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

Act current to 2021-09-11 and last amended on 2020-01-01. Previous Versions

PART VCorporate Finance (continued)

Marginal note:Enforcement of contract to buy shares

  •  (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.

  • R.S., 1985, c. C-44, s. 40
  • 2001, c. 14, s. 25

Marginal note:Commission for sale of shares

 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.

  • R.S., 1985, c. C-44, s. 41
  • 2001, c. 14, s. 135(E)

Marginal note:Dividends

 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.

  • 1974-75-76, c. 33, s. 40
  • 1978-79, c. 9, s. 1(F)

Marginal note:Form of dividend

  •  (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.

  • 1974-75-76, c. 33, s. 41
  • 1978-79, c. 9, ss. 1(F), 16

 [Repealed, 2001, c. 14, s. 26]

Marginal note:Shareholder immunity

  •  (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.

  • R.S., 1985, c. C-44, s. 45
  • 2001, c. 14, s. 27
  • 2011, c. 21, s. 26

PART VISale of Constrained Shares

Marginal note:Sale of constrained shares by corporation

  •  (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.

  • R.S., 1985, c. C-44, s. 46
  • 1991, c. 45, s. 552, c. 47, s. 720
  • 2001, c. 14, ss. 28, 135(E)
  • 2011, c. 21, s. 27

Marginal note:Proceeds of sale to be trust fund

  •  (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).

  • 1980-81-82-83, c. 115, s. 4

PART VIISecurity Certificates, Registers and Transfers

Interpretation and General

Marginal note:Application of Part

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


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


    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 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 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 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 includes transmission by operation of law; (transfert)

    trust indenture

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


    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 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.

  • R.S., 1985, c. C-44, s. 48
  • 2001, c. 14, ss. 29, 135(E)
  • 2011, c. 21, s. 28
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