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Insurance Companies Act (S.C. 1991, c. 47)

Act current to 2021-02-15 and last amended on 2019-06-17. Previous Versions

PART VICorporate Governance (continued)

DIVISION XVILiquidation and Dissolution (continued)

Court-supervised Liquidation (continued)

Marginal note:Due diligence

 A liquidator is not liable if they 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 company represented to the liquidator by an officer of the company or in a written report of the auditor of the company fairly to reflect the financial condition of the company; or

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

  • 1991, c. 47, s. 392
  • 2005, c. 54, s. 293

Marginal note:Examination of others

  •  (1) Where a liquidator has reason to believe that any property of the company is in the possession or under the control of a person or that a person has concealed, withheld or misappropriated any such property, the liquidator may apply to the court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.

  • Marginal note:Restoration and compensation

    (2) Where an examination conducted pursuant to subsection (1) discloses that a person has concealed, withheld or misappropriated any property of the company, the court may order that person to restore the property or pay compensation to the liquidator.

Marginal note:Costs of liquidation

 A liquidator shall pay the costs of liquidation out of the property of the company and shall pay or make adequate provision for all claims against the company.

Marginal note:Final accounts

  •  (1) Within one year after the appointment of a liquidator and after paying or making adequate provision for all claims against the company, the liquidator shall apply to the court

    • (a) for approval of the final accounts of the liquidator and for an order permitting the distribution, in money or in kind, of the remaining property of the company to its shareholders, if any, or to the incorporators, according to their respective rights; or

    • (b) for an extension of time, setting out the reasons therefor.

  • Marginal note:Shareholder application

    (2) If a liquidator fails to make the application required by subsection (1), a shareholder of the company or, if there are no shareholders of the company, an incorporator may apply to the court for an order for the liquidator to show cause why a final accounting and distribution should not be made.

  • Marginal note:Notification of final accounts

    (3) A liquidator shall give notice of the liquidator’s intention to make an application under subsection (1) to the Superintendent, to each inspector appointed under section 387, to each shareholder of the company or, if there are no shareholders, to each incorporator and to any person who provided a security or fidelity bond for the liquidation.

  • Marginal note:Publication

    (4) The liquidator shall publish the notice required under subsection (3) in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company has transacted any business within the preceding twelve months or as otherwise directed by the court.

Marginal note:Final order

  •  (1) If the court approves the final accounts rendered by a liquidator, the court shall make an order

    • (a) directing the company to apply to the Minister for letters patent dissolving the company;

    • (b) directing the custody or disposal of the documents, records and registers of the company; and

    • (c) discharging the liquidator except in respect of the duty of a liquidator under subsection (2).

  • Marginal note:Delivery of order

    (2) The liquidator shall forthwith send a certified copy of the order referred to in subsection (1) to the Superintendent.

Marginal note:Right to distribution of money

  •  (1) If in the course of the liquidation of a company the shareholders resolve to, or the liquidator proposes to,

    • (a) exchange all or substantially all of the remaining property of the company for securities of another entity that are to be distributed to the shareholders or to the incorporators, or

    • (b) distribute all or part of the remaining property of the company to the shareholders or to the incorporators in kind,

    a shareholder or incorporator may apply to the court for an order requiring the distribution of the remaining property of the company to be in money.

  • Marginal note:Powers of court

    (2) On an application under subsection (1), the court may order

    • (a) all of the remaining property of the company to be converted into and distributed in money; or

    • (b) the claim of any shareholder or incorporator applying under this section to be satisfied by a distribution in money.

  • Marginal note:Order by court

    (3) Where an order is made by a court under paragraph (2)(b), the court

    • (a) shall fix a fair value on the share of the property of the company attributable to the shareholder or incorporator;

    • (b) may in its discretion appoint one or more appraisers to assist the court in fixing a fair value in accordance with paragraph (a); and

    • (c) shall render a final order against the company in favour of the shareholder or incorporator for the amount of the share of the property of the company attributable to the shareholder or incorporator.

Marginal note:Dissolution by letters patent

  •  (1) On an application made pursuant to an order under paragraph 396(1)(a), the Minister may issue letters patent dissolving the company.

  • Marginal note:Company dissolved

    (2) A company in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the date of the issuance of the letters patent.

General

Definition of shareholder and incorporator

 In sections 401 and 402, shareholder and incorporator include the heirs and personal representatives of a shareholder or incorporator.

Marginal note:Continuation of actions

  •  (1) Notwithstanding the dissolution of a company under this Part,

    • (a) a civil, criminal or administrative action or proceeding commenced by or against the company before its dissolution may be continued as if the company had not been dissolved;

    • (b) a civil, criminal or administrative action or proceeding may be brought against the company within two years after its dissolution as if the company had not been dissolved; and

    • (c) any property that would have been available to satisfy any judgment or order if the company had not been dissolved remains available for that purpose.

  • Marginal note:Service on company

    (2) Service of a document on a company after its dissolution may be effected by serving the document on a person shown as a director in the incorporating instrument of the company or, if applicable, in the latest return sent to the Superintendent under section 668.

Marginal note:Limitations on liability

  •  (1) Notwithstanding the dissolution of a company, a shareholder or incorporator to whom any of its property has been distributed is liable to any person claiming under subsection 400(1) to the extent of the amount received by that shareholder or incorporator on the distribution.

  • Marginal note:Limitation

    (2) An action to enforce liability under subsection (1) may not be commenced except within two years after the date of the dissolution of the company.

  • Marginal note:Action against class

    (3) A court may order an action referred to in subsections (1) and (2) to be brought against the persons who were shareholders or incorporators as a class, subject to such conditions as the court thinks fit.

  • Marginal note:Reference

    (4) If the plaintiff establishes a claim in an action under subsection (3), the court may refer the proceedings to a referee or other officer of the court who may

    • (a) add as a party to the proceedings each person found by the plaintiff to have been a shareholder or incorporator;

    • (b) determine, subject to subsection (1), the amount that each person who was a shareholder or incorporator must contribute towards satisfaction of the plaintiff’s claim; and

    • (c) direct payment of the amounts so determined.

 
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