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Trust and Loan Companies Act (S.C. 1991, c. 45)

Act current to 2019-07-01 and last amended on 2019-06-17. Previous Versions

PART VICorporate Governance (continued)

Directors and Officers (continued)

Conflicts of Interest (continued)

Marginal note:General notice

  •  (1) For the purposes of subsection 207(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:

    • (a) the director or officer is a director or officer of a party referred to in paragraph 207(1)(b) or (c) or a person acting in a similar capacity;

    • (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 officer’s interest in the party.

  • Marginal note:Access to disclosures

    (2) The shareholders of the company may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 207(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the company.

  • 1991, c. 45, s. 209
  • 2005, c. 54, s. 406

Marginal note:Avoidance standards

  •  (1) A contract or transaction for which disclosure is required under subsection 207(1) is not invalid and a director or officer is not accountable to the company or its shareholders for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it if

    • (a) the director or officer disclosed their interest in accordance with section 207 and subsection 209(1);

    • (b) the directors approved the contract or transaction; and

    • (c) the contract or transaction was reasonable and fair to the company at the time that it was approved.

  • Marginal note:Confirmation by shareholders

    (2) Even if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the company or its shareholders for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it if

    • (a) the contract or transaction is approved or confirmed by special resolution at a meeting of 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 company at the time that it was approved or confirmed.

  • 1991, c. 45, s. 210
  • 2005, c. 54, s. 406

Marginal note:Court may set aside or require accounting

 If a director or officer of a company fails to comply with any of sections 207 to 210, a court, on application of the company or any of its shareholders, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the company for any profit or gain realized on it.

  • 1991, c. 45, s. 211
  • 2005, c. 54, s. 406

Liability, Exculpation and Indemnification

Marginal note:Director liability

  •  (1) Directors of a company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 68(1) or the issue of subordinated indebtedness contrary to section 83 for a consideration other than money are jointly and severally, or solidarily, liable to the company to make good any amount by which the consideration received is less than the fair equivalent of the money that the company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.

  • Marginal note:Further liability

    (2) Directors of a company who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the company any amounts so distributed or paid and not otherwise recovered by the company and any amounts in relation to any loss suffered by the company:

    • (a) a redemption or purchase of shares contrary to section 74;

    • (b) a reduction of capital contrary to section 78;

    • (c) a payment of a dividend contrary to section 82;

    • (d) a payment of an indemnity contrary to section 217; or

    • (e) any transaction contrary to Part XI.

  • 1991, c. 45, s. 212
  • 2005, c. 54, s. 407(E)

Marginal note:Contribution

  •  (1) A director who has satisfied a judgment in relation to the director’s liability under section 212 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

    (2) A director who is liable under section 212 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director

    • (a) any money or property that was paid or distributed to the shareholder or other person contrary to section 74, 78, 82 or 217; or

    • (b) an amount equal to the value of the loss suffered by the company as a result of any transaction contrary to Part XI.

  • Marginal note:Court order

    (3) Where an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,

    • (a) order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 74, 78, 82 or 217 or any amount referred to in paragraph (2)(b);

    • (b) order a company to return or issue shares to a person from whom the company has purchased, redeemed or otherwise acquired shares; or

    • (c) make any further order it thinks fit.

Marginal note:Limitation

 An action to enforce a liability imposed by section 212 may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Directors liable for wages

  •  (1) Subject to subsections (2) and (3), the directors of a company are jointly and severally, or solidarily, liable to each employee of the company for all debts not exceeding six months wages payable to the employee for services performed for the company while they are directors.

  • Marginal note:Conditions precedent

    (2) A director is not liable under subsection (1) unless

    • (a) the company 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 company has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or

    • (c) a winding-up order has been issued in respect of the company under the Winding-up and Restructuring Act and a claim for the debt has been allowed or proven within six months after the issue of the winding-up order.

  • Marginal note:Limitations

    (3) A director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.

  • 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) Where a director of a company pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or winding-up proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.

  • Marginal note:Contribution entitlement

    (6) A director of a company who has satisfied a claim under this section is entitled to a contribution from the other directors of the company who are liable for the claim.

  • 1991, c. 45, s. 215
  • 1996, c. 6, s. 167
  • 2005, c. 54, s. 408(E)
 
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