Short Title

Marginal note:Short title

1 This Act may be cited as the Canada Business Corporations Act.

PART IInterpretation and Application

Interpretation

Marginal note:Definitions

• 2 (1) In this Act,

  affairs

  affairs means the relationships among a corporation, its affiliates and the shareholders, directors and officers of such bodies corporate but does not include the business carried on by such bodies corporate; (affaires internes)

  affiliate

  affiliate means an affiliated body corporate within the meaning of subsection (2); (groupe)

  articles

  articles means the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of continuance, articles of reorganization, articles of arrangement, articles of dissolution, articles of revival and includes any amendments thereto; (statuts)

  associate

  associate, in respect of a relationship with a person, means

  • (a) a body corporate of which that person beneficially owns or controls, directly or indirectly, shares or securities currently convertible into shares carrying more than ten 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 such shares or such convertible securities,

  • (b) a partner of that person acting on behalf of the partnership of which they are partners,

  • (c) a trust or estate or succession in which that person has a substantial beneficial interest or in respect of which that person serves as a trustee or liquidator of the succession or in a similar capacity,

  • (d) a spouse of that person or an individual who is cohabiting with that person in a conjugal relationship, having so cohabited for a period of at least one year,

  • (e) a child of that person or of the spouse or individual referred to in paragraph (d), and

  • (f) a relative of that person or of the spouse or individual referred to in paragraph (d), if that relative has the same residence as that person; (liens)

  auditor

  auditor includes a partnership of auditors or an auditor that is incorporated; (vérificateur)

  beneficial interest

  beneficial interest means an interest arising out of the beneficial ownership of securities; (véritable propriétaire et propriété effective)

  beneficial ownership

  beneficial ownership includes ownership through any trustee, legal representative, agent or mandatary, or other intermediary; (véritable propriétaire et propriété effective)

  body corporate

  body corporate includes a company or other body corporate wherever or however incorporated; (personne morale)

  call

  call means an option transferable by delivery to demand delivery of a specified number or amount of securities at a fixed price within a specified time but does not include an option or right to acquire securities of the corporation that granted the option or right to acquire; (option d’achat)

  corporation

  corporation means a body corporate incorporated or continued under this Act and not discontinued under this Act; (société par actions ou société)

  court

  court means

  • (a) in the Province of Newfoundland and Labrador, the Trial Division of the Supreme Court of the Province,

  • (a.1) in the Province of Ontario, the Superior Court of Justice,

  • (b) in the Provinces of Nova Scotia, British Columbia and Prince Edward Island, the Supreme Court of the Province,

  • (c) in the Provinces of Manitoba, Saskatchewan, Alberta and New Brunswick, the Court of Queen’s Bench for the Province,

  • (d) in the Province of Quebec, the Superior Court of the Province, and

  • (e) the Supreme Court of Yukon, the Supreme Court of the Northwest Territories and the Nunavut Court of Justice; (tribunal)

  court of appeal

  court of appeal means the court to which an appeal lies from an order of a court; (Cour d’appel)

  debt obligation

  debt obligation means a bond, debenture, note or other evidence of indebtedness or guarantee of a corporation, whether secured or unsecured; (titre de créance)

  Director

  Director means the Director appointed under section 260; (directeur)

  director

  director means a person occupying the position of director by whatever name called and directors and board of directors includes a single director; (administrateur et conseil d’administration)

  distributing corporation

  distributing corporation means, subject to subsections (6) and (7), a distributing corporation as defined in the regulations; (société ayant fait appel au public)

  entity

  entity means a body corporate, a partnership, a trust, a joint venture or an unincorporated association or organization; (entité)

  going-private transaction

  going-private transaction means a going-private transaction as defined in the regulations; (opération de fermeture)

  incapable

  incapable, in respect of an individual, means that the individual is found, under the laws of a province, to be unable, other than by reason of minority, to manage their property or is declared to be incapable by any court in a jurisdiction outside Canada; (incapable)

  incorporator

  incorporator means a person who signs articles of incorporation; (fondateur)

  individual

  individual means a natural person; (particulier)

  liability

  liability includes a debt of a corporation arising under section 40, subsection 190(25) and paragraphs 241(3)(f) and (g); (passif)

  mandatary

  mandatary, in Quebec, includes a successor; (mandataire)

  Minister

  Minister means such member of the Queen’s Privy Council for Canada as is designated by the Governor in Council as the Minister for the purposes of this Act; (ministre)

  officer

  officer means an individual appointed as an officer under section 121, the chairperson of the board of directors, the president, a vice-president, the secretary, the treasurer, the comptroller, the general counsel, the general manager, a managing director, of a corporation, or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any of those offices; (dirigeant)

  ordinary resolution

  ordinary resolution means a resolution passed by a majority of the votes cast by the shareholders who voted in respect of that resolution; (résolution ordinaire)

  person

  person means an individual, partnership, association, body corporate, or personal representative; (personne)

  personal representative

  personal representative means a person who stands in place of and represents another person including, but not limited to, a trustee, an executor, an administrator, a liquidator of a succession, an administrator of the property of others, a guardian or tutor, a curator, a receiver or sequestrator, an agent or mandatary or an attorney; (représentant personnel)

  prescribed

  prescribed means prescribed by the regulations; (prescrit ou réglementaire)

  prior legislation

  prior legislation means the various Acts of Parliament that were in force prior to the coming into force of this Act and that applied to the incorporation of federal companies under those Acts, other than any financial institution as defined in section 2 of the Bank Act; (législation antérieure)

  put

  put means an option transferable by delivery to deliver a specified number or amount of securities at a fixed price within a specified time; (option de vente)

  redeemable share

  redeemable share means a share issued by a corporation

  • (a) that the corporation may purchase or redeem on the demand of the corporation, or

  • (b) that the corporation is required by its articles to purchase or redeem at a specified time or on the demand of a shareholder; (action rachetable)

  resident Canadian

  resident Canadian means an individual who is

  • (a) a Canadian citizen ordinarily resident in Canada,

  • (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or

  • (c) a 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 he or she first became eligible to apply for Canadian citizenship; (résident canadien)

  security

  security means a share of any class or series of shares or a debt obligation of a corporation and includes a certificate evidencing such a share or debt obligation; (valeur mobilière)

  security interest

  security interest means an interest or right in or charge on property of a corporation to secure payment of a debt or performance of any other obligation of the corporation; (sûreté)

  send

  send includes deliver; (envoyer)

  series

  series, in relation to shares, means a division of a class of shares; (série)

  special resolution

  special resolution means a resolution passed by a majority of not less than two-thirds of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution; (résolution spéciale)

  squeeze-out transaction

  squeeze-out transaction means a transaction by a corporation that is not a distributing corporation that would require an amendment to its articles and would, directly or indirectly, result in the interest of a holder of shares of a class of the corporation being terminated without the consent of the holder, and without substituting an interest of equivalent value in shares issued by the corporation, which shares have equal or greater rights and privileges than the shares of the affected class; (opération d’éviction)

  unanimous shareholder agreement

  unanimous shareholder agreement means an agreement described in subsection 146(1) or a declaration of a shareholder described in subsection 146(2). (convention unanime des actionnaires)

• Marginal note:Affiliated bodies corporate

  (2) For the purposes of this Act,

  • (a) one body corporate is affiliated with another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person; and

  • (b) if two bodies corporate are affiliated with the same body corporate at the same time, they are deemed to be affiliated with each other.

• Marginal note:Control

  (3) For the purposes of this Act, a body corporate is controlled by a person or by two or more bodies corporate if

  • (a) securities of the body corporate to which are attached more than fifty per cent of the votes that may be cast to elect directors of the body corporate are held, other than by way of security only, by or for the benefit of that person or by or for the benefit of those bodies corporate; and

  • (b) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate.

• Marginal note:Holding body corporate

  (4) A body corporate is the holding body corporate of another if that other body corporate is its subsidiary.

• Marginal note:Subsidiary body corporate

  (5) A body corporate is a subsidiary of another body corporate if

  • (a) it is controlled by

    • (i) that other body corporate,

    • (ii) that other body corporate and one or more bodies corporate each of which is controlled by that other body corporate, or

    • (iii) two or more bodies corporate each of which is controlled by that other body corporate; or

  • (b) it is a subsidiary of a body corporate that is a subsidiary of that other body corporate.

• Marginal note:Exemptions — on application by corporation

  (6) On the application of a corporation, the Director may determine that the corporation is not or was not a distributing corporation if the Director is satisfied that the determination would not be prejudicial to the public interest.

• Marginal note:Exemptions — classes of corporations

  (7) The Director may determine that a class of corporations are not or were not distributing corporations if the Director is satisfied that the determination would not be prejudicial to the public interest.

• Marginal note:Infants

  (8) For the purposes of this Act, the word infant 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.

Marginal note:Individual with significant control

• 2.1 (1) For the purposes of this Act, any of the following individuals is an individual with significant control over a corporation:

  • (a) an individual who has any of the following interests or rights, or any combination of them, in respect of a significant number of shares of the corporation:

    • (i) the individual is the registered holder of them,

    • (ii) the individual is the beneficial owner of them, or

    • (iii) the individual has direct or indirect control or direction over them;

  • (b) an individual who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation; or

  • (c) an individual to whom prescribed circumstances apply.

• Marginal note:Joint ownership or control

  (2) Two or more individuals are each considered to be an individual with significant control over a corporation if, in respect of a significant number of shares of the corporation,

  • (a) an interest or right, or a combination of interests or rights, referred to in paragraph (1)(a) is held jointly by those individuals; or

  • (b) a right, or combination of rights, referred to in paragraph (1)(a) is subject to any agreement or arrangement under which the right or rights are to be exercised jointly or in concert by those individuals.

• Marginal note:Significant number of shares

  (3) For the purposes of this section, a significant number of shares of a corporation is

  • (a) any number of shares that carry 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares; or

  • (b) any number of shares that is equal to 25% or more of all of the corporation’s outstanding shares measured by fair market value.

Application

Marginal note:Application of Act

• 3 (1) This Act applies to every corporation incorporated and every body corporate continued as a corporation under this Act that has not been discontinued under this Act.

• (2) [Repealed, 1991, c. 45, s. 551]

• Marginal note:Certain Acts do not apply

  (3) The following do not apply to a corporation:

  • (a) [Repealed, 2009, c. 23, s. 344]

  • (a.1) the Canada Not-for-profit Corporations Act;

  • (b) the Winding-up and Restructuring Act; and

  • (c) the provisions of a Special Act, as defined in section 87 of the Canada Transportation Act, that are inconsistent with this Act.

• Marginal note:Limitations on business that may be carried on

  (4) No corporation shall carry on the business of

  • (a) a bank;

  • (a.1) an association to which the Cooperative Credit Associations Act applies;

  • (b) a company or society to which the Insurance Companies Act applies; or

  • (c) a company to which the Trust and Loan Companies Act applies.

• Marginal note:Limitations on business that may be carried on

  (5) No corporation shall carry on business as a degree-granting educational institution unless expressly authorized to do so by a federal or provincial agent that by law has the power to confer degree-granting authority on an educational institution.

Purposes of Act

Marginal note:Purposes

4 The purposes of this Act are to revise and reform the law applicable to business corporations incorporated to carry on business throughout Canada, to advance the cause of uniformity of business corporation law in Canada and to provide a means of allowing an orderly transferance of certain federal companies incorporated under various Acts of Parliament to this Act.

PART IIIncorporation

Marginal note:Incorporators

• 5 (1) One or more individuals or bodies corporate may incorporate a corporation by signing articles of incorporation and complying with section 7.

• Marginal note:Individuals

  (2) An individual may incorporate a corporation only if that individual

  • (a) is not less than 18 years of age;

  • (b) is not incapable; or

  • (c) does not have the status of bankrupt.

Marginal note:Articles of incorporation

• 6 (1) Articles of incorporation shall follow the form that the Director fixes and shall set out, in respect of the proposed corporation,

  • (a) the name of the corporation;

  • (b) the province in Canada where the registered office is to be situated;

  • (c) the classes and any maximum number of shares that the corporation is authorized to issue, and

    • (i) if there will be two or more classes of shares, the rights, privileges, restrictions and conditions attaching to each class of shares, and

    • (ii) if a class of shares may be issued in series, the authority given to the directors to fix the number of shares in, and to determine the designation of, and the rights, privileges, restrictions and conditions attaching to, the shares of each series;

  • (d) if the issue, transfer or ownership of shares of the corporation is to be restricted, a statement to that effect and a statement as to the nature of such restrictions;

  • (e) the number of directors or, subject to paragraph 107(a), the minimum and maximum number of directors of the corporation; and

  • (f) any restrictions on the businesses that the corporation may carry on.

• Marginal note:Additional provisions in articles

  (2) The articles may set out any provisions permitted by this Act or by law to be set out in the by-laws of the corporation.

• Marginal note:Special majorities

  (3) Subject to subsection (4), if the articles or a unanimous shareholder agreement require a greater number of votes of directors or shareholders than that required by this Act to effect any action, the provisions of the articles or of the unanimous shareholder agreement prevail.

• Marginal note:Idem

  (4) The articles may not require a greater number of votes of shareholders to remove a director than the number required by section 109.

Marginal note:Delivery of articles of incorporation

7 An incorporator shall send to the Director articles of incorporation and the documents required by sections 19 and 106.

Marginal note:Certificate of incorporation

• 8 (1) Subject to subsection (2), on receipt of articles of incorporation, the Director shall issue a certificate of incorporation in accordance with section 262.

• Marginal note:Exception — failure to comply with Act

  (2) The Director may refuse to issue the certificate if a notice that is required to be sent under subsection 19(2) or 106(1) indicates that the corporation, if it came into existence, would not be in compliance with this Act.

Marginal note:Effect of certificate

9 A corporation comes into existence on the date shown in the certificate of incorporation.

Marginal note:Name of corporation

• 10 (1) The word or expression “Limited”, “Limitée”, “Incorporated”, “Incorporée”, “Corporation” or “Société par actions de régime fédéral” or the corresponding abbreviation “Ltd.”, “Ltée”, “Inc.”, “Corp.” or “S.A.R.F.” shall be part, other than only in a figurative or descriptive sense, of the name of every corporation, but a corporation may use and be legally designated by either the full or the corresponding abbreviated form.

• Marginal note:Saving for “S.C.C.”

  (1.1) Subsection (1) does not apply to a corporation that has a corporate name that, immediately before the day on which this subsection comes into force, included, other than only in a figurative or descriptive sense, the expression “Société commerciale canadienne” or the abbreviation “S.C.C.”, and any such corporation may use and be legally designated by either that expression or that abbreviation.

• Marginal note:Exemption

  (2) The Director may exempt a body corporate continued as a corporation under this Act from the provisions of subsection (1).

• Marginal note:Alternate name

  (3) Subject to subsection 12(1), the name of a corporation may be set out in its articles in an English form, a French form, an English form and a French form, or a combined English and French form, so long as the combined form meets the prescribed criteria. The corporation may use and may be legally designated by any such form.

• Marginal note:Alternative name outside Canada

  (4) Subject to subsection 12(1), a corporation may, for use outside Canada, set out its name in its articles in any language form and it may use and may be legally designated by any such form outside Canada.

• Marginal note:Publication of name

  (5) A corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the corporation.

• Marginal note:Other name

  (6) Subject to subsections (5) and 12(1), a corporation may carry on business under or identify itself by a name other than its corporate name if that other name does not contain, other than in a figurative or descriptive sense, either the word or expression “Limited”, “Limitée”, “Incorporated”, “Incorporée”, “Corporation” or “Société par actions de régime fédéral” or the corresponding abbreviation.

Marginal note:Reserving name

• 11 (1) The Director may, on request, reserve for ninety days a name for an intended corporation or for a corporation about to change its name.

• Marginal note:Designating number

  (2) If requested to do so by the incorporators or a corporation, the Director shall assign to the corporation as its name a designating number followed by the word “Canada” and a word or expression, or the corresponding abbreviation, referred to in subsection 10(1).

Marginal note:Prohibited names

• 12 (1) A corporation shall not be incorporated or continued as a corporation under this Act with, have, carry on business under or identify itself by a name

  • (a) that is, as prescribed, prohibited or deceptively misdescriptive; or

  • (b) that is reserved for another corporation or intended corporation under section 11.

• Marginal note:Directing change of name

  (2) If, through inadvertence or otherwise, a corporation

  • (a) comes into existence or is continued with a name, or

  • (b) on an application to change its name, is granted a name

  that contravenes this section, the Director may direct the corporation to change its name in accordance with section 173.

• (3) [Repealed, 1994, c. 24, s. 7]

• Marginal note:Idem

  (4) If a corporation has a designating number as its name, the Director may direct the corporation to change its name to a name other than a designating number in accordance with section 173.

• Marginal note:Undertaking to change name

  (4.1) Where a corporation acquires a name as a result of a person undertaking to dissolve or to change names, and the undertaking is not honoured, the Director may direct the corporation to change its name in accordance with section 173, unless the undertaking is honoured within the period specified in subsection (5).

• Marginal note:Revoking name

  (5) Where a corporation has been directed under subsection (2), (4) or (4.1) to change its name and has not within sixty days after the service of the directive to that effect changed its name to a name that complies with this Act, the Director may revoke the name of the corporation and assign a name to it and, until changed in accordance with section 173, the name of the corporation is thereafter the name so assigned.

Marginal note:Certificate of amendment

• 13 (1) When a corporation has had its name revoked and a name assigned to it under subsection 12(5), the Director shall issue a certificate of amendment showing the new name of the corporation and shall give notice of the change of name as soon as practicable in a publication generally available to the public.

• Marginal note:Effect of certificate

  (2) The articles of the corporation are amended accordingly on the date shown in the certificate of amendment.

Marginal note:Personal liability

• 14 (1) Subject to this section, a person who enters into, or purports to enter into, a written contract in the name of or on behalf of a corporation before it comes into existence is personally bound by the contract and is entitled to its benefits.

• Marginal note:Pre-incorporation and pre-amalgamation contracts

  (2) A corporation may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound thereby, adopt a written contract made before it came into existence in its name or on its behalf, and on such adoption

  • (a) the corporation is bound by the contract and is entitled to the benefits thereof as if the corporation had been in existence at the date of the contract and had been a party thereto; and

  • (b) a person who purported to act in the name of or on behalf of the corporation ceases, except as provided in subsection (3), to be bound by or entitled to the benefits of the contract.

• Marginal note:Application to court

  (3) Subject to subsection (4), whether or not a written contract made before the coming into existence of a corporation is adopted by the corporation, a party to the contract may apply to a court for an order respecting the nature and extent of the obligations and liability under the contract of the corporation and the person who entered into, or purported to enter into, the contract in the name of or on behalf of the corporation. On the application, the court may make any order it thinks fit.

• Marginal note:Exemption from personal liability

  (4) If expressly so provided in the written contract, a person who purported to act in the name of or on behalf of the corporation before it came into existence is not in any event bound by the contract or entitled to the benefits thereof.

PART IIICapacity and Powers

Marginal note:Capacity of a corporation

• 15 (1) A corporation has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.

• Marginal note:Idem

  (2) A corporation may carry on business throughout Canada.

• Marginal note:Extra-territorial capacity

  (3) A corporation has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent that the laws of such jurisdiction permit.

Marginal note:Powers of a corporation

• 16 (1) It is not necessary for a by-law to be passed in order to confer any particular power on the corporation or its directors.

• Marginal note:Restricted business or powers

  (2) A corporation shall not carry on any business or exercise any power that it is restricted by its articles from carrying on or exercising, nor shall the corporation exercise any of its powers in a manner contrary to its articles.

• Marginal note:Rights preserved

  (3) No act of a corporation, including any transfer of property to or by a corporation, is invalid by reason only that the act or transfer is contrary to its articles or this Act.

Marginal note:No constructive notice

17 No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a corporation by reason only that the document has been filed by the Director or is available for inspection at an office of the corporation.

Marginal note:Authority of directors, officers and agents

• 18 (1) No corporation and no guarantor of an obligation of a corporation may assert against a person dealing with the corporation or against a person who acquired rights from the corporation that

  • (a) the articles, by-laws and any unanimous shareholder agreement have not been complied with;

  • (b) the persons named in the most recent notice sent to the Director under section 106 or 113 are not the directors of the corporation;

  • (c) the place named in the most recent notice sent to the Director under section 19 is not the registered office of the corporation;

  • (d) a person held out by a corporation as a director, officer, agent or mandatary of the corporation 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 corporation or usual for a director, officer, agent or mandatary;

  • (e) a document issued by any director, officer, agent or mandatary of a corporation with actual or usual authority to issue the document is not valid or genuine; or

  • (f) a sale, lease or exchange of property referred to in subsection 189(3) was not authorized.

• Marginal note:Exception

  (2) Subsection (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 corporation.

PART IVRegistered Office and Records

Marginal note:Registered office

• 19 (1) A corporation shall at all times have a registered office in the province in Canada specified in its articles.

• Marginal note:Notice of registered office

  (2) A notice of registered office in the form that the Director fixes shall be sent to the Director together with any articles that designate or change the province where the registered office of the corporation is located.

• Marginal note:Change of address

  (3) The directors of a corporation may change the place and address of the registered office within the province specified in the articles.

• Marginal note:Notice of change of address

  (4) A corporation shall send to the Director, within fifteen days of any change of address of its registered office, a notice in the form that the Director fixes and the Director shall file it.

Marginal note:Corporate records

• 20 (1) A corporation shall prepare and maintain, at its registered office or at any other place in Canada designated by the directors, records containing

  • (a) the articles and the by-laws, and all amendments thereto, and a copy of any unanimous shareholder agreement;

  • (b) minutes of meetings and resolutions of shareholders;

  • (c) copies of all notices required by section 106 or 113; and

  • (d) a securities register that complies with section 50.

• Marginal note:Directors records

  (2) In addition to the records described in subsection (1), a corporation shall prepare and maintain adequate accounting records and records containing minutes of meetings and resolutions of the directors and any committee thereof.

• Marginal note:Retention of accounting records

  (2.1) Subject to any other Act of Parliament and to any Act of the legislature of a province that provides for a longer retention period, a corporation shall retain the accounting records referred to in subsection (2) for a period of six years after the end of the financial year to which the records relate.

• Marginal note:Records of continued corporations

  (3) For the purposes of paragraph (1)(b) and subsection (2), where a body corporate is continued under this Act, “records” includes similar records required by law to be maintained by the body corporate before it was so continued.

• Marginal note:Place of directors records

  (4) The records described in subsection (2) shall be kept at the registered office of the corporation or at such other place as the directors think fit and shall at all reasonable times be open to inspection by the directors.

• Marginal note:Records in Canada

  (5) If accounting records of a corporation are kept outside Canada, accounting records adequate to enable the directors to ascertain the financial position of the corporation with reasonable accuracy on a quarterly basis shall be kept at the registered office or any other place in Canada designated by the directors.

• Marginal note:When records or registers kept outside Canada

  (5.1) Despite subsections (1) and (5), but subject to the Income Tax Act, the Excise Tax Act, the Customs Act and any other Act administered by the Minister of National Revenue, a corporation may keep all or any of its corporate records and accounting records referred to in subsection (1) or (2) at a place outside Canada, if

  • (a) the records are available for inspection, by means of a computer terminal or other technology, during regular office hours at the registered office or any other place in Canada designated by the directors; and

  • (b) the corporation provides the technical assistance to facilitate an inspection referred to in paragraph (a).

• Marginal note:Offence

  (6) A corporation that, without reasonable cause, fails to comply with this section is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars.

Marginal note:Access to corporate records

• 21 (1) Subject to subsection (1.1), shareholders and creditors of a corporation, their personal representatives and the Director may examine the records described in subsection 20(1) during the usual business hours of the corporation, and may take extracts from the records, free of charge, and, if the corporation is a distributing corporation, any other person may do so on payment of a reasonable fee.

• Marginal note:Requirement for affidavit — securities register

  (1.1) Any person described in subsection (1) who wishes to examine the securities register of a distributing corporation must first make a request to the corporation or its agent or mandatary, accompanied by an affidavit referred to in subsection (7). On receipt of the affidavit, the corporation or its agent or mandatary shall allow the applicant access to the securities register during the corporation’s usual business hours, and, on payment of a reasonable fee, provide the applicant with an extract from the securities register.

• Marginal note:Copies of corporate records

  (2) A shareholder of a corporation is entitled on request and without charge to one copy of the articles and by-laws and of any unanimous shareholder agreement.

• Marginal note:Shareholder lists

  (3) Shareholders and creditors of a corporation, their personal representatives, the Director and, if the corporation is a distributing corporation, any other person, on payment of a reasonable fee and on sending to a corporation or its agent or mandatary the affidavit referred to in subsection (7), may on application require the corporation or its agent or mandatary to provide within 10 days after the receipt of the affidavit a list (in this section referred to as the “basic list”) made up to a date not more than 10 days before the date of receipt of the affidavit setting out the names of the shareholders of the corporation, the number of shares owned by each shareholder and the address of each shareholder as shown on the records of the corporation.

• Marginal note:Supplemental lists

  (4) A person requiring a corporation to provide a basic list may, by stating in the affidavit referred to in subsection (3) that they require supplemental lists, require the corporation or its agent or mandatary on payment of a reasonable fee to provide supplemental lists setting out any changes from the basic list in the names or addresses of the shareholders and the number of shares owned by each shareholder for each business day following the date the basic list is made up to.

• Marginal note:When supplemental lists to be provided

  (5) The corporation or its agent or mandatary shall provide a supplemental list required under subsection (4)

  • (a) on the date the basic list is furnished, where the information relates to changes that took place prior to that date; and

  • (b) on the business day following the day to which the supplemental list relates, where the information relates to changes that take place on or after the date the basic list is furnished.

• Marginal note:Holders of options

  (6) A person requiring a corporation to furnish a basic list or a supplemental list may also require the corporation to include in that list the name and address of any known holder of an option or right to acquire shares of the corporation.

• Marginal note:Contents of affidavit

  (7) The affidavit required under subsection (1.1) or (3) shall state

  • (a) the name and address of the applicant;

  • (b) the name and address for service of the body corporate, if the applicant is a body corporate; and

  • (c) that the basic list and any supplemental lists obtained pursuant to subsection (4) or the information contained in the securities register obtained pursuant to subsection (1.1), as the case may be, will not be used except as permitted under subsection (9).

• Marginal note:Idem

  (8) If the applicant is a body corporate, the affidavit shall be made by a director or officer of the body corporate.

• Marginal note:Use of information or shareholder list

  (9) A list of shareholders or information from a securities register obtained under this section shall not be used by any person except in connection with

  • (a) an effort to influence the voting of shareholders of the corporation;

  • (b) an offer to acquire securities of the corporation; or

  • (c) any other matter relating to the affairs of the corporation.

• Marginal note:Offence

  (10) A person who, without reasonable cause, contravenes this section is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

Marginal note:Register

• 21.1 (1) The corporation shall prepare and maintain, at its registered office or at any other place in Canada designated by the directors, a register of individuals with significant control over the corporation that contains

  • (a) the names, the dates of birth and the latest known address of each individual with significant control;

  • (b) the jurisdiction of residence for tax purposes of each individual with significant control;

  • (c) the day on which each individual became or ceased to be an individual with significant control, as the case may be;

  • (d) a description of how each individual is an individual with significant control over the corporation, including, as applicable, a description of their interests and rights in respect of shares of the corporation;

  • (e) any other prescribed information; and

  • (f) a description of each step taken in accordance with subsection (2).

• Marginal note:Updating of information

  (2) At least once during each financial year of the corporation, the corporation shall take reasonable steps to ensure that it has identified all individuals with significant control over the corporation and that the information in the register is accurate, complete and up-to-date.

• Marginal note:Recording of information

  (3) If the corporation becomes aware of any information referred to in paragraphs (1)(a) to (e) as a result of steps taken in accordance with subsection (2) or through any other means, the corporation shall record that information in the register within 15 days of becoming aware of it.

• Marginal note:Information from shareholders

  (4) If the corporation requests information referred to in any of paragraphs (1)(a) to (e) from one of its shareholders, the shareholder shall, to the best of their knowledge, reply accurately and completely as soon as feasible.

• Marginal note:Disposal of personal information

  (5) Within one year after the sixth anniversary of the day on which an individual ceases to be an individual with significant control over the corporation, the corporation shall — subject to any other Act of Parliament and to any Act of the legislature of a province that provides for a longer retention period — dispose of any of that individual’s personal information, as defined in subsection 2(1) of the Personal Information Protection and Electronic Documents Act, that is recorded in the register.

• Marginal note:Offence

  (6) A corporation that, without reasonable cause, contravenes this section is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars.

• Marginal note:Non-application

  (7) This section does not apply to a corporation that

  • (a) is a reporting issuer or an émetteur assujetti under an Act of the legislature of a province relating to the regulation of securities;

  • (b) is listed on a designated stock exchange, as defined in subsection 248(1) of the Income Tax Act; or

  • (c) is a member of a prescribed class.

Marginal note:Inability to identify individuals

21.2 A corporation to which section 21.1 applies shall take prescribed steps if it is unable to identify any individuals with significant control over the corporation.

Marginal note:Disclosure to Director

• 21.3 (1) A corporation to which section 21.1 applies shall disclose to the Director, on request, any information in its register of individuals with significant control.

• Marginal note:Access — affidavit

  (2) Shareholders and creditors of the corporation or their personal representatives, on sending to the corporation or its agent or mandatary the affidavit referred to in subsection (3), may on application require the corporation or its agent or mandatary to allow the applicant access to the register of the corporation referred to in subsection 21.1(1) during the usual business hours of the corporation and, on payment of a reasonable fee, provide the applicant with an extract from that register.

• Marginal note:Affidavit

  (3) The affidavit required under subsection (2) shall contain

  • (a) the name and address of the applicant;

  • (b) the name and address for service of the body corporate, if the applicant is a body corporate; and

  • (c) a statement that any information obtained under subsection (2) will not be used except as permitted under subsection (5).

• Marginal note:Application by body corporate

  (4) If the applicant is a body corporate, the affidavit shall be made by a director or officer of the body corporate.

• Marginal note:Use of information

  (5) Information obtained under subsection (2) shall not be used by any person except in connection with

  • (a) an effort to influence the voting of shareholders of the corporation;

  • (b) an offer to acquire securities of the corporation; or

  • (c) any other matter relating to the affairs of the corporation.

• Marginal note:Offence

  (6) A person who, without reasonable cause, contravenes subsection (5) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months, or to both.

Marginal note:Offence — preparation and maintenance of register

• 21.4 (1) Every director or officer of a corporation who knowingly authorizes, permits or acquiesces in the contravention of subsection 21.1(1) by that corporation commits an offence, whether or not the corporation has been prosecuted or convicted.

• Marginal note:Offence — recording of false or misleading information

  (2) Every director or officer of a corporation who knowingly records or knowingly authorizes, permits or acquiesces in the recording of false or misleading information in the register of the corporation referred to in subsection 21.1(1) commits an offence.

• Marginal note:Offence — provision of false or misleading information

  (3) Every director or officer of a corporation who knowingly provides or knowingly authorizes, permits or acquiesces in the provision to any person or entity of false or misleading information in relation to the register of the corporation referred to in subsection 21.1(1) commits an offence.

• Marginal note:Offence — subsection 21.1(4)

  (4) Every shareholder who knowingly contravenes subsection 21.1(4) commits an offence.

• Marginal note:Penalty

  (5) A person who commits an offence under any of subsections (1) to (4) is liable on summary conviction to a fine not exceeding $200,000 or to imprisonment for a term not exceeding six months, or to both.

Marginal note:Form of records

• 22 (1) All registers and other records required by this Act to be prepared and maintained may be in a bound or loose-leaf form or in a photographic film form, or may 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.

• Marginal note:Precautions

  (2) A corporation or its agents or mandataries shall take reasonable precautions to

  • (a) prevent loss or destruction of,

  • (b) prevent falsification of entries in, and

  • (c) facilitate detection and correction of inaccuracies in

  the registers and other records required by this Act to be prepared and maintained.

• Marginal note:Offence

  (3) A person who, without reasonable cause, contravenes this section is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

Marginal note:Corporate seal

• 23 (1) A corporation may, but need not, adopt a corporate seal, and may change a corporate seal that is adopted.

• Marginal note:Validity of unsealed documents

  (2) A document executed or, in Quebec, signed on behalf of a corporation is not invalid merely because a corporate seal is not affixed to it.

PART VCorporate Finance

Marginal note:Shares

• 24 (1) Shares of a corporation shall be in registered form and shall be without nominal or par value.

• Marginal note:Transitional

  (2) When a body corporate is continued under this Act, a share with nominal or par value issued by the body corporate before it was so continued is, for the purpose of subsection (1), deemed to be a share without nominal or par value.

• Marginal note:Rights attached to shares

  (3) Where a corporation has only one class of shares, the rights of the holders thereof are equal in all respects and include the rights

  • (a) to vote at any meeting of shareholders of the corporation;

  • (b) to receive any dividend declared by the corporation; and

  • (c) to receive the remaining property of the corporation on dissolution.

• Marginal note:Rights to classes of shares

  (4) The articles may provide for more than one class of shares and, if they so provide,

  • (a) the rights, privileges, restrictions and conditions attaching to the shares of each class shall be set out therein; and

  • (b) the rights set out in subsection (3) shall be attached to at least one class of shares but all such rights are not required to be attached to one class.

Marginal note:Issue of shares

• 25 (1) Subject to the articles, the by-laws and any unanimous shareholder agreement and to section 28, shares may be issued at such times and to such persons and for such consideration as the directors may determine.

• Marginal note:Shares non-assessable

  (2) Shares issued by a corporation are non-assessable and the holders are not liable to the corporation or to its creditors in respect thereof.

• Marginal note:Consideration

  (3) A share shall not be issued until the consideration for the share is fully paid in money or in property or past services that are not less in value than the fair equivalent of the money that the corporation would have received if the share had been issued for money.

• Marginal note:Consideration other than money

  (4) In determining whether property or past services are the fair equivalent of a money consideration, the directors may take into account reasonable charges and expenses of organization and reorganization and payments for property and past services reasonably expected to benefit the corporation.

• Marginal note:Definition of property

  (5) For the purposes of this section, property does not include a promissory note, or a promise to pay, that is made by a person to whom a share is issued, or a person who does not deal at arm’s length, within the meaning of that expression in the Income Tax Act, with a person to whom a share is issued.

Marginal note:Stated capital account

• 26 (1) A corporation shall maintain a separate stated capital account for each class and series of shares it issues.

• Marginal note:Entries in stated capital account

  (2) A corporation shall add to the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

• Marginal note:Exception for non-arm’s length transactions

  (3) Despite subsection (2), a corporation may, subject to subsection (4), add to the stated capital accounts maintained for the shares of classes or series the whole or any part of the amount of the consideration that it receives in an exchange if the corporation issues shares

  • (a) in exchange for

    • (i) property of a person who immediately before the exchange did not deal with the corporation at arm’s length within the meaning of that expression in the Income Tax Act,

    • (ii) shares of, or another interest or right in, a body corporate that immediately before the exchange, or that because of the exchange, did not deal with the corporation at arm’s length within the meaning of that expression in the Income Tax Act, or

    • (iii) property of a person who, immediately before the exchange, dealt with the corporation at arm’s length within the meaning of that expression in the Income Tax Act, if the person, the corporation and all the holders of shares in the class or series of shares so issued consent to the exchange; or

  • (b) pursuant to an agreement referred to in subsection 182(1) or an arrangement referred to in paragraph 192(1)(b) or (c) or to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated body corporate.

• Marginal note:Limit on addition to a stated capital account

  (4) On the issue of a share a corporation shall not add to a stated capital account in respect of the share it issues an amount greater than the amount of the consideration it received for the share.

• Marginal note:Constraint on addition to a stated capital account

  (5) Where a corporation proposes to add any amount to a stated capital account it maintains in respect of a class or series of shares, if

  • (a) the amount to be added was not received by the corporation as consideration for the issue of shares, and

  • (b) the corporation has issued any outstanding shares of more than one class or series,

  the addition to the stated capital account must be approved by special resolution unless all the issued and outstanding shares are shares of not more than two classes of convertible shares referred to in subsection 39(5).

• Marginal note:Other additions to stated capital

  (6) When a body corporate is continued under this Act, it may add to a stated capital account any consideration received by it for a share it issued and a corporation at any time may, subject to subsection (5), add to a stated capital account any amount it credited to a retained earnings or other surplus account.

• Marginal note:Transitional

  (7) When a body corporate is continued under this Act, subsection (2) does not apply to the consideration received by it before it was so continued unless the share in respect of which the consideration is received is issued after the corporation is so continued.

• Marginal note:Idem

  (8) When a body corporate is continued under this Act, any amount unpaid in respect of a share issued by the body corporate before it was so continued and paid after it was so continued shall be added to the stated capital account maintained for the shares of that class or series.

• Marginal note:Transitional

  (9) For the purposes of subsection 34(2), sections 38 and 42, and paragraph 185(2)(a), when a body corporate is continued under this Act its stated capital is deemed to include the amount that would have been included in stated capital if the body corporate had been incorporated under this Act.

• Marginal note:Restriction

  (10) A corporation shall not reduce its stated capital or any stated capital account except in the manner provided in this Act.

• Marginal note:Exception for an open-end mutual fund

  (11) Subsections (1) to (10) and any other provisions of this Act relating to stated capital do not apply to an open-end mutual fund.

• Marginal note:Definition of open-end mutual fund

  (12) For the purposes of this section, open-end mutual fund means a distributing corporation that carries on only the business of investing the consideration it receives for the shares it issues, and all or substantially all of those shares are redeemable on the demand of a shareholder.

Marginal note:Shares in series

• 27 (1) The articles may authorize, subject to any limitations set out in them, the issue of any class of shares in one or more series and may do either or both of the following:

  • (a) fix the number of shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the shares of, each series; or

  • (b) authorize the directors to fix the number of shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the shares of, each series.

• Marginal note:Series participation

  (2) If any cumulative dividends 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.

• Marginal note:Restrictions on series

  (3) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section shall confer on a 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.

• Marginal note:Amendment of articles

  (4) If the directors exercise their authority under paragraph (1)(b), they shall, before the issue of shares of the series, send, in the form that the Director fixes, articles of amendment to the Director to designate a series of shares.

• Marginal note:Certificate of amendment

  (5) On receipt of articles of amendment designating a series of shares, the Director shall issue a certificate of amendment in accordance with section 262.

• Marginal note:Effect of certificate

  (6) The articles of the corporation are amended accordingly on the date shown in the certificate of amendment.

Marginal note:Pre-emptive right

• 28 (1) If the articles so provide, no shares of a 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.

• Marginal note:Exception

  (2) Notwithstanding that the articles provide the pre-emptive right referred to in subsection (1), shareholders have no pre-emptive right in respect of shares to be issued

  • (a) for a consideration other than money;

  • (b) as a share dividend; or

  • (c) pursuant to the exercise of conversion privileges, options or rights previously granted by the corporation.

Marginal note:Options and rights

• 29 (1) A corporation may issue certificates, warrants or other evidences of conversion privileges, options or rights to acquire securities of the corporation, and shall set out the conditions thereof

  • (a) in the certificates, warrants or other evidences; or

  • (b) in certificates evidencing the securities to which the conversion privileges, options or rights are attached.

• Marginal note:Transferable rights

  (2) Conversion privileges, options and rights to acquire securities of a corporation may be made transferable or non-transferable, and options and rights to acquire may be made separable or inseparable from any securities to which they are attached.

• Marginal note:Reserved shares

  (3) Where a corporation has granted privileges to convert any securities issued by the corporation into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the articles limit the number of authorized shares, the corporation shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

Marginal note:Restriction regarding bearer shares

• 29.1 (1) Despite section 29, a corporation shall not issue, in bearer form, a certificate, warrant or other evidence of a conversion privilege, option or right to acquire a share of the corporation.

• Marginal note:Replacement

  (2) A corporation shall, on the request of a holder of a certificate, warrant or other evidence of a conversion privilege, option or right to acquire a share of the corporation that is in bearer form and that was issued before the coming into force of this section, issue in exchange to that holder, in registered form, a certificate, warrant or other evidence, as the case may be.

Marginal note:Corporation holding its own shares

• 30 (1) Subject to subsection (2) and sections 31 to 36, a corporation

  • (a) shall not hold shares in itself or in its holding body corporate; and

  • (b) shall not permit any of its subsidiary bodies corporate to acquire shares of the corporation.

• Marginal note:Subsidiary holding shares of its parent

  (2) Subject to section 31, a corporation shall cause a subsidiary body corporate of the corporation that holds shares of the corporation to sell or otherwise dispose of those shares within five years from the date

  • (a) the body corporate became a subsidiary of the corporation; or

  • (b) the corporation was continued under this Act.

Marginal note:Exception

• 31 (1) A corporation may in the capacity of a personal representative hold shares in itself or in its holding body corporate unless it or the holding body corporate or a subsidiary of either of them has a beneficial interest in the shares.

• Marginal note:Idem

  (2) A corporation may hold shares in itself or in its holding body corporate by way of security for the purposes of a transaction entered into by it in the ordinary course of a business that includes the lending of money.

• Marginal note:Exception — subsidiary acquiring shares

  (3) A corporation may permit any of its subsidiary bodies corporate to acquire shares of the corporation

  • (a) in the subsidiary’s capacity as a personal representative, unless the subsidiary would have a beneficial interest in the shares; or

  • (b) by way of security for the purposes of a transaction entered into by the subsidiary in the ordinary course of a business that includes the lending of money.

• Marginal note:Exception — conditions precedent

  (4) A corporation may permit any of its subsidiary bodies corporate to acquire shares of the corporation through the issuance of those shares by the corporation to the subsidiary body corporate if, before the acquisition takes place, the conditions prescribed for the purposes of this subsection are met.

• Marginal note:Conditions subsequent

  (5) After an acquisition has taken place under the purported authority of subsection (4), the conditions prescribed for the purposes of this subsection must be met.

• Marginal note:Non-compliance with conditions

  (6) If

  • (a) a corporation permits a subsidiary body corporate to acquire shares of the corporation under the purported authority of subsection (4), and

  • (b) either

    • (i) one or more of the conditions prescribed for the purposes of subsection (4) were not met, or

    • (ii) one or more of the conditions prescribed for the purposes of subsection (5) are not met or cease to be met,

  then, notwithstanding subsections 16(3) and 26(2), the prescribed consequences apply in respect of the acquisition of the shares and their issuance.

Marginal note:Exception relating to Canadian ownership

• 32 (1) Subject to subsection 39(8), a corporation may, for the purpose of assisting the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control, hold shares in itself that

  • (a) are not constrained for the purpose of assisting the corporation or any of its affiliates or associates to so qualify; or

  • (b) are shares into which shares held under paragraph (a) were converted by the corporation that are constrained for the purpose of assisting the corporation to so qualify and that were not previously held by the corporation.

• Marginal note:Prohibited transfers

  (2) A corporation shall not transfer shares held under subsection (1) to any person unless the corporation is satisfied, on reasonable grounds, that the ownership of the shares as a result of the transfer would assist the corporation or any of its affiliates or associates to achieve the purpose set out in subsection (1).

• Marginal note:Offence

  (3) A corporation that, without reasonable cause, fails to comply with subsection (2) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars.

• Marginal note:Directors of corporation

  (4) Where a corporation commits an offence under subsection (3), any director of the corporation who knowingly authorized, permitted or acquiesced in the commission of the offence is a party to and guilty of the offence and is liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both, whether or not the corporation has been prosecuted or convicted.

• Marginal note:Where shares are transferred

  (5) Where shares held under subsection (1) are transferred by a corporation, subsections 25(1), (3), (4) and (5), paragraph 115(3)(c) and subsection 118(1) apply, with such modifications as the circumstances require, in respect of the transfer as if the transfer were an issue.

• Marginal note:Transfer not void, voidable or null

  (6) No transfer of shares by a corporation shall be void, voidable or, in Quebec, null solely because the transfer is in contravention of subsection (2).

Marginal note:Voting shares

• 33 (1) A corporation holding shares in itself or in its holding body corporate shall not vote or permit those shares to be voted unless the corporation

  • (a) holds the shares in the capacity of a personal representative; and

  • (b) has complied with section 153.

• Marginal note:Subsidiary body corporate

  (2) A corporation shall not permit any of its subsidiary bodies corporate holding shares in the corporation to vote, or permit those shares to be voted, unless the subsidiary body corporate satisfies the requirements of subsection (1).

Marginal note:Acquisition of corporation’s own shares

• 34 (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.

Marginal note:Alternative acquisition of corporation’s own shares

• 35 (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.

Marginal note:Redemption of shares

• 36 (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.

Marginal note:Gift or legacy of shares

37 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.

Marginal note:Other reduction of stated capital

• 38 (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]

Marginal note:Adjustment of stated capital account

• 39 (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.

Marginal note:Enforcement of contract to buy shares

• 40 (1) A corporation shall fulfil its obligations under a contract to buy shares of the corporation, except if the corporation can prove that enforcement of the contract would put it in breach of any of sections 34 to 36.

• Marginal note:Status of contracting party

  (2) Until the corporation has fulfilled all its obligations under a contract referred to in subsection (1), the other party retains the status of claimant entitled to be paid as soon as the corporation is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors and to the rights of holders of any class of shares whose rights were in priority to the rights given to the holders of the class of shares being purchased, but in priority to the rights of other shareholders.

Marginal note:Commission for sale of shares

41 The directors may authorize the corporation to pay a reasonable commission to any person in consideration of the person’s purchasing or agreeing to purchase shares of the corporation from the corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares.

Marginal note:Dividends

42 A corporation shall not declare or pay a dividend 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 thereby be less than the aggregate of its liabilities and stated capital of all classes.

Marginal note:Form of dividend

• 43 (1) A corporation may pay a dividend by issuing fully paid shares of the corporation and, subject to section 42, a corporation may pay a dividend in money or property.

• Marginal note:Adjustment of stated capital account

  (2) If shares of a corporation are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money shall be added to the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend.

44 [Repealed, 2001, c. 14, s. 26]

Marginal note:Shareholder immunity

• 45 (1) The shareholders of a corporation are not, as shareholders, liable for any liability, act or default of the corporation except under subsection 38(4), 118(4) or (5), 146(5) or 226(4) or (5).

• Marginal note:Lien or hypothec on shares

  (2) Subject to subsection 49(8), the articles may provide that the corporation has a lien or hypothec on a share registered in the name of a shareholder or the shareholder’s personal representative for a debt of that shareholder to the corporation, including an amount unpaid in respect of a share issued by a body corporate on the date it was continued under this Act.

• Marginal note:Enforcement of lien or hypothec

  (3) A corporation may enforce a lien or hypothec referred to in subsection (2) in accordance with its by-laws.

PART VISale of Constrained Shares

Marginal note:Sale of constrained shares by corporation

• 46 (1) A corporation that has constraints on the issue, transfer or ownership of its shares of any class or series may, for any of the purposes referred to in paragraphs (a) to (c), sell, under the conditions and after giving the notice that may be prescribed, as if it were the owner of the shares, any of those constrained shares that are owned, or that the directors determine in the manner that may be prescribed may be owned, contrary to the constraints in order to

  • (a) assist the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control;

  • (b) assist the corporation to comply with any prescribed law; or

  • (c) attain or maintain a level of Canadian ownership specified in its articles.

• Marginal note:Obligations of directors in sale

  (2) Where shares are to be sold by a corporation under subsection (1), the directors of the corporation shall select the shares for sale in good faith and in a manner that is not unfairly prejudicial to, and does not unfairly disregard the interests of, the holders of the shares in the constrained class or series taken as a whole.

• Marginal note:Effect of sale

  (3) If shares are sold by a corporation under subsection (1), the owner of the shares immediately before the sale shall by that sale be divested of their interest or right in the shares, and the person who, but for the sale, would be the registered owner of the shares or a person who satisfies the corporation that, but for the sale, they could properly be treated as the registered owner or registered holder of the shares under section 51 shall, from the time of the sale, be entitled to receive only the net proceeds of the sale, together with any income earned on the proceeds from the beginning of the month next following the date of the receipt by the corporation of the proceeds of the sale, less any taxes on the proceeds and any costs of administration of a trust fund constituted under subsection 47(1) in relation to the constitution of the fund.

• Marginal note:Subsections 51(4) to (6) apply

  (4) Subsections 51(4) to (6) apply in respect of the person who is entitled under subsection (3) to receive the proceeds of a sale of shares under subsection (1) as if the proceeds were a security and the person were a registered holder or owner of the security.

Marginal note:Proceeds of sale to be trust fund

• 47 (1) The proceeds of a sale by a corporation under subsection 46(1) constitute a trust fund in the hands of the corporation for the benefit of the person entitled under subsection 46(3) to receive the proceeds of the sale, and any such trust fund may be commingled by the corporation with other such trust funds and shall be invested in such manner as may be prescribed.

• Marginal note:Costs of administration

  (2) Reasonable costs of administration of a trust fund referred to in subsection (1) may be deducted from the trust fund and any income earned thereon.

• Marginal note:Appointment of trust company

  (3) Subject to this section, a corporation may transfer any trust fund referred to in subsection (1), and the administration thereof, to a trust company in Canada registered as such under the laws of Canada or a province, and the corporation is thereupon discharged of all further liability in respect of the trust fund.

• Marginal note:Discharge of corporation and trust company

  (4) A receipt signed by a person entitled under subsection 46(3) to receive the proceeds of a sale that constitute a trust fund under subsection (1) shall be a complete discharge of the corporation and of any trust company to which a trust fund is transferred under subsection (3), in respect of the trust fund and income earned thereon paid to such person.

• Marginal note:Vesting in Crown

  (5) A trust fund described in subsection (1), together with any income earned thereon, less any taxes thereon and costs of administration, that has not been claimed by a person entitled under subsection 46(3) to receive the proceeds of a sale that constitute the trust fund for a period of ten years after the date of the sale vests in Her Majesty in right of Canada.

• Marginal note:Escheats Act applies

  (6) Sections 3 to 5 of the Escheats Act apply in respect of a trust fund that vests in Her Majesty in right of Canada under subsection (5).

PART VIISecurity Certificates, Registers and Transfers

Interpretation and General

Marginal note:Application of Part

• 48 (1) The transfer or transmission of a security shall be governed by this Part.

• Marginal note:Definitions

  (2) In this Part,

  adverse claim

  adverse 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 or right in the security; (opposition)

  bearer

  bearer means the person in possession of a security payable to bearer or endorsed in blank; (porteur)

  bona fide purchaser

  bona 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 or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)

  broker

  broker means a person who is engaged, whether or not exclusively, 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; (courtier)

  delivery

  delivery means voluntary transfer of possession; (livraison ou remise)

  fiduciary

  fiduciary means any person who acts in a fiduciary capacity or as the administrator of the property of others and includes a personal representative of a deceased person; (représentant)

  fungible

  fungible, in relation to securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)

  genuine

  genuine means free of forgery or counterfeiting; (authentique)

  good faith

  good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)

  holder

  holder means a person in possession of a security issued or endorsed to the person or the bearer or in blank; (détenteur)

  issuer

  issuer includes a corporation

  • (a) that is required by this Act to maintain a securities register,

  • (b) that, in Quebec, issues securities that confer directly or indirectly rights in its property, or

  • (c) that, elsewhere in Canada, directly or indirectly creates fractional interests in its rights or property and that issues securities as evidence of the fractional interests; (émetteur)

  overissue

  overissue means the issue of securities in excess of any maximum number of securities that the issuer is authorized by its articles or a trust indenture to issue; (émission excédentaire)

  purchaser

  purchaser means a person who takes an interest or right in a security by sale, mortgage, hypothec, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)

  security

  security or security certificate means an instrument issued by a corporation that is

  • (a) in bearer, order or registered form,

  • (b) 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,

  • (c) one of a class or series or by its terms divisible into a class or series of instruments, and

  • (d) evidence of a share, participation or other interest or right in or obligation of a corporation; (valeur mobilière ou certificat de valeur mobilière)

  transfer

  transfer includes transmission by operation of law; (transfert)

  trust indenture

  trust indenture means a trust indenture as defined in section 82; (acte de fiducie)

  unauthorized

  unauthorized, in relation to a signature or an endorsement, means one made without actual, implied or apparent authority and includes a forgery; (non autorisé)

  valid

  valid means issued in accordance with the applicable law and the articles of the issuer, or validated under section 52. (valide)

• Marginal note:Negotiable instruments

  (3) Except where its transfer is restricted and noted on a security in accordance with subsection 49(8), a security is a negotiable instrument.

• Marginal note:Registered form

  (4) A security is in registered form if

  • (a) it 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; or

  • (b) it bears a statement that it is in registered form.

• Marginal note:Order form

  (5) A debt obligation is in order form where, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to that person’s order.

• Marginal note:Bearer form

  (6) A security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.

• Marginal note:Guarantor for issuer

  (7) A guarantor for an issuer is deemed to be an issuer to the extent of the guarantee whether or not the obligation is noted on the security.

Marginal note:Rights of holder

• 49 (1) Every security holder is entitled at their option to a security certificate that complies with this Act or a non-transferable written acknowledgment of their right to obtain such a security certificate from a corporation in respect of the securities of that corporation held by them.

• Marginal note:Maximum fee for certificate by regulation

  (2) A corporation may charge a fee, not exceeding the prescribed amount, for a security certificate issued in respect of a transfer.

• Marginal note:Joint holders

  (3) A corporation is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a certificate to one of several joint holders is sufficient delivery to all.

• Marginal note:Signatures

  (4) A security certificate shall be signed by at least one of the following persons, or the signature shall be printed or otherwise mechanically reproduced on the certificate:

  • (a) a director or officer of the corporation;

  • (b) a registrar, transfer agent or branch transfer agent of the corporation, or an individual on their behalf; and

  • (c) a trustee who certifies it in accordance with a trust indenture.

• (5) [Repealed, 2001, c. 14, s. 30]

• Marginal note:Continuation of signature

  (6) If a security certificate contains a printed or mechanically reproduced signature of a person, the corporation may issue the security certificate, notwithstanding that the person has ceased to be a director or an officer of the corporation, and the security certificate is as valid as if the person were a director or an officer at the date of its issue.

• Marginal note:Contents of share certificate

  (7) There shall be stated on the face of each share certificate issued by a corporation

  • (a) the name of the corporation;

  • (b) the words “Incorporated under the Canada Business Corporations Act” or “subject to the Canada Business Corporations Act”;

  • (c) the name of the person to whom it was issued; and

  • (d) the number and class of shares and the designation of any series that the certificate represents.

• Marginal note:Restrictions

  (8) No restriction, charge, lien, hypothec, agreement or endorsement described in the following paragraphs is effective against a transferee of a security, issued by a corporation or by a body corporate before the body corporate was continued under this Act, who has no actual knowledge of the restriction, charge, lien, hypothec, agreement or endorsement unless it or a reference to it is noted conspicuously on the security certificate:

  • (a) a restriction on transfer other than a constraint under section 174;

  • (b) a charge, lien or hypothec in favour of the corporation;

  • (c) a unanimous shareholder agreement; or

  • (d) an endorsement under subsection 190(10).

• Marginal note:Limit on restriction

  (9) A distributing corporation, any of the issued shares of which remain outstanding and are held by more than one person, shall not have a restriction on the transfer or ownership of its shares of any class or series except by way of a constraint permitted under section 174.

• Marginal note:Notation of constraint

  (10) Where the articles of a corporation constrain the issue, transfer or ownership of shares of any class or series in order to assist

  • (a) the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control, or

  • (b) the corporation to comply with any prescribed law,

  the constraint, or a reference to it, shall be conspicuously noted on every security certificate of the corporation evidencing a share that is subject to the constraint where the security certificate is issued after the day on which the share becomes subject to the constraint under this Act.

• Marginal note:Failure to note

  (11) The failure to note a constraint or a reference to it pursuant to subsection (10) shall not invalidate any share or security certificate and shall not render a constraint ineffective against an owner, holder or transferee of the share or security certificate.

• Marginal note:Transitional

  (12) If a body corporate continued under this Act has outstanding security certificates, and if the words “private company” appear on the certificates, those words are deemed to be a notice of a restriction, lien, hypothec, agreement or endorsement for the purpose of subsection (8).

• Marginal note:Particulars of class

  (13) There shall be stated legibly on a share certificate issued by a corporation that is authorized to issue shares of more than one class or series

  • (a) the rights, privileges, restrictions and conditions attached to the shares of each class and series that exists when the share certificate is issued; or

  • (b) that the class or series of shares that it represents has rights, privileges, restrictions or conditions attached thereto and that the corporation will furnish a shareholder, on demand and without charge, with a full copy of the text of

    • (i) the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as the same have been fixed by the directors, and

    • (ii) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series.

• Marginal note:Duty

  (14) Where a share certificate issued by a corporation contains the statement mentioned in paragraph (13)(b), the corporation shall furnish a shareholder, on demand and without charge, with a full copy of the text of

  • (a) the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as the same have been fixed by the directors; and

  • (b) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series.

• Marginal note:Fractional share

  (15) A corporation may issue for each fractional share, a certificate in registered form or scrip certificates in registered form that entitle the holder to receive a certificate for a full share in exchange for scrip certificates equalling a full share.

• Marginal note:Replacement

  (15.1) On the request of a holder of a certificate for a fractional share or of a scrip certificate, a corporation shall, if the certificate is in bearer form and was issued before the coming into force of this subsection, issue in exchange to that holder, in registered form, a certificate for a fractional share or a scrip certificate, as the case may be.

• Marginal note:Scrip certificates

  (16) The directors may attach conditions to any scrip certificates issued by a corporation, including conditions that

  • (a) the scrip certificates become void or, in Quebec, null if not exchanged for a share certificate representing a full share before a specified date; and

  • (b) any shares for which such scrip certificates are exchangeable may, notwithstanding any pre-emptive right, be issued by the corporation to any person and the proceeds thereof distributed rateably to the holders of the scrip certificates.

• Marginal note:Holder of fractional share

  (17) A holder of a fractional share issued by a corporation is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share, unless

  • (a) the fractional share results from a consolidation of shares; or

  • (b) the articles of the corporation otherwise provide.

• Marginal note:Holder of scrip certificate

  (18) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.

Marginal note:Securities records

• 50 (1) A corporation shall maintain a securities register in which it records the securities issued by it in registered form, showing with respect to each class or series of securities

  • (a) the names, alphabetically arranged, and the latest known address of each person who is or has been a security holder;

  • (b) the number of securities held by each security holder; and

  • (c) the date and particulars of the issue and transfer of each security.

• Marginal note:Central and branch registers

  (2) A corporation may appoint an agent or mandatary to maintain a central securities register and branch securities registers.

• Marginal note:Place of register

  (3) A central securities register shall be maintained by a corporation at its registered office or at any other place in Canada designated by the directors, and any branch securities registers may be kept at any place in or out of Canada designated by the directors.

• Marginal note:Effect of registration

  (4) Registration 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.

• Marginal note:Branch register

  (5) A branch securities register shall only contain particulars of securities issued or transferred at that branch.

• Marginal note:Central register

  (6) Particulars of each issue or transfer of a security registered in a branch securities register shall also be kept in the corresponding central securities register.

• Marginal note:Destruction of certificates

  (7) A corporation, its agent or mandatary, or a trustee as defined in subsection 82(1) is not required to produce

  • (a) a cancelled security certificate in registered form, an instrument referred to in subsection 29(1) that is cancelled or a like cancelled instrument in registered form six years after the date of its cancellation;

  • (b) a cancelled security certificate in bearer form or an instrument referred to in subsection 29(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or

  • (c) an instrument referred to in subsection 29(1) or a like instrument, irrespective of its form, after the date of its expiration.

Marginal note:Dealings with registered holder

• 51 (1) A corporation or a trustee defined in subsection 82(1) may, subject to sections 134, 135 and 138, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payments in respect of the security, and otherwise to exercise all the rights and powers of an owner of the security.

• Marginal note:Constructive registered holder

  (2) Notwithstanding subsection (1), a corporation whose articles restrict the right to transfer its securities shall, and any other corporation may, treat a person as a registered security holder entitled to exercise all the rights of the security holder that the person represents, if the person furnishes the corporation with evidence as described in subsection 77(4) that the person is

  • (a) the heir of a deceased security holder, or the personal representative of the heirs, or the personal representative of the estate or succession of a deceased security holder;

  • (b) a personal representative of a registered security holder who is an infant, an incapable person or a missing person; or

  • (c) a liquidator of, or a trustee in bankruptcy for, a registered security holder.

• Marginal note:Permissible registered holder

  (3) If a person on whom the ownership of a security devolves by operation of law, other than a person described in subsection (2), furnishes proof of the person’s authority to exercise rights or privileges in respect of a security of the corporation that is not registered in the person’s name, the corporation shall treat the person as entitled to exercise those rights or privileges.

• Marginal note:Immunity of corporation

  (4) A corporation 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 section, as the owner or registered holder thereof.

• Marginal note:Persons less than 18 years of age

  (5) If a person who is less than 18 years of age exercises any rights of ownership in the securities of a corporation, no subsequent repudiation or avoidance or, in Quebec, annulment or reduction of obligations is effective against the corporation.

• Marginal note:Joint holders

  (6) A corporation may treat as owner of a security the survivors of persons to whom the security was issued as joint holders, if it receives proof satisfactory to it of the death of any such joint holder.

• Marginal note:Transmission of securities

  (7) Subject to any applicable law relating to the collection of taxes, a person referred to in paragraph (2)(a) is entitled to become a registered holder, or to designate a registered holder, if the person deposits with the corporation or its transfer agent

  • (a) the original grant of probate, of letters of administration or, in Quebec, of the probate of the will or of the notarial minutes of the probate, or a copy certified to be a true copy of one of those documents by

    • (i) the court that granted the probate or letters of administration, or the notary who prepared the minutes of the probate,

    • (ii) a trust company incorporated under the laws of Canada or a province, or

    • (iii) a lawyer or notary acting on behalf of the person referred to in paragraph (2)(a), or

  • (b) in the case of transmission by notarial will in Quebec, an authentic copy established in accordance with the laws of that province,

  together with

  • (c) an affidavit or declaration of transmission made by a person referred to in paragraph (2)(a), stating the particulars of the transmission, and

  • (d) the security certificate that was owned by the deceased holder

    • (i) in case of a transfer to a person referred to in paragraph (2)(a), with or without the endorsement of that person, and

    • (ii) in case of a transfer to any other person, endorsed in accordance with section 65,

    and accompanied by any assurance the corporation may require under section 77.

• Marginal note:Excepted transmissions

  (8) Despite subsection (7), 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 or the probate of the will or the notarial minutes of the probate in respect of the transmission, a personal representative of the deceased holder is entitled, subject to any applicable law relating to the collection of taxes, to become a registered holder or to designate a registered holder, if the personal representative deposits with the corporation or its transfer agent

  • (a) the security certificate that was owned by the deceased holder; and

  • (b) reasonable proof of the governing laws, of the deceased holder’s interest or right in the security and of the right of the personal representative or the person designated by the personal representative to become the registered holder.

• Marginal note:Right of corporation

  (9) Deposit of the documents required by subsection (7) or (8) empowers a corporation 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 (2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who thus becomes a registered holder as the owner of those securities.

Marginal note:Overissue

• 52 (1) The provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that validation, issue or reissue would result in overissue, but

  • (a) if a valid security, similar in all respects to the security involved in the overissue, is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security against surrender of the security that the person holds;

  • (b) if a valid security, similar in all respects to the security involved in the overissue, 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.

• Marginal note:Retroactive validation

  (2) When an issuer amends its articles or a trust indenture to which it is a party to increase its authorized securities to a number equal to or in excess of the number of securities previously authorized plus the amount of the securities overissued, the securities so overissued are valid from the date of their issue.

• Marginal note:Payment not a purchase or redemption

  (3) A purchase or payment by an issuer under subsection (1) is not a purchase or payment to which section 34, 35, 36 or 39 applies.

Marginal note:Burden of proof

53 In an action on a security,

• (a) unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;

• (b) 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;

• (c) 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; and

• (d) if 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 some person under whom the plaintiff claims.

Marginal note:Securities fungible

54 Unless otherwise agreed and subject to the provisions of this Act, of any other applicable Act of Parliament, of any applicable Act of the legislature of a province or of any applicable regulation made under any such Act or to any applicable stock exchange rule, a person required to deliver securities may deliver any security of the specified issue.

Issue — Issuer

Marginal note:Notice of defect

• 55 (1) Even against a purchaser for value 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 in it by reference to another instrument or act, statute, rule, regulation or order to the extent that the terms so incorporated 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, even though the security expressly states that a person accepting it admits the notice.

• Marginal note:Purchaser for value

  (2) A security is valid in the hands of a purchaser for value without notice of any defect going to its validity.

• Marginal note:Lack of genuineness

  (3) Subject to section 57, the fact that a security is not genuine is a complete defence even against a purchaser for value without notice.

• Marginal note:Ineffective defences

  (4) All other defences of an issuer, including non-delivery and conditional delivery of a security, are ineffective against a purchaser for value without notice of the particular defence.

Marginal note:Staleness as notice of defect

56 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.

Marginal note:Unauthorized signature

57 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.

Marginal note:Completion or alteration

• 58 (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.

Marginal note:Warranties of agents

• 59 (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.

Purchase

Marginal note:Title of purchaser

• 60 (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.

Marginal note:Deemed notice of adverse claim

• 61 (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.

Marginal note:Staleness as notice of adverse claim

62 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.

Marginal note:Warranties to issuer

• 63 (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.

Marginal note:Right to compel endorsement

64 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.

Marginal note:Definition of appropriate person

• 65 (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, minority or incapability, 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.

• Marginal note: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.

Marginal note:Effect of endorsement without delivery

66 An 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.

Marginal note:Endorsement in bearer form

67 An endorsement of a security in bearer form may give notice of an adverse claim under section 61 but does not otherwise affect any right to registration that the holder has.

Marginal note:Effect of unauthorized endorsement

• 68 (1) The owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value 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 owner

  • (a) has ratified an unauthorized endorsement of the security; or

  • (b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

• Marginal note:Liability of issuer

  (2) An issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.

Marginal note:Warranties of guarantor of signature

• 69 (1) A person who guarantees a signature of an endorser of a security warrants that at the time of signing

  • (a) the signature was genuine;

  • (b) the signer was an appropriate person as defined in section 65 to endorse; and

  • (c) the signer had legal capacity to sign.

• Marginal note:Limitation of liability

  (2) A person who guarantees a signature of an endorser does not otherwise warrant the rightfulness of the particular transfer.

• Marginal note:Warranties of guarantor of endorsement

  (3) A person who guarantees an endorsement of a security warrants both the signature and the rightfulness of the transfer in all respects, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

• Marginal note:Extent of liability

  (4) The warranties referred to in this section are made to any person taking or dealing with the security relying on the guarantee and the guarantor is liable to such person for any loss resulting from breach of warranty.

Marginal note:Constructive delivery of a security

• 70 (1) Delivery to a purchaser occurs when

  • (a) the purchaser or a person designated by the purchaser acquires possession of a security;

  • (b) the broker of the purchaser acquires possession of a security specially endorsed to or issued in the name of the purchaser;

  • (c) the broker of the purchaser sends the purchaser confirmation of the purchase and identifies in a record a specific security as belonging to the purchaser; or

  • (d) with respect to an identified security to be delivered while still in the possession of a third person, that person acknowledges holding it for the purchaser.

• Marginal note:Constructive ownership

  (2) A purchaser is the owner of a security that a broker holds for the purchaser, but is not a holder except in the cases referred to in paragraphs (1)(b) and (c).

• Marginal note:Ownership of part of fungible bulk

  (3) If a security is part of a fungible bulk, a purchaser of the security is the owner of a proportionate share in the fungible bulk.

• Marginal note:Notice to broker

  (4) Notice of an adverse claim received by a 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 as to which no notice of an adverse claim has been received.

Marginal note:Delivery of security

• 71 (1) Unless otherwise agreed, if a sale of a security is made on an exchange or otherwise through brokers,

  • (a) the selling customer fulfils their duty to deliver by delivering the security to the selling broker or to a person designated by the selling broker or by causing an acknowledgment to be made to the selling broker that it is held for the selling broker; and

  • (b) the selling broker, including a correspondent broker, acting for a selling customer fulfils their duty to deliver by delivering the security or a like security to the buying broker or to a person designated by the buying broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

• Marginal note:Duty to deliver

  (2) Subject to 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 acknowledgment to be made to the purchaser that the security is held for the purchaser.

• Marginal note:Delivery to broker

  (3) A sale to a broker purchasing for the broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

Marginal note:Right to reclaim possession

• 72 (1) A person against whom the transfer of a security is wrongful for any reason, including 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 or claim damages.

• Marginal note:Recovery if unauthorized endorsement

  (2) If 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 may be asserted against such purchaser under section 68.

• Marginal note:Remedies

  (3) The right to reclaim possession of a security may be specifically enforced, its transfer may be restrained and the security may be impounded or, in Quebec, sequestrated pending litigation.

Marginal note:Right to requisites for registration

• 73 (1) Unless otherwise agreed, a transferor shall on demand supply a purchaser with proof of authority to transfer 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 a transferor need not do so unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

• Marginal note:Rescission of transfer

  (2) If the transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.

Marginal note:Seizure of security

74 No seizure of a security or other interest or right evidenced by the security is effective until the person making the seizure obtains possession of the security.

Marginal note:No liability for acts in good faith

75 An agent or mandatary or a bailee who in good faith, including observance of reasonable commercial standards if the agent or mandatary or the bailee is in the business of buying, selling or otherwise dealing with securities of a corporation has received securities and sold, pledged or delivered them, according to the instructions of their principal or mandator, is not liable for conversion or for participation in breach of fiduciary duty although the principal has no right to dispose of them.

Registration

Marginal note:Duty to register transfer

• 76 (1) Where a security in registered form is presented for transfer, the issuer shall register the transfer if

  • (a) the security is endorsed by an appropriate person as defined in section 65;

  • (b) reasonable assurance is given that that endorsement is genuine and effective;

  • (c) the issuer has no duty to inquire into adverse claims or has discharged any such duty;

  • (d) any applicable law relating to the collection of taxes has been complied with;

  • (e) the transfer is rightful or is to a bona fide purchaser; and

  • (f) any fee referred to in subsection 49(2) has been paid.

• Marginal note:Liability for delay

  (2) Where an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for loss resulting from any unreasonable delay in registration or from failure or refusal to register the transfer.

Marginal note:Assurance that endorsement effective

• 77 (1) An 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, and by requiring

  • (a) if the endorsement is by an agent or mandatary, reasonable assurance of authority to sign;

  • (b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;

  • (c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

  • (d) in any other case, assurance that corresponds as closely as practicable to the foregoing.

• Marginal note:Definition of guarantee of the signature

  (2) For the purposes of subsection (1), a guarantee of the signature means a guarantee signed by or on behalf of a person reasonably believed by the issuer to be responsible.

• Marginal note:Standards

  (3) An issuer may adopt reasonable standards to determine responsible persons for the purpose of subsection (2).

• Marginal note:Definition of evidence of appointment or incumbency

  (4) In paragraph (1)(b), evidence of appointment or incumbency means

  • (a) in the case of a fiduciary appointed by a court, a copy of the order certified in accordance with subsection 51(7), and dated not earlier than sixty days before the date a security is presented for transfer; or

  • (b) in any other case, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.

• Marginal note:Standards

  (5) An issuer may adopt reasonable standards with respect to evidence for the purposes of paragraph (4)(b).

• Marginal note:No notice to issuer

  (6) An issuer is deemed not to have notice of the contents of any document referred to in subsection (4) except to the extent that the contents relate directly to appointment or incumbency.

• Marginal note:Notice from excess documentation

  (7) If an issuer demands assurance additional to that specified in this section for a purpose other than that specified in subsection (4) and obtains a copy of a will, trust or partnership agreement, by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.

Marginal note:Limited duty of inquiry

• 78 (1) An issuer to whom a security is presented for registration has a duty to inquire into adverse claims if

  • (a) written notice of an adverse claim has been received at a time and in a manner that affords the issuer 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; or

  • (b) the issuer is deemed to have notice of an adverse claim from a document that it obtained under subsection 77(7).

• Marginal note:Discharge of duty

  (2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address furnished by the claimant or, if no such address has been furnished, to the 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 from the date of mailing the notice either

  • (a) the issuer is served with a restraining order or other order of a court; or

  • (b) the 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 or mandatary of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.

• Marginal note:Inquiry into adverse claims

  (3) Unless an issuer is deemed to have notice of an adverse claim from a document that it obtained under subsection 77(7) or has received notice of an adverse claim under subsection (1), if a security presented for registration is endorsed by the appropriate person as defined in section 65, the issuer has no duty to inquire into adverse claims, and in particular,

  • (a) 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;

  • (b) an issuer registering transfer on an endorsement by a fiduciary has no duty to inquire whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

  • (c) an 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 or the fiduciary’s nominee.

• Marginal note:Duration of notice

  (4) A written notice of adverse claim received by an issuer is effective for twelve months from the date when it was received unless the notice is renewed in writing.

Marginal note:Limitation of issuer’s liability

• 79 (1) Subject to any applicable law relating to the collection of taxes, the 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 if

  • (a) the necessary endorsements were on or with the security; and

  • (b) the issuer had no duty to inquire into adverse claims or had discharged any such duty.

• Marginal note:Duty of issuer in default

  (2) If 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 unless

  • (a) subsection (1) applies;

  • (b) the owner is precluded by subsection 80(1) from asserting any claim; or

  • (c) the delivery would result in overissue, in which case the issuer’s liability is governed by section 52.

Marginal note:Notice of lost or stolen security

• 80 (1) Where 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 an adverse claim within a reasonable time after discovering the loss, destruction or taking and if the issuer has registered a transfer of the security before receiving such notice, the owner is precluded from asserting against the issuer any claim to a new security.

• Marginal note:Duty of issuer to issue a new security

  (2) Where 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 owner

  • (a) so requests before the issuer has notice that the security has been acquired by a bona fide purchaser;

  • (b) furnishes the issuer with a sufficient indemnity bond; and

  • (c) satisfies any other reasonable requirements imposed by the issuer.

• Marginal note:Duty to register transfer

  (3) If, 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 overissue, in which case the issuer’s liability is governed by section 52.

• Marginal note:Right of issuer to recover

  (4) In addition to any rights on an indemnity bond, the issuer may recover a new security issued under subsection (2) from the person to whom it was issued or anyone taking under the person other than a bona fide purchaser.

Marginal note:Rights and obligations

• 81 (1) An authenticating trustee, registrar, transfer agent or other agent or mandatary of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

  • (a) a duty to the issuer to exercise good faith and reasonable diligence; and

  • (b) the same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.

• Marginal note:Notice to agent or mandatary

  (2) Notice to an authenticating trustee, registrar, transfer agent or other agent or mandatary of an issuer is notice to the issuer with respect to the functions performed by the agent or mandatary.

PART VIIITrust Indentures

Marginal note:Definitions

• 82 (1) In this Part,

  event of default

  event of default means an event specified in a trust indenture on the occurrence of which

  • (a) a security interest constituted by the trust indenture becomes enforceable, or

  • (b) 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 conditions prescribed by the trust indenture in connection with such event for the giving of notice or the lapse of time or otherwise have been satisfied; (cas de défaut)

  trustee

  trustee means any person appointed as trustee, including the administrator of the property of others, under the terms of a trust indenture to which a corporation is a party and includes any successor trustee; (fiduciaire)

  trust indenture

  trust indenture means any deed, indenture or other instrument or act, including any supplement or amendment, made by a corporation after its incorporation or continuance under this Act, under which the corporation issues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations. (acte de fiducie)

• Marginal note:Application

  (2) This Part applies to a trust indenture if the debt obligations issued or to be issued under the trust indenture are part of a distribution to the public.

• Marginal note:Exemption

  (3) The Director may exempt a trust indenture from this Part if the trust indenture, the debt obligations issued thereunder and the security interest effected thereby are subject to a law of a province or a country other than Canada that is substantially equivalent to this Part.

Marginal note:Conflict of interest

• 83 (1) No person shall be appointed as trustee if there is a material conflict of interest between their role as trustee and their role in any other capacity.

• Marginal note:Eliminating conflict of interest

  (2) A trustee shall, within ninety days after becoming aware that a material conflict of interest exists

  • (a) eliminate such conflict of interest; or

  • (b) resign from office.

• Marginal note:Validity

  (3) A trust indenture, any debt obligations issued thereunder and a security interest effected thereby are valid notwithstanding a material conflict of interest of the trustee.

• Marginal note:Removal of trustee

  (4) If a trustee contravenes subsection (1) or (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.

Marginal note:Qualification of trustee

84 A trustee, or at least one of the trustees if more than one is appointed, shall be a body corporate incorporated under the laws of Canada or a province and authorized to carry on the business of a trust company.

Marginal note:List of security holders

• 85 (1) A holder of debt obligations issued under a trust indenture may, on payment to the trustee of a reasonable fee, require the trustee to furnish, within fifteen days after delivering to the trustee the statutory declaration referred to in subsection (4), a list setting out

  • (a) the names and addresses of the registered holders of the outstanding debt obligations,

  • (b) the principal amount of outstanding debt obligations owned by each such holder, and

  • (c) the aggregate principal amount of debt obligations outstanding

  as shown on the records maintained by the trustee on the day that the statutory declaration is delivered to that trustee.

• Marginal note:Duty of issuer

  (2) On the demand of a trustee, the issuer of debt obligations shall furnish the trustee with the information required to enable the trustee to comply with subsection (1).

• Marginal note:Corporate applicant

  (3) If the person requiring the trustee to furnish a list under subsection (1) is a body corporate, the statutory declaration required under that subsection shall be made by a director or officer of the body corporate.

• Marginal note:Contents of statutory declaration

  (4) The statutory declaration required under subsection (1) shall state

  • (a) the name and address of the person requiring the trustee to furnish the list and, if the person is a body corporate, the address for service thereof; and

  • (b) that the list will not be used except as permitted under subsection (5).

• Marginal note:Use of list

  (5) A list obtained under this section shall not be used by any person except in connection with

  • (a) an effort to influence the voting of the holders of debt obligations;

  • (b) an offer to acquire debt obligations; or

  • (c) any other matter relating to the debt obligations or the affairs of the issuer or guarantor thereof.

• Marginal note:Offence

  (6) A person who, without reasonable cause, contravenes subsection (5) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

Marginal note:Evidence of compliance

• 86 (1) An issuer or a guarantor of debt obligations issued or to be issued under a trust indenture shall, before doing any act under paragraph (a), (b) or (c), furnish the trustee with evidence of compliance with the conditions in the trust indenture relating to

  • (a) the issue, certification and delivery of debt obligations under the trust indenture;

  • (b) the release or release and substitution of property subject to a security interest constituted by the trust indenture; or

  • (c) the satisfaction and discharge of the trust indenture.

• Marginal note:Duty of issuer or guarantor

  (2) On the demand of a trustee, the issuer or guarantor of debt obligations issued or to be issued under a trust indenture shall furnish the trustee with evidence of compliance with 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.

Marginal note:Contents of declaration, etc.

87 Evidence of compliance as required by section 86 shall consist of

• (a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in that section have been complied with; and

• (b) where the trust indenture requires compliance with conditions that are subject to review

  • (i) by legal counsel, an opinion of legal counsel that such conditions have been complied with, and

  • (ii) by an auditor or accountant, an opinion or report of the auditor of the issuer or guarantor, or such other accountant as the trustee may select, that such conditions have been complied with.

Marginal note:Further evidence of compliance

88 The evidence of compliance referred to in section 87 shall include a statement by the person giving the evidence

• (a) declaring that they have read and understand the conditions of the trust indenture described in section 86;

• (b) describing the nature and scope of the examination or investigation on which the certificate, statement or opinion is based; and

• (c) declaring that they have made the examination or investigation that they believe necessary to enable them to make their statements or give their opinions.

Marginal note:Trustee may require evidence of compliance

• 89 (1) On the demand of a trustee, the issuer or guarantor of debt obligations issued under a trust indenture shall furnish the trustee with evidence in such form as the trustee may require as to compliance with any condition thereto relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

• Marginal note:Certificate of compliance

  (2) At 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 debt obligations issued under a trust indenture shall furnish the trustee with a certificate 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.

Marginal note:Notice of default

90 The trustee shall give to the holders of debt obligations issued under a trust indenture, within thirty days after the trustee becomes aware of the occurrence thereof, notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee reasonably believes that it is in the best interests of the holders of the debt obligations to withhold such notice and so informs the issuer and guarantor in writing.

Marginal note:Duty of care

91 A trustee in exercising their powers and discharging their duties shall

• (a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and

• (b) exercise the care, diligence and skill of a reasonably prudent trustee.

Marginal note:Reliance on statements

92 Notwithstanding section 91, a trustee is not liable if they rely in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

Marginal note:No exculpation

93 No term of a trust indenture or of any agreement between a trustee and the holders of debt obligations issued thereunder or between the trustee and the issuer or guarantor shall operate so as to relieve a trustee from the duties imposed on the trustee by section 91.

PART IXReceivers, Receiver-managers and Sequestrators

Marginal note:Functions of receiver or sequestrator

94 A receiver or sequestrator of any property of a corporation may, subject to the rights of secured creditors, receive the income from the property, pay the liabilities connected with the property and realize the security interest of those on behalf of whom the receiver or sequestrator is appointed, but, except to the extent permitted by a court, the receiver or sequestrator may not carry on the business of the corporation.

Marginal note:Functions of receiver-manager

95 A receiver-manager of the corporation may carry on any business of the corporation to protect the security interest of those on behalf of whom the receiver-manager is appointed.

Marginal note:Directors’ powers cease

96 If a receiver-manager or sequestrator is appointed by a court or under an instrument or act, the powers of the directors of the corporation that the receiver-manager or sequestrator is authorized to exercise may not be exercised by the directors until the receiver-manager or sequestrator is discharged.

Marginal note:Duty to act

97 A receiver, receiver-manager or sequestrator appointed by a court shall act in accordance with the directions of the court.

Marginal note:Duty under instrument or act

98 A receiver, receiver-manager or sequestrator appointed under an instrument or act shall act in accordance with that instrument or act and any direction of a court made under section 100.

Marginal note:Duty of care

99 A receiver, receiver-manager or sequestrator of a corporation appointed under an instrument or act shall

• (a) act honestly and in good faith; and

• (b) deal with any property of the corporation in their possession or control in a commercially reasonable manner.

Marginal note:Directions given by court

100 On an application by a receiver, receiver-manager or sequestrator, whether appointed by a court or under an instrument or act, or on an application by any interested person, a court may make any order it thinks fit including, without limiting the generality of the foregoing,

• (a) an order appointing, replacing or discharging a receiver, receiver-manager or sequestrator and approving their accounts;

• (b) an order determining the notice to be given to any person or dispensing with notice to any person;

• (c) an order fixing the remuneration of the receiver, receiver-manager or sequestrator;

• (d) an order requiring the receiver, receiver-manager or sequestrator, or a person by or on behalf of whom the receiver, receiver-manager or sequestrator is appointed, to make good any default in connection with the receiver’s, receiver-manager’s or sequestrator’s custody or management of the property and business of the corporation, or to relieve any such person from any default on any terms that the court thinks fit, and to confirm any act of the receiver, receiver-manager or sequestrator; and

• (e) an order giving directions on any matter relating to the duties of the receiver, receiver-manager or sequestrator.

Marginal note:Duties of receiver, receiver-manager or sequestrator

101 A receiver, receiver-manager or sequestrator shall

• (a) immediately notify the Director of their appointment and discharge;

• (b) take into their custody and control the property of the corporation in accordance with the court order or instrument or act under which they are appointed;

• (c) open and maintain a bank account in their name as receiver, receiver-manager or sequestrator of the corporation for the moneys of the corporation coming under their control;

• (d) keep detailed accounts of all transactions carried out as receiver, receiver-manager or sequestrator;

• (e) keep accounts of their administration that shall be available during usual business hours for inspection by the directors of the corporation;

• (f) prepare at least once in every six month period after the date of their appointment financial statements of their administration as far as is practicable in the form required by section 155; and

• (g) on completion of their duties, render a final account of their administration in the form adopted for interim accounts under paragraph (f).

PART XDirectors and Officers

Marginal note:Duty to manage or supervise management

• 102 (1) Subject to any unanimous shareholder agreement, the directors shall manage, or supervise the management of, the business and affairs of a corporation.

• Marginal note:Number of directors

  (2) A corporation shall have one or more directors but a distributing corporation, any of the issued securities of which remain outstanding and are held by more than one person, shall have not fewer than three directors, at least two of whom are not officers or employees of the corporation or its affiliates.

Marginal note:By-laws

• 103 (1) Unless the articles, by-laws or a unanimous shareholder agreement otherwise provide, the directors may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of the corporation.

• Marginal note:Shareholder approval

  (2) The directors shall submit a by-law, or an amendment or a repeal of a by-law, made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by ordinary resolution, confirm, reject or amend the by-law, amendment or repeal.

• Marginal note:Effective date

  (3) A by-law, or an amendment 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.

• Marginal note:Idem

  (4) If a by-law, an amendment or a repeal is rejected by the shareholders, or if the directors do not submit a by-law, an amendment or a repeal to the shareholders as required under subsection (2), the by-law, amendment or repeal ceases to be effective 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.

• Marginal note:Shareholder proposal

  (5) A shareholder entitled to vote at an annual meeting of shareholders may, in accordance with section 137, make a proposal to make, amend or repeal a by-law.

Marginal note:Organization meeting

• 104 (1) After issue of the certificate of incorporation, a meeting of the directors of the corporation shall be held at which the directors may

  • (a) make by-laws;

  • (b) adopt forms of security certificates and corporate records;

  • (c) authorize the issue of securities;

  • (d) appoint officers;

  • (e) appoint an auditor to hold office until the first annual meeting of shareholders;

  • (f) make banking arrangements; and

  • (g) transact any other business.

• Marginal note:Exception

  (2) Subsection (1) does not apply to a body corporate to which a certificate of amalgamation has been issued under subsection 185(4) or to which a certificate of continuance has been issued under subsection 187(4).

• Marginal note:Calling meeting

  (3) An incorporator or a director may call the meeting of directors referred to in subsection (1) by giving not less than five days notice thereof by mail to each director, stating the time and place of the meeting.

Marginal note:Qualifications of directors

• 105 (1) The following persons are disqualified from being a director of a corporation:

  • (a) anyone who is less than eighteen years of age;

  • (b) anyone who is incapable;

  • (c) a person who is not an individual; or

  • (d) a person who has the status of bankrupt.

• Marginal note:Further qualifications

  (2) Unless the articles otherwise provide, a director of a corporation is not required to hold shares issued by the corporation.

• Marginal note:Residency

  (3) Subject to subsection (3.1), at least twenty-five per cent of the directors of a corporation must be resident Canadians. However, if a corporation has less than four directors, at least one director must be a resident Canadian.

• Marginal note:Exception — Canadian ownership or control

  (3.1) If a corporation engages in an activity in Canada in a prescribed business sector or if a corporation, by an Act of Parliament or by a regulation made under an Act of Parliament, is required, either individually or in order to engage in an activity in Canada in a particular business sector, to attain or maintain a specified level of Canadian ownership or control, or to restrict, or to comply with a restriction in relation to, the number of voting shares that any one shareholder may hold, own or control, then a majority of the directors of the corporation must be resident Canadians.

• Marginal note:Clarification

  (3.2) Nothing in subsection (3.1) shall be construed as reducing any requirement for a specified number or percentage of resident Canadian directors that otherwise applies to a corporation referred to in that subsection.

• Marginal note:If only one or two directors

  (3.3) If a corporation referred to in subsection (3.1) has only one or two directors, that director or one of the two directors, as the case may be, must be a resident Canadian.

• Marginal note:Exception for holding corporation

  (4) Despite subsection (3.1), not more than one third of the directors of a holding corporation referred to in that subsection need be resident Canadians if the holding corporation earns in Canada directly or through its subsidiaries less than five per cent of the gross revenues of the holding corporation and all of its subsidiary bodies corporate together as shown in

  • (a) the most recent consolidated financial statements of the holding corporation referred to in section 157; or

  • (b) the most recent financial statements of the holding corporation and its subsidiary bodies corporate as at the end of the last completed financial year of the holding corporation.

Marginal note:Notice of directors

• 106 (1) At the time of sending articles of incorporation, the incorporators shall send to the Director a notice of directors in the form that the Director fixes, and the Director shall file the notice.

• Marginal note:Term of office

  (2) Each director named in the notice referred to in subsection (1) holds office from the issue of the certificate of incorporation until the first meeting of shareholders.

• Marginal note:Election of directors

  (3) Subject to paragraph 107(b), shareholders of a corporation shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election.

• Marginal note:Staggered terms

  (4) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term.

• Marginal note:No stated terms

  (5) A director not elected for an expressly stated term ceases to hold office at the close of the first annual meeting of shareholders following the director’s election.

• Marginal note:Incumbent directors

  (6) Notwithstanding subsections (2), (3) and (5), if directors are not elected at a meeting of shareholders the incumbent directors continue in office until their successors are elected.

• Marginal note:Vacancy among candidates

  (7) If a meeting of shareholders fails to elect the number or the minimum number of directors required by the articles by reason of the lack of consent, disqualification, incapacity or death of any candidates, the directors elected at that meeting may exercise all the powers of the directors if the number of directors so elected constitutes a quorum.

• Marginal note:Appointment of directors

  (8) The directors may, if the articles of the corporation so provide, appoint one or more additional directors, who shall hold office for a term expiring not later than the close of the next annual meeting of shareholders, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders.

• Marginal note:Election or appointment as director

  (9) An individual who is elected or appointed to hold office as a director is not a director and is deemed not to have been elected or appointed to hold office as a director unless

  • (a) he or she was present at the meeting when the election or appointment took place and he or she did not refuse to hold office as a director; or

  • (b) he or she was not present at the meeting when the election or appointment took place and

    • (i) he or she consented to hold office as a director in writing before the election or appointment or within ten days after it, or

    • (ii) he or she has acted as a director pursuant to the election or appointment.

Marginal note:Cumulative voting

107 Where the articles provide for cumulative voting,

• (a) the articles shall require a fixed number and not a minimum and maximum number of directors;

• (b) 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 may cast all of those votes in favour of one candidate or distribute them among the candidates in any manner;

• (c) 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 resolution;

• (d) if a shareholder has voted for more than one candidate without specifying the distribution of votes, the shareholder is deemed to have distributed the votes equally among those candidates;

• (e) 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;

• (f) each director ceases to hold office at the close of the first annual meeting of shareholders following the director’s election;

• (g) a director may be removed from office only if the number of votes cast in favour of the director’s removal is greater than the product of the number of directors required by the articles and the number of votes cast against the motion; and

• (h) the number of directors required by the articles may be decreased only if the votes cast in favour of the motion to decrease the number of directors is greater than the product of the number of directors required by the articles and the number of votes cast against the motion.

Marginal note:Ceasing to hold office

• 108 (1) A director of a corporation ceases to hold office when the director

  • (a) dies or resigns;

  • (b) is removed in accordance with section 109; or

  • (c) becomes disqualified under subsection 105(1).

• Marginal note:Effective date of resignation

  (2) A resignation of a director becomes effective at the time a written resignation is sent to the corporation, or at the time specified in the resignation, whichever is later.

Marginal note:Removal of directors

• 109 (1) Subject to paragraph 107(g), the shareholders of a corporation may by ordinary resolution at a special meeting remove any director or directors from office.

• Marginal note:Exception

  (2) Where the holders of any class or series of shares of a corporation have an exclusive right to elect one or more directors, a director so elected may only be removed by an ordinary resolution at a meeting of the shareholders of that class or series.

• Marginal note:Vacancy

  (3) Subject to paragraphs 107(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 111.

• Marginal note:Resignation (or removal)

  (4) If all of the directors have resigned or have been removed without replacement, a person who manages or supervises the management of the business and affairs of the corporation is deemed to be a director for the purposes of this Act.

• Marginal note:Exception

  (5) Subsection (4) does not apply to

  • (a) an officer who manages the business or affairs of the corporation under the direction or control of a shareholder or other person;

  • (b) a lawyer, notary, accountant or other professional who participates in the management of the corporation solely for the purpose of providing professional services; or

  • (c) a trustee in bankruptcy, receiver, receiver-manager, sequestrator or secured creditor who participates in the management of the corporation or exercises control over its property solely for the purpose of the realization of security or the administration of a bankrupt’s estate, in the case of a trustee in bankruptcy.

Marginal note:Attendance at meeting

• 110 (1) A director of a corporation is entitled to receive notice of and to attend and be heard at every meeting of shareholders.

• Marginal note:Statement of director

  (2) A director who

  • (a) resigns,

  • (b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the director from office, or

  • (c) receives 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 corporation a written statement giving reasons for resigning or for opposing any proposed action or resolution.

• Marginal note:Circulating statement

  (3) A corporation shall forthwith send a copy of the statement referred to in subsection (2) to every shareholder entitled to receive notice of any meeting referred to in subsection (1) and to the Director unless the statement is included in or attached to a management proxy circular required by section 150.

• Marginal note:Immunity

  (4) No corporation or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (3).

Marginal note:Filling vacancy

• 111 (1) Despite subsection 114(3), but subject to subsections (3) and (4), a quorum of directors may fill a vacancy among the directors, except a vacancy resulting from an increase in the number or the minimum or maximum number of directors or a failure to elect the number or minimum number of directors provided for in the articles.

• Marginal note:Calling meeting

  (2) If there is not a quorum of directors or if there has been a failure to elect the number or minimum number of directors provided for in the articles, the directors then in office shall without delay call a special meeting of shareholders to fill the vacancy and, if they fail to call a meeting or if there are no directors then in office, the meeting may be called by any shareholder.

• Marginal note:Class director

  (3) If the holders of any class or series of shares of a corporation have an exclusive right to elect one or more directors and a vacancy occurs among those directors,

  • (a) subject to subsection (4), the remaining directors elected by the holders of that class or series of shares may fill the vacancy except a vacancy 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 articles for that class or series; or

  • (b) if there are no remaining directors any holder of shares of that class or series may call a meeting of the holders of shares of that class or series for the purpose of filling the vacancy.

• Marginal note:Shareholders filling vacancy

  (4) The articles may provide that a vacancy among the directors shall only be filled by a vote of the shareholders, or by 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 that class or series.

• Marginal note:Unexpired term

  (5) A director appointed or elected to fill a vacancy holds office for the unexpired term of their predecessor.

Marginal note:Number of directors

• 112 (1) The shareholders of a corporation may amend the articles to increase or, subject to paragraph 107(h), to decrease the number of directors, or the minimum or maximum number of directors, but no decrease shall shorten the term of an incumbent director.

• Marginal note:Election of directors where articles amended

  (2) Where the shareholders at a meeting adopt an amendment to the articles of a corporation to increase or, subject to paragraph 107(h) and to subsection (1), decrease the number or minimum or maximum number of directors, the shareholders may, at the meeting, elect the number of directors authorized by the amendment, and for that purpose, notwithstanding subsections 179(1) and 262(3), on the issue of a certificate of amendment the articles are deemed to be amended as of the date the shareholders adopt the amendment.

Marginal note:Notice of change of director or director’s address

• 113 (1) A corporation shall, within fifteen days after

  • (a) a change is made among its directors, or

  • (b) it receives a notice of change of address of a director referred to in subsection (1.1),

  send to the Director a notice, in the form that the Director fixes, setting out the change, and the Director shall file the notice.

• Marginal note:Director’s change of address

  (1.1) A director shall, within fifteen days after changing his or her address, send the corporation a notice of that change.

• Marginal note:Application to court

  (2) Any interested person, or the Director, may apply to a court for an order to require a corporation to comply with subsection (1), and the court may so order and make any further order it thinks fit.

Marginal note:Meeting of directors

• 114 (1) Unless the articles or by-laws otherwise provide, the directors may meet at any place and on such notice as the by-laws require.

• Marginal note:Quorum

  (2) Subject to the articles or by-laws, a majority of the number of directors or minimum number of directors required by the articles constitutes a quorum at any meeting of directors, and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

• Marginal note:Canadian directors present at meetings

  (3) Directors, other than directors of a corporation referred to in subsection 105(4), shall not transact business at a meeting of directors unless,

  • (a) if the corporation is subject to subsection 105(3), at least twenty-five per cent of the directors present are resident Canadians or, if the corporation has less than four directors, at least one of the directors present is a resident Canadian; or

  • (b) if the corporation is subject to subsection 105(3.1), a majority of directors present are resident Canadians or if the corporation has only two directors, at least one of the directors present is a resident Canadian.

• Marginal note:Exception

  (4) Despite subsection (3), directors may transact business at a meeting of directors where the number of resident Canadian directors, required under that subsection, is not present if

  • (a) a resident Canadian director who is unable to be present approves in writing, or by telephonic, electronic or other communication facility, the business transacted at the meeting; and

  • (b) the required number of resident Canadian directors would have been present had that director been present at the meeting.

• Marginal note:Notice of meeting

  (5) A notice of a meeting of directors shall specify any matter referred to in subsection 115(3) that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not specify the purpose of or the business to be transacted at the meeting.

• Marginal note:Waiver of notice

  (6) A director may in any manner waive a notice of a meeting of directors; and attendance of a director at a meeting of directors is a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

• Marginal note:Adjournment

  (7) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting is announced at the original meeting.

• Marginal note:One director meeting

  (8) Where a corporation has only one director, that director may constitute a meeting.

• Marginal note:Participation

  (9) Subject to the by-laws, a director may, in accordance with the regulations, if any, and if all the directors of the corporation consent, participate in a meeting of directors or of a committee of directors by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. A director participating in such a meeting by such means is deemed for the purposes of this Act to be present at that meeting.

Marginal note:Delegation

• 115 (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.

Marginal note:Validity of acts of directors and officers

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

Marginal note:Resolution in lieu of meeting

• 117 (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.

Marginal note:Directors’ liability

• 118 (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.

Marginal note:Liability of directors for wages

• 119 (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.

Marginal note:Disclosure of interest

• 120 (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

  • (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.

Marginal note:Officers

121 Subject to the articles, the by-laws or any unanimous shareholder agreement,

• (a) the directors may designate the offices of the corporation, appoint as officers persons of full capacity, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except powers to do anything referred to in subsection 115(3);

• (b) a director may be appointed to any office of the corporation; and

• (c) two or more offices of the corporation may be held by the same person.

Marginal note:Duty of care of directors and officers

• 122 (1) Every director and officer of a corporation in exercising their powers and discharging their duties shall

  • (a) act honestly and in good faith with a view to the best interests of the corporation; and

  • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• Marginal note:Duty to comply

  (2) Every director and officer of a corporation shall comply with this Act, the regulations, articles, by-laws and any unanimous shareholder agreement.

• Marginal note:No exculpation

  (3) Subject to subsection 146(5), no provision in a contract, the articles, the by-laws or a resolution relieves a director or officer from the duty to act in accordance with this Act or the regulations or relieves them from liability for a breach thereof.

Marginal note:Dissent

• 123 (1) A director who is present at a meeting of directors or committee of directors is deemed to have consented to any resolution passed or action taken at the meeting unless

  • (a) the director requests a dissent to be entered in the minutes of the meeting, or the dissent has been entered in the minutes;

  • (b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

  • (c) the director sends a dissent by registered mail or delivers it to the registered office of the corporation immediately after the meeting is adjourned.

• Marginal note:Loss of right to dissent

  (2) A director who votes for or consents to a resolution is not entitled to dissent under subsection (1).

• Marginal note:Dissent of absent director

  (3) A director who was not present at a meeting at which a resolution was passed or action taken is deemed to have consented thereto unless within seven days after becoming aware of the resolution, the director aware or the resolution, the director

  • (a) causes a dissent to be placed with the minutes of the meeting; or

  • (b) sends a dissent by registered mail or delivers it to the registered office of the corporation.

• Marginal note:Defence — reasonable diligence

  (4) A director is not liable under section 118 or 119, and has complied with his or her duties under subsection 122(2), if the director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on

  • (a) financial statements of the corporation represented to the director by an officer of the corporation or in a written report of the auditor of the corporation fairly to reflect the financial condition of the corporation; or

  • (b) a report of a person whose profession lends credibility to a statement made by the professional person.

• Marginal note:Defence — good faith

  (5) A director has complied with his or her duties under subsection 122(1) if the director relied in good faith on

  • (a) financial statements of the corporation represented to the director by an officer of the corporation or in a written report of the auditor of the corporation fairly to reflect the financial condition of the corporation; or

  • (b) a report of a person whose profession lends credibility to a statement made by the professional person.

Marginal note:Indemnification

• 124 (1) A corporation may indemnify a director or officer of the corporation, a former director or officer of the corporation or another individual who acts or acted at the corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity.

• Marginal note:Advance of costs

  (2) A corporation may advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1). The individual shall repay the moneys if the individual does not fulfil the conditions of subsection (3).

• Marginal note:Limitation

  (3) A corporation may not indemnify an individual under subsection (1) unless the individual

  • (a) acted honestly and in good faith with a view to the best interests of the corporation, or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the corporation’s request; and

  • (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful.

• Marginal note:Indemnification in derivative actions

  (4) A corporation may with the approval of a court, indemnify an individual referred to in subsection (1), or advance moneys under subsection (2), in respect of an action by or on behalf of the corporation or other entity to procure a judgment in its favour, to which the individual is made a party because of the individual’s association with the corporation or other entity as described in subsection (1) against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfils the conditions set out in subsection (3).

• Marginal note:Right to indemnity

  (5) Despite subsection (1), an individual referred to in that subsection is entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the corporation or other entity as described in subsection (1), if the individual seeking indemnity

  • (a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and

  • (b) fulfils the conditions set out in subsection (3).

• Marginal note:Insurance

  (6) A corporation may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual

  • (a) in the individual’s capacity as a director or officer of the corporation; or

  • (b) in the individual’s capacity as a director or officer, or similar capacity, of another entity, if the individual acts or acted in that capacity at the corporation’s request.

• Marginal note:Application to court

  (7) A corporation, an individual or an entity referred to in subsection (1) may apply to a court for an order approving an indemnity under this section and the court may so order and make any further order that it sees fit.

• Marginal note:Notice to Director

  (8) An applicant under subsection (7) shall give the Director notice of the application and the Director is entitled to appear and be heard in person or by counsel.

• Marginal note:Other notice

  (9) On an application under subsection (7) the court may order notice to be given to any interested person and the person is entitled to appear and be heard in person or by counsel.

Marginal note:Remuneration

125 Subject to the articles, the by-laws or any unanimous shareholder agreement, the directors of a corporation may fix the remuneration of the directors, officers and employees of the corporation.

PART XIInsider Trading

Marginal note:Definitions

• 126 (1) In this Part,

  business combination

  business combination means an acquisition of all or substantially all the property of one body corporate by another, or an amalgamation of two or more bodies corporate, or any similar reorganization between or among two or more bodies corporate; (regroupement d’entreprises)

  distributing corporation

  distributing corporation[Repealed, 2001, c. 14, s. 52]

  insider

  insider means, except in section 131,

  • (a) a director or officer of a distributing corporation;

  • (b) a director or officer of a subsidiary of a distributing corporation;

  • (c) a director or officer of a body corporate that enters into a business combination with a distributing corporation; and

  • (d) a person employed or retained by a distributing corporation; (initié)

  officer

  officer means the chairperson of the board of directors, the president, a vice-president, the secretary, the treasurer, the comptroller, the general counsel, the general manager, a managing director, of an entity, or any other individual who performs functions for an entity similar to those normally performed by an individual occupying any of those offices; (dirigeant)

  share

  share means a share carrying voting rights under all circumstances or by reason of the occurrence of an event that has occurred and that is continuing, and includes

  • (a) a security currently convertible into such a share, and

  • (b) currently exercisable options and rights to acquire such a share or such a convertible security. (action)

• Marginal note:Further interpretation

  (2) For the purposes of this Part,

  • (a) a director or an officer of a body corporate that beneficially owns, directly or indirectly, shares of a distributing corporation, or that exercises control or direction over shares of the distributing corporation, or that has a combination of any such ownership, control and direction, carrying more than the prescribed percentage of voting rights attached to all of the outstanding shares of the distributing corporation not including shares held by the body corporate as underwriter while those shares are in the course of a distribution to the public is deemed to be an insider of the distributing corporation;

  • (b) a director or an officer of a body corporate that is a subsidiary is deemed to be an insider of its holding distributing corporation;

  • (c) a person is deemed to beneficially own shares that are beneficially owned by a body corporate controlled directly or indirectly by the person;

  • (d) a body corporate is deemed to own beneficially shares beneficially owned by its affiliates; and

  • (e) the acquisition or disposition by an insider of an option or right to acquire a share is deemed to be a change in the beneficial ownership of the share to which the option or right to acquire relates.

• (3) and (4) [Repealed, 2001, c. 14, s. 52]

127 to 129 [Repealed, 2001, c. 14, s. 53]

Marginal note:Prohibition of short sale

• 130 (1) An insider shall not knowingly sell, directly or indirectly, a security of a distributing corporation or any of its affiliates if the insider selling the security does not own or has not fully paid for the security to be sold.

• Marginal note:Calls and puts

  (2) An insider shall not knowingly, directly or indirectly, sell a call or buy a put in respect of a security of the corporation or any of its affiliates.

• Marginal note:Exception

  (3) Despite subsection (1), an insider may sell a security they do not own if they own another security convertible into the security sold or an option or right to acquire the security sold and, within ten days after the sale, they

  • (a) exercise the conversion privilege, option or right and deliver the security so acquired to the purchaser; or

  • (b) transfer the convertible security, option or right to the purchaser.

• Marginal note:Offence

  (4) An insider who contravenes subsection (1) or (2) is guilty of an offence and liable on summary conviction to a fine not exceeding the greater of one million dollars and three times the profit made, or to imprisonment for a term not exceeding six months or to both.

Marginal note:Definitions

• 131 (1) In this section, insider means, with respect to a corporation,

  • (a) the corporation;

  • (b) an affiliate of the corporation;

  • (c) a director or an officer of the corporation or of any person described in paragraph (b), (d) or (f);

  • (d) a person who beneficially owns, directly or indirectly, shares of the corporation or who exercises control or direction over shares of the corporation, or who has a combination of any such ownership, control and direction, carrying more than the prescribed percentage of voting rights attached to all of the outstanding shares of the corporation not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;

  • (e) a person, other than a person described in paragraph (f), employed or retained by the corporation or by a person described in paragraph (f);

  • (f) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the corporation;

  • (g) a person who received, while they were a person described in any of paragraphs (a) to (f), material confidential information concerning the corporation;

  • (h) a person who receives material confidential information from a person described in this subsection or in subsection (3) or (3.1), including a person described in this paragraph, and who knows or who ought reasonably to have known that the person giving the information is a person described in this subsection or in subsection (3) or (3.1), including a person described in this paragraph; and

  • (i) a prescribed person.

• Marginal note:Expanded definition of security

  (2) For the purposes of this section, the following are deemed to be a security of the corporation:

  • (a) a put, call, option or other right or obligation to purchase or sell a security of the corporation; and

  • (b) a security of another entity, the market price of which varies materially with the market price of the securities of the corporation.

• Marginal note:Deemed insiders

  (3) For the purposes of this section, a person who proposes to make a take-over bid (as defined in the regulations) for securities of a corporation, or to enter into a business combination with a corporation, is an insider of the corporation with respect to material confidential information obtained from the corporation and is an insider of the corporation for the purposes of subsection (6).

• Marginal note:Deemed insiders

  (3.1) An insider of a person referred to in subsection (3), and an affiliate or associate of such a person, is an insider of the corporation referred to in that subsection. Paragraphs (1)(b) to (i) apply in determining whether a person is such an insider except that references to “corporation” in those paragraphs are to be read as references to “person described in subsection (3)”.

• Marginal note:Insider trading — compensation to persons

  (4) An insider who purchases or sells a security of the corporation with knowledge of confidential information that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the corporation is liable to compensate the seller of the security or the purchaser of the security, as the case may be, for any damages suffered by the seller or purchaser as a result of the purchase or sale, unless the insider establishes that

  • (a) the insider reasonably believed that the information had been generally disclosed;

  • (b) the information was known, or ought reasonably to have been known, by the seller or purchaser; or

  • (c) the purchase or sale of the security took place in the prescribed circumstances.

• Marginal note:Insider trading — compensation to corporation

  (5) The insider is accountable to the corporation for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (4) unless the insider establishes the circumstances described in paragraph (4)(a).

• Marginal note:Tipping — compensation to persons

  (6) An insider of the corporation who discloses to another person confidential information with respect to the corporation that has not been generally disclosed and that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the corporation is liable to compensate for damages any person who subsequently sells securities of the corporation to, or purchases securities of the corporation from, any person that received the information, unless the insider establishes

  • (a) that the insider reasonably believed that the information had been generally disclosed;

  • (b) that the information was known, or ought reasonably to have been known, by the person who alleges to have suffered the damages;

  • (c) that the disclosure of the information was necessary in the course of the business of the insider, except if the insider is a person described in subsection (3) or (3.1); or

  • (d) if the insider is a person described in subsection (3) or (3.1), that the disclosure of the information was necessary to effect the take-over bid or the business combination, as the case may be.

• Marginal note:Tipping — compensation to corporation

  (7) The insider is accountable to the corporation for any benefit or advantage received or receivable by the insider as a result of a disclosure of the information as described in subsection (6) unless the insider establishes the circumstances described in paragraph (6)(a), (c) or (d).

• Marginal note:Measure of damages

  (8) The court may assess damages under subsection (4) or (6) in accordance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in a situation involving a security of a distributing corporation, the court must consider the following:

  • (a) if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security over the twenty trading days immediately following general disclosure of the information; and

  • (b) if the plaintiff is a seller, the average market price of the security over the twenty trading days immediately following general disclosure of the information, less the price that the plaintiff received for the security.

• Marginal note:Liability

  (9) If more than one insider is liable under subsection (4) or (6) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.

• Marginal note:Limitation

  (10) An action to enforce a right created by subsections (4) to (7) may be commenced only within two years after discovery of the facts that gave rise to the cause of action.

PART XIIShareholders

Marginal note:Place of meetings

• 132 (1) Meetings of shareholders of a corporation shall be held at the place within Canada provided in the by-laws or, in the absence of such provision, at the place within Canada that the directors determine.

• Marginal note:Meeting outside Canada

  (2) Despite subsection (1), a meeting of shareholders of a corporation may be held at a place outside Canada if the place is specified in the articles or all the shareholders entitled to vote at the meeting agree that the meeting is to be held at that place.

• Marginal note:Exception

  (3) A shareholder who attends a meeting of shareholders held outside Canada is deemed to have agreed to it being held outside Canada except when the shareholder attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully held.

• Marginal note:Participation in meeting by electronic means

  (4) Unless the by-laws otherwise provide, any person entitled to attend a meeting of shareholders may participate in the meeting, in accordance with the regulations, if any, 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 corporation makes available such a communication facility. A person participating in a meeting by such means is deemed for the purposes of this Act to be present at the meeting.

• Marginal note:Meeting held by electronic means

  (5) If the directors or the shareholders of a corporation call a meeting of shareholders pursuant to this Act, those directors or shareholders, as the case may be, may determine that the meeting shall be held, in accordance with the regulations, if any, entirely 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 by-laws so provide.

Marginal note:Calling annual meetings

• 133 (1) The directors of a corporation shall call an annual meeting of shareholders

  • (a) not later than eighteen months after the corporation comes into existence; and

  • (b) subsequently, not later than fifteen months after holding the last preceding annual meeting but no later than six months after the end of the corporation’s preceding financial year.

• Marginal note:Calling special meetings

  (2) The directors of a corporation may at any time call a special meeting of shareholders.

• Marginal note:Order to delay calling of annual meeting

  (3) Despite subsection (1), the corporation may apply to the court for an order extending the time for calling an annual meeting.

Marginal note:Fixing record date

• 134 (1) The directors may, within the prescribed period, fix in advance a date as the record date for the purpose of determining shareholders

  • (a) entitled to receive payment of a dividend;

  • (b) entitled to participate in a liquidation distribution;

  • (c) entitled to receive notice of a meeting of shareholders;

  • (d) entitled to vote at a meeting of shareholders; or

  • (e) for any other purpose.

• Marginal note:No record date fixed

  (2) If no record date is fixed,

  • (a) the record date for the determination of shareholders entitled to receive notice of a meeting of shareholders shall be

    • (i) at the close of business on the day immediately preceding the day on which the notice is given, or

    • (ii) if no notice is given, the day on which the meeting is held; and

  • (b) the record date for the determination of shareholders for any purpose other than to establish a shareholder’s right to receive notice of a meeting or to vote shall be at the close of business on the day on which the directors pass the resolution relating thereto.

• Marginal note:When record date fixed

  (3) If a record date is fixed, 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 the directors fix the record date, notice of the record date must be given within the prescribed period

  • (a) by advertisement in a newspaper published or distributed in the place where the corporation has its registered office and in each place in Canada where it has a transfer agent or where a transfer of its shares may be recorded; and

  • (b) by written notice to each stock exchange in Canada on which the shares of the corporation are listed for trading.

• (4) [Repealed, 2001, c. 14, s. 57]

Marginal note:Notice of meeting

• 135 (1) Notice of the time and place of a meeting of shareholders shall be sent within the prescribed period to

  • (a) each shareholder entitled to vote at the meeting;

  • (b) each director; and

  • (c) the auditor of the corporation.

• Marginal note:Exception — not a distributing corporation

  (1.1) In the case of a corporation that is not a distributing corporation, the notice may be sent within a shorter period if so specified in the articles or by-laws.

• Marginal note:Exception — shareholders not registered

  (2) A notice of a meeting is not required to be sent to shareholders who were not registered on the records of the corporation or its transfer agent on the record date determined under paragraph 134(1)(c) or subsection 134(2), but failure to receive a notice does not deprive a shareholder of the right to vote at the meeting.

• Marginal note:Adjournment

  (3) If 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.

• Marginal note:Notice of adjourned meeting

  (4) If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of thirty days or more, notice of the adjourned meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for an aggregate of more than ninety days, subsection 149(1) does not apply.

• Marginal note:Business

  (5) All business transacted at a special meeting of shareholders and all business transacted at an annual meeting of shareholders, except consideration of the financial statements, auditor’s report, election of directors and re-appointment of the incumbent auditor, is deemed to be special business.

• Marginal note:Notice of business

  (6) Notice of a meeting of shareholders at which special business is to be transacted shall state

  • (a) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon; and

  • (b) the text of any special resolution to be submitted to the meeting.

Marginal note:Waiver of notice

136 A shareholder or any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders, and their attendance at a meeting of shareholders is a waiver of notice of the meeting, except where they attend a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

Marginal note:Proposals

• 137 (1) Subject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares that are entitled to be voted at an annual meeting of shareholders may

  • (a) submit to the corporation notice of any matter that the person proposes to raise at the meeting (a “proposal”); and

  • (b) discuss at the meeting any matter in respect of which the person would have been entitled to submit a proposal.

• Marginal note:Persons eligible to make proposals

  (1.1) To be eligible to submit a proposal, a person

  • (a) must be, for at least the prescribed period, the registered holder or the beneficial owner of at least the prescribed number of outstanding shares of the corporation; or

  • (b) must have the support of persons who, in the aggregate, and including or not including the person that submits the proposal, have been, for at least the prescribed period, the registered holders, or the beneficial owners of, at least the prescribed number of outstanding shares of the corporation.

• Marginal note:Information to be provided

  (1.2) A proposal submitted under paragraph (1)(a) must be accompanied by the following information:

  • (a) the name and address of the person and of the person’s supporters, if applicable; and

  • (b) the number of shares held or owned by the person and the person’s supporters, if applicable, and the date the shares were acquired.

• Marginal note:Information not part of proposal

  (1.3) The information provided under subsection (1.2) does not form part of the proposal or of the supporting statement referred to in subsection (3) and is not included for the purposes of the prescribed maximum word limit set out in subsection (3).

• Marginal note:Proof may be required

  (1.4) If requested by the corporation within the prescribed period, a person who submits a proposal must provide proof, within the prescribed period, that the person meets the requirements of subsection (1.1).

• Marginal note:Information circular

  (2) A corporation that solicits proxies shall set out the proposal in the management proxy circular required by section 150 or attach the proposal thereto.

• Marginal note:Supporting statement

  (3) If so requested by the person who submits a proposal, the corporation shall include in the management proxy circular or attach to it a statement in support of the proposal by the person and the name and address of the person. The statement and the proposal must together not exceed the prescribed maximum number of words.

• Marginal note:Nomination for director

  (4) A proposal may include nominations for the election of directors if the proposal is signed by one or more holders of shares representing in the aggregate not less than five per cent of the shares or five per cent of the shares of a class of shares of the corporation entitled to vote at the meeting to which the proposal is to be presented, but this subsection does not preclude nominations made at a meeting of shareholders.

• Marginal note:Exemptions

  (5) A corporation is not required to comply with subsections (2) and (3) if

  • (a) the proposal is not submitted to the corporation at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders in connection with the previous annual meeting of shareholders;

  • (b) it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the corporation or its directors, officers or security holders;

  • (b.1) it clearly appears that the proposal does not relate in a significant way to the business or affairs of the corporation;

  • (c) not more than the prescribed period before the receipt of a proposal, a person failed to present, in person or by proxy, at a meeting of shareholders, a proposal that at the person’s request, had been included in a management proxy circular relating to the meeting;

  • (d) substantially the same proposal was submitted to shareholders in a management proxy circular or a dissident’s proxy circular relating to a meeting of shareholders held not more than the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting; or

  • (e) the rights conferred by this section are being abused to secure publicity.

• Marginal note:Corporation may refuse to include proposal

  (5.1) If a person who submits a proposal fails to continue to hold or own the number of shares referred to in subsection (1.1) up to and including the day of the meeting, the corporation is not required to set out in the management proxy circular, or attach to it, any proposal submitted by that person for any meeting held within the prescribed period following the date of the meeting.

• Marginal note:Immunity

  (6) No corporation or person acting on its behalf incurs any liability by reason only of circulating a proposal or statement in compliance with this section.

• Marginal note:Notice of refusal

  (7) If a corporation refuses to include a proposal in a management proxy circular, the corporation shall, within the prescribed period after the day on which it receives the proposal or the day on which it receives the proof of ownership under subsection (1.4), as the case may be, notify in writing the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal.

• Marginal note:Person may apply to court

  (8) On the application of a person submitting a proposal who claims to be aggrieved by a corporation’s refusal under subsection (7), a court may restrain the holding of the meeting to which the proposal is sought to be presented and make any further order it thinks fit.

• Marginal note:Corporation’s application to court

  (9) The corporation or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the corporation to omit the proposal from the management proxy circular, and the court, if it is satisfied that subsection (5) applies, may make such order as it thinks fit.

• Marginal note:Director entitled to notice

  (10) An applicant under subsection (8) or (9) shall give the Director notice of the application and the Director is entitled to appear and be heard in person or by counsel.

Marginal note:List of shareholders entitled to receive notice

• 138 (1) A corporation shall prepare an alphabetical list of its shareholders entitled to receive notice of a meeting, showing the number of shares held by each shareholder,

  • (a) if a record date is fixed under paragraph 134(1)(c), not later than ten days after that date; or

  • (b) if no record date is fixed, on the record date established under paragraph 134(2)(a).

• Marginal note:Voting list — if record date fixed

  (2) If a record date for voting is fixed under paragraph 134(1)(d), the corporation shall prepare, no later than ten days after the record date, an alphabetical list of shareholders entitled to vote as of the record date at a meeting of shareholders that shows the number of shares held by each shareholder.

• Marginal note:Voting list — if no record date fixed

  (3) If a record date for voting is not fixed under paragraph 134(1)(d), the corporation shall prepare, not later than 10 days after the record date that is fixed under paragraph 134(1)(c) or not later than the record date that is established under paragraph 134(2)(a), as the case may be, an alphabetical list of shareholders who are entitled to vote as of the record date that shows the number of shares held by each shareholder.

• Marginal note:Entitlement to vote

  (3.1) A shareholder whose name appears on a list prepared under subsection (2) or (3) is entitled to vote the shares shown opposite their name at the meeting to which the list relates.

• Marginal note:Examination of list

  (4) A shareholder may examine the list of shareholders

  • (a) during usual business hours at the registered office of the corporation or at the place where its central securities register is maintained; and

  • (b) at the meeting of shareholders for which the list was prepared.

Marginal note:Quorum

• 139 (1) Unless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders, irrespective of the number of persons actually present at the meeting, if the holders of a majority of the shares entitled to vote at the meeting are present in person or represented by proxy.

• Marginal note:Opening quorum sufficient

  (2) If 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.

• Marginal note:Adjournment

  (3) If 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.

• Marginal note:One shareholder meeting

  (4) If a corporation has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or by proxy constitutes a meeting.

Marginal note:Right to vote

• 140 (1) Unless the articles otherwise provide, each share of a corporation entitles the holder thereof to one vote at a meeting of shareholders.

• Marginal note:Representative

  (2) If a body corporate or association is a shareholder of a corporation, the corporation shall recognize any individual authorized by a resolution of the directors or governing body of the body corporate or association to represent it at meetings of shareholders of the corporation.

• Marginal note:Powers of representative

  (3) An individual authorized under subsection (2) may exercise on behalf of the body corporate or association all the powers it could exercise if it were an individual shareholder.

• Marginal note:Joint shareholders

  (4) Unless 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 by proxy, vote, they shall vote as one on the shares jointly held by them.

Marginal note:Voting

• 141 (1) Unless the by-laws otherwise provide, voting at a meeting of shareholders shall be by show of hands except where a ballot is demanded by a shareholder or proxyholder entitled to vote at the meeting.

• Marginal note:Ballot

  (2) A shareholder or proxyholder may demand a ballot either before or after any vote by show of hands.

• Marginal note:Electronic voting

  (3) Despite subsection (1), unless the by-laws otherwise provide, any vote referred to in subsection (1) may be held, in accordance with the regulations, if any, entirely by means of a telephonic, electronic or other communication facility, if the corporation makes available such a communication facility.

• Marginal note:Voting while participating electronically

  (4) Unless the by-laws otherwise provide, any person participating in a meeting of shareholders under subsection 132(4) or (5) and entitled to vote at that meeting may vote, in accordance with the regulations, if any, by means of the telephonic, electronic or other communication facility that the corporation has made available for that purpose.

Marginal note:Resolution in lieu of meeting

• 142 (1) Except where a written statement is submitted by a director under subsection 110(2) or by an auditor under subsection 168(5),

  • (a) 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; and

  • (b) a 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.

• Marginal note:Filing resolution

  (2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders.

• 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.

Marginal note:Requisition of meeting

• 143 (1) The holders of not less than five per cent of the issued shares of a corporation 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.

• Marginal note:Form

  (2) The requisition referred to in subsection (1), which may consist of several documents of like form each signed by one or more shareholders, shall state the business to be transacted at the meeting and shall be sent to each director and to the registered office of the corporation.

• Marginal note:Directors calling meeting

  (3) On receiving the requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition, unless

  • (a) a record date has been fixed under paragraph 134(1)(c) and notice of it has been given under subsection 134(3);

  • (b) the directors have called a meeting of shareholders and have given notice thereof under section 135; or

  • (c) the business of the meeting as stated in the requisition includes matters described in paragraphs 137(5)(b) to (e).

• Marginal note:Shareholder calling meeting

  (4) If the directors do not within twenty-one days after receiving the requisition referred to in subsection (1) call a meeting, any shareholder who signed the requisition may call the meeting.

• Marginal note:Procedure

  (5) A 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, this Part and Part XIII.

• Marginal note:Reimbursement

  (6) Unless the shareholders otherwise resolve at a meeting called under subsection (4), the corporation shall reimburse the shareholders the expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

Marginal note:Meeting called by court

• 144 (1) A court, on the application of a director, a shareholder who is entitled to vote at a meeting of shareholders or the Director, may order a meeting of a corporation to be called, held and conducted in the manner that the court directs, if

  • (a) it is impracticable to call the meeting within the time or in the manner in which those meetings are to be called;

  • (b) it is impracticable to conduct the meeting in the manner required by this Act or the by-laws; or

  • (c) the court thinks that the meeting should be called, held and conducted within the time or in the manner it directs for any other reason.

• Marginal note:Varying quorum

  (2) Without restricting the generality of subsection (1), the 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.

• Marginal note:Valid meeting

  (3) A meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders of the corporation duly called, held and conducted.

Marginal note:Court review of election

• 145 (1) A corporation or a shareholder or director may apply to a court to determine any controversy with respect to an election or appointment of a director or auditor of the corporation.

• Marginal note:Powers of court

  (2) On an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

  • (b) an order declaring the result of the disputed election or appointment;

  • (c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the corporation until a new election is held or appointment made; and

  • (d) an order determining the voting rights of shareholders and of persons claiming to own shares.

Marginal note:Pooling agreement

145.1 A written agreement between two or more shareholders may provide that in exercising voting rights the shares held by them shall be voted as provided in the agreement.

Marginal note:Unanimous shareholder agreement

• 146 (1) An otherwise lawful written agreement among all the shareholders of a corporation, or among all the shareholders and one or more persons who are not shareholders, that restricts, in whole or in part, the powers of the directors to manage, or supervise the management of, the business and affairs of the corporation is valid.

• Marginal note:Declaration by single shareholder

  (2) If a person who is the beneficial owner of all the issued shares of a corporation makes a written declaration that restricts in whole or in part the powers of the directors to manage, or supervise the management of, the business and affairs of the corporation, the declaration is deemed to be a unanimous shareholder agreement.

• Marginal note:Constructive party

  (3) A purchaser or transferee of shares subject to a unanimous shareholder agreement is deemed to be a party to the agreement.

• Marginal note:When no notice given

  (4) If notice is not given to a purchaser or transferee of the existence of a unanimous shareholder agreement, in the manner referred to in subsection 49(8) or otherwise, the purchaser or transferee may, no later than 30 days after they become aware of the existence of the unanimous shareholder agreement, rescind the transaction by which they acquired the shares.

• Marginal note:Rights of shareholder

  (5) To the extent that a unanimous shareholder agreement restricts the powers of the directors to manage, or supervise the management of, the business and affairs of the corporation, parties to the unanimous shareholder agreement who are given that power to manage or supervise the management of the business and affairs of the corporation have all the rights, powers, duties and liabilities of a director of the corporation, whether they arise under this Act or otherwise, including any defences available to the directors, and the directors are relieved of their rights, powers, duties and liabilities, including their liabilities under section 119, to the same extent.

• Marginal note:Discretion of shareholders

  (6) Nothing in this section prevents shareholders from fettering their discretion when exercising the powers of directors under a unanimous shareholder agreement.

PART XIIIProxies

Marginal note:Definitions

147 In this Part,

form of proxy

form of proxy means a written or printed form that, on completion and execution or, in Quebec, on signing by or on behalf of a shareholder, becomes a proxy; (formulaire de procuration)

intermediary

intermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includes

• (a) a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;

• (b) a securities depositary;

• (c) a financial institution;

• (d) in respect of a clearing agency, a securities dealer, trust company, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominees hold securities of an issuer;

• (e) a trustee or administrator of a self-administered retirement savings plan, retirement income fund, education savings plan or other similar self-administered savings or investment plan registered under the Income Tax Act;

• (f) a nominee of a person referred to in any of paragraphs (a) to (e); and

• (g) a person who carries out functions similar to those carried out by individuals or entities referred to in any of paragraphs (a) to (e) and that holds a security registered in its name, or in the name of its nominee, on behalf of another person who is not the registered holder of the security. (intermédiaire)

proxy

proxy means a completed and executed or, in Quebec, signed 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; (procuration)

registrant

registrant[Repealed, 2001, c. 14, s. 67]

solicit

solicit or solicitation

• (a) includes

  • (i) a request for a proxy whether or not accompanied by or included in a form of proxy,

  • (ii) a request to execute or not to execute or, in Quebec, to sign or not to sign a form of proxy or to revoke a proxy,

  • (iii) 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, and

  • (iv) the sending of a form of proxy to a shareholder under section 149; but

• (b) does not include

  • (i) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,

  • (ii) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

  • (iii) the sending by an intermediary of the documents referred to in section 153,

  • (iv) a solicitation by a person in respect of shares of which the person is the beneficial owner,

  • (v) a public announcement, as prescribed, by a shareholder of how the shareholder intends to vote and the reasons for that decision,

  • (vi) a communication for the purposes of obtaining the number of shares required for a shareholder proposal under subsection 137(1.1), or

  • (vii) a communication, other than a solicitation by or on behalf of the management of the corporation, that is made to shareholders, in any circumstances that may be prescribed; (sollicitation)

solicitation by or on behalf of the management of a corporation

solicitation by or on behalf of the management of a corporation means a solicitation by any person pursuant to a resolution or instructions of, or with the acquiescence of, the directors or a committee of the directors. (sollicitation effectuée par la direction ou pour son compte)

Marginal note:Appointing proxyholder

• 148 (1) A shareholder entitled to vote at a meeting of shareholders may by means of a 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.

• Marginal note:Execution or signing of proxy

  (2) A proxy shall be executed or, in Quebec, signed by the shareholder or by the shareholder’s personal representative authorized in writing.

• Marginal note:Validity of proxy

  (3) A proxy is valid only at the meeting in respect of which it is given or any adjournment thereof.

• Marginal note:Revocation of proxy

  (4) A shareholder may revoke a proxy

  • (a) by depositing an instrument or act in writing executed or, in Quebec, signed by the shareholder or by the shareholder’s personal representative authorized in writing

    • (i) at the registered office of the corporation at any time up to and including the last business day preceding the day of the meeting, or an adjournment thereof, at which the proxy is to be used, or

    • (ii) with the chairman of the meeting on the day of the meeting or an adjournment thereof; or

  • (b) in any other manner permitted by law.

• Marginal note:Deposit of proxies

  (5) The directors may specify in a notice calling a meeting of shareholders a time not more than 48 hours, excluding Saturdays and holidays, before the meeting or adjournment before which time proxies to be used at the meeting must be deposited with the corporation or its agent or mandatary.

Marginal note:Mandatory solicitation

• 149 (1) Subject to subsection (2), the management of a corporation shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder who is entitled to receive notice of the meeting.

• Marginal note:Exception

  (2) The management of the corporation is not required to send a form of proxy under subsection (1) if it

  • (a) is not a distributing corporation; and

  • (b) has fifty or fewer shareholders entitled to vote at a meeting, two or more joint holders being counted as one shareholder.

• Marginal note:Offence

  (3) If the management of a corporation fails to comply, without reasonable cause, with subsection (1), the corporation is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars.

• Marginal note:Officers, etc., of corporations

  (4) Where a corporation commits an offence under subsection (3), any director or officer of the corporation who knowingly authorized, permitted or acquiesced in the commission of the offence is a party to and guilty of the offence and is liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both, whether or not the corporation has been prosecuted or convicted.

Marginal note:Soliciting proxies

• 150 (1) A person shall not solicit proxies unless

  • (a) in the case of solicitation by or on behalf of the management of a corporation, a management proxy circular in prescribed form, either as an appendix to or as a separate document accompanying the notice of the meeting, or

  • (b) in 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 corporation, to each shareholder whose proxy is solicited, to each director and, if paragraph (b) applies, to the corporation.

• Marginal note:Exception — solicitation to fifteen or fewer shareholders

  (1.1) Despite subsection (1), a person may solicit proxies, other than by or on behalf of the management of the corporation, without sending a dissident’s proxy circular, if the total number of shareholders whose proxies are solicited is fifteen or fewer, two or more joint holders being counted as one shareholder.

• Marginal note:Exception — solicitation by public broadcast

  (1.2) Despite subsection (1), a person may solicit proxies, other than by or on behalf of the management of the corporation, without sending a dissident’s proxy circular if the solicitation is, in the prescribed circumstances, conveyed by public broadcast, speech or publication.

• Marginal note:Copy to Director

  (2) A person required to send a management proxy circular or dissident’s proxy circular shall send concurrently a copy of it to the Director together with a statement in prescribed form, the form of proxy, any other documents for use in connection with the meeting and, in the case of a management proxy circular, a copy of the notice of meeting.

• Marginal note:Offence

  (3) A person who fails to comply with subsections (1) and (2) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both, whether or not the body corporate has been prosecuted or convicted.

• Marginal note:Officers, etc., of bodies corporate

  (4) Where a body corporate commits an offence under subsection (3), any director or officer of the body corporate who knowingly authorized, permitted or acquiesced in the commission of the offence is a party to and guilty of the offence and is liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both, whether or not the body corporate has been prosecuted or convicted.

Marginal note:Exemption

• 151 (1) On the application of an interested person, the Director may exempt the person, on any terms that the Director thinks fit, from any of the requirements of section 149 or subsection 150(1) or 153(1). The exemption may have retroactive effect.

• (2) [Repealed, 2018, c. 8, s. 18]

Marginal note:Attendance at meeting

• 152 (1) A person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend the meeting in respect of which the proxy is given and comply with the directions of the shareholder who appointed him.

• Marginal note:Right of a proxyholder

  (2) A proxyholder or an alternate proxyholder has the same rights as the shareholder by whom they were appointed 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 such a meeting in respect of any matter by way of any show of hands.

• Marginal note:Show of hands

  (3) Despite subsections (1) and (2), if the chairperson of a meeting of shareholders declares to the meeting that, if a ballot is 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 will be the decision of the meeting in relation to any matter or group of matters is less than five per cent of all the votes that might be cast by shareholders personally or through proxy at the meeting on the ballot, unless a shareholder or proxyholder demands a ballot,

  • (a) the chairperson may conduct the vote in respect of that matter or group of matters by a show of hands; and

  • (b) a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by a show of hands.

• Marginal note:Offence

  (4) A proxyholder or alternate proxyholder who without reasonable cause fails to comply with the directions of a shareholder under this section is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

Marginal note:Duty of intermediary

• 153 (1) Shares of a corporation that are registered in the name of an intermediary or their nominee and not beneficially owned by the intermediary must not be voted unless the intermediary, without delay after receipt of the notice of the meeting, financial statements, management proxy circular, dissident’s proxy circular and any other documents other than the form of proxy sent to shareholders by or on behalf of any person for use in connection with the meeting, sends a copy of the document to the beneficial owner and, except when the intermediary has received written voting instructions from the beneficial owner, a written request for such instructions.

• Marginal note:Restriction on voting

  (2) An intermediary, or a proxyholder appointed by an intermediary, may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or in the name of a nominee of the intermediary unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.

• Marginal note:Copies

  (3) A person by or on behalf of whom a solicitation is made shall provide, at the request of an intermediary, without delay, to the intermediary at the person’s expense the necessary number of copies of the documents referred to in subsection (1), other than copies of the document requesting voting instructions.

• Marginal note:Instructions to intermediary

  (4) An intermediary shall vote or appoint a proxyholder to vote any shares referred to in subsection (1) in accordance with any written voting instructions received from the beneficial owner.

• Marginal note:Beneficial owner as proxyholder

  (5) If a beneficial owner so requests and provides an intermediary with appropriate documentation, the intermediary must appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.

• Marginal note:Validity

  (6) The failure of an intermediary to comply with this section does not render void any meeting of shareholders or any action taken at the meeting.

• Marginal note:Limitation

  (7) Nothing in this section gives an intermediary the right to vote shares that the intermediary is otherwise prohibited from voting.

• Marginal note:Offence

  (8) An intermediary who knowingly fails to comply with this section is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

• Marginal note:Officers, etc., of bodies corporate

  (9) If an intermediary that is a body corporate commits an offence under subsection (8), any director or officer of the body corporate who knowingly authorized, permitted or acquiesced in the commission of the offence is a party to and guilty of the offence and is liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both, whether or not the body corporate has been prosecuted or convicted.

Marginal note:Restraining order

• 154 (1) If 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 required therein or necessary to make a statement contained therein not misleading in the light of the circumstances in which it was made, an interested person or the Director may apply to a court and the court may make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order restraining the solicitation, the holding of the meeting, or any person from implementing or acting on any resolution passed at the meeting to which the form of proxy, management proxy circular or dissident’s proxy circular relates;

  • (b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and

  • (c) an order adjourning the meeting.

• Marginal note:Notice to Director

  (2) An applicant under this section shall give to the Director notice of the application and the Director is entitled to appear and to be heard in person or by counsel.

PART XIVFinancial Disclosure

Marginal note:Annual financial statements

• 155 (1) The directors of a corporation shall place before the shareholders at every annual meeting

  • (a) prescribed comparative financial statements that conform to any prescribed requirements and relate separately to

    • (i) the period that began on the date the corporation came into existence and ended not more than six months before the annual meeting or, if the corporation has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting, and

    • (ii) the immediately preceding financial year;

  • (b) the report of the auditor, if any; and

  • (c) any further information respecting the financial position of the corporation and the results of its operations required by the articles, the by-laws or any unanimous shareholder agreement.

• Marginal note:Exception

  (2) Notwithstanding paragraph (1)(a), the financial statements referred to in subparagraph (1)(a)(ii) may be omitted if the reason for the omission is set out in the financial statements, or in a note thereto, to be placed before the shareholders at an annual meeting.

Marginal note:Application for exemption

156 On the application of a corporation, the Director may exempt the corporation, on any terms that the Director thinks fit, from any requirement set out in section 155 or any of sections 157 to 160, if the Director reasonably believes that the detriment that may be caused to the corporation by the requirement outweighs its benefit to the shareholders or, in the case of a distributing corporation, to the public.

Marginal note:Consolidated statements

• 157 (1) A corporation shall keep at its registered office a copy of the financial statements of each of its subsidiary bodies corporate and of each body corporate the accounts of which are consolidated in the financial statements of the corporation.

• Marginal note:Examination

  (2) Shareholders of a corporation and their personal representatives may on request examine the statements referred to in subsection (1) during the usual business hours of the corporation and may make extracts free of charge.

• Marginal note:Barring examination

  (3) A corporation may, within fifteen days of a request to examine under subsection (2), apply to a court for an order barring the right of any person to so examine, and the court may, if it is satisfied that such examination would be detrimental to the corporation or a subsidiary body corporate, bar such right and make any further order it thinks fit.

• Marginal note:Notice to Director

  (4) A corporation shall give the Director and the person asking to examine under subsection (2) notice of an application under subsection (3), and the Director and such person may appear and be heard in person or by counsel.

Marginal note:Approval of financial statements

• 158 (1) The directors of a corporation shall approve the financial statements referred to in section 155 and the approval shall be evidenced by the manual signature of one or more directors or a facsimile of the signatures reproduced in the statements.

• Marginal note:Condition precedent

  (2) A corporation shall not issue, publish or circulate copies of the financial statements referred to in section 155 unless the financial statements are

  • (a) approved and signed in accordance with subsection (1); and

  • (b) accompanied by the report of the auditor of the corporation, if any.

Marginal note:Copies to shareholders

• 159 (1) A corporation shall, not less than twenty-one days before each annual meeting of shareholders or before the signing of a resolution under paragraph 142(1)(b) in lieu of the annual meeting, send a copy of the documents referred to in section 155 to each shareholder, except to a shareholder who has informed the corporation in writing that he or she does not want a copy of those documents.

• Marginal note:Offence

  (2) A corporation that, without reasonable cause, fails to comply with subsection (1) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars.

Marginal note:Copies to Director

• 160 (1) A distributing corporation, any of the issued securities of which remain outstanding and are held by more than one person, shall send a copy of the documents referred to in section 155 to the Director

  • (a) not less than twenty-one days before each annual meeting of shareholders, or without delay after a resolution referred to in paragraph 142(1)(b) is signed; and

  • (b) in any event within fifteen months after the last preceding annual meeting should have been held or a resolution in lieu of the meeting should have been signed, but no later than six months after the end of the corporation’s preceding financial year.

• Marginal note:Subsidiary corporation exemption

  (2) A subsidiary corporation is not required to comply with this section if

  • (a) the financial statements of its holding corporation are in consolidated or combined form and include the accounts of the subsidiary; and

  • (b) the consolidated or combined financial statements of the holding corporation are included in the documents sent to the Director by the holding corporation in compliance with this section.

• Marginal note:Offence

  (3) A corporation that fails to comply with this section is guilty of an offence and is liable on summary conviction to a fine not exceeding five thousand dollars.

Marginal note:Qualification of auditor

• 161 (1) Subject to subsection (5), a person is disqualified from being an auditor of a corporation if the person is not independent of the corporation, any of its affiliates, or the directors or officers of any such corporation or its affiliates.

• Marginal note:Independence

  (2) For the purposes of this section,

  • (a) independence is a question of fact; and

  • (b) a person is deemed not to be independent if they or their business partner

    • (i) is a business partner, a director, an officer or an employee of the corporation or any of its affiliates, or a business partner of any director, officer or employee of any such corporation or any of its affiliates,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the securities of the corporation or any of its affiliates, or

    • (iii) has been a receiver, receiver-manager, sequestrator, liquidator or trustee in bankruptcy of the corporation or any of its affiliates within two years of the person’s proposed appointment as auditor of the corporation.

• Marginal note:Business partners

  (2.1) For the purposes of subsection (2), a person’s business partner includes a shareholder of that person.

• Marginal note:Duty to resign

  (3) An auditor who becomes disqualified under this section shall, subject to subsection (5), resign forthwith after becoming aware of the disqualification.

• Marginal note:Disqualification order

  (4) An interested person may apply to a court for an order declaring an auditor to be disqualified under this section and the office of auditor to be vacant.

• Marginal note:Exemption order

  (5) An interested person may apply to a court for an order exempting an auditor from disqualification under this section and the court may, if it is satisfied that an exemption would not unfairly prejudice the shareholders, make an exemption order on such terms as it thinks fit, which order may have retrospective effect.

Marginal note:Appointment of auditor

• 162 (1) Subject to section 163, shareholders of a corporation shall, by ordinary resolution, at the first annual meeting of shareholders and at each succeeding annual meeting, appoint an auditor to hold office until the close of the next annual meeting.

• Marginal note:Eligibility

  (2) An auditor appointed under section 104 is eligible for appointment under subsection (1).

• Marginal note:Incumbent auditor

  (3) Notwithstanding subsection (1), if an auditor is not appointed at a meeting of shareholders, the incumbent auditor continues in office until a successor is appointed.

• Marginal note:Remuneration

  (4) The remuneration of an auditor may be fixed by ordinary resolution of the shareholders or, if not so fixed, may be fixed by the directors.

Marginal note:Dispensing with auditor

• 163 (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor.

• Marginal note:Limitation

  (2) A resolution under subsection (1) is valid only until the next succeeding annual meeting of shareholders.

• Marginal note:Unanimous consent

  (3) A resolution under subsection (1) is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote.

• (4) [Repealed, 1994, c. 24, s. 18]

Marginal note:Ceasing to hold office

• 164 (1) An auditor of a corporation ceases to hold office when the auditor

  • (a) dies or resigns; or

  • (b) is removed pursuant to section 165.

• Marginal note:Effective date of resignation

  (2) A resignation of an auditor becomes effective at the time a written resignation is sent to the corporation, or at the time specified in the resignation, whichever is later.

Marginal note:Removal of auditor

• 165 (1) The shareholders of a corporation may by ordinary resolution at a special meeting remove from office the auditor other than an auditor appointed by a court under section 167.

• Marginal note:Vacancy

  (2) A vacancy created by the removal of an auditor may be filled at the meeting at which the auditor is removed or, if not so filled, may be filled under section 166.

Marginal note:Filling vacancy

• 166 (1) Subject to subsection (3), the directors shall forthwith fill a vacancy in the office of auditor.

• Marginal note:Calling meeting

  (2) If there is not a quorum of directors, the directors then in office shall, within twenty-one days after a vacancy in the office of auditor occurs, call a special meeting of shareholders to fill the vacancy and, if they fail to call a meeting or if there are no directors, the meeting may be called by any shareholder.

• Marginal note:Shareholders filling vacancy

  (3) The articles of a corporation may provide that a vacancy in the office of auditor shall only be filled by vote of the shareholders.

• Marginal note:Unexpired term

  (4) An auditor appointed to fill a vacancy holds office for the unexpired term of the auditor’s predecessor.

Marginal note:Court appointed auditor

• 167 (1) If a corporation does not have an auditor, the court may, on the application of a shareholder or the Director, appoint and fix the remuneration of an auditor who holds office until an auditor is appointed by the shareholders.

• Marginal note:Exception

  (2) Subsection (1) does not apply if the shareholders have resolved under section 163 not to appoint an auditor.

Marginal note:Right to attend meeting

• 168 (1) The auditor of a corporation is entitled to receive notice of every meeting of shareholders and, at the expense of the corporation, to attend and be heard on matters relating to the auditor’s duties.

• Marginal note:Duty to attend

  (2) If a director or shareholder of a corporation, 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 the auditor or a former auditor of the corporation, the auditor or former auditor shall attend the meeting at the expense of the corporation and answer questions relating to their duties as auditor.

• Marginal note:Notice to corporation

  (3) A director or shareholder who sends a notice referred to in subsection (2) shall send concurrently a copy of the notice to the corporation.

• Marginal note:Offence

  (4) An auditor or former auditor of a corporation who fails without reasonable cause to comply with subsection (2) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

• Marginal note:Statement of auditor

  (5) An auditor is entitled to submit to the corporation a written statement giving reasons for resigning or for opposing any proposed action or resolution when the auditor

  • (a) resigns;

  • (b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the auditor from office;

  • (c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed to fill the office of auditor, whether because of the resignation or removal of the incumbent auditor or because the auditor’s term of office has expired or is about to expire; or

  • (d) receives a notice or otherwise learns of a meeting of shareholders at which a resolution referred to in section 163 is to be proposed.

• Marginal note:Other statements

  (5.1) In the case of a proposed replacement of an auditor, whether through removal or at the end of the auditor’s term, the following rules apply with respect to other statements:

  • (a) the corporation shall make a statement on the reasons for the proposed replacement; and

  • (b) the proposed replacement auditor may make a statement in which he or she comments on the reasons referred to in paragraph (a).

• Marginal note:Circulating statement

  (6) The corporation shall send a copy of the statements referred to in subsections (5) and (5.1) without delay to every shareholder entitled to receive notice of a meeting referred to in subsection (1) and to the Director, unless the statement is included in or attached to a management proxy circular required by section 150.

• Marginal note:Replacing auditor

  (7) No person shall accept appointment or consent to be appointed as auditor of a corporation to replace an auditor who has resigned, been removed or whose term of office has expired or is about to expire until the person has requested and received from that auditor a written statement of the circumstances and the reasons, in that auditor’s opinion, for their replacement.

• Marginal note:Exception

  (8) Notwithstanding subsection (7), a person otherwise qualified may accept appointment or consent to be appointed as auditor of a corporation if, within fifteen days after making the request referred to in that subsection, the person does not receive a reply.

• Marginal note:Effect of non-compliance

  (9) Unless subsection (8) applies, an appointment as auditor of a corporation of a person who has not complied with subsection (7) is void.

Marginal note:Examination

• 169 (1) An auditor of a corporation shall make the examination that is in their opinion necessary to enable them to report in the prescribed manner on the financial statements required by this Act to be placed before the shareholders, except such financial statements or part thereof that relate to the period referred to in subparagraph 155(1)(a)(ii).

• Marginal note:Reliance on other auditor

  (2) Notwithstanding section 170, an auditor of a corporation may reasonably rely on the report of an auditor of a body corporate or an unincorporated business the accounts of which are included in whole or in part in the financial statements of the corporation.

• Marginal note:Reasonableness

  (3) For the purpose of subsection (2), reasonableness is a question of fact.

• Marginal note:Application

  (4) Subsection (2) applies whether or not the financial statements of the holding corporation reported on by the auditor are in consolidated form.

Marginal note:Right to information

• 170 (1) On the demand of an auditor of a corporation, the present or former directors, officers, employees, agents or mandataries of the corporation shall provide any

  • (a) information and explanations, and

  • (b) access to records, documents, books, accounts and vouchers of the corporation or any of its subsidiaries

  that are, in the opinion of the auditor, necessary to enable the auditor to make the examination and report required under section 169 and that the directors, officers, employees, agents or mandataries are reasonably able to provide.

• Marginal note:Idem

  (2) On the demand of the auditor of a corporation, the directors of the corporation shall

  • (a) obtain from the present or former directors, officers, employees and agents or mandataries of any subsidiary of the corporation the information and explanations that the present or former directors, officers, employees and agents or mandataries are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable the auditor to make the examination and report required under section 169; and

  • (b) furnish the auditor with the information and explanations so obtained.

• Marginal note:No civil liability

  (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) is not liable in any civil proceeding arising from having made the communication.

Marginal note:Audit committee

• 171 (1) Subject to subsection (2), a corporation described in subsection 102(2) shall, and any other corporation may, have an audit committee composed of not less than three directors of the corporation, a majority of whom are not officers or employees of the corporation or any of its affiliates.

• Marginal note:Exemption

  (2) The Director may, on the application of a corporation, authorize the corporation to dispense with an audit committee, and the Director may, if satisfied that the shareholders will not be prejudiced, permit the corporation to dispense with an audit committee on any reasonable conditions that the Director thinks fit.

• Marginal note:Duty of committee

  (3) An audit committee shall review the financial statements of the corporation before such financial statements are approved under section 158.

• Marginal note:Auditor’s attendance

  (4) The auditor of a corporation is entitled to receive notice of every meeting of the audit committee and, at the expense of the corporation, to attend and be heard thereat; and, if so requested by a member of the audit committee, shall attend every meeting of the committee held during the term of office of the auditor.

• Marginal note:Calling meeting

  (5) The auditor of a corporation or a member of the audit committee may call a meeting of the committee.

• Marginal note:Notice of errors

  (6) A director or an officer of a corporation shall forthwith notify the audit committee and the auditor of any error or mis-statement of which the director or officer becomes aware in a financial statement that the auditor or a former auditor has reported on.

• Marginal note:Error in financial statements

  (7) An auditor or former auditor of a corporation who is notified or becomes aware of an error or mis-statement in a financial statement on which they have reported, if in their opinion the error or mis-statement is material, shall inform each director accordingly.

• Marginal note:Duty of directors

  (8) When under subsection (7) the auditor or former auditor informs the directors of an error or mis-statement in a financial statement, the directors shall

  • (a) prepare and issue revised financial statements; or

  • (b) otherwise inform the shareholders and, if the corporation is one that is required to comply with section 160, it shall inform the Director of the error or mis-statement in the same manner as it informs the shareholders.

• Marginal note:Offence

  (9) Every director or officer of a corporation who knowingly fails to comply with subsection (6) or (8) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

Marginal note:Qualified privilege (defamation)

172 Any oral or written statement or report made under this Act by the auditor or former auditor of a corporation has qualified privilege.

PART XVFundamental Changes

Marginal note:Amendment of articles

• 173 (1) Subject to sections 176 and 177, the articles of a corporation may by special resolution be amended to

  • (a) change its name;

  • (b) change the province in which its registered office is situated;

  • (c) add, change or remove any restriction on the business or businesses that the corporation may carry on;

  • (d) change any maximum number of shares that the corporation is authorized to issue;

  • (e) create new classes of shares;

  • (f) reduce or increase its stated capital, if its stated capital is set out in the articles;

  • (g) change the designation of all or any of its shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued;

  • (h) 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;

  • (i) divide a class of shares, whether issued or unissued, into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

  • (j) authorize the directors to divide any class of unissued shares into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

  • (k) authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;

  • (l) revoke, diminish or enlarge any authority conferred under paragraphs (j) and (k);

  • (m) increase or decrease the number of directors or the minimum or maximum number of directors, subject to sections 107 and 112;

  • (n) add, change or remove restrictions on the issue, transfer or ownership of shares; or

  • (o) add, change or remove any other provision that is permitted by this Act to be set out in the articles.

• Marginal note:Termination

  (2) The directors of a corporation may, if authorized by the shareholders in the special resolution effecting an amendment under this section, revoke the resolution before it is acted on without further approval of the shareholders.

• Marginal note:Amendment of number name

  (3) Notwithstanding subsection (1), where a corporation has a designating number as a name, the directors may amend its articles to change that name to a verbal name.

Marginal note:Constraints on shares

• 174 (1) Subject to sections 176 and 177, a distributing corporation, any of the issued shares of which remain outstanding and are held by more than one person, may by special resolution amend its articles in accordance with the regulations to constrain

  • (a) the issue or transfer of shares of any class or series to persons who are not resident Canadians;

  • (b) the issue or transfer of shares of any class or series to enable the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province

    • (i) to obtain a licence to carry on any business,

    • (ii) to become a publisher of a Canadian newspaper or periodical, or

    • (iii) to acquire shares of a financial intermediary as defined in the regulations;

  • (c) the issue, transfer or ownership of shares of any class or series in order to assist the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control;

  • (d) the issue, transfer or ownership of shares of any class or series in order to assist the corporation to comply with any prescribed law.

  • (e) the issue, transfer or ownership of shares of any class or series to enable the corporation to be a registered labour-sponsored venture capital corporation under Part X.3 of the Income Tax Act.

• Marginal note:Exception in respect of paragraph (1)(c)

  (2) Paragraph (1)(c) does not permit a constraint on the issue, transfer or ownership of shares of any class or series of which any shares are outstanding unless

  • (a) in the case of a constraint in respect of a class, the shares of the class, or

  • (b) in the case of a constraint in respect of a series, the shares of the series

  are already subject to a constraint permitted under that paragraph.

• Marginal note:Limitation on ownership of shares

  (3) A corporation may, pursuant to paragraph (1)(c), limit the number of shares of that corporation that may be owned, or prohibit the ownership of shares, by any person whose ownership would adversely affect the ability of the corporation or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in paragraph (1)(c).

• Marginal note:Change or removal of constraint

  (4) A corporation referred to in subsection (1) may by special resolution amend its articles to change or remove any constraint on the issue, transfer or ownership of its shares.

• Marginal note:Termination

  (5) The directors of a corporation may, if authorized by the shareholders in the special resolution effecting an amendment under subsection (1) or (4), revoke the resolution before it is acted on without further approval of the shareholders.

• Marginal note:Regulations

  (6) Subject to subsections 261(2) and (3), the Governor in Council may make regulations with respect to a corporation that constrains the issue, transfer or ownership of its shares prescribing

  • (a) the disclosure required of the constraints in documents issued or published by the corporation;

  • (b) the duties and powers of the directors to refuse to issue or register transfers of shares in accordance with the articles of the corporation;

  • (c) the limitations on voting rights of any shares held contrary to the articles of the corporation;

  • (d) the powers of the directors to require disclosure of beneficial ownership of shares of the corporation and the right of the corporation and its directors, employees and agents or mandataries to rely on that disclosure and the effects of that reliance; and

  • (e) the rights of any person owning shares of the corporation at the time of an amendment to its articles constraining share issues or transfers.

• Marginal note:Validity of acts

  (7) An issue or a transfer of a share or an act of a corporation is valid notwithstanding any failure to comply with this section or the regulations.

Marginal note:Proposal to amend

• 175 (1) Subject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders may, in accordance with section 137, make a proposal to amend the articles.

• Marginal note:Notice of amendment

  (2) Notice of a meeting of shareholders at which a proposal to amend the articles is to be considered shall set out the proposed amendment and, where applicable, shall state that a dissenting shareholder is entitled to be paid the fair value of their shares in accordance with section 190, but failure to make that statement does not invalidate an amendment.

Marginal note:Class vote

• 176 (1) The holders of shares of a class or, subject to subsection (4), of a series are, unless the articles otherwise provide in the case of an amendment referred to in paragraphs (a), (b) and (e), entitled to vote separately as a class or series on a proposal to amend the articles to

  • (a) increase or decrease any maximum number of authorized shares of such class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of such class;

  • (b) effect an exchange, reclassification or cancellation of all or part of the shares of such class;

  • (c) add, change or remove the rights, privileges, restrictions or conditions attached to the shares of such class and, without limiting the generality of the foregoing,

    • (i) remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,

    • (ii) add, remove or change prejudicially redemption rights,

    • (iii) reduce or remove a dividend preference or a liquidation preference, or

    • (iv) add, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of a corporation, or sinking fund provisions;

  • (d) increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of such class;

  • (e) create a new class of shares equal or superior to the shares of such class;

  • (f) make any class of shares having rights or privileges inferior to the shares of such class equal or superior to the shares of such class;

  • (g) effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of such class; or

  • (h) constrain the issue, transfer or ownership of the shares of such class or change or remove such constraint.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of a proposal to amend the articles to add a right or privilege for a holder to convert shares of a class or series into shares of another class or series that is subject to a constraint permitted under paragraph 174(1)(c) but is otherwise equal to the class or series first mentioned.

• Marginal note:Deeming provision

  (3) For the purpose of paragraph (1)(e), a new class of shares, the issue, transfer or ownership of which is to be constrained by an amendment to the articles pursuant to paragraph 174(1)(c), that is otherwise equal to an existing class of shares shall be deemed not to be equal or superior to the existing class of shares.

• Marginal note:Limitation

  (4) The holders of a series of shares of a class are entitled to vote separately as a series under subsection (1) only if such series is affected by an amendment in a manner different from other shares of the same class.

• Marginal note:Right to vote

  (5) Subsection (1) applies whether or not shares of a class or series otherwise carry the right to vote.

• Marginal note:Separate resolutions

  (6) A proposed amendment to the articles referred to in subsection (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 such amendment by a special resolution.

Marginal note:Delivery of articles

• 177 (1) Subject to any revocation under subsection 173(2) or 174(5), after an amendment has been adopted under section 173, 174 or 176 articles of amendment in the form that the Director fixes shall be sent to the Director.

• Marginal note:Reduction of stated capital

  (2) If an amendment effects or requires a reduction of stated capital, subsections 38(3) and (4) apply.

Marginal note:Certificate of amendment

178 On receipt of articles of amendment, the Director shall issue a certificate of amendment in accordance with section 262.

Marginal note:Effect of certificate

• 179 (1) An amendment becomes effective on the date shown in the certificate of amendment and the articles are amended accordingly.

• Marginal note:Rights preserved

  (2) No amendment to the articles affects an existing cause of action or claim or liability to prosecution in favour of or against the corporation or its directors or officers, or any civil, criminal or administrative action or proceeding to which a corporation or its directors or officers is a party.

Marginal note:Restated articles

• 180 (1) The directors may at any time, and shall when reasonably so directed by the Director, restate the articles of incorporation.

• Marginal note:Delivery of articles

  (2) Restated articles of incorporation in the form that the Director fixes shall be sent to the Director.

• Marginal note:Restated certificate

  (3) On receipt of restated articles of incorporation, the Director shall issue a restated certificate of incorporation in accordance with section 262.

• Marginal note:Effect of certificate

  (4) Restated articles of incorporation are effective on the date shown in the restated certificate of incorporation and supersede the original articles of incorporation and all amendments thereto.

Marginal note:Amalgamation

181 Two or more corporations, including holding and subsidiary corporations, may amalgamate and continue as one corporation.

Marginal note:Amalgamation agreement

• 182 (1) Each corporation proposing to amalgamate shall enter into an agreement setting out the terms and means of effecting the amalgamation and, in particular, setting out

  • (a) the provisions that are required to be included in articles of incorporation under section 6;

  • (b) the name and address of each proposed director of the amalgamated corporation;

  • (c) the manner in which the shares of each amalgamating corporation are to be converted into shares or other securities of the amalgamated corporation;

  • (d) if any shares of an amalgamating corporation are not to be converted into securities of the amalgamated corporation, the amount of money or securities of any body corporate that the holders of such shares are to receive in addition to or instead of securities of the amalgamated corporation;

  • (e) the manner of payment of money instead of the issue of fractional shares of the amalgamated corporation or of any other body corporate the securities of which are to be received in the amalgamation;

  • (f) whether the by-laws of the amalgamated corporation are to be those of one of the amalgamating corporations and, if not, a copy of the proposed by-laws; and

  • (g) details of any arrangements necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated corporation.

• Marginal note:Cancellation

  (2) If shares of one of the amalgamating corporations are held by or on behalf of another of the amalgamating corporations, the amalgamation agreement shall provide for the cancellation of such 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 such shares into shares of the amalgamated corporation.

Marginal note:Shareholder approval

• 183 (1) The directors of each amalgamating corporation shall submit the amalgamation agreement for approval to a meeting of the holders of shares of the amalgamating corporation of which they are directors and, subject to subsection (4), to the holders of each class or series of such shares.

• Marginal note:Notice of meeting

  (2) A notice of a meeting of shareholders complying with section 135 shall be sent in accordance with that section to each shareholder of each amalgamating corporation, and shall

  • (a) include or be accompanied by a copy or summary of the amalgamation agreement; and

  • (b) state that a dissenting shareholder is entitled to be paid the fair value of their shares in accordance with section 190, but failure to make that statement does not invalidate an amalgamation.

• Marginal note:Right to vote

  (3) Each share of an amalgamating corporation carries the right to vote in respect of an amalgamation agreement whether or not it otherwise carries the right to vote.

• Marginal note:Class vote

  (4) The holders of shares of a class or series of shares of each amalgamating corporation are entitled to vote separately as a class or series in respect of an amalgamation agreement if the amalgamation agreement contains a provision that, if contained in a proposed amendment to the articles, would entitle such holders to vote as a class or series under section 176.

• Marginal note:Shareholder approval

  (5) Subject to subsection (4), an amalgamation agreement is adopted when the shareholders of each amalgamating corporation have approved of the amalgamation by special resolutions.

• Marginal note:Termination

  (6) An amalgamation agreement may provide that at any time before the issue of a certificate of amalgamation the agreement may be terminated by the directors of an amalgamating corporation, notwithstanding approval of the agreement by the shareholders of all or any of the amalgamating corporations.

Marginal note:Vertical short-form amalgamation

• 184 (1) A holding corporation and one or more of its subsidiary corporations may amalgamate and continue as one corporation without complying with sections 182 and 183 if

  • (a) the amalgamation is approved by a resolution of the directors of each amalgamating corporation;

  • (a.1) all of the issued shares of each amalgamating subsidiary corporation are held by one or more of the other amalgamating corporations; and

  • (b) the resolutions provide that

    • (i) the shares of each amalgamating subsidiary corporation shall be cancelled without any repayment of capital in respect thereof,

    • (ii) except as may be prescribed, the articles of amalgamation shall be the same as the articles of the amalgamating holding corporation, and

    • (iii) no securities shall be issued by the amalgamated corporation in connection with the amalgamation and the stated capital of the amalgamated corporation shall be the same as the stated capital of the amalgamating holding corporation.

• Marginal note:Horizontal short-form amalgamation

  (2) Two or more wholly-owned subsidiary corporations of the same holding body corporate may amalgamate and continue as one corporation without complying with sections 182 and 183 if

  • (a) the amalgamation is approved by a resolution of the directors of each amalgamating corporation; and

  • (b) the resolutions provide that

    • (i) the shares of all but one of the amalgamating subsidiary corporations shall be cancelled without any repayment of capital in respect thereof,

    • (ii) except as may be prescribed, the articles of amalgamation shall be the same as the articles of the amalgamating subsidiary corporation whose shares are not cancelled, and

    • (iii) the stated capital of the amalgamating subsidiary corporations whose shares are cancelled shall be added to the stated capital of the amalgamating subsidiary corporation whose shares are not cancelled.

Marginal note:Sending of articles

• 185 (1) Subject to subsection 183(6), after an amalgamation has been adopted under section 183 or approved under section 184, articles of amalgamation in the form that the Director fixes shall be sent to the Director together with the documents required by sections 19 and 106.

• Marginal note:Attached declarations

  (2) The articles of amalgamation shall have attached thereto a statutory declaration of a director or an officer of each amalgamating corporation that establishes to the satisfaction of the Director that

  • (a) there are reasonable grounds for believing that

    • (i) each amalgamating corporation is and the amalgamated corporation will be able to pay its liabilities as they become due, and

    • (ii) the realizable value of the amalgamated corporation’s assets will not be less than the aggregate of its liabilities and stated capital of all classes; and

  • (b) there are reasonable grounds for believing that

    • (i) no creditor will be prejudiced by the amalgamation, or

    • (ii) adequate notice has been given to all known creditors of the amalgamating corporations and no creditor objects to the amalgamation otherwise than on grounds that are frivolous or vexatious.

• Marginal note:Adequate notice

  (3) For the purposes of subsection (2), adequate notice is given if

  • (a) a notice in writing is sent to each known creditor having a claim against the corporation that exceeds one thousand dollars;

  • (b) a notice is published once in a newspaper published or distributed in the place where the corporation has its registered office and reasonable notice thereof is given in each province where the corporation carries on business; and

  • (c) each notice states that the corporation intends to amalgamate with one or more specified corporations in accordance with this Act and that a creditor of the corporation may object to the amalgamation within thirty days from the date of the notice.

• Marginal note:Certificate of amalgamation

  (4) On receipt of articles of amalgamation, the Director shall issue a certificate of amalgamation in accordance with section 262.

Marginal note:Effect of certificate

186 On the date shown in a certificate of amalgamation

• (a) the amalgamation of the amalgamating corporations and their continuance as one corporation become effective;

• (b) the property of each amalgamating corporation continues to be the property of the amalgamated corporation;

• (c) the amalgamated corporation continues to be liable for the obligations of each amalgamating corporation;

• (d) an existing cause of action, claim or liability to prosecution is unaffected;

• (e) a civil, criminal or administrative action or proceeding pending by or against an amalgamating corporation may be continued to be prosecuted by or against the amalgamated corporation;

• (f) a conviction against, or ruling, order or judgment in favour of or against, an amalgamating corporation may be enforced by or against the amalgamated corporation; and

• (g) the articles of amalgamation are deemed to be the articles of incorporation of the amalgamated corporation and the certificate of amalgamation is deemed to be the certificate of incorporation of the amalgamated corporation.

Marginal note:Amalgamation under other federal Acts

• 186.1 (1) Subject to subsection (2), a corporation may not amalgamate with one or more bodies corporate pursuant to the Bank Act, the Canada Cooperatives Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act unless the corporation is first authorized to do so by the shareholders in accordance with section 183.

• Marginal note:Short-form amalgamations

  (2) A corporation may not amalgamate with one or more bodies corporate pursuant to the provisions of one of the Acts referred to in subsection (1) respecting short-form amalgamations unless the corporation is first authorized to do so by the directors in accordance with section 184.

• Marginal note:Discontinuance

  (3) On receipt of a notice satisfactory to the Director that a corporation has amalgamated pursuant to one of the Acts referred to in subsection (1), the Director shall file the notice and issue a certificate of discontinuance in accordance with section 262.

• Marginal note:Notice deemed to be articles

  (4) For the purposes of section 262, a notice referred to in subsection (3) is deemed to be articles that are in the form that the Director fixes.

• Marginal note:Act ceases to apply

  (5) This Act ceases to apply to the corporation on the date shown in the certificate of discontinuance.

• Marginal note:Non-application

  (6) For greater certainty, section 185 does not apply to a corporation that amalgamates pursuant to one of the Acts referred to in subsection (1).

Marginal note:Continuance (import)

• 187 (1) A 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 Director for a certificate of continuance.

• Marginal note:Amendments in articles of continuance

  (2) A body corporate that applies for continuance under subsection (1) may, without so stating in its articles of continuance, effect by those articles any amendment to its Act of incorporation, articles, letters patent or memorandum or articles of association if the amendment is an amendment a corporation incorporated under this Act may make to its articles.

• Marginal note:Articles of continuance

  (3) Articles of continuance in the form that the Director fixes shall be sent to the Director together with the documents required by sections 19 and 106.

• Marginal note:Certificate of continuance

  (4) On receipt of articles of continuance, the Director shall issue a certificate of continuance in accordance with section 262.

• Marginal note:Effect of certificate

  (5) On the date shown in the certificate of continuance

  • (a) the body corporate becomes a corporation to which this Act applies as if it had been incorporated under this Act;

  • (b) the articles of continuance are deemed to be the articles of incorporation of the continued corporation; and

  • (c) the certificate of continuance is deemed to be the certificate of incorporation of the continued corporation.

• Marginal note:Copy of certificate

  (6) The Director shall forthwith send a copy of the certificate of continuance to the appropriate official or public body in the jurisdiction in which continuance under this Act was authorized.

• Marginal note:Rights preserved

  (7) When a body corporate is continued as a corporation under this Act,

  • (a) the property of the body corporate continues to be the property of the corporation;

  • (b) the corporation continues to be liable for the obligations of the body corporate;

  • (c) an existing cause of action, claim or liability to prosecution is unaffected;

  • (d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may be continued to be prosecuted by or against the corporation; and

  • (e) a conviction against, or ruling, order or judgment in favour of or against, the body corporate may be enforced by or against the corporation.

• Marginal note:Issued shares

  (8) Subject to subsections (9) and 49(8), a share of a body corporate issued before the body corporate was continued under this Act is deemed to have been issued in compliance with this Act and with the provisions of the articles of continuance irrespective of whether the share is fully paid and irrespective of any designation, rights, privileges, restrictions or conditions set out on or referred to in the certificate representing the share. Continuance under this section does not deprive a holder of any right or privilege that the holder claims under, or relieve the holder of any liability in respect of, an issued share.

• Marginal note:Convertible shares

  (9) If a corporation continued under this Act had, before it was so continued, issued a share certificate in registered form that is convertible to bearer form, the corporation shall not, if a holder of such a share certificate exercises the conversion privilege attached to the certificate, issue a share certificate in bearer form.

• Marginal note:Definition of share

  (10) For the purposes of subsections (8) and (9), share includes an instrument referred to in subsection 29(1), a share warrant as defined in the Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970, or a like instrument.

• Marginal note:Where continued reference to par value shares permissible

  (11) Where the Director determines, on the application of a body corporate, that it is not practicable to change a reference to the nominal or par value of shares of a class or series that the body corporate was authorized to issue before it was continued under this Act, the Director may, notwithstanding subsection 24(1), permit the body corporate to continue to refer in its articles to those shares, whether issued or unissued, as shares having a nominal or par value.

• Marginal note:Limitation

  (12) A corporation shall set out in its articles the maximum number of shares of a class or series referred to in subsection (11) and may not amend its articles to increase that maximum number of shares or to change the nominal or par value of those shares.