PART VICorporate Governance (continued)
Directors and Officers (continued)
Election and Tenure — Directors (continued)
Marginal note:Election or appointment as director
169.1 The election or appointment of a person as a director is subject to the following:
(a) the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; or
(b) the person was not present at the meeting when the election or appointment took place but
- 2005, c. 54, s. 397
Marginal note:Term of directors
Marginal note:Term of one, two or three years
(2) A director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders, as the case may be, following the election of the director.
Marginal note:No stated term
(3) A director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders following the election of the director.
Marginal note:Tenure of office
(4) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term.
(5) If a by-law of a company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.
Marginal note:Composition requirements
(6) Where a director of a company is elected or appointed for a term of more than one year, the company shall comply with subsections 163(2) and 167(1) and section 168 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.
(7) Subsection (6) does not apply in respect of a former-Act company until the day of the third annual meeting of shareholders after the coming into force of this section.
Marginal note:Determining election of directors
171 (1) Except where this Act or the by-laws of a company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a company shall be the directors thereof.
(2) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.
Marginal note:Cumulative voting
(a) there shall be a stated number of directors fixed by by-law 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 the shareholder may cast all such 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 vote;
(d) if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;
(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 next 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 a motion to remove the director is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion; and
(h) the number of directors required by the by-laws may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion.
Marginal note:Mandatory cumulative voting
(2) Where the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a company, the directors shall be elected by cumulative voting.
(3) Subsection (2) does not apply
(a) where all the voting shares of the company that are outstanding, other than directors’ qualifying shares, if any, are beneficially owned by
(b) in respect of a former-Act company whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.
Marginal note:Transitional election
(4) Where this Act or the by-laws of a company provide for cumulative voting, the shareholders of the company shall,
(a) at the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, and
(b) at each succeeding annual meeting,
elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.
(5) Nothing in this Act precludes the holders of any class or series of shares of a company from having an exclusive right to elect one or more directors.
- 1991, c. 45, s. 172
- 1997, c. 15, s. 352
- 2005, c. 54, s. 398
Marginal note:Re-election of directors
173 A director who has completed a term of office is, if otherwise qualified, eligible for re-election.
Incomplete Elections and Director Vacancies
Marginal note:Void election or appointment
174 (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 163(2) or 167(1) or section 168, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.
Marginal note:Failure to elect minimum
(2) Where, at the close of a meeting of shareholders of a company, the shareholders have failed to elect the number or minimum number of directors required by this Act or the by-laws of a company, the purported election of directors at the meeting
(a) is valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or
(b) is void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.
(3) and (4) [Repealed, 1997, c. 15, s. 353]
- 1991, c. 45, s. 174
- 1997, c. 15, s. 353
- Date modified: