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

Act current to 2017-11-06 and last amended on 2015-02-26. Previous Versions

Marginal note:Staleness as notice of defect

 After 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 issuer,

  • (a) if the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and such money 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; or

  • (b) if the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which such performance became due.

  • R.S., 1985, c. C-44, s. 56;
  • 2001, c. 14, s. 135(E).
Marginal note:Unauthorized signature

 An unauthorized signature on a security before or in the course of its 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 by

  • (a) an 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; or

  • (b) an employee of the issuer or of a person referred to in paragraph (a) who in the ordinary course of their duties handles the security.

  • R.S., 1985, c. C-44, s. 57;
  • 2001, c. 14, s. 135(E).
Marginal note:Completion or alteration
  •  (1) Where a security contains the signatures necessary for its issue or transfer but is incomplete in any other respect,

    • (a) any person may complete it by filling in the blanks in accordance with their authority; and

    • (b) notwithstanding 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 such incorrectness.

  • Marginal note:Enforceability

    (2) A completed security that has been improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.

  • R.S., 1985, c. C-44, s. 58;
  • 2001, c. 14, s. 135(E).
Marginal note:Warranties of agents
  •  (1) A 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 that

    • (a) the security is genuine;

    • (b) the person’s acts in connection with the issue of the security are within their authority; and

    • (c) the person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.

  • Marginal note:Limitation of liability

    (2) Unless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.

  • R.S., 1985, c. C-44, s. 59;
  • 2001, c. 14, s. 135(E).

Purchase

Marginal note:Title of purchaser
  •  (1) On delivery of a security the purchaser acquires the rights in the security that the transferor had or had authority to convey, except that 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 does not improve their position by taking from a later bona fide purchaser.

  • Marginal note:Title of bona fide purchaser

    (2) A bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.

  • Marginal note:Limitation of the purchase

    (3) A purchaser acquires rights only to the extent of the interest or right purchased.

  • R.S., 1985, c. C-44, s. 60;
  • 2001, c. 14, s. 135(E);
  • 2011, c. 21, s. 33(E).
Marginal note:Deemed notice of adverse claim
  •  (1) A purchaser of a security, or any broker for a seller or purchaser, is deemed to have notice of an adverse claim if

    • (a) the security, whether in bearer or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or

    • (b) the 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.

  • Marginal note:Notice of fiduciary duty

    (2) Notwithstanding that a purchaser, or any broker for a seller or purchaser, has notice that a security is held for a third person or is registered in the name of or endorsed by a fiduciary, they have no duty to inquire into the rightfulness of the transfer and have no notice of an adverse claim, except that where they know 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 broker is deemed to have notice of an adverse claim.

  • R.S., 1985, c. C-44, s. 61;
  • 2001, c. 14, s. 135(E).
Marginal note:Staleness as notice of adverse claim

 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 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 purchase

  • (a) after one year from any date set for such presentation or surrender for redemption or exchange; or

  • (b) after six months from any date set for payment of money against presentation or surrender of the security if funds are available for payment on that date.

  • 1974-75-76, c. 33, s. 58;
  • 1978-79, c. 9, s. 1(F).
Marginal note:Warranties to issuer
  •  (1) A 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.

  • Marginal note:Warranties to purchaser

    (2) A person by transferring a security to a purchaser for value warrants only that

    • (a) the transfer is effective and rightful;

    • (b) the security is genuine and has not been materially altered; and

    • (c) the person knows of nothing that might impair the validity of the security.

  • Marginal note:Warranties of intermediary

    (3) Where 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 such delivery, the intermediary by such delivery warrants only the intermediary’s 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.

  • Marginal note:Warranties of pledgee

    (4) A 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).

  • Marginal note:Warranties of broker

    (5) A broker gives to a customer, to the issuer or to a purchaser, as the case may be, the warranties provided in this section and has the rights and privileges of a purchaser under this section, and those warranties of and in favour of the broker acting as an agent or mandatary are in addition to warranties given by the customer and warranties given in favour of the customer.

  • R.S., 1985, c. C-44, s. 63;
  • 2001, c. 14, s. 135(E);
  • 2011, c. 21, s. 34(E).
Marginal note:Right to compel endorsement

 When 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.

  • R.S., 1985, c. C-44, s. 64;
  • 2001, c. 14, s. 135(E).

Definition of appropriate person

  •  (1) In this section, appropriate person means

    • (a) the person specified by the security or by special endorsement to be entitled to the security;

    • (b) 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 the person’s successor;

    • (c) if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified;

    • (d) if a person described in paragraph (a) is an individual and is without capacity to act by reason of death, incompetence, minority, or other incapacity, the person’s fiduciary;

    • (e) if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death all cannot sign, the survivor or survivors;

    • (f) a person having power to sign under applicable law or a power of attorney; or

    • (g) to the extent that a person described in paragraphs (a) to (f) may act through an agent or mandatary, the authorized agent or mandatary.

  • Determining appropriate person

    (2) Whether 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.

  • Marginal note:Endorsement

    (3) An 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.

  • Marginal note:Special or blank

    (4) An endorsement may be special or in blank.

  • Marginal note:Blank endorsement

    (5) An endorsement in blank includes an endorsement to bearer.

  • Marginal note:Special endorsement

    (6) A special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.

  • Marginal note:Right of holder

    (7) A holder may convert an endorsement in blank into a special endorsement.

  • Marginal note:Immunity of endorser

    (8) Unless otherwise agreed, the endorser assumes no obligation that the security will be honoured by the issuer.

  • Marginal note:Partial endorsement

    (9) An endorsement purporting to be only of part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

  • Marginal note:Failure of fiduciary to comply

    (10) Failure of a fiduciary to comply with a controlling instrument or act 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.

  • R.S., 1985, c. C-44, s. 65;
  • 2001, c. 14, ss. 32(E), 135(E);
  • 2011, c. 21, s. 35(E).
 
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