaning assigned to that expression by section 2 of the Bank Act.
  • 1991, c. 45, s. 237;
  • 1999, c. 28, s. 139.
Agreement to SuperintendentA sale agreement must be submitted to the Superintendent before it is sent to shareholders of the selling company under subsection 239(1).
  • 1991, c. 45, s. 238;
  • 2007, c. 6, s. 350.
Previous Version
Shareholder approvalThe directors of a selling company shall submit a sale agreement for approval to a meeting of the holders of shares of the company and, subject to subsection (3), to the holders of each class or series of shares of the company.Right to voteEach share of a selling company carries the right to vote in respect of a sale referred to in subsection 237(1) whether or not the share otherwise carries the right to vote.Class voteThe holders of shares of a class or series of shares of a selling company are entitled to vote separately as a class or series in respect of a sale referred to in subsection 237(1) only if the shares of the class or series are affected by the sale in a manner different from the shares of another class or series.Special resolutionA sale agreement is approved when the shareholders, and the holders of each class or series of shares entitled to vote separately as a class or series pursuant to subsection (3), of the selling company have approved the sale by special resolution.
Abandoning saleWhere a special resolution approving a sale under subsection 239(4) so states, the directors of a selling company may, subject to the rights of third parties, abandon the sale without further approval of the shareholders.
Application to MinisterSubject to subsection (2), unless a sale agreement is abandoned in accordance with section 240, the selling company shall, within three months after the approval of the sale agreement in accordance with subsection 239(4), apply to the Minister for approval of the sale agreement.Conditions precedent to applicationNo application for approval under subsection (1) may be made unlessnotice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the selling company is situated;the application is supported by satisfactory evidence that the selling company has complied with the requirements of sections 237 to 240 and this section; andwhere the selling company is a trust company pursuant to subsection 57(2), the application is supported by satisfactory evidence that the selling company has made such arrangements as may be necessary to transfer to another company that is a trust company pursuant to subsection 57(2) money or other assets held in trust by the selling company, other than assets held in respect of guaranteed trust money.Approval by MinisterA sale agreement has no force or effect until it has been approved by the Minister.IdemWhere an application has been made to the Minister in accordance with subsections (1) and (2), the Minister may approve the sale agreement to which the application relates.IdemWhere a selling company is a trust company pursuant to subsection 57(2), the Minister shall not approve the sale agreement until the Minister is satisfied that the selling company has made satisfactory arrangements for the protection of persons in relation to whom the selling company was acting in a fiduciary capacity.
Corporate RecordsHead Office and Corporate Records
Head officeA company shall at all times have a head office in the province specified in its incorporating instrument or by-laws.Change of head officeThe directors of a company may change the address of the head office within the province specified in the incorporating instrument or by-laws.Notice of change of addressA company shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.
  • 1991, c. 45, s. 242;
  • 2005, c. 54, s. 414.
Previous Version
Company recordsA company shall prepare and maintain records containingits incorporating instrument and the by-laws of the company and all amendments thereto;minutes of meetings and resolutions of shareholders;the information referred to in paragraphs 499(1)(a), (c) and (e) to (h) contained in all returns provided to the Superintendent pursuant to section 499;particulars of any authorizations, designations, conditions and limitations established by the Superintendent under subsection 57(1), (3) or (4) or 58(1) that are from time to time applicable to the company; andparticulars of exceptions granted under section 37 or 236 that are from time to time applicable to the company.Additional recordsIn addition to the records described in subsection (1), a company shall prepare and maintain adequatecorporate accounting records;records containing minutes of meetings and resolutions of the directors and any committee thereof;records relating to fiduciary activities of the company; andrecords showing, for each customer of the company, on a daily basis, particulars of the transactions between the company and that customer and the balance owing to or by the company in respect of that customer.Former-Act and continued companiesFor the purposes of paragraph (1)(b) and subsection (2),in the case of a body corporate continued as a company under this Act, “records” includes similar records required by law to be maintained by the body corporate before it was so continued;in the case of a body corporate amalgamated and continued as a company under this Act, “records” includes similar records required by law to be maintained by the body corporate before it was so amalgamated; andin the case of a former-Act company, “records” includes similar records required by law to be maintained by the company before the coming into force of this section.
  • 1991, c. 45, s. 243;
  • 1997, c. 15, s. 365(E);
  • 2007, c. 6, s. 351(E).
Previous Version
Place of recordsThe records described in section 243 shall be kept at the head office of the company or at such other place in Canada as the directors think fit.Notice of place of recordsWhere any of the records described in section 243 are not kept at the head office of a company, the company shall notify the Superintendent of the place where the records are kept.ExceptionSubsection (1) does not apply in respect of records of a branch of the company outside Canada or in respect of customers of such a branch.InspectionThe records described in section 243, other than those described in paragraph 243(2)(d), shall at all reasonable times be open to inspection by the directors.Access to company recordsShareholders and creditors of a company and their personal representatives may examine the records referred to in subsection 243(1) during the usual business hours of the company and may take extracts from them free of charge or have copies of them made on payment of a reasonable fee. If the company is a distributing company, any other person may on payment of a reasonable fee examine those records during the usual business hours of the company and take extracts from them or have copies of them made.Electronic accessA company may make the information contained in records referred to in subsection 243(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.Copies of by-lawsEvery shareholder of a company is entitled, on request made not more frequently than once in each calendar year, to receive, free of charge, one copy of the by-laws of the company.
  • 1991, c. 45, s. 244;
  • 2001, c. 9, s. 511;
  • 2005, c. 54, s. 415.
Previous Version
Shareholder listsA person who is entitled to a basic list of shareholders of a company (in this section referred to as the “applicant”) may request the company to furnish the applicant with a basic list within ten days after receipt by the company of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the company shall comply with the request.Affidavit and contentsA request under subsection (1) must be accompanied by an affidavit containingthe name and address of the applicant,the name and address for service of the entity, if the applicant is an entity, andan undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 247,and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.EntitlementA shareholder or creditor of a company or their personal representative — or if the company is a distributing company, any person — is entitled to a basic list of shareholders of the company.Basic listA basic list of shareholders of a company consists of a list of shareholders that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets outthe names of the shareholders of the company;the number of shares owned by each shareholder; andthe address of each shareholder as shown in the records of the company.Supplemental listsA person requiring a company to supply a basic list of shareholders may, if the person states in the accompanying affidavit that supplemental lists are required, request the company or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders setting out any changes from the basic list in the names and addresses of the shareholders and the number of shares owned by each shareholder for each business day following the date to which the basic list is made up.When supplemental lists to be furnishedA company or its agent shall provide a supplemental list of shareholders required under subsection (5)within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; andwithin ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.
  • 1991, c. 45, s. 245;
  • 2005, c. 54, s. 416;
  • 2007, c. 6, ss. 352(E), 451(E).
Previous Version
Option holdersA person requiring a company to supply a basic list or a supplemental list of shareholders may also require the company to include in that list the name and address of any known holder of an option or right to acquire shares of the company.
Use of shareholder listA list of shareholders obtained under section 245 shall not be used by any person except in connection withan effort to influence the voting of shareholders of the company;an offer to acquire shares of the company; orany other matter relating to the affairs of the company.
Form of recordsA register or other record required or authorized by this Act to be prepared and maintained by a companymay be in a bound or loose-leaf form or in a photographic film form; ormay be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.Conversion of recordsRegisters and records maintained in one form may be converted to any other form.Destruction of converted recordsNotwithstanding section 251, a company may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.
Protection of recordsA company and its agents shall take reasonable precautions toprevent loss or destruction of,prevent falsification of entries in,facilitate detection and correction of inaccuracies in, andensure that unauthorized persons do not have access to or use of information inthe registers and records required or authorized by this Act to be prepared and maintained.
Requirement to maintain copies and process information in CanadaIf the Superintendent is of the opinion that it is incompatible with the fulfilment of the Superintendent’s responsibilities under this Act for a company to maintain, in another country, copies of records referred to in section 243 or of its central securities register or for a company to process, in another country, information or data relating to the preparation and maintenance of those records or of its central securities register — or if the Superintendent is advised by the Minister that, in the opinion of the Minister, it is not in the national interest for a company to do any of those activities in another country — the Superintendent shall direct the company to not maintain those copies, or to not process the information or data, as the case may be, in that other country or to maintain those copies or to process the information or data only in Canada.Company to complyA company shall without delay comply with any direction issued under subsection (1).
  • 1991, c. 45, s. 250;
  • 2001, c. 9, s. 512;
  • 2005, c. 54, s. 417;
  • 2007, c. 6, s. 353.
Previous Version
Retention of recordsA company shall retainthe records of the company referred to in subsection 243(1);any record of the company referred to in paragraph 243(2)(a) or (b); andthe central securities register referred to in subsection 253(1).IdemA company shall retain all signature cards and signing authorities or copies thereof relating to any deposit or instrument in respect of which the company has paid an amount to the Bank of Canada pursuant to section 424 until the Bank of Canada notifies the company that they need no longer be retained.EvidenceCopies of the signature cards and signing authorities referred to in subsection (2) may be kept in any manner or form referred to in paragraphs 248(1)(a) and (b) and any such copies, or prints therefrom, are admissible in evidence in the same manner and to the same extent as the original signature cards and signing authorities.ReliefNothing in this section affects the operation of any statute of limitation or prescription or relieves the company from any obligation to the Bank of Canada in respect of any deposit or instrument in respect of which section 424 applies.
RegulationsThe Governor in Council may make regulations respecting the records, papers and documents to be retained by a company and the length of time those records, papers and documents are to be retained.
Securities Registers
Central securities registerA company shall maintain a central securities register in which it shall record the securities, within the meaning of section 84, issued by it in registered form, showing in respect of each class or series of securitiesthe names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;the number of securities held by each security holder; andthe date and particulars of the issue and transfer of each security.Former-Act and continued companiesFor the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by a former-Act company or by a body corporate continued, or amalgamated and continued, as a company under this Act before the continuance, amalgamation or coming into force of this section, as the case may be.Access to central securities registerShareholders and creditors of a company and their personal representatives may examine the central securities register during the usual business hours of the company and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the company is a distributing company, any other person may on payment of a reasonable fee examine the central securities register during the usual business hours of the company and take extracts from it or have copies of it made.Electronic accessThe company may make the information contained in the central securities register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.Affidavit and undertakingA person who wishes to examine the central securities register, take extracts from it or have copies of it made shall provide the company with an affidavit containing their name and address — or if they are an entity, the name and address for service of the entity — and with an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders may be used under section 247. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.Supplementary informationA person who wishes to examine a central securities register, take extracts from it or have copies of it made may on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the company or its agent to provide supplementary information setting out any changes made to the register.When supplementary information to be providedA company or its agent shall provide the supplementary information within10 days after the day on which the central securities register is examined if the changes take place before that day; and10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the central securities register is examined.
  • 1991, c. 45, s. 253;
  • 2001, c. 9, s. 513;
  • 2005, c. 54, s. 418.
Previous Version
Branch registersA company may establish as many branch securities registers as it considers necessary.
AgentsA company may appoint an agent to maintain its central securities register and each of its branch securities registers.
Location of central securities registerThe central securities register of a company shall be maintained by the company at its head office or at any other place in Canada designated by the directors of the company.Location of branch securities registerA branch securities register of a company may be kept at any place in or outside Canada designated by the directors of the company.
Effect of registrationRegistration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.
Particulars in branch registerA branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.Particulars in central registerParticulars of each issue or transfer of a security registered in a branch securities register of a company shall also be kept in the central securities register of the company.
Destruction of certificatesA company, its agent or a trustee within the meaning of section 299 is not required to producea cancelled security certificate in registered form or an instrument referred to in subsection 72(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;a cancelled security certificate in bearer form or an instrument referred to in subsection 72(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; oran instrument referred to in subsection 72(1) or a like instrument, irrespective of its form, after the date of its expiration.
Corporate Name and Seal
Publication of nameA company shall set out its name in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the company.
Corporate sealA company may adopt a corporate seal and change one that it adopted.Validity of unsealed documentsA document executed on behalf of a company is not invalid merely because a corporate seal is not affixed to it.
  • 1991, c. 45, s. 261;
  • 2005, c. 54, s. 419.
Previous Version
[Repealed, 1997, c. 15, s. 366]
Insiders
DefinitionsIn this section and sections 271 to 277,affiliategroupeaffiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2); business combinationregroupement d’entreprisesbusiness combination means an acquisition of all or substantially all of the assets of one body corporate by another, an amalgamation of two or more bodies corporate or any similar reorganization between two or more bodies corporate; calloption d’achatcall means an option, transferable by delivery, to demand delivery of a specified number or amount of shares at a fixed price within a specified time but does not include an option or right to acquire shares of the body corporate that granted the option or right to acquire; distributing company[Repealed, 2005, c. 54, s. 420]insider[Repealed, 2005, c. 54, s. 420]officerdirigeant d’une sociétéofficer , in relation to a company, means an officer as defined in paragraph (a) of the definition “officer” in section 2, orany natural person who performs functions for the company similar to those performed by a person referred to in paragraph (a) of the definition “officer” in section 2;putoption de venteput means an option, transferable by delivery, to deliver a specified number or amount of shares at a fixed price within a specified time; shareactionshare means a voting share and includes a security currently convertible into a voting share, anda currently exercisable option or a right to acquire a voting share or a security referred to in paragraph (a).ControlFor the purposes of this section and sections 271 to 277, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).[Repealed, 2005, c. 54, s. 420]
  • 1991, c. 45, s. 270;
  • 2005, c. 54, s. 420.
Previous Version
Insider Reporting
Insider reportAn insider shall submit an insider report in accordance with the regulations.
  • 1991, c. 45, s. 271;
  • 1997, c. 15, s. 367;
  • 2005, c. 54, s. 421.
Previous Version
Exemption by SuperintendentOn application by an insider, the Superintendent may in writing and on any terms that the Superintendent thinks fit exempt the insider from any of the requirements of section 271. The exemption may be given retroactive effect and the Superintendent shall publish the partic­ulars of the exemption and the reasons for it in a periodical available to the public.
  • 1991, c. 45, s. 272;
  • 2005, c. 54, s. 421.
Previous Version
[Repealed, 2005, c. 54, s. 421]Previous Version
RegulationsThe Governor in Council may make regulations for carrying out the purposes of sections 271 and 272, includingdefining “insider” for the purposes of sections 271 and section 272;respecting the form and content of an insider report; andrespecting the submission or publication of an insider report.
  • 1991, c. 45, s. 273;
  • 2005, c. 54, s. 421.
Previous Version
[Repealed, 2005, c. 54, s. 421]Previous Version
Insider Trading
Meaning of insiderIn this section, insider means with respect to a distributing companya director or officer of the company;a director or officer of a subsidiary of the company;a director or officer of a body corporate that enters into a business combination with the company; ora person employed or retained by the company.Prohibition — short saleNo insider may knowingly sell, directly or indirectly, a security of a distributing company or of any of the distributing company’s affiliates if the insider does not own or has not fully paid for the security.ExceptionDespite subsection (2), an insider may sell a security that they do not own if they own another security that is convertible into the security that was sold or they own an option or right to acquire the security that was sold, and if within 10 days after the sale theyexercise the conversion privilege, option or right and deliver the security so acquired to the purchaser; ortransfer the convertible security, option or right to the purchaser.Prohibition — calls and putsNo insider may knowingly, directly or indirectly, buy or sell a call or put in respect of a security of a company or of any of the company’s affiliates.
  • 1991, c. 45, s. 275;
  • 2005, c. 54, s. 422.
Previous Version
Civil Remedies
Extended meaning of insiderIn this section and sections 276.1 and 277, insider with respect to a company meansthe company;an affiliate of the company;a director or officer of the company or of any person described in paragraph (b), (d) or (f);a person who beneficially owns directly or indirectly, or who exercises control or direction over or has a combination of ownership, control and direction in respect of, shares of the company carrying more than the prescribed percentage of the voting rights attached to all of the company’s outstanding shares not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;a person, other than a person described in paragraph (f), who is employed or retained by the company or by a person described in paragraph (f);a person who engages in or proposes to engage in any business or professional activity with or on behalf of the company;a person who received material confidential information concerning the company while they were a person described in any of paragraphs (a) to (f);a person who receives material confidential information from a person who is and who they know or ought reasonably to have known is a person described in this subsection, including in this paragraph, or subsection (3) or (4); ora prescribed person.Extended meaning of securityFor the purposes of this section, each of the following is deemed to be a security of a company:a put, call, option or other right or obligation to purchase or sell a security of the company; anda security of another entity, the market price of which varies materially with the market price of the securities of the company.Deemed insider — take-over bid or business combinationFor the purposes of this section and subsection 276.1(1), a person who proposes to make a take-over bid as defined in the regulations for securities of a company or to enter into a business combination with a company is an insider of the company with respect to material confidential information obtained from the company.Deemed insider — affiliate or associateAn insider of a person referred to in subsection (3), or the person’s affiliate or associate, is an insider of the company referred to in that subsection. Paragraphs (1)(b) to (i) apply in making this determination except that references to “company” are to be read as references to “person described in subsection (3)”.Meaning of associateIn subsection (4), associate means with respect to a persona body corporate that the person directly or indirectly controls, determined without regard to paragraph 3(1)(d), or of which they beneficially own shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing or a currently exercisable option or right to purchase the shares or convertible securities;a partner of the person acting on behalf of the partnership of which they are partners;a trust or estate in which the person has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity;a spouse or common-law partner of the person;a child of the person or of their spouse or common-law partner; orif that relative has the same residence as the person, a relative of the person or of their spouse or common-law partner.Insider trading — compensation to sellers and purchasersAn insider of a company who purchases or sells a security of the company with knowledge of confidential information that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the company is liable to compensate the seller or purchaser of the security, as the case may be, for any loss suffered by them as a result of the purchase or sale unless the insider establishes thatthe insider reasonably believed that the information had been generally disclosed;the information was known or ought reasonably to have been known by the seller or purchaser; orthe purchase or sale of the security took place in the prescribed circumstances.Insider trading — compensation to companyThe insider is accountable to the company for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (6) unless they establish the circumstances described in paragraph (6)(a).
  • 1991, c. 45, s. 276;
  • 2005, c. 54, s. 422.
Previous Version
Tipping — compensation to sellers and purchasersAn insider of a company who discloses confidential information with respect to the company that has not been generally disclosed and that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the company is liable to compensate any person who subsequently sells securities of the company to or purchases them from any person who received the information unless the insider establishes thatthe insider reasonably believed that the information had been generally disclosed;the information was known or ought reasonably to have been known by the person who alleges that they suffered the loss;if the insider is not a person described in subsection 276(3) or (4), the disclosure of the information was necessary in the course of their business; orif the insider is a person described in subsection 276(3) or (4), the disclosure of the information was necessary to effect the take-over bid or business combination.Tipping — compensation to companyThe insider is accountable to the company for any benefit or advantage received or receivable by them as a result of a disclosure of information as described in subsection (1) unless they establish the circumstances described in paragraph (1)(a), (c) or (d).
  • 2005, c. 54, s. 422.
Measure of damagesThe court may assess damages under subsection 276(6) or 276.1(1) in accord­ance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in respect of a security of a distributing company, the court shall consider the following:if the plaintiff is a purchaser, the price that they paid for the security less the average market price of the security over the 20 trading days immediately following general disclosure of the information; andif the plaintiff is a seller, the average market price of the security over the 20 trading days immediately following general disclosure of the information, less the price that they received for the security.Liability — more than one insiderIf more than one insider is liable under subsection 276(6) or 276.1(1) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.LimitationAn action to enforce a right created by subsection 276(6) or (7) or section 276.1 may be commenced only within two years after discovery of the facts that gave rise to the cause of action.
  • 1991, c. 45, s. 277;
  • 2005, c. 54, s. 422.
Previous Version
Prospectus
DistributionNo person including a company shall distribute securities of a company except in accordance with the regulations made under subsection (2).RegulationsThe Governor in Council may make regulations respecting the distribution of securities of a company, includingrespecting the information that is to be disclosed by a company before the distribution of any of its securities, including the information that is to be included in a prospectus;respecting the manner of disclosure and the form of the information that is to be disclosed; andexempting any class of distribution of securities from the application of subsection (1).
  • 1991, c. 45, s. 278;
  • 2005, c. 54, s. 422.
Previous Version
Order of exemptionOn application by a company or any person proposing to make a distribution, the Superintendent may, by order, exempt that distribution from the application of any regulations made under subsection 278(2) if the Superintendent is satisfied that the company has disclosed or is about to disclose, in compliance with the laws of the relevant jurisdiction, information relating to the distribution that in form and content substantially complies with the requirements of those regulations.ConditionsAn order under subsection (1) may contain any conditions or limitations that the Superintendent deems appropriate.
  • 1991, c. 45, s. 279;
  • 2005, c. 54, s. 422.
Previous Version
Going-private Transactions and Squeeze-out Transactions
Going-private transactionsA company may carry out a going-private transaction if it complies with any applicable provincial securities laws.
  • 1991, c. 45, s. 280;
  • 1994, c. 26, s. 75(F);
  • 1999, c. 31, s. 215;
  • 2005, c. 54, s. 422.
Previous Version
Squeeze-out transactionsNo company may carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the company’s by-laws, the transaction is approved by ordinary resolution of the holders of each class of shares affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:affiliates of the company; andholders of shares that following the squeeze-out transaction would be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.
  • 1991, c. 45, s. 281;
  • 1999, c. 31, s. 216;
  • 2005, c. 54, s. 422.
Previous Version
Right to dissentA holder of shares of a company may dissent if the company resolves to carry out a going-private transaction or squeeze-out transaction that affects those shares.Payment for sharesIn addition to any other right that the shareholder may have, but subject to subsection (25), a shareholder who complies with this section is, when the action approved by the resolution from which the shareholder dissents becomes effective, entitled to be paid by the company the fair value of the shares in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted by the shareholders.No partial dissentA dissenting shareholder may claim under this section only with respect to all of the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder.ObjectionA dissenting shareholder shall send to the company, at or before any meeting of shareholders at which a resolution referred to in subsection (2) is to be voted on by the shareholders, a written objection to the resolution unless the company did not give notice to the shareholder of the purpose of the meeting and their right to dissent.Notice that resolution was adoptedThe company shall within 10 days after the day on which the shareholders adopt the resolution send to each shareholder who sent an objection under subsection (4) notice that the resolution was adopted. If it is necessary for the Minister or Superintendent to approve the transaction within the meaning of subsection 527.2(1) before it becomes effective, the company shall send notice within 10 days after the approval. Notice is not required to be sent to a shareholder who voted for the resolution or one who has withdrawn their objection.Demand for paymentA dissenting shareholder shall within 20 days after receiving the notice referred to in subsection (5) — or, if they do not receive it, within 20 days after learning that the resolution was adopted by the shareholders — send to the company a written notice containingtheir name and address;the number and class of shares in respect of which they dissent; anda demand for payment of the fair value of those shares.Share certificatesA dissenting shareholder shall within 30 days after sending a notice under subsection (6) send the certificates representing the shares in respect of which they dissent to the company or its transfer agent.ForfeitureA dissenting shareholder who fails to comply with subsection (7) has no right to make a claim under this section.Endorsing certificateA company or its transfer agent shall endorse on any share certificate received in accordance with subsection (7) a notice that the holder is a dissenting shareholder under this section and shall without delay return the share certificates to the dissenting shareholder.Suspension of rightsOn sending a notice under subsection (6), a dissenting shareholder ceases to have any rights as a shareholder other than to be paid the fair value of their shares as determined under this section. However, the shareholder’s rights are reinstated as of the date the notice was sent ifthe shareholder withdraws the notice before the company makes an offer under subsection (11);the company fails to make an offer in accordance with subsection (11) and the shareholder withdraws the notice; orthe directors revoke under section 225 the special resolution that was made in respect of the going-private transaction or squeeze-out transaction.Offer to payA company shall, no later than seven days after the later of the day on which the action approved by the resolution from which the shareholder dissents becomes effective and the day on which the company received the notice referred to in subsection (6), send to each dissenting shareholder who sent a noticea written offer to pay for their shares in an amount considered by the directors of the company to be the fair value, accompanied by a statement showing how the fair value was determined; orif subsection (25) applies, a notice that it is unable to lawfully pay dissenting shareholders for their shares.Same termsEvery offer made under subsection (11) for shares of the same class or series is to be on the same terms.PaymentSubject to subsection (25), a company shall pay for the shares of a dissenting shareholder within 10 days after the day on which an offer made under subsection (11) is accepted, but the offer lapses if the company does not receive an acceptance within 30 days after the day on which the offer is made.Court may fix fair valueIf a company fails to make an offer under subsection (11) or if a dissenting shareholder fails to accept an offer, the company may, within 50 days after the day on which the action approved by the resolution from which the shareholder dissents becomes effective or within any further period that a court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder.Shareholder applicationIf a company fails to apply to a court under subsection (14), a dissenting shareholder may apply to a court for the same purpose within a further period of 20 days or within any further period that the court may allow.VenueAn application under subsection (14) or (15) is to be made to a court having jurisdiction where the company’s head office is situated or, if the company carries on business in the province in which the dissenting shareholder resides, in that province.No security for costsA dissenting shareholder is not required to give security for costs in an application made under subsection (14) or (15).PartiesOn an application to a court under subsection (14) or (15),all dissenting shareholders whose shares have not been purchased by the company are to be joined as parties and are bound by the decision of the court;the company shall notify each of them of the date, place and consequences of the application and their right to appear and be heard in person or by counsel; andthe company shall notify the Superintend­ent of the date and place of the application and the Superintendent may appear and be heard in person or by counsel.Powers of courtOn an application to a court under subsection (14) or (15), the court may determine whether any other person is a dissenting shareholder and is to be joined as a party and the court shall then fix a fair value for the shares of all dissenting shareholders.AppraisersThe court may appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders.Final orderThe final order of the court is to be rendered against the company in favour of each dissenting shareholder for the value of the shares as fixed by the court.InterestThe court may allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution from which the shareholder dissents becomes effective until the date of payment.Notice that s. (25) appliesIf subsection (25) applies, the company shall within 10 days after an order is made under subsection (21) notify each dissenting shareholder that it is unable to lawfully pay dissenting shareholders for their shares.Effect of s. (25)If subsection (25) applies, a dissenting shareholder may by written notice delivered to the company within 30 days after receiving notice under subsection (23)withdraw their notice of dissent, in which case the company is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; orretain their status as a claimant against the company, to be paid as soon as the company is able to lawfully pay them or, in a liquidation, to be ranked subordinate to the rights of the company’s creditors but in priority to its shareholders.LimitationA company may not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that the company is or the payment would cause the company to be in contravention of a regulation referred to in subsection 473(1) or (2) or of an order made under subsection 473(3).
  • 1991, c. 45, s. 282;
  • 2005, c. 54, s. 422.
Previous Version
[Repealed, 2005, c. 54, s. 422]Previous Version
[Repealed, 2005, c. 54, s. 422]Previous Version
[Repealed, 2005, c. 54, s. 422]Previous Version
[Repealed, 2005, c. 54, s. 422]Previous Version
[Repealed, 2005, c. 54, s. 422]Previous Version
Compulsory Acquisitions
DefinitionsIn this section and sections 289 to 298,affiliategroupeaffiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2);associate of the offerorassocié du pollicitantassociate of the offeror meansa body corporate that an offeror, directly or indirectly, controls, determined without regard to paragraph 3(1)(d), or of which an offeror beneficially owns shares or securities currently convertible into shares carrying more than 10 per cent of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase the shares or the convertible securities,a partner of the offeror acting on behalf of the partnership of which they are partners,a trust or estate in which the offeror has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity,a spouse or common-law partner of the offeror,a child of the offeror or of the offeror’s spouse or common-law partner, ora relative of the offeror or of the offeror’s spouse or common-law partner, if that relative has the same residence as the offeror;dissenting offereepollicité opposantdissenting offeree means a holder of a share who does not accept a take-over bid or a subsequent holder of the share who acquires it from the first-mentioned holder; exempt offer[Repealed, 2005, c. 54, s. 423]offereepollicitéofferee means a person to whom a take-over bid is made;offeree companysociété pollicitéeofferee company means a company the shares of which are the object of a take-over bid;offerorpollicitantofferor means a person, other than an agent, who makes a take-over bid, and includes two or more persons who, directly or indirectly,make take-over bids jointly or in concert, orintend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made;shareactionshare means a share with or without voting rights and includes a security that is currently convertible into a share, anda currently exercisable option or right to acquire a share or a security referred to in paragraph (a);take-over bidoffre d’achat visant à la mainmisetake-over bid means an offer made by an offeror at approximately the same time to all of the shareholders of a distributing company to acquire all of the shares of a class of issued shares, and includes an offer by a distributing company to repurchase all of the shares of a class. ControlFor the purposes of this section and sections 289 to 298, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).Date of bidA take-over bid is deemed to be dated as of the date on which it is sent.
  • 1991, c. 45, s. 288;
  • 2000, c. 12, s. 299;
  • 2005, c. 54, s. 423.
Previous Version
Right to acquire sharesIf, within one hundred and twenty days after the date of a take-over bid, the bid is accepted by the holders of not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with sections 290 to 295, subsections 296(1) and (2) and section 297, to acquire the shares held by the dissenting offerees.
  • 1991, c. 45, s. 289;
  • 2005, c. 54, s. 424(F).
Previous Version
Offeror’s notice to dissentersAn offeror may acquire shares held by a dissenting offeree by sending by registered mail within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, an offeror’s notice to each dissenting offeree and to the Superintendent stating thatofferees holding not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, have accepted the take-over bid;the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;a dissenting offeree is required to electto transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid, orto demand payment of the fair value of the dissenting offeree’s shares in accordance with sections 294 to 297 by notifying the offeror within twenty days after receipt of the offeror’s notice;a dissenting offeree who does not notify the offeror in accordance with paragraph 291(b) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid; anda dissenting offeree must send the dissenting offeree’s shares to which the take-over bid relates to the offeree company within twenty days after the dissenting offeree receives the offeror’s notice.Notice of adverse claimConcurrently with sending the offeror’s notice under subsection (1), the offeror shall send to the offeree company a notice of adverse claim in accordance with subsection 132(1) with respect to each share held by a dissenting offeree.
  • 1991, c. 45, s. 290;
  • 2005, c. 54, s. 425.
Previous Version
Share certificates and electionA dissenting offeree to whom a notice is sent under subsection 290(1) shall within 20 days after receiving the noticesend to the offeree company the share certificates representing the shares to which the take-over bid relates; andelect to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid or to demand payment of the fair value of the shares in accordance with sections 294 to 297 by notifying the offeror.
  • 1991, c. 45, s. 291;
  • 2005, c. 54, s. 426.
Previous Version
Deemed electionA dissenting offeree who does not notify the offeror in accordance with paragraph 291(b) is deemed to have elected to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid.
  • 2005, c. 54, s. 426.
Payment to offeree companyWithin 20 days after the offeror sends a notice under subsection 290(1), the offeror shall pay the money, or transfer the other consideration, to the offeree company that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 291(b).Consideration in trustAn offeree company is deemed to hold in a fiduciary capacity for the dissenting offerees the money or other consideration it receives under subsection (1).Deposit or custodyAn offeree company shall deposit the money received under subsection (1) in a separate account in another deposit-taking financial institution in Canada and the offeree company shall place any other consideration in the custody of another deposit-taking financial institution in Canada.
  • 1991, c. 45, s. 292;
  • 2005, c. 54, s. 427.
Previous Version
Fiduciary capacity of companyA company that is making a take-over bid to repurchase all of the shares of a class is deemed to hold in a fiduciary capacity for the dissenting shareholders the money that it would have had to pay, and the other consideration that it would have had to transfer, to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 291(b). The company shall within 20 days after a notice is sent under subsection 290(1) deposit the money in a separate account in another deposit-taking financial institution in Canada and place any other consideration in the custody of another deposit-taking financial institution in Canada.
  • 2005, c. 54, s. 428.
Duty of offeree companyWithin thirty days after an offeror sends an offeror’s notice under subsection 290(1), the offeree company shallif the payment or transfer required by subsection 292(1) is made, issue to the offeror a share certificate in respect of the shares that were held by the dissenting offerees;give to each dissenting offeree who elects to transfer shares under paragraph 291(b) and who sends the share certificates as required under paragraph 291(a) the money or other consideration to which they are entitled, disregarding fractional shares, which may be paid for in money; andif the payment or transfer required by subsection 292(1) is made and the money or other consideration is deposited as required by subsections 292(2) and (3) or section 292.1, send to each dissenting offeree who has not sent share certificates as required under paragraph 291(a) a notice stating thattheir shares have been cancelled,the offeree company or its designated person holds in a fiduciary capacity for that offeree the money or other consideration to which they are entitled as payment for or in exchange for the shares, andthe offeree company will, subject to sections 294 to 297, send that money or other consideration to that offeree without delay after receiving the share certificates.
  • 1991, c. 45, s. 293;
  • 2005, c. 54, s. 429.
Previous Version
Court may fix fair valueIf a dissenting offeree has elected to demand payment of the fair value of their shares under paragraph 291(b), the offeror may, within 20 days after it has paid the money or transferred the other consideration under subsection 292(1), apply to a court to fix the fair value of the shares of that dissenting offeree.IdemIf an offeror fails to apply to a court under subsection (1), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.VenueAn application under subsection (1) or (2) shall be made to a court having jurisdiction in the place at which the head office of the company is situated or in the province in which the dissenting offeree resides if the company carries on business in that province.No security for costsA dissenting offeree is not required to give security for costs in an application made under subsection (1) or (2).
  • 1991, c. 45, s. 294;
  • 2005, c. 54, s. 430.
Previous Version
Parties and noticeOn an application under subsection 294(1) or (2),all dissenting offerees who have made elections to demand payment under paragraph 291(b) and whose shares have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; andthe offeror shall notify each affected dissenting offeree of the date, place and consequences of the application and of the dissenting offeree’s right to appear and be heard in person or by counsel at the hearing of the application.
  • 1991, c. 45, s. 295;
  • 2005, c. 54, s. 431.
Previous Version
Powers of courtOn an application to a court under subsection 294(1) or (2), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting offerees.AppraisersA court may in its discretion appoint one or more appraisers to assist the court in fixing a fair value for the shares of a dissenting offeree.Final orderThe final order of a court shall be made against the offeror in favour of each dissenting offeree and for the amount for each dissenting offeree’s shares as fixed by the court.Additional powers of courtIn connection with proceedings under subsection 294(1) or (2), a court may make any order it thinks fit and, without limiting the generality of the foregoing, mayfix the amount of money or other consideration that is deemed to be held in a fiduciary capacity under subsection 292(2) or section 292.1;order that the money or other consideration is to be held in trust by a person other than the offeree company;allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the dissenting offeree sends the share certificates required under section 291 until the date of payment; ororder that any money payable to a shareholder who cannot be found is to be paid to the Minister.
  • 1991, c. 45, s. 296;
  • 2005, c. 54, s. 432.
Previous Version
Status of dissenterWhere no application is made to a court under subsection 294(2) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.
Payment of unclaimed moneyThe Minister shall pay to the Bank of Canada any amounts paid to the Minister under subsection 296(4), and section 372 applies in respect thereof as if the amounts paid under subsection 296(4) had been paid under subsection 371(3).
Obligation to acquire sharesIf a shareholder who holds shares of an offeree company does not receive the notice referred to in subsection 290(1), the shareholder may require the offeror to acquire the shareswithin 90 days after the date of termination of the take-over bid; orif the shareholder did not receive an offer under the take-over bid, within 90 days after the later ofthe date of termination of the take-over bid, andthe day on which the shareholder learned of the take-over bid.Acquisition on same termsIf the shareholder requires the offeror to acquire shares, the offeror shall acquire them on the same terms as those on which the offeror acquires shares from offerees who accept the take-over bid.
  • 2005, c. 54, s. 433.
Trust Indentures
DefinitionsIn this section and sections 300 to 311,event of defaultcas de défautevent of default means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other moneys payable thereunder become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period of time for giving the notice has elapsed;issuerémetteurissuer means a company that has issued, is about to issue or is in the process of issuing subordinated indebtedness;trusteefiduciairetrustee means any person appointed as trustee under the terms of a trust indenture to which a company is a party, and includes any successor trustee;trust indentureacte de fiducietrust indenture means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a company under which the company issues subordinated indebtedness and in which a person is appointed as trustee for the holders of the subordinated indebtedness issued thereunder.
ApplicationSections 301 to 311 apply in respect of a trust indenture if the subordinated indebtedness issued or to be issued under the trust indenture is part of a distribution to the public.
ExemptionThe Superintendent may, in writing, exempt a trust indenture from the application of sections 302 to 311 if, in the Superintendent’s opinion, the trust indenture and the subordinated indebtedness are subject to a law of a province or other jurisdiction, other than Canada, that is substantially equivalent to the provisions of this Act relating to trust indentures.
Conflict of interestNo person shall be appointed as trustee if at the time of the appointment there is a material conflict of interest between the person’s role as trustee and any other role of the person.Eliminating conflict of interestA trustee shall, within ninety days after the trustee becomes aware that a material conflict of interest exists,eliminate the conflict of interest; orresign from office.
Validity despite conflictA trust indenture and any subordinated indebtedness issued thereunder are valid notwithstanding a material conflict of interest of the trustee.
Removal of trusteeIf a trustee is appointed in contravention of subsection 302(1) or if a trustee contravenes subsection 302(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.
Trustee qualificationsA trustee, or at least one of the trustees if more than one is appointed, must bea company that is a trust company pursuant to subsection 57(2); ora body corporate that is incorporated by or under an Act of the legislature of a province and authorized to carry on business as a trustee.
List of security holdersA holder of subordinated indebtedness issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, within fifteen days after the delivery to the trustee of the statutory declaration, a list setting outthe names and addresses of the registered holders of the outstanding subordinated indebtedness,the principal amount of outstanding subordinated indebtedness owned by each such holder, andthe aggregate principal amount of subordinated indebtedness outstandingas shown on the records maintained by the trustee on the day the statutory declaration is delivered to that trustee.Duty of issuerOn the demand of a trustee, the issuer of subordinated indebtedness shall provide the trustee with the information required to enable the trustee to comply with subsection (1).Where applicant is entityWhere the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection shall be made by a director or an officer of the entity or a person acting in a similar capacity.Contents of statutory declarationThe statutory declaration required under subsection (1) must statethe name and address of the person requiring the trustee to provide the list and, if the person is an entity, the address for service thereof; andthat the list will not be used except as permitted by subsection (5).Use of listNo person shall use a list obtained under this section except in connection withan effort to influence the voting of the holders of subordinated indebtedness;an offer to acquire subordinated indebtedness; orany other matter relating to the subordinated indebtedness or the affairs of the issuer or guarantor thereof.
Compliance with trust indenturesAn issuer or a guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall, before undertakingthe issue, certification and delivery of subordinated indebtedness under the trust indenture, orthe satisfaction and discharge of the trust indenture,provide the trustee with evidence of compliance with the conditions in the trust indenture in respect thereof.Compliance by issuer or guarantorOn the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.Evidence of complianceThe following documents constitute evidence of compliance for the purposes of subsections (1) and (2):a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; andan opinion or report of the auditors of the issuer or guarantor, or such other accountant as the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors.Further evidence of complianceThe evidence of compliance referred to in subsection (3) shall include a statement by the person giving the evidencedeclaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; anddeclaring that the person has made such examination or investigation as the person believes necessary to enable the statements to be made or the opinions contained or expressed therein to be given.
Trustee may require evidenceOn the request of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with evidence in such form as the trustee requires of compliance with any condition thereof relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.Certificate of complianceAt least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.
Notice of defaultA trustee shall, within thirty days after the trustee becomes aware of the occurrence thereof, give to the holders of subordinated indebtedness issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the subordinated indebtedness to withhold the notice and so informs the issuer and guarantor in writing.
Duty of careIn exercising a trustee’s powers and discharging a trustee’s duties, the trustee shallact honestly and in good faith with a view to the best interests of the holders of the subordinated indebtedness issued under the trust indenture; andexercise the care, diligence and skill of a reasonably prudent trustee.Reliance on statementsNotwithstanding subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.
No exculpationNo term of a trust indenture or of any agreement between a trustee and the holders of subordinated indebtedness issued thereunder or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by sections 302, 306 and 309 and subsection 310(1).
Financial Statements and AuditorsAnnual Financial Statement
Financial yearThe financial year of a company ends, at the election of the company in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.First financial yearWhere a company has, after the first day of July in any year, obtained an order approving the commencement and carrying on of business, the first financial year of the company ends, at the election of the company in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.
Annual financial statementThe directors of a company shall place before the shareholders at every annual meetinga comparative annual financial statement (in this Act referred to as an “annual statement”) relating separately tothe financial year immediately preceding the meeting, andthe financial year, if any, immediately preceding the financial year referred to in subparagraph (i);the report of the auditor of the company; andany further information respecting the financial position of the company and the results of its operations required by the by-laws of the company to be placed before the shareholders at the annual meeting.Annual statement — contentsWith respect to each of the financial years to which it relates, the annual statement of a company must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accord­ance with the accounting principles referred to in subsection (4), the financial position of the company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the company for that financial year.Additional informationA company shall include with its annual statementa list of the subsidiaries of the company, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 457 or pursuant to a realization of security in accordance with section 458 and which the company would not otherwise be permitted to hold, showing, with respect to each subsidiary,its name and the address of its head or principal office,the book value of the aggregate of any shares of the subsidiary beneficially owned by the company and by other subsidiaries of the company, andthe percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the company and by other subsidiaries of the company; andsuch other information as the Governor in Council may, by order, require in such form as may be prescribed.Accounting principlesThe financial statements referred to in subsection (1), paragraph (3)(b) and subsection 315(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.RegulationsThe Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).
  • 1991, c. 45, s. 313;
  • 1997, c. 15, s. 369;
  • 2001, c. 9, s. 514;
  • 2005, c. 54, s. 434.
Previous Version
Annual statement — approvalThe directors of a company shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature ofthe chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the company authorized by the directors to sign in the stead of the chief executive officer; andone director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.Condition precedent to publicationA company shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).
  • 1991, c. 45, s. 314;
  • 2005, c. 54, s. 435.
Previous Version
Statements: subsidiariesA company shall keep at its head office a copy of the current financial statements of each subsidiary of the company.ExaminationSubject to this section, the shareholders of a company and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the company and may take extracts therefrom free of charge.Barring examinationA company may refuse to permit an examination under subsection (2) by any person.Application for orderWithin fifteen days after a refusal under subsection (3), the company shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the company to permit the examination or, if it is satisfied that the examination would be detrimental to the company or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.Notice to SuperintendentA company shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.
Annual statement — distributionA company shall, no later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 155(1)(b) in lieu of the annual meeting, send to each shareholder a copy of the documents referred to in subsections 313(1) and (3) unless that time period is waived by the shareholder.ExceptionA company is not required to comply with subsection (1) with respect to a shareholder who has informed the company, in writing, that the shareholder does not wish to receive the annual statement.Effect of defaultWhere a company is required to comply with subsection (1) and the company does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.
  • 1991, c. 45, s. 316;
  • 1997, c. 15, s. 370;
  • 2005, c. 54, s. 436.
Previous Version
Copy to SuperintendentSubject to subsection (2), a company shall send to the Superintendent a copy of the documents referred to in subsections 313(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the company.Later filingIf a company’s shareholders sign a resolution under paragraph 155(1)(b) in lieu of an annual meeting, the company shall send a copy of the documents referred to in subsections 313(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.
  • 1991, c. 45, s. 317;
  • 1997, c. 15, s. 371;
  • 2001, c. 9, s. 515.
Auditor
DefinitionsFor the purposes of this section and sections 319 to 338,firm of accountantscabinet de comptablesfirm of accountants means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting;membermembremember, in relation to a firm of accountants, meansan accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting, oran accountant who is an employee of a firm of accountants.
Appointment of auditorThe shareholders of a company shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint an auditor to hold office until the close of the next annual meeting.Remuneration of auditorThe remuneration of an auditor may be fixed by ordinary resolution of the shareholders but, if not so fixed, shall be fixed by the directors.
Qualification of auditorA natural person or firm of accountants is qualified to be an auditor of a company ifin the case of a natural person, the person is an accountant whois a member in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,has at least five years experience at a senior level in performing audits of a financial institution,is ordinarily resident in Canada, andis independent of the company; andin the case of a firm of accountants, the member of the firm jointly designated by the firm and the company to conduct the audit of the company on behalf of the firm is qualified in accordance with paragraph (a).IndependenceFor the purposes of subsection (1),independence is a question of fact; anda person is deemed not to be independent of a company if that person, a business partner of that person or a firm of accountants of which that person is a memberis a business partner, director, officer or employee of the company or of any affiliate of the company or is a business partner of any director, officer or employee of the company or of any affiliate of the company,beneficially owns or controls, directly or indirectly, a material interest in the shares of the company or of any affiliate of the company, orhas been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the company within the two years immediately preceding the person’s proposed appointment as auditor of the company, other than an affiliate that is a subsidiary of the company acquired pursuant to section 457 or through a realization of security pursuant to section 458.Business partnersFor the purposes of subsection (2),in the case of the appointment of a natural person as the auditor of a company, a business partner of the person includes a shareholder of the business partner; andin the case of the appointment of a firm of accountants as the auditor of a company, a business partner of a member of the firm includes another member of the firm and a shareholder of the firm or of a business partner of the member.Notice of designationWithin fifteen days after the appointment of a firm of accountants as auditor of a company, the company and the firm of accountants shall jointly designate a member of the firm who meets the qualifications described in subsection (1) to conduct the audit of the company on behalf of the firm and the company shall forthwith notify the Superintendent in writing of the designation.New designationWhere for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the company, the company and the firm of accountants may jointly designate another member of the same firm of accountants who meets the qualifications described in subsection (1) to conduct the audit of the company and the company shall forthwith notify the Superintendent in writing of the designation.Deemed vacancyIn any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the company, there shall be deemed to be a vacancy in the office of auditor of the company.
  • 1991, c. 45, s. 320;
  • 2001, c. 9, s. 516;
  • 2005, c. 54, s. 437.
Previous Version
Duty to resignAn auditor who ceases to be qualified under section 320 shall resign forthwith after the auditor, where the auditor is a natural person, or any member of the firm of accountants, where the auditor is a firm of accountants, becomes aware that the auditor or the firm has ceased to be so qualified.Disqualification orderAny interested person may apply to a court for an order declaring that an auditor of a company has ceased to be qualified under section 320 and declaring the office of auditor to be vacant.
Revocation of appointmentThe shareholders of a company may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.IdemThe Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 319(1) or section 324 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the company addressed to the usual place of business of the auditor and the company.Filling vacancyA vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 324.
Ceasing to hold officeAn auditor of a company ceases to hold office whenthe auditor resigns;the auditor, where the auditor is a natural person, dies; orthe appointment of the auditor is revoked by the shareholders or the Superintendent.Effective date of resignationThe resignation of an auditor becomes effective at the time a written resignation is sent to the company or at the time specified in the resignation, whichever is later.
Filling vacancySubject to subsection 322(3), where a vacancy occurs in the office of auditor of a company, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.Where Superintendent may fill vacancyWhere the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.Designation of member of firmWhere the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the company on behalf of the firm.
Right to attend meetingsThe auditor of a company is entitled to receive notice of every meeting of shareholders and, at the expense of the company, to attend and be heard thereat on matters relating to the duties of the auditor.Duty to attend meetingIf a director or shareholder of a company, whether or not the shareholder is entitled to vote at the meeting, gives written notice, not less than ten days before a meeting of shareholders, to an auditor or former auditor of the company that the director or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor shall attend the meeting at the expense of the company and answer questions relating to the auditor’s or former auditor’s duties as auditor.Notice to companyA director or shareholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the company and the company shall forthwith send a copy thereof to the Superintendent.Superintendent may attendThe Superintendent may attend and be heard at any meeting referred to in subsection (2).
Statement of auditorAn auditor of a company whoresigns,receives a notice or otherwise learns of a meeting of shareholders called for the purpose of revoking the appointment of the auditor, orreceives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed in the auditor’s stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,shall submit to the company and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.Other statementsIn the case of a proposed replacement of an auditor whether because of removal or the expiry of their term, the company shall make a statement of the reasons for the proposed replacement and the proposed replacement auditor may make a statement in which they comment on those reasons.Statements to be sentThe company shall send a copy of the statements referred to in subsections (1) and (1.1) without delay to every shareholder entitled to vote at the annual meeting of shareholders and to the Superintendent.
  • 1991, c. 45, s. 326;
  • 2005, c. 54, s. 438.
Previous Version
Duty of replacement auditorWhere an auditor of a company has resigned or the appointment of an auditor has been revoked, no person or firm shall accept an appointment as auditor of the company or consent to be the auditor of the company until the person or firm has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.ExceptionNotwithstanding subsection (1), a person or firm may accept an appointment or consent to be appointed as auditor of a company if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.Effect of non-complianceUnless subsection (2) applies, an appointment as auditor of a company is void if subsection (1) has not been complied with.
Auditor’s examinationThe auditor of a company shall make such examination as the auditor considers necessary to enable the auditor to report on the annual statement and on other financial statements required by this Act to be placed before the shareholders, except such annual statements or parts thereof as relate to the period referred to in subparagraph 313(1)(a)(ii).Auditing standardsThe auditor’s examination referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants.
Right to informationOn the request of the auditor of a company, the present or former directors, officers, employees or agents of the company shall, to the extent that such persons are reasonably able to do so,permit access to such records, assets and security held by the company or any entity in which the company has a substantial investment, andprovide such information and explanationsas are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the company.Directors to provide informationOn the request of the auditor of a company, the directors of the company shall, to the extent that they are reasonably able to do so,obtain from the present or former directors, officers, employees and agents of any entity in which the company has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the company; andprovide the auditor with the information and explanations so obtained.No civil liabilityA person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.
Auditor’s report and extended examinationThe Superintendent may, in writing, require that the auditor of a company report to the Superintendent on the extent of the auditor’s procedures in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.Special examinationThe Superintendent may, in writing, require that the auditor of a company make a particular examination relating to the adequacy of the procedures adopted by the company for the safety of its creditors and shareholders, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.IdemThe Superintendent may direct that a special audit of a company be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose an accountant or a firm of accountants qualified pursuant to subsection 320(1) to be an auditor of the company.Expenses payable by companyThe expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the company on being approved in writing by the Superintendent.
  • 1991, c. 45, s. 330;
  • 1999, c. 31, s. 217(F).
Auditor’s reportThe auditor shall, not less than twenty-one days before the date of the annual meeting of the shareholders of the company, make a report in writing to the shareholders on the annual statement referred to in subsection 313(1).Audit for shareholdersIn each report required under subsection (1), the auditor shall state whether, in the auditor’s opinion, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 313(4), the financial position of the company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the company for that financial year.Auditor’s remarksIn each report referred to in subsection (2), the auditor shall include such remarks as the auditor considers necessary whenthe examination has not been made in accordance with the auditing standards referred to in subsection 328(2);the annual statement has not been prepared on a basis consistent with that of the preceding financial year; orthe annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 313(4), the financial position of the company as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the company for that financial year.
Report on directors’ statementThe auditor of a company shall, if required by the shareholders, audit and report to the shareholders on any financial statement submitted by the directors to the shareholders, and the report shall state whether, in the auditor’s opinion, the financial statement presents fairly the information required by the shareholders.Making of reportA report of the auditor made under subsection (1) shall be attached to the financial statement to which it relates and a copy of the statement and report shall be sent by the directors to every shareholder and to the Superintendent.
Report to officersIt is the duty of the auditor of a company to report in writing to the chief executive officer and chief financial officer of the company any transactions or conditions that have come to the auditor’s attention affecting the well-being of the company that in the auditor’s opinion are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor shall, as occasion requires, make a report to those officers in respect oftransactions of the company that have come to the auditor’s attention and that in the auditor’s opinion have not been within the powers of the company, andloans owing to the company by any person the aggregate amount of which exceeds one half of one per cent of the regulatory capital of the company and in respect of which, in the auditor’s opinion, loss to the company is likely to occur,but when a report required under paragraph (b) has been made in respect of loans to any person, it is not necessary to report again in respect of loans to that person unless, in the opinion of the auditor, the amount of the loss likely to occur has increased.Transmission of reportWhere the auditor of a company makes a report under subsection (1),the auditor shall transmit the report, in writing, to the chief executive officer and chief financial officer of the company;the report shall be presented to the first meeting of the directors following its receipt;the report shall be incorporated in the minutes of that meeting; andthe auditor shall, at the time of transmitting the report to the chief executive officer and chief financial officer, provide the audit committee of the company and the Superintendent with a copy.
  • 1991, c. 45, s. 333;
  • 2005, c. 54, s. 439.
Previous Version
Auditor of subsidiariesA company shall take all necessary steps to ensure that its auditor is duly appointed as the auditor of each of its subsidiaries.Subsidiary outside CanadaSubsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of the auditor of the company as the auditor of that subsidiary.ExceptionSubsection (1) does not apply in respect of any particular subsidiary where the company, after having consulted its auditor, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the company.
Auditor’s attendanceThe auditor of a company is entitled to receive notice of every meeting of the audit committee and the conduct review committee of the company and, at the expense of the company, to attend and be heard at that meeting.AttendanceIf so requested by a member of the audit committee, the auditor shall attend every meeting of the audit committee held during the member’s term of office.
  • 1991, c. 45, s. 335;
  • 1993, c. 34, s. 125(F).
Calling meetingThe auditor of a company or a member of the audit committee may call a meeting of the audit committee.Right to interviewThe chief internal auditor of a company or any officer or employee of the company acting in a similar capacity shall, at the request of the auditor of the company and on receipt of reasonable notice, meet with the auditor.
Notice of errorsA director or an officer of a company shall forthwith notify the audit committee and the auditor of the company of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or any former auditor has reported.Error noted by auditorIf the auditor or a former auditor of a company is notified or becomes aware of an error or misstatement in an annual statement or other financial statement on which the auditor reported and in the auditor’s opinion the error or misstatement is material, the auditor or former auditor shall inform each director of the company accordingly.Duty of directorsWhen under subsection (2) the auditor or a former auditor of a company informs the directors of an error or misstatement in an annual statement or other financial statement, the directors shallprepare and issue a revised annual statement or financial statement; orotherwise inform the shareholders and the Superintendent of the error or misstatement.
Qualified privilege for statementsAny oral or written statement or report made under this Act by the auditor or a former auditor of a company has qualified privilege.
Remedial Actions
Derivative actionSubject to subsection (2), a complainant or the Superintendent may apply to a court for leave to bring an action under this Act in the name and on behalf of a company or any of its subsidiaries, or to intervene in an action under this Act to which the company or a subsidiary of the company is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the company or the subsidiary.Conditions precedentNo action may be brought and no intervention in an action may be made under subsection (1) by a complainant unless the court is satisfied thatthe complainant has, not less than 14 days before bringing the application or as otherwise ordered by the court, given notice to the directors of the company or the company’s subsidiary of the complainant’s intention to apply to the court under subsection (1) if the directors of the company or the company’s subsidiary do not bring, diligently prosecute or defend or discontinue the action;the complainant is acting in good faith; andit appears to be in the interests of the company or the subsidiary that the action be brought, prosecuted, defended or discontinued.Notice to SuperintendentA complainant under subsection (1) shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.
  • 1991, c. 45, s. 339;
  • 2005, c. 54, s. 440.
Previous Version
Powers of courtIn connection with an action brought or intervened in under subsection 339(1), the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,an order authorizing the Superintendent, the complainant or any other person to control the conduct of the action;an order giving directions for the conduct of the action;an order directing that any amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to former and present security holders of the company or of the subsidiary instead of to the company or to the subsidiary; andan order requiring the company or the subsidiary to pay reasonable legal fees incurred by the Superintendent or the complainant in connection with the action.JurisdictionNotwithstanding subsection (1), the court may not make any order in relation to any matter that would, under this Act, require the approval of the Minister or the Superintendent.
Status of shareholder approvalAn application made or an action brought or intervened in under subsection 339(1) or section 343 need not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the company or its subsidiary has been or might be approved by the shareholders of the company or subsidiary or both, but evidence of approval by the shareholders may be taken into account by the court in making an order under section 340.Court approval to discontinueAn application made or an action brought or intervened in under subsection 339(1) or section 343 shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given on such terms as the court thinks fit and, if the court determines that the interests of any complainant might be substantially affected by any stay, discontinuance, settlement or dismissal, the court may order any party to the application or action to give notice to the complainant.
No security for costsA complainant is not required to give security for costs in any application made or any action brought or intervened in under subsection 339(1) or section 343.Interim costsIn an application made or an action brought or intervened in under subsection 339(1) or section 343, the court may at any time order the company or its subsidiary to pay to the complainant interim costs, including legal fees and disbursements, but the complainant may be held accountable by the court for those interim costs on final disposition of the application or action.
  • 1991, c. 45, s. 342;
  • 2005, c. 54, s. 441(F).
Previous Version
Application to rectify recordsIf the name of a person is alleged to be or to have been wrongly entered or retained in, or wrongly deleted or omitted from, the securities register or any other record of a company, the company, a security holder of the company or any aggrieved person may apply to a court for an order that the securities register or record be rectified.Notice to SuperintendentAn applicant under this section shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.Powers of courtIn connection with an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,an order requiring the securities register or other record of the company to be rectified;an order restraining a company from calling or holding a meeting of shareholders or paying a dividend before the rectification;an order determining the right of a party to the proceedings to have the party’s name entered or retained in, or deleted or omitted from, the securities register or records of the company, whether the issue arises between two or more security holders or alleged security holders, or between the company and any security holder or alleged security holder; andan order compensating a party who has incurred a loss.
Liquidation and Dissolution
Definition of “court”For the purposes of subsections 351(1) and 352(1) and (2), sections 353 to 357, subsection 358(1), sections 360 and 362 to 364, subsections 368(3) and (4) and section 373, court means a court having jurisdiction in the place where the company has its head office.
Application of subsection (2) and sections 346 to 373Subsection (2) and sections 346 to 373 do not apply to a company that is insolvent within the meaning of the Winding-up and Restructuring Act.Staying proceedings on insolvencyAny proceedings taken under this Part to dissolve or to liquidate and dissolve a company shall be stayed if the company is at any time found to be insolvent within the meaning of the Winding-up and Restructuring Act.
  • 1991, c. 45, s. 345;
  • 1996, c. 6, s. 167.
Returns to SuperintendentA liquidator appointed under this Part to wind up the business of a company shall provide the Superintendent with such information relating to the business and affairs of the company in such form as the Superintendent requires.
Simple Liquidation
No property and no liabilitiesA company that has no property and no liabilities may, if authorized by a special resolution of the shareholders or, if there are no shareholders, by a resolution of all the directors, apply to the Minister for letters patent dissolving the company.Dissolution by letters patentWhere the Minister has received an application under subsection (1) and is satisfied that all the circumstances so warrant, the Minister may issue letters patent dissolving the company.Effect of letters patentA company in respect of which letters patent are issued under subsection (2) ceases to exist on the day stated in the letters patent.
Proposing liquidationThe voluntary liquidation and dissolution of a company, other than a company referred to in subsection 347(1),may be proposed by its directors; ormay be initiated by way of a proposal made by a shareholder who is entitled to vote at an annual meeting of shareholders in accordance with sections 146 and 147.Terms must be set outA notice of any meeting of shareholders at which the voluntary liquidation and dissolution of a company is to be proposed shall set out the terms of the proposal.
Shareholders’ resolutionWhere the voluntary liquidation and dissolution of a company is proposed, the company may apply to the Minister for letters patent dissolving the company if authorized by a special resolution of the shareholders or, where the company has issued more than one class of shares, by special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote.
Approval of Minister requiredNo action directed toward the voluntary liquidation and dissolution of a company shall be taken by a company, other than as provided in sections 348 and 349, until an application made by the company pursuant to section 349 has been approved by the Minister.Conditional approvalWhere the Minister is satisfied on the basis of an application made pursuant to section 349 that the circumstances warrant the voluntary liquidation and dissolution of a company, the Minister may, by order, approve the application.Effect of approvalWhere the Minister has approved an application made pursuant to section 349 with respect to a company, the company shall not carry on business except to the extent necessary to complete its voluntary liquidation.Liquidation processWhere the Minister has approved an application made pursuant to section 349 with respect to a company, the company shallcause notice of the approval to be sent to each known claimant against and creditor of the company;publish notice of the approval once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company transacted any business within the preceding twelve months;proceed to collect its property, dispose of property that is not to be distributed in kind to its shareholders, discharge all its obligations and do all other acts required to liquidate its business;where the company is a trust company pursuant to subsection 57(2), make such arrangements as are necessary to transfer to another company that is a trust company pursuant to subsection 57(2) money or other assets held in trust by the company, other than assets held in respect of guaranteed trust money; andafter giving the notice required under paragraphs (a) and (b) and adequately providing for the payment or discharge of all its obligations, distribute its remaining property, either in money or in kind, among its shareholders according to their respective rights.
Dissolution instrumentUnless a court has made an order in accordance with subsection 352(1), the Minister may, if satisfied that the company has complied with subsection 350(4) and that all the circumstances so warrant, issue letters patent dissolving the company.Company dissolvedA company in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the day stated in the letters patent.
Court-supervised Liquidation
Application for court supervisionThe Superintendent or any interested person may, at any time during the liquidation of a company, apply to a court for an order for the continuance of the voluntary liquidation under the supervision of the court in accordance with this section and sections 353 to 365 and on such application the court may so order and make any further order it thinks fit.IdemAn application under subsection (1) to a court to supervise a voluntary liquidation shall state the reasons, verified by an affidavit of the applicant, why the court should supervise the liquidation.Notice to SuperintendentWhere a person, other than the Superintendent, makes an application under subsection (1), the person shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.
Court supervision thereafterWhen a court makes an order under subsection 352(1), the liquidation of the company shall continue under the supervision of the court.Commencement of liquidationThe supervision of the liquidation of a company by the court pursuant to an order made under subsection 352(1) commences on the day the order is made.
Powers of courtIn connection with the liquidation and dissolution of a company, the court may, where it is satisfiedthat the company is able to pay or adequately provide for the discharge of all its obligations, andin the case of a company that is a trust company pursuant to subsection 57(2), that the company is able to make satisfactory arrangements for the protection of persons in relation to whom the company is acting in a fiduciary capacity,make any order it thinks fit including, without limiting the generality of the foregoing,an order to liquidate,an order appointing a liquidator, with or without security, fixing a liquidator’s remuneration and replacing a liquidator,an order appointing inspectors or referees, specifying their powers, fixing their remuneration and replacing inspectors or referees,an order determining the notice to be given to any interested person, or dispensing with notice to any person,an order determining the validity of any claims made against the company,an order, at any stage of the proceedings, restraining the directors and officers of the company fromexercising any of their powers, orcollecting or receiving any debt or other property of the company, and from paying out or transferring any property of the company, except as permitted by the court,an order determining and enforcing the duty or liability of any present or former director, officer or shareholderto the company, orfor an obligation of the company,an order approving the payment, satisfaction or compromise of claims against the company and the retention of assets for that purpose, and determining the adequacy of provisions for the payment, discharge or transfer of any trust obligation or other obligation of the company, whether liquidated, unliquidated, future or contingent,with the concurrence of the Superintendent, an order providing for the disposal or destruction of the documents, records or registers of the company,on the application of a creditor, an inspector or the liquidator, an order giving directions on any matter arising in the liquidation,after notice has been given to all interested parties, an order relieving the liquidator from any omission or default on such terms as the court thinks fit and confirming any act of the liquidator,subject to sections 361 to 363, an order approving any proposed, interim or final distribution to shareholders, if any, or incorporators, in money or in property,an order disposing of any property belonging to creditors, shareholders and incorporators who cannot be found,on the application of any director, officer, shareholder, incorporator, creditor or the liquidator,an order staying the liquidation proceedings on such terms and conditions as the court thinks fit,an order continuing or discontinuing the liquidation proceedings, oran order to the liquidator to restore to the company all of its remaining property, andafter the liquidator has rendered the liquidator’s final account to the court, an order directing the company to apply to the Minister for letters patent dissolving the company.
  • 1991, c. 45, s. 354;
  • 2005, c. 54, s. 442(F).
Previous Version
Cessation of business and powersWhere a court makes an order for the liquidation of a company,the company continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation; andthe powers of the directors and shareholders, if any, are vested in the liquidator and cease to be vested in the directors or shareholders, except as specifically authorized by the court.Delegation by liquidatorA liquidator may delegate any of the powers vested by paragraph (1)(b) to the directors or shareholders, if any.
Appointment of liquidatorWhen making an order for the liquidation of a company or at any time thereafter, the court may appoint any person, including a director, an officer or a shareholder of the company or any other company, as liquidator of the company.
Vacancy in liquidator’s officeWhere an order for the liquidation of a company has been made and the office of liquidator is or becomes vacant, the property of the company is under the control of the court until the office of liquidator is filled.
Duties of liquidatorA liquidator shallforthwith after appointment give notice thereof to the Superintendent and to each claimant and creditor of the company known to the liquidator;forthwith after appointment publish notice thereof once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company has transacted any business within the preceding twelve months, requiringany person indebted to the company to render an account and pay to the liquidator at the time and place specified in the notice any amount owing,any person possessing property of the company to deliver it to the liquidator at the time and place specified in the notice, andany person having a claim against the company, whether liquidated, unliquidated, future or contingent, to present particulars thereof in writing to the liquidator not later than sixty days after the first publication of the notice;take into custody and control the property of the company;if the company is a trust company pursuant to subsection 57(2), make such arrangements as are necessary to transfer to another company that is a trust company pursuant to subsection 57(2) money or other assets held in trust by the company, other than assets held in respect of guaranteed trust money;open and maintain a trust account for the moneys received by the liquidator in the course of the liquidation of the company;keep accounts of the moneys received and paid out by the liquidator in the course of the liquidation of the company;maintain separate lists of each class of creditors, shareholders and other persons having claims against the company;if at any time the liquidator determines that the company is unable to pay or adequately provide for the discharge of its obligations, apply to the court for directions;deliver to the court and to the Superintendent, at least once in every twelve month period after the liquidator’s appointment or more often as the court requires, the annual statement of the company prepared in accordance with subsection 313(1) or prepared in such manner as the liquidator thinks proper or as the court requires; andafter the final accounts are approved by the court, distribute any remaining property of the company among the shareholders, if any, or incorporators, according to their respective rights.Powers of liquidatorA liquidator mayretain lawyers, notaries, accountants, appraisers and other professional advisers;bring, defend or take part in any civil, criminal or administrative action or proceeding in the name and on behalf of the company;carry on the business of the company as required for an orderly liquidation;sell by public auction or private sale any property of the company;if the company is a trust company pursuant to subsection 57(2), make such arrangements as are necessary to transfer to another company that is a trust company pursuant to subsection 57(2) money or other assets held in trust by the company, other than assets held in respect of guaranteed trust money;do all acts and execute documents in the name and on behalf of the company;borrow money on the security of the property of the company;settle or compromise any claims by or against the company; anddo all other things necessary for the liquidation of the company and distribution of its property.
Due diligenceA liquidator is not liable if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith onfinancial statements of the company represented to the liquidator by an officer of the company or in a written report of the auditor of the company fairly to reflect the financial condition of the company; ora report of a person whose profession lends credibility to a statement made by them.
  • 1991, c. 45, s. 359;
  • 2005, c. 54, s. 443.
Previous Version
Examination of othersWhere a liquidator has reason to believe that any property of the company is in the possession or under the control of a person or that a person has concealed, withheld or misappropriated any such property, the liquidator may apply to the court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.Restoration and compensationWhere an examination conducted pursuant to subsection (1) discloses that a person has concealed, withheld or misappropriated any property of the company, the court may order that person to restore the property or pay compensation to the liquidator.
Costs of liquidationA liquidator shall pay the costs of liquidation out of the property of the company and shall pay or make adequate provision for all claims against the company.
Final accountsWithin one year after the appointment of a liquidator and after paying or making adequate provision for all claims against the company, the liquidator shall apply to the courtfor approval of the final accounts of the liquidator and for an order permitting the distribution, in money or in kind, of the remaining property of the company to its shareholders, if any, or to the incorporators, according to their respective rights; orfor an extension of time, setting out the reasons therefor.Shareholder applicationIf a liquidator fails to make the application required by subsection (1), a shareholder of the company or, if there are no shareholders of the company, an incorporator may apply to the court for an order for the liquidator to show cause why a final accounting and distribution should not be made.Notification of final accountsA liquidator shall give notice of the liquidator’s intention to make an application under subsection (1) to the Superintendent, to each inspector appointed under section 354, to each shareholder of the company or, if there are no shareholders, to each incorporator and to any person who provided a security or fidelity bond for the liquidation.PublicationThe liquidator shall publish the notice required under subsection (3) in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company has transacted any business within the preceding twelve months or as otherwise directed by the court.
Final orderIf the court approves the final accounts rendered by a liquidator, the court shall make an orderdirecting the company to apply to the Minister for letters patent dissolving the company;directing the custody or disposal of the documents, records and registers of the company; anddischarging the liquidator except in respect of the duty of a liquidator under subsection (2).Delivery of orderThe liquidator shall forthwith send a certified copy of the order referred to in subsection (1) to the Superintendent.
Right to distribution of moneyIf in the course of the liquidation of a company the shareholders resolve to, or the liquidator proposes to,exchange all or substantially all of the remaining property of the company for securities of another entity that are to be distributed to the shareholders or to the incorporators, ordistribute all or part of the remaining property of the company to the shareholders or to the incorporators in kind,a shareholder or incorporator may apply to the court for an order requiring the distribution of the remaining property of the company to be in money.Powers of courtOn an application under subsection (1), the court may orderall of the remaining property of the company to be converted into and distributed in money; orthe claim of any shareholder or incorporator applying under this section to be satisfied by a distribution in money.Order by courtWhere an order is made by a court under paragraph (2)(b), the courtshall fix a fair value on the share of the property of the company attributable to the shareholder or incorporator;may in its discretion appoint one or more appraisers to assist the court in fixing a fair value in accordance with paragraph (a); andshall render a final order against the company in favour of the shareholder or incorporator for the amount of the share of the property of the company attributable to the shareholder or incorporator.
Dissolution by letters patentOn an application made pursuant to an order under paragraph 363(1)(a), the Minister may issue letters patent dissolving the company.Company dissolvedA company in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the date of the issuance of the letters patent.
General
Definition of shareholder and incorporatorIn sections 368 and 369, shareholder and incorporator include the heirs and personal representatives of a shareholder or incorporator.
Continuation of actionsNotwithstanding the dissolution of a company under this Part,a civil, criminal or administrative action or proceeding commenced by or against the company before its dissolution may be continued as if the company had not been dissolved;a civil, criminal or administrative action or proceeding may be brought against the company within two years after its dissolution as if the company had not been dissolved; andany property that would have been available to satisfy any judgment or order if the company had not been dissolved remains available for that purpose.Service on companyService of a document on a company after its dissolution may be effected by serving the document on a person shown as a director in the incorporating instrument of the company or, if applicable, in the latest return sent to the Superintendent under section 499.
  • 1991, c. 45, s. 367;
  • 1999, c. 31, s. 218.
Limitations on liabilityNotwithstanding the dissolution of a company, a shareholder or incorporator to whom any of its property has been distributed is liable to any person claiming under subsection 367(1) to the extent of the amount received by that shareholder or incorporator on the distribution.LimitationAn action to enforce liability under subsection (1) may not be commenced except within two years after the date of the dissolution of the company.Action against classA court may order an action referred to in subsections (1) and (2) to be brought against the persons who were shareholders or incorporators as a class, subject to such conditions as the court thinks fit.ReferenceIf the plaintiff establishes a claim in an action under subsection (3), the court may refer the proceedings to a referee or other officer of the court who mayadd as a party to the proceedings each person found by the plaintiff to have been a shareholder or incorporator;determine, subject to subsection (1), the amount that each person who was a shareholder or incorporator must contribute towards satisfaction of the plaintiff’s claim; anddirect payment of the amounts so determined.
Where creditor cannot be foundWhere a creditor, shareholder or incorporator to whom property is to be distributed on the dissolution of a company cannot be found, the portion of the property to be distributed to that creditor, shareholder or incorporator shall be converted into money and paid in accordance with section 371.
Vesting in CrownSubject to subsection 367(1) and sections 371 and 372, property of a company that has not been disposed of at the date of the dissolution of the company vests in Her Majesty in right of Canada.
Unclaimed money on winding-upNotwithstanding the Winding-up and Restructuring Act, where the business of a company is being wound up, the liquidator or the company shall pay to the Minister on demand and in any event before the final winding-up of that business any amount that is payable by the liquidator or the company to a creditor, shareholder or incorporator of the company to whom payment thereof has not, for any reason, been made.RecordsWhere a liquidator or a company makes a payment to the Minister under subsection (1) with respect to a creditor, shareholder or incorporator, the liquidator or company shall concurrently forward to the Minister all documents, records and registers in the possession of the liquidator or company that relate to the entitlement of the creditor, shareholder or incorporator.Payment to Bank of CanadaThe Minister shall pay to the Bank of Canada all amounts paid to the Minister under subsection (1) and shall provide the Bank of Canada with any document, record or register received by the Minister under subsection (2).Liquidator and company dischargedPayment by a liquidator or a company to the Minister under subsection (1) discharges the liquidator and the company in respect of which the payment is made from all liability for the amount so paid, and payment by the Minister to the Bank of Canada under subsection (3) discharges the Minister from all liability for the amount so paid.
  • 1991, c. 45, s. 371;
  • 1996, c. 6, s. 167.
Liability of Bank of CanadaSubject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada of an amount under subsection 371(3), the Bank of Canada, if payment is demanded by a person who, but for subsection 371(4), would be entitled to receive payment of that amount from the liquidator, the company or the Minister, is liable to pay to that person at its head office an amount equal to the amount so paid to it, with interest thereon for the period, not exceeding ten years, from the day on which the payment was received by the Bank of Canada until the date of payment to the person, at such rate and computed in such manner as the Minister determines.Enforcing liabilityThe liability of the Bank of Canada under subsection (1) may be enforced by action against the Bank of Canada in the court in the province in which the debt or instrument was payable.
Custody of records after dissolutionA person who has been granted custody of the documents, records and registers of a dissolved company shall keep them available for production for six years following the date of the dissolution of the company or until the expiration of such shorter period as may be ordered by the court when it orders the dissolution.
InsolvencyIn the case of the insolvency of a company,the payment of any amount due to Her Majesty in right of Canada, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a first charge on the assets of the company;the payment of any amount due to Her Majesty in right of a province, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a second charge on the assets of the company;the payment of the deposit liabilities of the company and all other liabilities of the company, except the liabilities referred to in paragraphs (d) and (e), shall be a third charge on the assets of the company;subordinated indebtedness of the company and all other liabilities that by their terms rank equally with or subordinate to such subordinated indebtedness shall be a fourth charge on the assets of the company; andthe payment of any fines and penalties for which the company is liable shall be a last charge on the assets of the company.Priority not affectedNothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a company.PrioritiesPriorities within each of paragraphs (1)(a) to (e) shall be determined in accordance with the laws governing priorities and, where applicable, by the terms of the indebtedness and liabilities referred to therein.
  • 1991, c. 45, s. 374;
  • 2001, c. 9, s. 517.
OWNERSHIPInterpretation
DefinitionsThe following definitions apply in this Part.agentmandataireagent meansin relation to Her Majesty in right of Canada or of a province, any agent of Her Majesty in either of those rights, and includes a municipal or public body empowered to perform a function of government in Canada or any entity empowered to perform a function or duty on behalf of Her Majesty in either of those rights, but does not includean official or entity performing a function or duty in connection with the administration or management of the estate or property of a natural person,an official or entity performing a function or duty in connection with the administration, management or investment of a fund established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons, or moneys derived from such a fund, orthe trustee of any trust for the administration of a fund to which Her Majesty in either of those rights contributes and of which an official or entity that is an agent of Her Majesty in either of those rights is a trustee; andin relation to the government of a foreign country or any political subdivision thereof, a person empowered to perform a function or duty on behalf of the government of the foreign country or political subdivision, other than a function or duty in connection with the administration or management of the estate or property of a natural person.eligible agentmandataire admissibleeligible agent means an agent or agency of Her Majesty in right of Canada or of a province or an agent or agency of a government of a foreign country or any political subdivision of a foreign countrywhose mandate is publicly available;that controls the assets of an investment fund in a manner intended to maximize long-term risk-adjusted returns and that fund isone to which, as the case may be, Her Majesty in right of Canada or of a province or the government of a foreign country or political subdivision contributes, orestablished to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons; andwhose decisions with respect to the assets of the fund referred to in paragraph (b) are not influenced in any significant way by, as the case may be, Her Majesty in right of Canada or of the province or the government of the foreign country or the political subdivision.
  • 1994, c. 47, s. 205;
  • 2012, c. 19, s. 327.
Previous Version
AssociatesFor the purpose of determining ownership of a company by an eligible agent, where two persons, at least one of whom is an eligible agent, are associated with each other, those persons are deemed to be a single eligible agent who beneficially owns the aggregate number of shares of the company beneficially owned by them.AssociatesFor the purposes of subsection (1), a person is associated with another person ifeach person is an agent or agency of Her Majesty in right of Canada;each person is an agent or agency of Her Majesty in right of the same province;each person is an agent or agency of a government of the same foreign country or a political subdivision of the same foreign country;one person is Her Majesty in right of Canada and the other person is an agent or agency of Her Majesty in that right;one person is Her Majesty in right of a province and the other person is an agent or agency of Her Majesty in right of that province; orone person is a government of a foreign country or any political subdivision of a foreign country and the other person is its agent or agency.
  • 2012, c. 19, s. 327.
Constraints on Ownership
Constraining acquisitionNo person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a company or purchase or otherwise acquire control of any entity that holds any share of a company ifthe acquisition would cause the person to have a significant interest in any class of shares of the company; orwhere the person has a significant interest in a class of shares of the company, the acquisition would increase the significant interest of the person in that class of shares.Amalgamation, etc., constitutes acquisitionIf the entity that would result from an amalgamation, a merger or a reorganization would have a significant interest in a class of shares of a company, the entity is deemed to be acquiring a significant interest in that class of shares of the company through an acquisition for which the approval of the Minister is required under subsection (1).ExemptionOn application by a company, the Superintendent may exempt from the application of this section and section 376 any class of non-voting shares of the company if the aggregate book value of the shares of the class is not more than 30 per cent of the aggregate book value of all the outstanding shares of the company.[Repealed, 2001, c. 9, s. 518]
  • 1991, c. 45, s. 375;
  • 2001, c. 9, s. 518;
  • 2007, c. 6, s. 354.
Previous Version
No acquisition of control without approvalNo person shall acquire control, within the meaning of paragraph 3(1)(d), of a company without the approval of the Minister.Amalgamation, etc., constitutes acquisitionIf the entity that would result from an amalgamation, a merger or a reorganization would control, within the meaning of paragraph 3(1)(d), a company, the entity is deemed to be acquiring control, within the meaning of that paragraph, of the company through an acquisition for which the approval of the Minister is required under subsection (1).
  • 1997, c. 15, s. 372;
  • 2001, c. 9, s. 519;
  • 2007, c. 6, s. 355.
Previous Version
Constraining registrationNo company shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the company to any person or to any entity controlled by a person ifthe transfer or issue of the share would cause the person to have a significant interest in any class of shares of the company; orwhere the person has a significant interest in a class of shares of the company, the transfer or issue of the share would increase the significant interest of the person in that class of shares of the company.
Exception — small holdingsDespite section 376, if, as a result of a transfer or issue of shares of a class of shares of a company to a person, other than an eligible agent, the total number of shares of that class registered in the securities register of the company in the name of that person would not exceed 5,000 and would not exceed 0.1% of the outstanding shares of that class, the company is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the company as a result of that issue or transfer of shares.
  • 1994, c. 47, s. 206;
  • 2012, c. 31, s. 100.
Previous Version
Where approval not requiredNotwithstanding subsections 375(1) and (2) and section 376, approval of the Minister is not required where a person with a significant interest in a class of shares of a company or an entity controlled by a person with a significant interest in a class of shares of a companypurchases or otherwise acquires shares of that class, oracquires control of any entity that holds any share of that class,and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the company to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.PercentageSubject to subsection (3), for the purposes of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the company on the later of the day this Part comes into force and the day of the most recent purchase or other acquisition bythe person, orany entity controlled by the person, other than the entity referred to in paragraph (1)(b),of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister.IdemWhere a person has a significant interest in a class of shares of a company and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition bythe person, orany entity controlled by the person, other than the entity referred to in paragraph (1)(b),of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of5 percentage points in excess of the significant interest of the person in that class of shares of the company on the later of the day this Part comes into force and the day of the most recent purchase or other acquisition bythe person, orany entity controlled by the person, other than the entity referred to in paragraph (1)(b),of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister, and10 percentage points in excess of the lowest significant interest of the person in that class of shares of the company at any time after the later of the day this Part comes into force and the day of the most recent purchase or other acquisition bythe person, orany entity controlled by the person, other than the entity referred to in paragraph (1)(b),of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister.Exception — eligible agentIf the person referred to in subsection (1) is an eligible agent or an entity controlled by an eligible agent, then the Minister may reduce the percentage referred to in subsection (2) or (3).ExceptionSubsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection wouldresult in the acquisition of control of the company by the person referred to in that subsection;where the person controls the company but the voting rights attached to the aggregate of any voting shares of the company beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the company, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the company;result in the acquisition of a significant interest in a class of shares of the company by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; orresult in an increase in a significant interest in a class of shares of the company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.RegulationsThe Governor in Council may make regulationsexempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the company by an entity controlled by the person; andexempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.
  • 1991, c. 45, s. 377;
  • 1997, c. 15, s. 373;
  • 2012, c. 31, s. 101.
Previous Version
Where approval not requiredDespite sections 375 and 376, the approval of the Minister is not required ifthe Superintendent has, by order, directed the company to increase its capital and shares of the company are issued and acquired in accordance with such terms and conditions as may be specified in the order; ora person, other than an eligible agent, who controls, within the meaning of paragraph 3(1)(a), the company acquires additional shares of the company.Pre-approvalFor the purposes of subsections 375(1) and (2) and section 376, the Minister may approvethe purchase or other acquisition of such number or percentage of shares of a company as may be required in a particular transaction or series of transactions; orthe purchase or other acquisition of up to a specified number or percentage of shares of a company within a specified period.
  • 1991, c. 45, s. 378;
  • 2001, c. 9, s. 520;
  • 2012, c. 31, s. 102.
Previous Version
Public holding requirementEvery company shall, from and after the day determined under this section in respect of that company, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the company and that areshares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; andshares none of which is beneficially owned by a person who is a major shareholder of the company in respect of the voting shares of the company or by any entity that is controlled by a person who is a major shareholder of the company in respect of such shares.Determination of dayIf the company has equity of two billion dollars or more on the day it comes into existence, the day referred to in subsection (1) is the day that is three years after that day and, in the case of any other company, the day referred to in subsection (1) is the day that is three years after the day of the first annual meeting of the shareholders of the company held after the equity of the company first reaches two billion dollars.ExtensionIf general market conditions so warrant and the Minister is satisfied that a company has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the company must comply with subsection (1).
  • 1991, c. 45, s. 379;
  • 2001, c. 9, s. 521;
  • 2007, c. 6, s. 356.
Previous Version
Limit on assetsUnless an exemption order with respect to the company is granted under section 382, if a company fails to comply with section 379 in any month, the Minister may, by order, require the company not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the company’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.Average total assetsFor the purposes of subsection (1), the average total assets of a company in a three month period shall be computed by adding the total assets of the company as calculated for the month end of each of the three months in the period and by dividing the sum by three.Definition of total assetsFor the purposes of subsections (1) and (2), total assets, in respect of a company, has the meaning given that expression by the regulations.
  • 1991, c. 45, s. 380;
  • 2001, c. 9, s. 522.
Increase of capitalWhere the Superintendent has, by order, directed a company to increase its capital and shares of the company are issued and acquired in accordance with such terms and conditions as may be specified in the order, section 379 shall not apply in respect of the company until such time as the Superintendent may, by order, specify.
Exemption by MinisterOn application by a company and subject to any terms that the Minister considers appropriate, the Minister may by order exempt the company from the requirements of section 379 if the Minister considers it appropriate to do so.Compliance with s. 379The company shall comply with section 379 as of the day on which the exemption order expires.Limit on assetsIf a company fails to comply with section 379 on the day referred to in subsection (2), it shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding its average total assets in the three month period ending on the last day of the month immediately preceding the day referred to in subsection (2) or on any later day that the Minister may specify by order.Application of ss. 380(2) and (3)Subsections 380(2) and (3) apply for the purposes of subsection (3).
  • 1991, c. 45, s. 382, c. 47, s. 753;
  • 2001, c. 9, s. 523;
  • 2005, c. 54, s. 444.
Previous Version
Continuation of exemptionDespite subsection 382(2), if an exemption order that was granted in respect of a company under subsection 382(3) as it read before the day on which this section comes into force provides that it expires if the holding body corporate ceases to comply with section 379, the company is not required to comply with that section until six months after the day on which the holding body corporate ceased to comply with that section if the failure to comply is as a result ofa distribution to the public of voting shares of the holding body corporate;a redemption or purchase of voting shares of the holding body corporate;the exercise of any option to acquire voting shares of the holding body corporate; orthe conversion of any convertible securities into voting shares of the holding body corporate.Shares acquiring voting rightsDespite subsection 382(2), if as a result of an event that has occurred and is continuing shares of a holding body corporate referred to in subsection (1) acquire voting rights in such number as to cause the holding body corporate to no longer be in compliance with section 379, the company is not required to comply with that section until six months after the day on which the holding body corporate ceased to comply with that section or any later day that the Minister may by order specify.
  • 2005, c. 54, s. 444.
ExceptionWhere a company fails to comply with section 379 as the result ofa distribution to the public of voting shares of the company,a redemption or purchase of voting shares of the company,the exercise of any option to acquire voting shares of the company, orthe conversion of any convertible securities into voting shares of the company,section 380 shall not apply in respect of that company until the expiration of six months after the day the company failed to comply with section 379.Shares acquiring voting rightsWhere, as the result of an event that has occurred and is continuing, shares of a company acquire voting rights in such number as to cause the company to no longer be in compliance with section 379, section 380 shall not apply in respect of that company until the expiration of six months after the day the company ceased to be in compliance with section 379 or such later day as the Minister may, by order, specify.[Repealed, 2005, c. 54, s. 445]
  • 1991, c. 45, s. 383;
  • 2005, c. 54, s. 445.
Previous Version
Acquisition of control permittedSubject to subsection (2) and sections 376 and 385, section 379 does not apply in respect of the company if a person acquires control of a company with equity of two billion dollars or more through the purchase or other acquisition of all or any number of the shares of the company by the person or by any entity controlled by the person.Undertaking requiredSubsection (1) applies only if the person provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the company has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the company and that areshares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; andshares none of which is beneficially owned by a person who is a major shareholder of the company in respect of the voting shares of the company or by any entity that is controlled by a person who is a major shareholder of the company in respect of such shares.
  • 1991, c. 45, s. 384;
  • 2001, c. 9, s. 524;
  • 2007, c. 6, s. 357.
Previous Version
Application of section 379At the expiration of the period for compliance with an undertaking referred to in subsection 384(2), section 379 shall apply in respect of the company to which the undertaking relates.
  • 1991, c. 45, s. 385;
  • 2001, c. 9, s. 524.
Restriction on voting rightsIf, with respect to any company, a particular person contravenes section 375 or 375.1 or fails to comply with an undertaking referred to in subsection 384(2) or with any term or condition imposed under section 389, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rightsthat are attached to shares of the company beneficially owned by the particular person or any entity controlled by the particular person; orthat are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.Subsection (1) ceases to applySubsection (1) ceases to apply in respect of a person when, as the case may be,the shares to which the contravention relates have been disposed of;the person ceases to control the company within the meaning of paragraph 3(1)(d);if the person failed to comply with an undertaking referred to in subsection 384(2), the company complies with section 379; orif the person failed to comply with a term or condition imposed under section 389, the person complies with the term or condition.
  • 1991, c. 45, s. 386;
  • 1997, c. 15, s. 374;
  • 2001, c. 9, s. 524.
Approval Process
Application for approvalAn application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.ApplicantIf, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.
  • 1991, c. 45, s. 387;
  • 2001, c. 9, s. 525.
Matters for considerationSubject to subsection (2), if an application for an approval under section 375 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the company;the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the company;the business record and experience of the applicant or applicants;the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;whether the company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations of the applicant or applicants with those of the company on the conduct of those businesses and operations; andthe best interests of the financial system in Canada.National treatmentWhere a transaction in respect of which subsection 375(1) or (2) applies would cause a company to become a subsidiary of a foreign institution that is engaged in the trust and loan business, that does not have any other company as its subsidiary and that is a non-WTO Member foreign institution, the Minister shall not approve the transaction unless the Minister is satisfied that treatment as favourable for companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.Part XII of the Bank ActNothing in subsection (1) or (2) affects the operation of Part XII of the Bank Act.
  • 1991, c. 45, s. 388;
  • 1999, c. 28, s. 140;
  • 2001, c. 9, s. 526.
Terms and conditionsThe Minister may impose any terms and conditions in respect of an approval given under this Part that the Minister considers necessary to ensure compliance with any provision of this Act.
  • 1991, c. 45, s. 389;
  • 2001, c. 9, s. 527.
Certifying receipt of applicationIf, in the opinion of the Superintendent, an application filed under this Part contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.Incomplete applicationIf, in the opinion of the Superintendent, an application filed under this Part is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.
  • 1991, c. 45, s. 390;
  • 2001, c. 9, s. 528.
Notice of decision to applicantSubject to subsections (2) and (3) and 392(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 390(1), send to the applicanta notice approving the transaction to which the application relates; orwhere the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.Notice of decisionSubject to subsections (4) and 392(2), the notice referred to in paragraph (1)(a) or (b) shall be sent by the Minister within a period of 45 days after the certified date referred to in subsection 390(1) in the following cases:the application involves the acquisition of control of a company;the application is made by an eligible agent or an entity controlled by an eligible agent; oran application is made for the approval referred to in subsection 396(3).Extension of period for noticeWhere the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall,within that period, send a notice to that effect to the applicant; andwithin a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within such other further period as may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.IdemWhere the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.
  • 1991, c. 45, s. 391;
  • 2012, c. 31, s. 103.
Previous Version
Reasonable opportunity to make representationsWhere, after receipt of the notice referred to in paragraph 391(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister shall provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within such further period as may be agreed on by the applicant and the Minister, to make representations in respect of the matter.Reasonable opportunity to make representationsIf, after receipt of the notice sent in accordance with subsection 391(2) that the Minister is not satisfied that the transaction to which the application relates should be approved, the applicant advises the Minister that the applicant wishes to make representations, the Minister shall provide the applicant with a reasonable opportunity within a period of 45 days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.
  • 1991, c. 45, s. 392;
  • 2012, c. 31, s. 104(E).
Previous Version
Notice of decisionWithin a period of thirty days after the expiration of the period for making representations referred to in subsection 392(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the share transaction to which the application relates.IdemWithin a period of forty-five days after the expiration of the period for making representations referred to in subsection 392(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the share transaction to which the application relates.
Deemed approvalWhere the Minister does not send a notice under subsection 391(1) or (3) or 393(1) within the period provided for in those subsections, the Minister is deemed to have approved the share transaction to which the application relates.
[Repealed, 1994, c. 47, s. 207]
Constraining registration: Crown and foreign governmentsNo company shall record in its securities register a transfer or issue of any share of the company toHer Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; orthe government of a foreign country or any political subdivision thereof, or any agent or agency thereof.ExceptionDespite subsection (1), a company may record in its securities register a transfer or issue of any share of the company to a foreign institution that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the share that is transferred or issued is beneficially owned by the foreign institution or by an entity controlled by the foreign institution.ExceptionDespite subsection (1), a company may, with the Minister’s approval, record in its securities register the issue of any share of the company to an eligible agent.Application made jointlyThe application for the approval referred to in subsection (3) must be made jointly by the company and the eligible agent.Matters for considerationThe Minister, in determining whether to grant the approval referred to in subsection (3), shall take into account all matters that he or she considers relevant, including those set out in paragraphs 388(1)(a) to (g).Consequence of revocation of approvalIf an approval referred to in subsection (3) is revoked, the company shall delete any entry in its securities register in respect of the recording of the issuance of shares to the eligible agent.Disposition of shareholdingsIf a company or an eligible agent fails to comply with any undertaking or term or condition in relation to an approval referred to in subsection (3), or if an eligible agent ceases to be an eligible agent, the Minister may, if the Minister considers it to be in the public interest to do so, by order, direct the eligible agent or former eligible agent and any person controlled by the eligible agent or former eligible agent to dispose of any number of shares of the company beneficially owned by the eligible agent or former eligible agent or the persons controlled by the eligible agent or former eligible agent that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the eligible agent or former eligible agent and the persons controlled by the eligible agent or former eligible agent that is specified in the order.RepresentationsNo direction shall be made under subsection (7) unless the Minister has provided each person to whom the direction relates and the company concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.AppealAny person with respect to whom a direction has been made under subsection (7) may, within 30 days after the date of the direction, appeal the matter in accordance with section 530.
  • 1991, c. 45, s. 396;
  • 2012, c. 5, s. 165, c. 19, s. 328, c. 31, s. 105.
Previous Version
[Repealed, 1994, c. 47, s. 208]
[Repealed, 1994, c. 47, s. 209]Suspension of voting rights held by governmentsNotwithstanding section 151, where any voting shares of a company are beneficially owned byHer Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights, orthe government of a foreign country or any political subdivision thereof, or any agency thereof,no person shall, in person or by proxy, exercise the voting rights attached to those shares.ExceptionSubsection (2) does not apply to a foreign institution that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the shares referred to in subsection (1) are beneficially owned by the foreign institution or by an entity controlled by the foreign institution.TransitionalSubsection (2) does not apply in respect of a government or agency referred to in that subsection that, on September 27, 1990, beneficially owned shares of a former-Act company where the exercise of the voting rights attached to those shares was not prohibited under subsection 41(2) of the Trust Companies Act or subsection 48(2) of the Loan Companies Act, as those subsections read immediately prior to June 1, 1992.TransitionalSubsection (3) ceases to apply where a government or agency referred to in that subsection acquires beneficial ownership of any additional voting shares of the former-Act company in such number that the percentage of the voting rights attached to all of the voting shares of the former-Act company beneficially owned by the government or agency is greater than the percentage of the voting rights attached to all of the voting shares of the former-Act company that were beneficially owned by the government or agency on September 27, 1990.Exception — eligible agentSubsection (2) does not apply in respect of the exercise of voting rights attached to any share referred to in subsection 396(3).Consequence of suspension of approvalIf an approval referred to in subsection 396(3) is suspended, the eligible agent shall not exercise, in person or by proxy, any voting rights attached to any share of the company that is beneficially owned by the eligible agent.
  • 1991, c. 45, s. 399;
  • 1994, c. 47, s. 209;
  • 2012, c. 5, s. 166, c. 19, s. 329, c. 31, s. 106.
Previous Version
[Repealed, 1994, c. 47, s. 210]
Directions
Disposition of shareholdingsIf, with respect to any company, a person contravenes section 375 or 375.1 or fails to comply with an undertaking referred to in subsection 384(2) or with any terms and conditions imposed under section 389, the Minister may, if the Minister deems it in the public interest to do so, by order, direct that person and any person controlled by that person to dispose of any number of shares of the company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order.RepresentationsNo direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the company concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.AppealAny person with respect to whom a direction has been made under subsection (1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 530.[Repealed, 2001, c. 9, s. 529]
  • 1991, c. 45, s. 401;
  • 1996, c. 6, s. 119;
  • 2001, c. 9, s. 529.
Application to courtIf a person fails to comply with a direction made under subsection 396(7) or 401(1), an application on behalf of the Minister may be made to a court for an order to enforce the direction.Court orderA court may, on an application under subsection (1), make such order as the circumstances require to give effect to the terms of the direction and may, without limiting the generality of the foregoing, require the company concerned to sell the shares that are the subject-matter of the direction.AppealAn appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.
  • 1991, c. 45, s. 402;
  • 2012, c. 31, s. 107.
Previous Version
General Provisions
Interest of securities underwriterThis Part does not apply to a securities underwriter in respect of shares of a body corporate or ownership interests in an unincorporated entity that are acquired by the underwriter in the course of a distribution to the public of those shares or ownership interests and that are held by the underwriter for a period of not more than six months.
Arrangements to effect complianceThe directors of a company may make such arrangements as they deem necessary to carry out the intent of this Part and, in particular, but without limiting the generality of the foregoing, mayrequire any person in whose name a share of the company is held to submit a declaration setting outthe beneficial ownership of the share, andsuch other information as the directors deem relevant for the purposes of this Part;require any person who wishes to have a transfer of a share registered in the name of, or to have a share issued to, that person to submit a declaration referred to in paragraph (a) as though the person were the holder of that share; anddetermine the circumstances in which a declaration referred to in paragraph (a) is to be required, the form of the declaration and the times at which it is to be submitted.Order of SuperintendentThe Superintendent may, by order, direct a company to obtain from any person in whose name a share of the company is held a declaration setting out the name of every entity controlled by that person and containing information concerningthe ownership or beneficial ownership of the share; andsuch other related matters as are specified by the Superintendent.Compliance requiredAs soon as possible after receipt by a company of a direction under subsection (2),the company shall comply with the direction; andevery person who is requested by the company to provide a declaration containing information referred to in subsection (1) or (2) shall comply with the request.Outstanding declaration: effectWhere, pursuant to this section, a declaration is required to be submitted by a shareholder or other person in respect of the issue or transfer of any share, a company may refuse to issue the share or register the transfer unless the required declaration is submitted.
Reliance on informationA company and any person who is a director or an officer, employee or agent of the company may rely on any information contained in a declaration required by the directors pursuant to section 404 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the company or any such person for anything done or omitted to be done in good faith in reliance on any such information.
[Repealed, 1994, c. 47, s. 211]
Exemption regulationsThe Governor in Council may, by regulation, exempt from any of the provisions of this Part any share transaction or any class of share transactions involving the transfer of shares on the death of the beneficial owner thereof, or any arrangement made in contemplation of the death of the beneficial owner, to one or more members of the beneficial owner’s family, or to one or more trustees on their behalf.
Competition ActNothing in, or done under the authority of, this Act affects the operation of the Competition Act.
BUSINESS AND POWERSGeneral Business
Main businessSubject to this Act, a company shall not engage in or carry on any business other than such business generally as appertains to the business of providing financial services.IdemFor greater certainty, a company maysubject to section 412, act as a trustee;act as a financial agent, receiver, liquidator or sequestrator;provide investment counselling services and portfolio management services; andissue payment, credit or charge cards and, in cooperation with others including other financial institutions, operate a payment, credit or charge card plan.
  • 1991, c. 45, s. 409;
  • 2009, c. 2, s. 289(F).
Previous Version
Additional activitiesIn addition, a company mayact as an agent for vendors, purchasers, mortgagors, mortgagees, lessors or lessees of real property and provide consulting or appraisal services in respect of real property;hold, manage and otherwise deal with real property;outside Canada, or with the prior written approval of the Minister, in Canada, engage in any of the following activities, namely,collecting, manipulating and transmittinginformation that is primarily financial or economic in nature,information that relates to the business of a permitted entity, as defined in subsection 449(1), orany other information that the Minister may, by order, specify,providing advisory or other services in the design, development or implementation of information management systems,designing, developing or marketing computer software, anddesigning, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the company is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are usedto provide information that is primarily financial or economic in nature,to provide information that relates to the business of a permitted entity, as defined in subsection 449(1), orfor a prescribed purpose or in prescribed circumstances;in Canada, engage in such activities referred to in paragraph (c) that the company was engaged in prior to June 1, 1992;engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services;promote merchandise and services to the holders of any payment, credit or charge card issued by the company;engage in the sale oftickets, including lottery tickets, on a non-profit public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest,urban transit tickets, andtickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any such government or governments; andact as a custodian of property.RestrictionExcept as authorized by or under this Act, a company shall not deal in goods, wares or merchandise or engage in any trade or other business.RegulationsThe Governor in Council may make regulationsrespecting what a company may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(c), (c.1) and (d.1);imposing terms and conditions in respect of the provision of the services referred to in paragraphs (1)(a) and 409(2)(c) and the carrying on of the activities referred to in paragraphs (1)(c), (c.1) and (d.1); andrespecting the circumstances in which companies may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(c) or (c.1).
  • 1991, c. 45, s. 410;
  • 1993, c. 34, s. 126(F);
  • 1997, c. 15, s. 375;
  • 2001, c. 9, s. 530.
NetworkingSubject to section 416, a company mayact as agent for any person in respect of the provision of any service that is provided by a financial institution, a permitted entity as defined in subsection 449(1) or a prescribed entity and may enter into an arrangement with any person in respect of the provision of that service; orrefer any person to any such financial institution or entity.
  • 1991, c. 45, s. 411;
  • 2001, c. 9, s. 531.
Restriction on fiduciary activitiesNo company, other than a company that is a trust company pursuant to subsection 57(2), shall act in Canada asan executor, administrator or official guardian or a guardian, tutor, curator, judicial adviser or committee of a mentally incompetent person; ora trustee for a trust.
Restriction on deposit takingA company shall not accept deposits in Canada unlessit is a member institution, as defined in section 2 of the Canada Deposit Insurance Corporation Act;it has been authorized under subsection 26.03(1) of that Act to accept deposits without being a member institution, as defined in section 2 of that Act; orthe order approving the commencement and carrying on of business in Canada by the company authorizes it to accept deposits solely in accordance with subsection (2).Deposits that fall below $150,000A company referred to in paragraph (1)(b) or (c) shall ensure that, on each day that is at least 30 days after the company receives the authorization referred to in that paragraph,A/B ≤ 0.01whereAis the sum of all amounts each of which is the sum of all the deposits held by the company at the end of a day in the preceding 30 days each of which deposits is less than $150,000 and payable in Canada; andBis the sum of all amounts each of which is the sum of all deposits held by the company at the end of a day in those preceding 30 days and payable in Canada.Exchange rateFor the purpose of subsection (2), the rate of exchange to be applied on any day in determining the amount in Canadian dollars of a deposit in a currency of a country other than Canada is to be determined in accordance with rules prescribed under subsection 26.03(2) of the Canada Deposit Insurance Corporation Act.Definition of depositFor the purpose of subsection (2), deposit has the meaning that would be given to that term by the schedule to the Canada Deposit Insurance Corporation Act for the purposes of deposit insurance if that schedule were read without reference to subsections 2(2), (5) and (6) of that schedule, but does not include prescribed deposits.RegulationsThe Governor in Council may make regulationsprescribing the deposits referred to in subsection (4); andprescribing terms and conditions with respect to the acceptance of those deposits.
  • 1991, c. 45, s. 413;
  • 2007, c. 6, s. 358.
Previous Version
Notice before opening account or providing prescribed productBefore a company referred to in paragraph 413(1)(b) or (c) opens a deposit account in Canada or provides in Canada any prescribed product that relates to a deposit, the company shall, in the prescribed manner, give the person requesting the opening of the account or the provision of the producta notice in writing that deposits to the deposit account, or that the deposit that relates to the prescribed product, as the case may be, will not be insured by the Canada Deposit Insurance Corporation or, if the request is made by telephone, a verbal notice to that effect; andany other information that may be prescribed.Other noticeA company referred to in paragraph 413(1)(b) or (c) shall, in accordance with any regulations that may be made,post notices at all of its branches, and at prescribed points of service, in Canada where deposits are accepted, and on all of its websites at which deposits are accepted in Canada, to inform the public that deposits with the company are not insured by the Canada Deposit Insurance Corporation; andinclude in its advertisements notices to inform the public that deposits with the company are not insured by the Canada Deposit Insurance Corporation.RegulationsThe Governor in Council may make regulationsprescribing the manner in which notices referred to in subsection (1) are to be given and the additional information to be contained in the notices; andrespecting notices for the purpose of subsection (2).
  • 2007, c. 6, s. 358.
Deposits less than $150,000Subject to the regulations, a company referred to in paragraph 413(1)(b) or (c) may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.Definition of depositIn this section, deposit has the meaning assigned by subsection 413(4).RegulationsThe Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, a company referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.
  • 2007, c. 6, s. 358.
Shared premisesSubject to the regulations, no company referred to in paragraph 413(1)(b) or (c) shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the company.LimitationSubsection (1) only applies in respect of premises or any portion of premises on which both the company and the member institution carry on business with the public and to which the public has access.Adjacent premisesSubject to the regulations, no company referred to in paragraph 413(1)(b) or (c) shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the company, unless the company clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.RegulationsThe Governor in Council may make regulationsrespecting the circumstances in which, and the conditions under which, a company referred to in paragraph 413(1)(b) or (c) may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); andrespecting the circumstances in which, and the conditions under which, a company referred to in paragraph 413(1)(b) or (c) may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).
  • 2007, c. 6, s. 358.
Restriction on guaranteesA company shall not guarantee on behalf of any person the payment or repayment of any sum of money unlessthe sum of money is a fixed sum of money with or without interest thereon; andthe person on whose behalf the company has undertaken to guarantee the payment or repayment has an unqualified obligation to reimburse the company for the full amount of the payment or repayment to be guaranteed.ExceptionParagraph (1)(a) does not apply where the person on whose behalf the company has undertaken to guarantee a payment or repayment is a subsidiary of the company.IdemNotwithstanding subsection (1), a company may guarantee repayment of the principal or payment of the interest, or both, of any moneys entrusted to the company for investment, on such terms and conditions as are agreed on.RegulationsThe Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.
  • 1991, c. 45, s. 414;
  • 1997, c. 15, s. 376;
  • 2001, c. 9, s. 532.
Restriction on securities activitiesA company shall not deal in Canada in securities to the extent prohibited or restricted by such regulations as the Governor in Council may make for the purposes of this section.
Restriction on insurance businessA company shall not undertake the business of insurance except to the extent permitted by this Act or the regulations.Restriction on acting as agentA company shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space in any branch in Canada of the company to any person engaged in the placing of insurance.RegulationsThe Governor in Council may make regulations respecting the matters referred to in subsection (1) and regulations respecting relations between companies andentities that undertake the business of insurance; orinsurance agents or insurance brokers.SavingNothing in this section precludes a company fromrequiring insurance to be placed by a borrower for the security of the company; orobtaining group insurance for its employees or the employees of any bodies corporate in which it has a substantial investment pursuant to section 453.No pressureNo company shall exercise pressure on a borrower to place insurance for the security of the company in any particular insurance company, but a company may require that an insurance company chosen by a borrower meet with its approval, which shall not be unreasonably withheld.Definition of business of insuranceIn this section, business of insurance includesthe issuance of any annuity if the liability in respect of the annuity is contingent on the death of a person; andthe issuance of any debt obligation, any of whose terms and conditions are established on the basis of mortality considerations, under which the issuer is obliged to make periodic payments.
  • 1991, c. 45, s. 416;
  • 2012, c. 19, s. 205.
Previous Version
Restriction on leasingA company shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, within the meaning of subsection 449(1), is not permitted to engage.
  • 1991, c. 45, s. 417;
  • 2001, c. 9, s. 533.
Restriction on residential mortgagesA company shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.ExceptionSubsection (1) does not apply in respect ofa loan made or guaranteed under the National Housing Act or any other Act of Parliament by or pursuant to which a different limit on the value of property on the security of which the company may make a loan is established;a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;the acquisition by the company from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the company to the entity against the issue of such securities; ora loan secured by a mortgage wherethe mortgage is taken back by the company on a property disposed of by the company, including where the disposition is by way of a realization of a security interest, andthe mortgage secures payment of an amount payable to the company for the property.
  • 1991, c. 45, s. 418;
  • 1997, c. 15, s. 377;
  • 2007, c. 6, s. 359.
Previous Version
Restriction on charges to borrowersSubject to any regulations made under subsection (2), a company that has obtained insurance or a guarantee against default on a loan made in Canada on the security of residential property shall not charge a borrower an amount for the insurance or guarantee that exceeds the actual cost to the company of the insurance or guarantee.RegulationsThe Governor in Council may make regulationsrespecting the determination of the actual cost to a company for the purposes of subsection (1);respecting the circumstances in which a company is exempt from the application of subsection (1);respecting, in relation to insurance or a guarantee against default on a loan made by a company in Canada on the security of residential property,the arrangements into which the company, its representatives and its employees may or may not enter, andthe payments or benefits that the company, its representatives and its employees may or may not accept from an insurer or the insurer’s affiliates; andrespecting any other matters necessary to carry out the purposes of subsection (1).Regulations — disclosureThe Governor in Council may make regulations respecting the disclosure by a company of information relating to insurance or a guarantee against default on a loan made by the company in Canada on the security of residential property, including regulations respectingthe information that must be disclosed, including information relating tothe person who benefits from the insurance or guarantee,the arrangements between the company, its representatives or its employees and the insurer or the insurer’s affiliates, andthe payments and benefits that the company, its representatives and its employees accept from an insurer or the insurer’s affiliates;the time and place at which, the form and manner in which and the persons to whom information is to be disclosed; andthe circumstances under which a company is not required to disclose information.
  • 2009, c. 2, s. 290;
  • 2012, c. 5, s. 167(E).
Previous Version
Policies re security interestsThe directors of a company shall establish and the company shall adhere to policies regarding the creation of security interests in property of the company to secure obligations of the company and the acquisition by the company of beneficial interests in property that is subject to security interests.Order to amend policiesThe Superintendent may, by order, direct a company to amend its policies as specified in the order.ComplianceA company shall comply with an order made under subsection (2) within the time specified in the order.
  • 1991, c. 45, s. 419;
  • 1999, c. 31, s. 219(E);
  • 2001, c. 9, s. 534;
  • 2007, c. 6, s. 360(F).
Previous Version
Regulations and guidelinesThe Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by a company of security interests in its property to secure obligations of the company and the acquisition by the company of beneficial interests in property that is subject to security interests.
  • 2001, c. 9, s. 534.
ExceptionSections 419 and 419.1 do not apply in respect of a security interest created by a company to secure an obligation of the company to the Bank of Canada or the Canada Deposit Insurance Corporation.
  • 2001, c. 9, s. 534.
Restriction on receiversA company shall not grant to a person the right to appoint a receiver or a receiver and manager of the property or business of the company.
Restriction on partnershipsExcept with the approval of the Superintendent, a company may not be a general partner in a limited partnership or a partner in a general partnership.Meaning of “general partnership”For the purposes of subsection (1), general partnership means any partnership other than a limited partnership.
  • 1991, c. 45, s. 421;
  • 2001, c. 9, s. 535.
Fiduciary Activities
Separate and distinctA company shall keep money and other assets acquired or held in trust by the company separate and distinct from its own assets and shall keep a separate account for each trust.Common trust fundUnless the instrument creating a trust otherwise provides, a company may invest money it holds in trust in one or more common trust funds.
Deposit Acceptance
Deposit acceptanceA company may, without the intervention of any other person,accept a deposit from any person whether or not the person is qualified by law to enter into contracts; andpay all or part of the principal of the deposit and all or part of the interest thereon to or to the order of that person.ExceptionParagraph (1)(b) does not apply if, before payment, the money deposited in the company pursuant to paragraph (1)(a) is claimed by some other personin any action or proceeding to which the company is a party and in respect of which service of a writ or other process originating that action or proceeding has been made on the company, orin any other action or proceeding pursuant to which an injunction or order made by the court requiring the company not to make payment of that money or make payment thereof to some person other than the depositor has been served on the company,and, in the case of any such claim so made, the money so deposited may be paid to the depositor with the consent of the claimant or to the claimant with the consent of the depositor.Guaranteed trust moneyA company that is a trust company pursuant to subsection 57(2) shall accept deposits only as guaranteed trust money.ProfitNotwithstanding subsection (3), a company that is a trust company pursuant to subsection 57(2) that accepts deposits may retain the interest and profit resulting from the investment thereof in excess of the amount of interest payable to its depositors in respect thereof.Assets to be identifiedWhere a company that is a trust company pursuant to subsection 57(2) accepts deposits, the company shall identify on its books assets to be held in respect thereof equal to the aggregate amount of the deposits.Execution of trustA company is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject, other than a trust of which the company is a trustee.Payment when company has notice of trustSubsection (6) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the company has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.
  • 1991, c. 45, s. 423;
  • 2001, c. 9, s. 536.
Unclaimed Balances
Unclaimed balancesWherea deposit has been made in Canada that is payable in Canada in Canadian currency and in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of ten yearsin the case of a deposit made for a fixed period, from the day on which the fixed period terminated, andin the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later, ora cheque, draft or bill of exchange (including any such instrument drawn by one branch of a company on another branch of the company but not including such an instrument issued in payment of a dividend on the capital of a company) payable in Canada in Canadian currency has been issued, certified or accepted by a company in Canada and no payment has been made in respect thereof for a period of ten years after the date of issue, certification, acceptance or maturity, whichever is later,the company shall pay to the Bank of Canada not later than December 31 in each year an amount equal to the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument, and payment accordingly discharges the company from all liability in respect of the deposit or instrument.Provision of informationA company shall, on making a payment under subsection (1), provide the Bank of Canada, for each deposit or instrument in respect of which the payment is made, with the following information current as of the day the payment is made, in so far as it is known to the company:in the case of a deposit,the name of the depositor in whose name the deposit is held,the recorded address of the depositor,the outstanding amount of the deposit, andthe branch of the company at which the last transaction took place in respect of the deposit, and the date of that last transaction; andin the case of an instrument,the name of the person to whom or at whose request the instrument was issued, certified or accepted,the recorded address of that person,the name of the payee of the instrument,the amount and date of the instrument,the name of the place where the instrument was payable, andthe branch of the company at which the instrument was issued, certified or accepted.Copies of signature cards and signing authoritiesA company shall, on written request by the Bank of Canada, provide the Bank of Canada with copies of signature cards and signing authorities relating to any deposit or instrument in respect of which it has made a payment under subsection (1). If it does not have any with respect to a deposit or instrument to which the request relates, it shall so inform the Bank of Canada.Payment to claimantSubject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada under subsection (1) in respect of any deposit or instrument, and if payment is demanded or the instrument is presented at the Bank of Canada by the person who, but for that section, would be entitled to receive payment of the deposit or instrument, the Bank of Canada is liable to pay, at its agency in the province in which the deposit or instrument was payable, an amount equal to the amount so paid to it together with interest, if interest was payable under the terms of the deposit or instrument,for a period not exceeding ten years from the day on which the payment was received by the Bank of Canada until the date of payment to the claimant; andat such rate and computed in such manner as the Minister determines.Enforcing liabilityThe liability of the Bank of Canada under subsection (3) may be enforced by action against the Bank of Canada in the court in the province in which the deposit or instrument was payable.Application of subsection (1)Subsection (1) applies only in respect of deposits made, and cheques, drafts and bills of exchange issued, certified or accepted after May 31, 1990.ApplicationThis section shall not apply until the day that is eight years after the day on which this section comes into force.
  • 1991, c. 45, s. 424;
  • 1993, c. 34, s. 127;
  • 2007, c. 6, s. 361.
Previous Version
Notice of unpaid amountA company shall mail to each person, in so far as is known to the company,to whom a deposit referred to in paragraph 424(1)(a) is payable, orto whom or at whose request an instrument referred to in paragraph 424(1)(b) was issued, certified or accepted,at the person’s recorded address, a notice stating that the deposit or instrument remains unpaid.When notice to be givenA notice required by subsection (1) shall be given during the month of January next following the end of the first two year period, and also during the month of January next following the end of the first five year period,in the case of a deposit made for a fixed period, after the fixed period has terminated;in the case of any other deposit, in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor; andin the case of a cheque, draft or bill of exchange, in respect of which the instrument has remained unpaid.When notice to be sentThe notice must be sent during the month of January next following the end of the first two-year period, during the month of January next following the end of the first five-year period and also during the month of January next following the end of the first nine-year period[Not in force]in the case of any other deposit, in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor; and[Not in force]
  • 1991, c. 45, s. 425;
  • 2007, c. 6, s. 362.
Previous Version
Accounts
DefinitionsThe following definitions apply in this section and in sections 431 to 434, 444.1 and 444.3.member companysociété membremember company means a company that is a member institution as defined in section 2 of the Canada Deposit Insurance Corporation Act.personal deposit accountcompte de dépôt personnelpersonal deposit account means a deposit account in the name of one or more natural persons that is kept by that person or those persons for a purpose other than that of carrying on business.retail deposit accountcompte de dépôt de détailretail deposit account means a personal deposit account that is opened with a deposit of less than $150,000 or any greater amount that may be prescribed.
  • 2001, c. 9, s. 538.
Account chargesA company shall not, directly or indirectly, charge or receive any sum for the keeping of an account unless the charge is made by express agreement between the company and a customer or by order of a court.
Disclosure on opening accountA company shall not, after the day that is six months after the coming into force of this Part, open or maintain an interest-bearing deposit account in Canada in the name of any natural person unless the company discloses, in accordance with the regulations, to the person who requests the company to open the account, the rate of interest applicable to the account and how the amount of interest to be paid is to be calculated.ExceptionSubsection (1) does not apply in respect of an interest-bearing deposit account that is opened with a deposit in excess of $150,000 or any greater amount that may be prescribed.
  • 1991, c. 45, s. 427;
  • 2001, c. 9, s. 539.
Disclosure in advertisementsNo person shall authorize the publication, issue or appearance of any advertisement in Canada that indicates the rate of interest offered by a company on an interest-bearing deposit or a debt obligation unless the advertisement discloses, in accordance with the regulations, how the amount of interest is to be calculated.
Disclosure regulationsThe Governor in Council may make regulations respectingthe time and place at which and the form and manner in which disclosure is to be made by a company ofinterest rates applicable to debts of the company and deposits with the company, andthe manner in which the amount of interest paid is to be calculated;the manner in which any charges for the keeping of an account are to be disclosed by a company to its customers and when the disclosure is to be made; andsuch other matters or things as may be necessary to carry out the requirements of sections 426 to 428.
  • 1991, c. 45, s. 429;
  • 2012, c. 5, s. 168.
Previous Version
[Repealed, 2001, c. 9, s. 540]
Disclosure required on opening a deposit accountSubject to subsections (2) to (4), a company shall not open a deposit account in the name of a customer unless, at or before the time the account is opened, the company provides in writing to the individual who requests the opening of the accounta copy of the account agreement with the company;information about all charges applicable to the account;information about how the customer will be notified of any increase in those charges and of any new charges applicable to the account;information about the company’s procedures relating to complaints about the application of any charge applicable to the account; andsuch other information as may be prescribed.ExceptionIf a deposit account is not a personal deposit account and the amount of a charge applicable to the account cannot be established at or before the time the account is opened, the company shall, as soon as is practicable after the amount is established, provide the customer in whose name the account is kept with a notice in writing of the amount of the charge.ExceptionIf a company has a deposit account in the name of a customer and the customer by telephone requests the opening of another deposit account in the name of the customer and the company has not complied with subsection (1) in respect of the opening of that other account, the company shall not open the account unless it provides the customer orally with any information prescribed at or before the time the account is opened.Disclosure in writingIf a company opens an account under subsection (3), it shall, not later than seven business days after the account is opened, provide to the customer in writing the agreement and information referred to in subsection (1).Right to close accountA customer may, within 14 business days after a deposit account is opened under subsection (3), close the account without charge and in such case is entitled to a refund of any charges related to the operation of the account, other than interest charges, incurred while the account was open.RegulationsFor the purposes of subsection (4), the Governor in Council may make regulations prescribing circumstances in which, and the time when, the agreement and information will be deemed to have been provided to the customer.
  • 1991, c. 45, s. 431;
  • 1997, c. 15, s. 378;
  • 2001, c. 9, s. 541.
Disclosure of chargesA company shall disclose to its customers and to the public, at the prescribed time and place and in the prescribed form and manner, the charges applicable to deposit accounts with the company and the usual amount, if any, charged by the company for services normally provided by the company to its customers and to the public.
  • 1991, c. 45, s. 432;
  • 2012, c. 5, s. 169.
Previous Version
No increase or new charges without disclosureA company shall not increase any charge applicable to a personal deposit account with the company or introduce any new charge applicable to a personal deposit account with the company unless the company discloses the charge at the prescribed time and place and in the prescribed form and manner to the customer in whose name the account is kept.Mandatory disclosureWith respect to prescribed services in relation to deposit accounts, other than personal deposit accounts, a company shall not increase any charge for any such service in relation to a deposit account with the company or introduce any new charge for any such service in relation to a deposit account with the company unless the company discloses the charge at the prescribed time and place and in the prescribed form and manner to the customer in whose name the account is kept.
  • 1991, c. 45, s. 433;
  • 2012, c. 5, s. 169.
Previous Version
ApplicationSections 431 to 433 apply only in respect of charges applicable to deposit accounts with the company in Canada and services provided by the company in Canada.
  • 1991, c. 45, s. 434;
  • 2001, c. 9, s. 542.
Registered Products
Disclosure required concerning registered productsSubject to subsection (2), a company shall not open an account that is or forms part of a registered product in the name of a customer, or enter into an agreement with a customer for a prescribed product or service that is or forms part of a registered product, unless the company provides, in the prescribed manner, to the individual requesting the account or the prescribed product or serviceinformation about all charges applicable to the registered product;information about how the customer will be notified of any increase in those charges and of any new charges applicable to the registered product;information about the company’s procedures relating to complaints about the application of any charge applicable to the registered product; andany other information that may be prescribed.RegulationsThe Governor in Council may make regulations specifying the circumstances under which a company need not provide the information.Definition of registered productIn this section, registered product means a product that is defined to be a registered product by the regulations.
  • 2007, c. 6, s. 363.
Borrowing Costs
Definition of cost of borrowingFor the purposes of this section and sections 435.1 to 442, cost of borrowing means, in respect of a loan made by a company,the interest or discount applicable to the loan;any amount charged in connection with the loan that is payable by the borrower to the company; andany charge prescribed to be included in the cost of borrowing.For those purposes, however, cost of borrowing does not include any charge prescribed to be excluded from the cost of borrowing.
  • 1991, c. 45, s. 435;
  • 1997, c. 15, s. 379;
  • 2001, c. 9, s. 543.
Rebate of borrowing costsWhere a company makes a loan in respect of which the disclosure requirements of section 436 apply and the loan is not secured by a mortgage on real property and is required to be repaid either on a fixed future date or by instalments, the company shall, if there is a prepayment of the loan, rebate to the borrower a portion of the charges included in the cost of borrowing in respect of the loan.ExceptionThe charges to be rebated do not include the interest or discount applicable to the loan.RegulationsThe Governor in Council may make regulations governing the rebate of charges under subsection (1). The rebate shall be made in accordance with those regulations.
  • 1997, c. 15, s. 379.
Disclosing borrowing costsA company shall not make a loan to a natural person that is repayable in Canada unless the cost of borrowing, as calculated and expressed in accordance with section 437, and other prescribed information have been disclosed by the company to the borrower at the prescribed time and place and in the prescribed form and manner.Non-applicationSubsection (1) does not apply in respect of a loan that is of a prescribed class of loans.
  • 1991, c. 45, s. 436;
  • 1997, c. 15, s. 379;
  • 2012, c. 5, s. 170.
Previous Version
Calculating borrowing costsThe cost of borrowing shall be calculated, in the prescribed manner, on the basis that all obligations of the borrower are duly fulfilled and shall be expressed as a rate per annum and, in prescribed circumstances, as an amount in dollars and cents.
Additional disclosureWhere a company makes a loan in respect of which the disclosure requirements of section 436 are applicable and the loan is required to be repaid either on a fixed future date or by instalments, the company shall disclose to the borrower, in accordance with the regulations,whether the borrower has the right to repay the amount borrowed before the maturity of the loan and, if applicable,any terms and conditions relating to that right, including the particulars of the circumstances in which the borrower may exercise that right, andwhether, in the event that the borrower exercises the right, any portion of the cost of borrowing is to be rebated, the manner in which any such rebate is to be calculated or, if a charge or penalty will be imposed on the borrower, the manner in which the charge or penalty is to be calculated;in the event that an amount borrowed is not repaid at maturity or, if applicable, an instalment is not paid on the day the instalment is due to be paid, particulars of the charges or penalties to be paid by the borrower because of the failure to repay or pay in accordance with the contract governing the loan;at the prescribed time and place and in the prescribed form and manner, any prescribed changes respecting the cost of borrowing or the loan agreement;particulars of any other rights and obligations of the borrower; andany other prescribed information, at the prescribed time and place and in the prescribed form and manner.Disclosure in credit card applicationsA company shall, in accordance with the regulations, at the prescribed time and place and in the prescribed form and manner, provide prescribed information in any application forms or related documents that it prepares for the issuance of credit, payment or charge cards and provide prescribed information to any person applying to it for a credit, payment or charge card.Disclosure re credit cardsWhere a company issues or has issued a credit, payment or charge card to a natural person, the company shall, in addition to disclosing the costs of borrowing in respect of any loan obtained through the use of the card, disclose to the person, in accordance with the regulations,any charges or penalties described in paragraph (1)(b);particulars of the person’s rights and obligations;any charges for which the person becomes responsible by accepting or using the card;at the prescribed time and place and in the prescribed form and manner, any prescribed changes respecting the cost of borrowing or the loan agreement; andany other prescribed information, at the prescribed time and place and in the prescribed form and manner.Additional disclosure re other loansWhere a company enters into or has entered into an arrangement, including a line of credit, for the making of a loan in respect of which the disclosure requirements of section 436 apply and the loan is not a loan in respect of which subsection (1) or (2) applies, the company shall, in addition to disclosing the costs of borrowing, disclose to the person to whom the loan is made, in accordance with the regulations,any charges or penalties described in paragraph (1)(b);particulars of the person’s rights and obligations;any charges for which the person is responsible under the arrangement;at the prescribed time and place and in the prescribed form and manner, any prescribed changes respecting the cost of borrowing under the arrangement; andany other prescribed information, at the prescribed time and place and in the prescribed form and manner.
  • 1991, c. 45, s. 438;
  • 1997, c. 15, s. 380;
  • 2012, c. 5, s. 171.
Previous Version
Renewal statementIf a company makes a loan in respect of which the disclosure requirements of section 436 apply and the loan is secured by a mortgage on real property, the company shall disclose to the borrower, at the prescribed time and place and in the prescribed form and manner, any information that is prescribed respecting the renewal of the loan.
  • 1997, c. 15, s. 381;
  • 2012, c. 5, s. 172.
Previous Version
Disclosure in advertisingNo person shall authorize the publication, issue or appearance of any advertisement in Canada relating to arrangements referred to in subsection 438(3), loans, credit cards, payment cards or charge cards, offered to natural persons by a company, and purporting to disclose prescribed information about the cost of borrowing or about any other matter unless the advertisement discloses prescribed information at the prescribed time and place and in the prescribed form and manner.
  • 1991, c. 45, s. 439;
  • 1997, c. 15, s. 381;
  • 2012, c. 5, s. 172.
Previous Version
Regulations re borrowing costsThe Governor in Council may make regulationsrespecting the time and place at which, and the form and manner in which, a company is to disclose to a borrowerthe cost of borrowing,any rebate of the cost of borrowing, andany other information relating to a loan, arrangement, credit card, payment card or charge card referred to in section 438;respecting the contents of any statement disclosing the cost of borrowing and other information required to be disclosed by a company to a borrower;respecting the manner of calculating the cost of borrowing;respecting the circumstances under which the cost of borrowing is to be expressed as an amount in dollars and cents;specifying any class of loans that are not to be subject to section 435.1, subsection 436(1) or 438(1) or (3) or section 438.1 or 439 or the regulations or any specified provisions of the regulations;respecting the time and place at which, and the form and manner in which, any rights, obligations, charges or penalties referred to in sections 435.1 to 439 are to be disclosed;prohibiting the imposition of any charge or penalty referred to in section 438 or providing that the charge or penalty, if imposed, will not exceed a prescribed amount;respecting the nature or amount of any charge or penalty referred to in paragraph 438(1)(b), (2)(a) or (3)(a) and the costs of the company that may be included or excluded in the determination of the charge or penalty;respecting the method of calculating the amount of rebate of the cost of borrowing, or the portion of the cost of borrowing referred to in subparagraph 438(1)(a)(ii);respecting advertisements made by a company regarding arrangements referred to in subsection 438(3), loans, credit cards, payment cards or charge cards;respecting the renewal of loans; andrespecting such other matters or things as are necessary to carry out the purposes of sections 435.1 to 439.
  • 1991, c. 45, s. 440;
  • 1997, c. 15, s. 381;
  • 2012, c. 5, s. 173.
Previous Version
Complaints
Procedures for dealing with complaintsA company shallestablish procedures for dealing with complaints made by persons having requested or received products or services in Canada from the company;designate an officer or employee of the company to be responsible for implementing those procedures; anddesignate one or more officers or employees of the company to receive and deal with those complaints.Procedures to be filed with CommissionerA company shall file with the Commissioner a copy of its procedures established under paragraph (1)(a).How procedures to be made availableA company shall make its procedures established under paragraph (1)(a) availablein the form of a brochure, at its branches where products or services are offered in Canada;on its websites through which products or services are offered in Canada; andin written format to be sent to any person who requests them.Information on contacting AgencyA company shall also make prescribed information on how to contact the Agency available whenever it makes its procedures established under paragraph (1)(a) available under subsection (3).
  • 1991, c. 45, s. 441;
  • 1997, c. 15, s. 382;
  • 2001, c. 9, s. 545;
  • 2007, c. 6, s. 364.
Previous Version
Obligation to be member of complaints bodyIn any province, if there is no law of the province that makes a company subject to the jurisdiction of an organization that deals with complaints made by persons having requested or received products or services in the province from a company, the company shall be a member of an organization that is not controlled by it and that deals with those complaints that have not been resolved to the satisfaction of the persons under procedures established by companies under paragraph 441(1)(a).
  • 2001, c. 9, s. 546.
Information on contacting AgencyA company shall, in accordance with the regulations, at the prescribed time and place and in the prescribed form and manner, provide a person requesting or receiving a product or service from it with prescribed information on how to contact the Agency if the person has a complaint about a deposit account, an arrangement referred to in subsection 438(3), a payment, credit or charge card, the disclosure of or manner of calculating the cost of borrowing in respect of a loan or about any other obligation of the company under a consumer provision.ReportThe Commissioner shall prepare a report, to be included in the report referred to in section 34 of the Financial Consumer Agency of Canada Act, respectingprocedures for dealing with complaints established by companies pursuant to paragraph 441(1)(a); andthe number and nature of complaints that have been brought to the attention of the Agency by persons who have requested or received a product or service from a company.
  • 1991, c. 45, s. 442;
  • 1997, c. 15, s. 383;
  • 2001, c. 9, s. 547;
  • 2012, c. 5, s. 174.
Previous Version
Miscellaneous
Charges for prescribed products or servicesA company shall not, directly or indirectly, charge or receive any sum for the provision of any prescribed products or services unless the charge is made by express agreement between it and a customer or by order of a court.
  • 2007, c. 6, s. 365.
Prepayment protectedA company shall not make a loan to a natural person that is repayable in Canada, the terms of which prohibit prepayment of the money advanced or any instalment thereon before its due date.Minimum balanceExcept by express agreement between the company and the borrower, the making in Canada of a loan or advance by a company to a borrower shall not be subject to a condition that the borrower maintain a minimum credit balance with the company.Non-application of subsection (1)Subsection (1) does not apply in respect of a loanthat is secured by a mortgage on real property; orthat is made for business purposes and the principal amount of which is more than $100,000 or such other amount as may be prescribed.Government chequesA company shall not make a chargefor cashing a cheque or other instrument drawn on the Receiver General or on the Receiver General’s account in the Bank of Canada, in a company or in any other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament;for cashing any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund; orin respect of any cheque or other instrument that isdrawn in favour of the Receiver General, the Government of Canada or any department thereof or any public officer acting in the capacity of a public officer, andtendered for deposit to the credit of the Receiver General.Deposits of Government of CanadaNothing in subsection (4) precludes any arrangement between the Government of Canada and a company concerningcompensation for services performed by the company for the Government of Canada; orinterest to be paid on any or all deposits of the Government of Canada with the company.
  • 1991, c. 45, s. 443;
  • 1997, c. 15, s. 384.
Regulations respecting the holding of fundsThe Governor in Council may make regulations respecting the maximum period during which a company may hold funds in respect of specified classes of cheques or other instruments that are deposited into an account at a branch or prescribed point of service in Canada before permitting the customer in whose name the account is kept to access the funds.
  • 2007, c. 6, s. 366.
Regulations — activitiesThe Governor in Council may make regulations respecting any matters involving a company’s dealings, or its employees’ or representatives’ dealings, with customers or the public, includingwhat a company may or may not do in carrying out any of the activities in which it is permitted to engage, or in providing any of the services that it may provide, under section 409 and any ancillary, related or incidental activities or services; andthe time and place at which and the form and manner in which any of those activities are to be carried out or any of those services are to be provided.
  • 2009, c. 2, s. 291;
  • 2012, c. 5, s. 175.
Previous Version
Regulations re customer informationThe Governor in Council may make regulationsrequiring a company to establish procedures regarding the collection, retention, use and disclosure of any information about its customers or any class of customers;requiring a company to establish procedures for dealing with complaints made by a customer about the collection, retention, use or disclosure of information about the customer;respecting the disclosure by a company of information relating to the procedures referred to in paragraphs (a) and (b);requiring a company to designate the officers and employees of the company who are responsible forimplementing the procedures referred to in paragraph (b), andreceiving and dealing with complaints made by a customer of the company about the collection, retention, use or disclosure of information about the customer;requiring a company to report information relating tocomplaints made by customers of the company about the collection, retention, use or disclosure of information, andthe actions taken by the company to deal with the complaints; anddefining “information”, “collection” and “retention” for the purposes of paragraphs (a) to (e) and the regulations made under those paragraphs.
  • 1991, c. 45, s. 444;
  • 1997, c. 15, s. 385.
Notice of branch closureSubject to regulations made under subsection (5), a member company with a branch in Canada at which it, through a natural person, opens retail deposit accounts and disburses cash to customers, shall give notice in accordance with those regulations before closing that branch or having it cease to carry on either of those activities.Pre-closure meetingAfter notice is given but before the branch is closed or ceases to carry on the activities, the Commissioner shall, in prescribed situations, require the company to convene and hold a meeting between representatives of the company, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing or cessation of activities, including, but not limited to, alternative service delivery by the company and measures to help the branch’s customers adjust to the closing or cessation of activities.Meeting detailsThe Commissioner may establish rules for convening a meeting referred to in subsection (2) and for its conduct.Not statutory instrumentsThe Statutory Instruments Act does not apply in respect of rules established under subsection (3).RegulationsThe Governor in Council may make regulations prescribingthe time and place at which and the form and manner in which notice shall be given under subsection (1), the persons to whom it shall be given and the information to be included, the time, place, form and manner being permitted to vary according to circumstances specified in the regulations;circumstances in which a member company is not required to give notice under subsection (1), circumstances in which the Commissioner may exempt a member company from the requirement to give notice under that subsection, and circumstances in which the Commissioner may vary the time and place at which and the form and manner in which notice is required to be given under any regulation made under paragraph (a); andcircumstances in which a meeting may be convened under subsection (2).
  • 2001, c. 9, s. 548;
  • 2007, c. 6, s. 367;
  • 2012, c. 5, s. 176.
Previous Version
Public accountability statementsA company with equity of $1 billion or more shall, in accordance with regulations made under subsection (4), annually publish a statement describing the contribution of the company and its prescribed affiliates to the Canadian economy and society.FilingA company shall, at the prescribed time and place and in the prescribed form and manner, file a copy of the statement with the Commissioner.Provision of statement to publicA company shall, at the prescribed time and place and in the prescribed form and manner, disclose the statement to its customers and to the public.RegulationsThe Governor in Council may make regulations prescribingthe name, contents and form of a statement referred to in subsection (1) and the time within which, the place at which and the manner in which it must be prepared;affiliates of a company referred to in subsection (1);the time and place at which and the form and manner in which a statement must be filed under subsection (2); andthe time and place at which and the form and manner in which a statement mentioned in subsection (3) is to be disclosed, respectively, to a company’s customers and to the public.
  • 2001, c. 9, s. 548;
  • 2012, c. 5, s. 177.
Previous Version
Regulations re disclosureThe Governor in Council may, subject to any other provisions of this Act relating to the disclosure of information, make regulations respecting the disclosure of information by companies or any prescribed class of companies, including regulations respectingthe information that must be disclosed, including information relating toany product or service or prescribed class of products or services offered by them,any of their policies, procedures or practices relating to the offer by them of any product or service or prescribed class of products or services,anything they are required to do or to refrain from doing under a consumer provision, andany other matter that may affect their dealings, or their employees’ or representatives’ dealings, with customers or the public;the time and place at which, the form and manner in which and the persons to whom information is to be disclosed; andthe content and form of any advertisement by companies or any prescribed class of companies relating to any matter referred to in paragraph (a).
  • 2001, c. 9, s. 548;
  • 2007, c. 6, s. 368;
  • 2012, c. 5, s. 178.
Previous Version
Bank Act securityA bank that is continued as a company under this Act that, immediately before that continuance, held any outstanding security pursuant to section 426 or 427 of the Bank Act may continue to hold the security for the life of the loan to which the security relates and all the provisions of the Bank Act relating to the security and its enforcement continue to apply to the company as though it were a bank.
  • 1991, c. 45, ss. 445, 559.
Transmission in case of deathWhere the transmission of a debt owing by a company by reason of a deposit, of property held by a company as security or for safe-keeping or of rights with respect to a safety deposit box and property deposited therein takes place because of the death of a person, the delivery to the company ofan affidavit or declaration in writing in form satisfactory to the company signed by or on behalf of a person claiming by virtue of the transmission stating the nature and effect of the transmission, andone of the following documents, namely,when the claim is based on a will or other testamentary instrument or on a grant of probate thereof or on such a grant and letters testamentary or other document of like import or on a grant of letters of administration or other document of like import, purporting to be issued by any court of authority in Canada or elsewhere, an authenticated copy or certificate thereof under the seal of the court or authority without proof of the authenticity of the seal or other proof, orwhen the claim is based on a notarial will, an authenticated copy thereof,is sufficient justification and authority for giving effect to the transmission in accordance with the claim.IdemNothing in subsection (1) shall be construed to prevent a company from refusing to give effect to a transmission until there has been delivered to the company such documentary or other evidence of or in connection with the transmission as it may deem requisite.
Branch of account with respect to depositsFor the purposes of this Act, the branch of account with respect to a deposit account isthe branch the address or name of which appears on the specimen signature card or other signing authority signed by a depositor with respect to the deposit account or that is designated by agreement between the company and the depositor at the time of opening of the deposit account; orif no branch has been identified or agreed on as provided in paragraph (a), the branch that is designated as the branch of account with respect thereto by the company by notice in writing to the depositor.Where debt payableThe amount of any debt owing by a company by reason of a deposit in a deposit account in the company is payable to the person entitled thereto only at the branch of account and the person entitled thereto is not entitled to demand payment or to be paid at any other branch of the company.IdemNotwithstanding subsection (2), a company may permit, either occasionally or as a regular practice, the person to whom the company is indebted by reason of a deposit in a deposit account in the company to withdraw moneys owing by reason of that deposit at a branch of the company other than the branch of account or to draw cheques or other orders for the payment of such moneys at a branch other than the branch of account.Situs of indebtednessThe indebtedness of a company by reason of a deposit in a deposit account in the company shall be deemed for all purposes to be situated at the place where the branch of account is situated.
Effect of writ, etc.Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of a company, or on money owing to a person by reason of a deposit account in a company, only if the document or a notice of it is served at the branch of the company that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;an order or injunction made by a court;an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; oran enforcement notice in respect of a support order or support provision.NoticesAny notification sent to a company with respect to a customer of the company, other than a document referred to in subsection (1) or (3), constitutes notice to the company and fixes the company with knowledge of its contents only if sent to and received at the branch of the company that is the branch of account of an account held in the name of that customer.Notices: Minister of National RevenueDespite subsections (1) and (2), a notice, demand, order or other document issued with respect to a customer of a company constitutes notice to the company and fixes the company with knowledge of its contents and, where applicable, is binding on property belonging to the customer and in the possession of the company or on money owing to the customer by reason of an account in the company, if it is sent to the branch of the company referred to in subsection (1) or (2), an office of the company referred to in paragraph (3)(a) or any other office agreed to by the company and the Minister of National Revenue and it relates tothe administration of an Act of Parliament by the Minister of National Revenue; orthe administration of an Act of the legislature of a province or legislation made by an aboriginal government, where the Minister or the Minister of National Revenue has entered into a tax collection agreement under an Act of Parliament with the government of the province or the aboriginal government.ExceptionSubsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision ifthe enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of a company designated in accordance with the regulations in respect of a province; andthe order or provision can be enforced under the laws of that province.Time of applicationSubsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.RegulationsThe Governor in Council may make regulationsrespecting the designation by a company of a place, for the purpose of subsection (3), in any province for the service of enforcement notices in respect of support orders and support provisions;prescribing the manner in which a company shall publicize the locations of designated offices of the company; andrespecting the information that must accompany enforcement notices in respect of support orders and support provisions.DefinitionsThe following definitions apply in this section.designated officebureau désignédesignated office means a place designated in accordance with regulations made for the purpose of subsection (3).enforcement noticeavis d’exécutionenforcement notice, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision.support orderordonnance alimentairesupport order means an order or judgment or interim order or judgment for family financial support.support provisiondisposition alimentairesupport provision means a provision of an agreement relating to the payment of maintenance or family financial support.
  • 1991, c. 45, s. 448;
  • 2001, c. 9, s. 549;
  • 2005, c. 19, s. 64.
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INVESTMENTSDefinitions and Application
DefinitionsThe following definitions apply in this Part.closed-end fundfonds d’investissement à capital fixeclosed-end fund means an entity whose activities are limited to investing the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities, and whose securities are fixed in number and distributed to the public in an offering under a preliminary prospectus, prospectus, short-form prospectus or similar document in accordance with the laws of a province or a foreign jurisdiction;traded on an exchange or an over-the-counter market; andliquidated on a fixed future termination date, the proceeds of which are allocated to the holders of the securities on a proportional basis.commercial loanprêt commercialcommercial loan meansany loan made or acquired by a company, other thana loan to a natural person in an amount of two hundred and fifty thousand dollars or less,a loan to the Government of Canada, the government of a province, a municipality, or to any agency thereof, or to the government of a foreign country or any political subdivision thereof, or any agency thereof, or to a prescribed international agency,a loan that is guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in subparagraph (ii),a loan that is secured by a mortgage on real property, ifthe mortgage is on residential property and the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 80% of the value of the property at the time the loan is made or acquired, orthe mortgage is on real property other than residential property andthe amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 80% of the value of the property at the time the loan is made or acquired, andat the time the loan is made or acquired, the property provides an annual income sufficient to pay all annual expenses related to the property, including the payments owing under the mortgage and the mortgages having an equal or prior claim against the property,a loan that is secured by a mortgage on real property, ifthe mortgage is on residential property andthe amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, exceeds 80% of the value of the property at the time the loan is made or acquired, andrepayment of the amount of the loan that exceeds 80% of the value of the property is guaranteed or insured by a government agency or private insurer approved by the Superintendent,the mortgage is on real property other than residential property andthe amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, exceeds 80% of the value of the property at the time the loan is made or acquired,repayment of the amount of the loan that exceeds 80% of the value of the property is guaranteed or insured by a government agency or private insurer approved by the Superintendent, andat the time the loan is made or acquired, the property provides an annual income sufficient to pay all annual expenses related to the property, including the payments owing under the mortgage and the mortgages having an equal or prior claim against the property, orthe loan is one referred to in paragraph 418(2)(d),a loan thatconsists of a deposit made by the company with another financial institution,is fully secured by a deposit with any financial institution, including the company,is fully secured by debt obligations guaranteed by any financial institution other than the company, oris fully secured by a guarantee of a financial institution other than the company, ora loan to an entity controlled by the company;an investment in debt obligations, other thandebt obligations that areguaranteed by any financial institution other than the company,fully secured by deposits with any financial institution, including the company, orfully secured by debt obligations that are guaranteed by any financial institution other than the company,debt obligations issued by the Government of Canada, the government of a province, a municipality, or by any agency thereof, or by the government of a foreign country or any political subdivision thereof, or by any agency thereof, or by a prescribed international agency,debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in subparagraph (ii),debt obligations that are widely distributed, as that expression is defined by the regulations, ordebt obligations of an entity controlled by the company; andan investment in shares of a body corporate or ownership interests in an unincorporated entity, other thanshares or ownership interests that are widely distributed, as that expression is defined by the regulations,shares or ownership interests of an entity controlled by the company, orparticipating shares.factoring entityentité s’occupant d’affacturagefactoring entity means a factoring entity as defined in the regulations.finance entityentité s’occupant de financementfinance entity means a finance entity as defined in the regulations.financial leasing entityentité s’occupant de crédit-bailfinancial leasing entity means an entitythe activities of which are limited to the financial leasing of personal property and such related activities as are prescribed and whose activities conform to such restrictions and limitations thereon as are prescribed; andthat, in conducting the activities referred to in paragraph (a) in Canada, does notdirect its customers or potential customers to particular dealers in the leased property or the property to be leased,enter into lease agreements with persons in respect of any motor vehicle having a gross vehicle weight, as that expression is defined by the regulations, of less than twenty-one tonnes, orenter into lease agreements with natural persons in respect of personal household property, as that expression is defined by the regulations.loanprêt ou empruntloan includes an acceptance, endorsement or other guarantee, a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit but does not include investments in securities.motor vehiclevéhicule à moteurmotor vehicle means a motorized vehicle designed to be used primarily on a public highway for the transportation of persons or things, but does not includea fire-engine, bus, ambulance or utility truck; orany other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose.mutual fund distribution entitycourtier de fonds mutuelsmutual fund distribution entity means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests ifthe proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund; andthe existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest.mutual fund entityentité s’occupant de fonds mutuelsmutual fund entity means an entitywhose activities are limited to the investing of the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities; andwhose securities entitle their holders to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of its net assets, including a separate fund or trust account of the entity.participating shareaction participanteparticipating share means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution.permitted entityentité admissiblepermitted entity means an entity in which a company is permitted to acquire a substantial investment under section 453.prescribed subsidiaryfiliale réglementaireprescribed subsidiary means a subsidiary that is one of a prescribed class of subsidiaries.specialized financing entityentité s’occupant de financement spécialspecialized financing entity means a specialized financing entity as defined in the regulations.Members of a company’s groupFor the purpose of this Part, a member of a company’s group is any of the following:an entity referred to in any of paragraphs 453(1)(a) to (f) that controls the company;a subsidiary of the company or of an entity referred to in any of paragraphs 453(1)(a) to (f) that controls the company;an entity in which the company, or an entity referred to in any of paragraphs 453(1)(a) to (f) that controls the company, has a substantial investment; or