Canada Not-for-profit Corporations Act (S.C. 2009, c. 23)

Marginal note:Limitation of the purchase

68 A purchaser acquires rights only to the extent of the interest or right purchased.

Marginal note:Deemed notice

• 69 (1) A purchaser of a debt obligation, or a broker for a seller or purchaser, is deemed to have notice of an adverse claim if

  • (a) the debt obligation has been endorsed “for collection” or “for surrender” or for a purpose other than transfer; or

  • (b) the debt obligation is in bearer form and has a statement on it that it belongs to a person other than the transferor.

• Marginal note:Name

  (2) The mere writing of a name on a debt obligation is not a statement for the purposes of paragraph (1)(b).

Marginal note:No duty to inquire

• 70 (1) A purchaser of a debt obligation, or a broker for a seller or purchaser, has no duty to inquire into the rightfulness of the transfer and, subject to sections 69 and 71, has no notice of an adverse claim.

• Marginal note:Third party holding

  (2) Subsection (1) applies even if the purchaser or broker has notice that the debt obligation is held by a third person or is registered in the name of or endorsed by a fiduciary.

Marginal note:Deemed notice

71 A purchaser or broker who knows that the transaction is for the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty is deemed to have notice of an adverse claim.

Marginal note:Staleness

• 72 (1) The following events do not constitute notice of an adverse claim except if the debt obligation becomes stale within the meaning of subsection (2):

  • (a) an event that creates a right to performance of the principal obligation evidenced by the debt obligation; or

  • (b) an event that sets the date on or after which the debt obligation is to be presented or surrendered for redemption or exchange.

• Marginal note:Staleness of debt obligation

  (2) A debt obligation becomes stale if

  • (a) the purchaser takes the debt obligation later than the prescribed period that is after

    • (i) the date on which performance of the principal obligation evidenced by the debt obligation was due, or

    • (ii) the date on or after which the debt obligation was to be presented or surrendered for redemption or exchange; or

  • (b) the payment of money or the delivery of debt obligations is required in order to present or surrender the debt obligation, the money or debt obligations are available on the day for the payment or delivery and the purchaser takes the debt obligation later than the prescribed period that is after that day.

Marginal note:Guarantee

• 73 (1) A person who presents a debt obligation for registration of transfer or for payment or exchange guarantees to the issuer that the person is entitled to do so.

• Marginal note:Limitation on guarantee

  (2) A good faith purchaser who receives a new, reissued or re-registered debt obligation and who registers a transfer guarantees only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

Marginal note:Content of guarantee

74 A person who transfers a debt obligation to a purchaser for value guarantees by the transfer only that

• (a) the transfer is effective and rightful;

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

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

Marginal note:Guarantee of intermediary

75 An intermediary delivering a debt obligation to a purchaser who knows that the intermediary is an intermediary guarantees only its good faith.

Marginal note:Guarantee of broker

76 A broker shall give to a customer, to the issuer and to a purchaser the guarantees provided in sections 73 to 75 and has the rights and privileges of a purchaser under those sections, and those guarantees of and in favour of the broker acting as an agent or mandatary are in addition to guarantees given by the customer and guarantees given in favour of the customer.

Marginal note:Right to compel endorsement

77 If a registered debt obligation is delivered to a purchaser without a necessary endorsement, the purchaser has the right to demand the endorsement. The purchaser becomes a good faith purchaser after the endorsement.

Marginal note:Definition of appropriate

• 78 (1) In section 79, subsections 86(1) and 94(1) and section 98, appropriate, with respect to a person, means that the person is

  • (a) the person who is specified by the debt obligation or by a special endorsement to be entitled to the debt obligation;

  • (b) if the person described in paragraph (a) is described as a fiduciary but is no longer serving as one, either that person or their successor;

  • (c) if the debt obligation or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons is no longer a fiduciary, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified;

  • (d) if the 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 debt obligation or endorsement mentioned in paragraph (a) specifies more than one person with a right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;

  • (f) a person who has the legal power to sign; or

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

• Marginal note:Time for determination

  (2) The authority of a person signing is determined as of the time of signing.

Marginal note:Endorsement

• 79 (1) An endorsement of a debt obligation in registered form for the purposes of assignment or transfer is made when an appropriate person signs either the debt obligation or a separate document, or when the signature of an appropriate person is written without more on the back of the debt obligation.

• Marginal note:Blank or special

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

• Marginal note:Blank endorsement

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

• Marginal note:Special endorsement

  (4) A special endorsement specifies the person to whom the debt obligation is to be transferred or who has power to transfer it.

• Marginal note:Right of holder

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

Marginal note:Immunity of endorser

80 Unless agreed otherwise, the endorser does not, by the endorsement, assume any obligation that the debt obligation will be honoured by the issuer.

Marginal note:Partial endorsement

81 An endorsement purporting to be an endorsement of only part of a debt obligation representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

Marginal note:Effect of failure by fiduciary to comply

82 Failure of a fiduciary to comply with the document that is the source of the fiduciary’s power or with the law of the jurisdiction governing the fiduciary relationship does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

Marginal note:Effect of endorsement

83 An endorsement of a debt obligation does not constitute a transfer until delivery of the debt obligation on which it appears or, if the endorsement is on a separate document, until delivery of both the debt obligation and the document.

Marginal note:Endorsement in bearer form

84 An endorsement of a debt obligation in bearer form may give notice of an adverse claim under section 69 but does not otherwise affect any of the holder’s rights.

Marginal note:Effect of unauthorized endorsement

• 85 (1) The owner of a debt obligation may assert the ineffectiveness of an endorsement against the issuer or a 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 debt obligation on registration of transfer, unless the owner

  • (a) has ratified an unauthorized endorsement of the debt obligation; 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 debt obligation on an unauthorized endorsement is liable for improper registration.

Marginal note:Warranties of guarantor of signature

• 86 (1) A person who guarantees the signature of an endorser of a debt obligation warrants that, at the time of signing, the signer was an appropriate person to endorse and the signature was genuine.

• Marginal note:Limitation of liability

  (2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.

• Marginal note:Warranties of guarantor of endorsement

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

• Marginal note:Extent of liability

  (4) If a guarantee referred to in subsection (1) or (3) is made to any person who, relying on the guarantee, takes or deals with the debt obligation, the guarantor is liable to the person for any loss resulting from breach of warranty.

Marginal note:Presumption of delivery

87 Delivery of a debt obligation to a purchaser occurs when

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

• (b) the purchaser’s broker acquires possession of a debt obligation specially endorsed to or issued in the name of the purchaser;

• (c) the purchaser’s broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific debt obligation as belonging to the purchaser; or

• (d) in respect of an identified debt obligation to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.

Marginal note:Presumption of ownership

• 88 (1) A purchaser is the owner of a debt obligation held for the purchaser by a broker, but a purchaser is not a holder except in the cases described in paragraphs 87(b) and (c).

• Marginal note:Ownership of part of fungible bulk

  (2) If a debt obligation is part of a fungible bulk, by nature or usage of trade, a purchaser of the debt obligation is the owner of the proportionate share in the bulk.

• Marginal note:Notice to debt obligations broker of adverse claim

  (3) 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 debt obligation in respect of which no notice of an adverse claim has been received.

Marginal note:Delivery of debt obligation

• 89 (1) Unless agreed otherwise, if a sale of a debt obligation is made through brokers, on a stock exchange or otherwise,

  • (a) the selling customer fulfils their duty to deliver when the customer delivers the debt obligation to the selling broker or to a person designated by the selling broker or when they cause an acknowledgement to be made to the selling broker that the debt obligation is held for the selling broker; and

  • (b) the selling broker, including a correspondence broker, acting for a selling customer fulfils their duty to deliver by delivering the debt obligation or a similar debt obligation 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) Except as provided otherwise in this section and unless agreed otherwise, a transferor’s duty to deliver a debt obligation under a contract of purchase is not fulfilled until the transferor delivers the debt obligation in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the debt obligation is held for the purchaser.

• Marginal note:Delivery to debt obligations 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

• 90 (1) A person against whom the transfer of a debt obligation is wrongful may, against anyone except a good faith purchaser,

  • (a) reclaim possession of the debt obligation or obtain possession of a new debt obligation evidencing all or part of the same rights; or

  • (b) claim damages.

• Marginal note:Recovery when unauthorized endorsement

  (2) If the transfer of a debt obligation is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the debt obligation or a new debt obligation even from a good faith purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 85.

Marginal note:Right to requisites for registration

• 91 (1) Unless agreed otherwise, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a debt obligation or with any other requisite that is necessary to obtain registration of the transfer of a debt obligation, but if the transfer is not for value, it is not necessary for the transferor to provide authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

• Marginal note:Rescission of transfer

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

Marginal note:Seizure of debt obligation

92 No seizure of a debt obligation or other interest or right evidenced by the debt obligation is effective until the person making the seizure obtains possession of the debt obligation.

Marginal note:Not liable if good faith delivery

93 An agent or mandatary, or a bailee, who in good faith has received debt obligations and sold, pledged or delivered them according to the instructions of the principal or mandator is not in breach of their duties as a fiduciary or otherwise liable even though they have no right to dispose of the debt obligations.