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

Act current to 2016-06-06 and last amended on 2015-02-26. Previous Versions

Marginal note:Acquisition of corporation’s own shares
  •  (1) Subject to subsection (2) and to its articles, a corporation may purchase or otherwise acquire shares issued by it.

  • Marginal note:Limitation

    (2) A corporation shall not make any payment to purchase or otherwise acquire shares issued by it if there are reasonable grounds for believing that

    • (a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or

    • (b) the realizable value of the corporation’s assets would after the payment be less than the aggregate of its liabilities and stated capital of all classes.

  • R.S., 1985, c. C-44, s. 34;
  • 2001, c. 14, s. 20(F).
Marginal note:Alternative acquisition of corporation’s own shares
  •  (1) Notwithstanding subsection 34(2), but subject to subsection (3) and to its articles, a corporation may purchase or otherwise acquire shares issued by it to

    • (a) settle or compromise a debt or claim asserted by or against the corporation;

    • (b) eliminate fractional shares; or

    • (c) fulfil the terms of a non-assignable agreement under which the corporation has an option or is obliged to purchase shares owned by a director, an officer or an employee of the corporation.

  • Marginal note:Idem

    (2) Notwithstanding subsection 34(2), a corporation may purchase or otherwise acquire shares issued by it to

    • (a) satisfy the claim of a shareholder who dissents under section 190; or

    • (b) comply with an order under section 241.

  • Marginal note:Limitation

    (3) A corporation shall not make any payment to purchase or acquire under subsection (1) shares issued by it if there are reasonable grounds for believing that

    • (a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or

    • (b) the realizable value of the corporation’s assets would after the payment be less than the aggregate of

      • (i) its liabilities, and

      • (ii) the amount required for payment on a redemption or in a liquidation of all shares the holders of which have the right to be paid before the holders of the shares to be purchased or acquired, to the extent that the amount has not been included in its liabilities.

  • R.S., 1985, c. C-44, s. 35;
  • 2001, c. 14, s. 21.
Marginal note:Redemption of shares
  •  (1) Notwithstanding subsection 34(2) or 35(3), but subject to subsection (2) and to its articles, a corporation may purchase or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof stated in the articles or calculated according to a formula stated in the articles.

  • Marginal note:Limitation

    (2) A corporation shall not make any payment to purchase or redeem any redeemable shares issued by it if there are reasonable grounds for believing that

    • (a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or

    • (b) the realizable value of the corporation’s assets would after the payment be less than the aggregate of

      • (i) its liabilities, and

      • (ii) the amount that would be required to pay the holders of shares that have a right to be paid, on a redemption or in a liquidation, rateably with or before the holders of the shares to be purchased or redeemed, to the extent that the amount has not been included in its liabilities.

  • R.S., 1985, c. C-44, s. 36;
  • 2001, c. 14, s. 22.
Marginal note:Gift or legacy of shares

 A corporation may accept from any shareholder a share of the corporation surrendered to it as a gift including, in Quebec, a legacy but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 38.

  • R.S., 1985, c. C-44, s. 37;
  • 2011, c. 21, s. 24.
Marginal note:Other reduction of stated capital
  •  (1) Subject to subsection (3), a corporation may by special resolution reduce its stated capital for any purpose including, without limiting the generality of the foregoing, for the purpose of

    • (a) extinguishing or reducing a liability in respect of an amount unpaid on any share;

    • (b) distributing to the holder of an issued share of any class or series of shares an amount not exceeding the stated capital of the class or series; and

    • (c) declaring its stated capital to be reduced by an amount that is not represented by realizable assets.

  • Marginal note:Contents of special resolution

    (2) A special resolution under this section shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

  • Marginal note:Limitation

    (3) A corporation shall not reduce its stated capital for any purpose other than the purpose mentioned in paragraph (1)(c) if there are reasonable grounds for believing that

    • (a) the corporation is, or would after the reduction be, unable to pay its liabilities as they become due; or

    • (b) the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities.

  • Marginal note:Recovery

    (4) A creditor of a corporation is entitled to apply to a court for an order compelling a shareholder or other recipient

    • (a) to pay to the corporation an amount equal to any liability of the shareholder that was extinguished or reduced contrary to this section; or

    • (b) to pay or deliver to the corporation any money or property that was paid or distributed to the shareholder or other recipient as a consequence of a reduction of capital made contrary to this section.

  • Marginal note:Limitation

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

  • (6) [Repealed, 2001, c. 14, s. 23]

  • R.S., 1985, c. C-44, s. 38;
  • 2001, c. 14, s. 23.
Marginal note:Adjustment of stated capital account
  •  (1) On a purchase, redemption or other acquisition by a corporation under section 34, 35, 36, 45 or 190 or paragraph 241(3)(f), of shares or fractions thereof issued by it, the corporation shall deduct from the stated capital account maintained for the class or series of shares of which the shares purchased, redeemed or otherwise acquired form a part 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 or fractions thereof purchased, redeemed or otherwise acquired, divided by the number of issued shares of that class or series immediately before the purchase, redemption or other acquisition.

  • Marginal note:Idem

    (2) A corporation shall deduct the amount of a payment made by the corporation to a shareholder under paragraph 241(3)(g) from the stated capital account maintained for the class or series of shares in respect of which the payment was made.

  • Marginal note:Idem

    (3) A corporation shall adjust its stated capital account or accounts in accordance with any special resolution referred to in subsection 38(2).

  • Marginal note:Idem

    (4) On a conversion of issued shares of a corporation into shares of another class or series or a change under section 173, 191 or 241 of issued shares of a corporation into shares of another class or series, the corporation shall

    • (a) deduct 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, divided by the number of issued shares of that class or series immediately before the conversion or change; and

    • (b) add the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change to 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.

  • Marginal note:Stated capital of interconvertible shares

    (5) For the purposes of subsection (4) and subject to its articles, where a corporation issues two classes of shares and there is attached to each such class a right to convert a share of the one class into a share of the other class, if a share of one class is converted into a share of the other class, 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 issued shares of both classes immediately before the conversion.

  • Marginal note:Cancellation or restoration of shares

    (6) Shares or fractions thereof of any class or series of shares issued by a corporation and purchased, redeemed or otherwise acquired by it shall be cancelled or, if the articles limit the number of authorized shares, may be restored to the status of authorized but unissued shares of the class.

  • Marginal note:Exception

    (7) For the purposes of this section, a corporation holding shares in itself as permitted by subsections 31(1) and (2) is deemed not to have purchased, redeemed or otherwise acquired such shares.

  • Marginal note:Idem

    (8) For the purposes of this section, a corporation holding shares in itself as permitted by paragraph 32(1)(a) is deemed not to have purchased, redeemed or otherwise acquired the shares at the time they were acquired, but

    • (a) any of those shares that are held by the corporation at the expiration of two years, and

    • (b) any shares into which any of those shares were converted by the corporation and held under paragraph 32(1)(b) that are held by the corporation at the expiration of two years after the shares from which they were converted were acquired

    are deemed to have been acquired at the expiration of the two years.

  • Marginal note:Conversion or change of shares

    (9) Shares issued by a corporation and converted into shares of another class or series or changed under section 173, 191 or 241 into shares of another class or series shall become issued shares of the class or series of shares into which the shares have been converted or changed.

  • Marginal note:Effect of change of shares on number of unissued shares

    (10) Where the articles limit the number of authorized shares of a class of shares of a corporation and issued shares of that class or of a series of shares of that class have become, pursuant to subsection (9), issued shares of another class or series, the number of unissued shares of the first-mentioned class shall, unless the articles otherwise provide, be increased by the number of shares that, pursuant to subsection (9), became shares of another class or series.

  • Marginal note:Repayment

    (11) Debt obligations issued, pledged, hypothecated or deposited by a corporation are not redeemed by reason only that the indebtedness evidenced by the debt obligations or in respect of which the debt obligations are issued, pledged, hypothecated or deposited is repaid.

  • Marginal note:Acquisition and reissue of debt obligations

    (12) Debt obligations issued by a corporation and purchased, redeemed or otherwise acquired by it may be cancelled or, subject to any applicable trust indenture or other agreement, may be reissued, pledged or hypothecated to secure any obligation of the corporation then existing or thereafter incurred, and any such acquisition and reissue, pledge or hypothecation is not a cancellation of the debt obligations.

  • R.S., 1985, c. C-44, s. 39;
  • 1994, c. 24, s. 9(F);
  • 2001, c. 14, s. 24(F);
  • 2011, c. 21, s. 25(F).
 
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