Canada Business Corporations Act (R.S.C., 1985, c. C-44)

Act current to 2017-09-27 and last amended on 2015-02-26. Previous Versions

Marginal note:Delegation
  •  (1) Directors of a corporation may appoint from their number a managing director who is a resident Canadian or a committee of directors and delegate to such managing director or committee any of the powers of the directors.

  • (2) [Repealed, 2001, c. 14, s. 44]

  • Marginal note:Limits on authority

    (3) Notwithstanding subsection (1), no managing director and no committee of directors has authority to

    • (a) submit to the shareholders any question or matter requiring the approval of the shareholders;

    • (b) fill a vacancy among the directors or in the office of auditor, or appoint additional directors;

    • (c) issue securities except as authorized by the directors;

    • (c.1) issue shares of a series under section 27 except as authorized by the directors;

    • (d) declare dividends;

    • (e) purchase, redeem or otherwise acquire shares issued by the corporation;

    • (f) pay a commission referred to in section 41 except as authorized by the directors;

    • (g) approve a management proxy circular referred to in Part XIII;

    • (h) approve a take-over bid circular or directors’ circular referred to in Part XVII;

    • (i) approve any financial statements referred to in section 155; or

    • (j) adopt, amend or repeal by-laws.

  • R.S., 1985, c. C-44, s. 115;
  • 2001, c. 14, s. 44.
Marginal note:Validity of acts of directors and officers

 An act of a director or officer is valid notwithstanding an irregularity in their election or appointment or a defect in their qualification.

  • R.S., 1985, c. C-44, s. 116;
  • 2001, c. 14, s. 135(E).
Marginal note:Resolution in lieu of meeting
  •  (1) A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors or committee of directors, is as valid as if it had been passed at a meeting of directors or committee of directors.

  • Marginal note:Filing resolution

    (2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors or committee of directors.

  • Marginal note:Evidence

    (3) Unless a ballot is demanded, an entry in the minutes of a meeting to the effect that the chairperson of the meeting declared a resolution to be carried or defeated is, in the absence of evidence to the contrary, proof of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

  • R.S., 1985, c. C-44, s. 117;
  • 2001, c. 14, s. 45.
Marginal note:Directors’ liability
  •  (1) Directors of a corporation who vote for or consent to a resolution authorizing the issue of a share under section 25 for a consideration other than money are jointly and severally, or solidarily, liable to the corporation to make good any amount by which the consideration received is less than the fair equivalent of the money that the corporation would have received if the share had been issued for money on the date of the resolution.

  • Marginal note:Further directors’ liabilities

    (2) Directors of a corporation who vote for or consent to a resolution authorizing any of the following are jointly and severally, or solidarily, liable to restore to the corporation any amounts so distributed or paid and not otherwise recovered by the corporation:

    • (a) a purchase, redemption or other acquisition of shares contrary to section 34, 35 or 36;

    • (b) a commission contrary to section 41;

    • (c) a payment of a dividend contrary to section 42;

    • (d) a payment of an indemnity contrary to section 124; or

    • (e) a payment to a shareholder contrary to section 190 or 241.

  • Marginal note:Contribution

    (3) A director who has satisfied a judgment rendered under this section is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.

  • Marginal note:Recovery

    (4) A director liable under subsection (2) is entitled to apply to a court for an order compelling a shareholder or other recipient to pay or deliver to the director any money or property that was paid or distributed to the shareholder or other recipient contrary to section 34, 35, 36, 41, 42, 124, 190 or 241.

  • Marginal note:Order of court

    (5) In connection with an application under subsection (4) a court may, if it is satisfied that it is equitable to do so,

    • (a) order a shareholder or other recipient to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other recipient contrary to section 34, 35, 36, 41, 42, 124, 190 or 241;

    • (b) order a corporation to return or issue shares to a person from whom the corporation has purchased, redeemed or otherwise acquired shares; or

    • (c) make any further order it thinks fit.

  • Marginal note:No liability

    (6) A director who proves that the director did not know and could not reasonably have known that the share was issued for a consideration less than the fair equivalent of the money that the corporation would have received if the share had been issued for money is not liable under subsection (1).

  • Marginal note:Limitation

    (7) An action to enforce a liability imposed by this section may not be commenced after two years from the date of the resolution authorizing the action complained of.

  • R.S., 1985, c. C-44, s. 118;
  • 2001, c. 14, ss. 46, 135(E).
Marginal note:Liability of directors for wages
  •  (1) Directors of a corporation are jointly and severally, or solidarily, liable to employees of the corporation for all debts not exceeding six months wages payable to each such employee for services performed for the corporation while they are such directors respectively.

  • Marginal note:Conditions precedent to liability

    (2) A director is not liable under subsection (1) unless

    • (a) the corporation 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;

    • (b) the corporation has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proved within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or

    • (c) the corporation has made an assignment or a bankruptcy order has been made against it under the Bankruptcy and Insolvency Act and a claim for the debt has been proved within six months after the date of the assignment or bankruptcy order.

  • Marginal note:Limitation

    (3) A director, unless sued for a debt referred to in subsection (1) while a director or within two years after ceasing to be a director, is not liable under this section.

  • Marginal note:Amount due after execution

    (4) Where execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.

  • Marginal note:Subrogation of director

    (5) A director who pays a debt referred to in subsection (1) that is proved in liquidation and dissolution or bankruptcy proceedings is entitled to any priority that the employee would have been entitled to and, if a judgment has been obtained, the director is

    • (a) in Quebec, subrogated to the employee’s rights as declared in the judgment; and

    • (b) elsewhere in Canada, entitled to an assignment of the judgment.

  • Marginal note:Contribution

    (6) A director who has satisfied a claim under this section is entitled to contribution from the other directors who were liable for the claim.

  • R.S., 1985, c. C-44, s. 119;
  • 1992, c. 27, s. 90;
  • 2001, c. 14, ss. 47, 135(E);
  • 2004, c. 25, s. 187;
  • 2011, c. 21, s. 51.
Marginal note:Disclosure of interest
  •  (1) A director or an officer of a corporation shall disclose to the corporation, in writing or by requesting to have it entered in the minutes of meetings of directors or of meetings of committees of directors, the nature and extent of any interest that he or she has in a material contract or material transaction, whether made or proposed, with the corporation, if the director or officer

    • (a) is a party to the contract or transaction;

    • (b) is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction; or

    • (c) has a material interest in a party to the contract or transaction.

  • Marginal note:Time of disclosure for director

    (2) The disclosure required by subsection (1) shall be made, in the case of a director,

    • (a) at the meeting at which a proposed contract or transaction is first considered;

    • (b) if the director was not, at the time of the meeting referred to in paragraph (a), interested in a proposed contract or transaction, at the first meeting after he or she becomes so interested;

    • (c) if the director becomes interested after a contract or transaction is made, at the first meeting after he or she becomes so interested; or

    • (d) if an individual who is interested in a contract or transaction later becomes a director, at the first meeting after he or she becomes a director.

  • Marginal note:Time of disclosure for officer

    (3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,

    • (a) immediately after he or she becomes aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting;

    • (b) if the officer becomes interested after a contract or transaction is made, immediately after he or she becomes so interested; or

    • (c) if an individual who is interested in a contract later becomes an officer, immediately after he or she becomes an officer.

  • Marginal note:Time of disclosure for director or officer

    (4) If a material contract or material transaction, whether entered into or proposed, is one that, in the ordinary course of the corporation’s business, would not require approval by the directors or shareholders, a director or officer shall disclose, in writing to the corporation or request to have it entered in the minutes of meetings of directors or of meetings of committees of directors, the nature and extent of his or her interest immediately after he or she becomes aware of the contract or transaction.

  • Marginal note:Voting

    (5) A director required to make a disclosure under subsection (1) shall not vote on any resolution to approve the contract or transaction unless the contract or transaction unless the contract or transaction

    • (a) relates primarily to his or her remuneration as a director, officer, employee, agent or mandatary of the corporation or an affiliate;

    • (b) is for indemnity or insurance under section 124; or

    • (c) is with an affiliate.

  • Marginal note:Continuing disclosure

    (6) For the purposes of this section, a general notice to the directors declaring that a director or an officer is to be regarded as interested, for any of the following reasons, in a contract or transaction made with a party, is a sufficient declaration of interest in relation to the contract or transaction:

    • (a) the director or officer is a director or officer, or acting in a similar capacity, of a party referred to in paragraph (1)(b) or (c);

    • (b) the director or officer has a material interest in the party; or

    • (c) there has been a material change in the nature of the director’s or the officer’s interest in the party.

  • Marginal note:Access to disclosures

    (6.1) The shareholders of the corporation may examine the portions of any minutes of meetings of directors or of committees of directors that contain disclosures under this section, and any other documents that contain those disclosures, during the usual business hours of the corporation.

  • Marginal note:Avoidance standards

    (7) A contract or transaction for which disclosure is required under subsection (1) is not invalid, and the director or officer is not accountable to the corporation or its shareholders for any profit realized from the contract or transaction, because of the director’s or officer’s interest in the contract or transaction or because the director was present or was counted to determine whether a quorum existed at the meeting of directors or committee of directors that considered the contract or transaction, if

    • (a) disclosure of the interest was made in accordance with subsections (1) to (6);

    • (b) the directors approved the contract or transaction; and

    • (c) the contract or transaction was reasonable and fair to the corporation when it was approved.

  • Marginal note:Confirmation by shareholders

    (7.1) Even if the conditions of subsection (7) are not met, a director or officer, acting honestly and in good faith, is not accountable to the corporation or to its shareholders for any profit realized from a contract or transaction for which disclosure is required under subsection (1), and the contract or transaction is not invalid by reason only of the interest of the director or officer in the contract or transaction, if

    • (a) the contract or transaction is approved or confirmed by special resolution at a meeting of the shareholders;

    • (b) 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; and

    • (c) the contract or transaction was reasonable and fair to the corporation when it was approved or confirmed.

  • Marginal note:Application to court

    (8) If a director or an officer of a corporation fails to comply with this section, a court may, on application of the corporation or any of its shareholders, set aside the contract or transaction on any terms that it thinks fit, or require the director or officer to account to the corporation for any profit or gain realized on it, or do both those things.

  • R.S., 1985, c. C-44, s. 120;
  • 2001, c. 14, s. 48;
  • 2011, c. 21, s. 52(E).
 
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