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

Civil Remedies

Extended meaning of insider

• 276 (1) In this section and sections 276.1 and 277, insider with respect to a company means

  • (a) the company;

  • (b) an affiliate of the company;

  • (c) a director or officer of the company or of any person described in paragraph (b), (d) or (f);

  • (d) a person who beneficially owns directly or indirectly, or who exercises control or direction over or has a combination of ownership, control and direction in respect of, shares of the company carrying more than the prescribed percentage of the voting rights attached to all of the company’s outstanding shares not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;

  • (e) a person, other than a person described in paragraph (f), who is employed or retained by the company or by a person described in paragraph (f);

  • (f) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the company;

  • (g) a person who received material confidential information concerning the company while they were a person described in any of paragraphs (a) to (f);

  • (h) a person who receives material confidential information from a person who is and who they know or ought reasonably to have known is a person described in this subsection, including in this paragraph, or subsection (3) or (4); or

  • (i) a prescribed person.

• Extended meaning of security

  (2) For the purposes of this section, each of the following is deemed to be a security of a company:

  • (a) a put, call, option or other right or obligation to purchase or sell a security of the company; and

  • (b) a security of another entity, the market price of which varies materially with the market price of the securities of the company.

• Marginal note:Deemed insider — take-over bid or business combination

  (3) For the purposes of this section and subsection 276.1(1), a person who proposes to make a take-over bid as defined in the regulations for securities of a company or to enter into a business combination with a company is an insider of the company with respect to material confidential information obtained from the company.

• Marginal note:Deemed insider — affiliate or associate

  (4) An insider of a person referred to in subsection (3), or the person’s affiliate or associate, is an insider of the company referred to in that subsection. Paragraphs (1)(b) to (i) apply in making this determination except that references to “company” are to be read as references to “person described in subsection (3)”.

• Meaning of associate

  (5) In subsection (4), associate means with respect to a person

  • (a) a body corporate that the person directly or indirectly controls, determined without regard to paragraph 3(1)(d), or of which they beneficially own shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing or a currently exercisable option or right to purchase the shares or convertible securities;

  • (b) a partner of the person acting on behalf of the partnership of which they are partners;

  • (c) a trust or estate in which the person has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity;

  • (d) a spouse or common-law partner of the person;

  • (e) a child of the person or of their spouse or common-law partner; or

  • (f) if that relative has the same residence as the person, a relative of the person or of their spouse or common-law partner.

• Marginal note:Insider trading — compensation to sellers and purchasers

  (6) An insider of a company who purchases or sells a security of the company with knowledge of confidential information that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the company is liable to compensate the seller or purchaser of the security, as the case may be, for any loss suffered by them as a result of the purchase or sale unless the insider establishes that

  • (a) the insider reasonably believed that the information had been generally disclosed;

  • (b) the information was known or ought reasonably to have been known by the seller or purchaser; or

  • (c) the purchase or sale of the security took place in the prescribed circumstances.

• Marginal note:Insider trading — compensation to company

  (7) The insider is accountable to the company for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (6) unless they establish the circumstances described in paragraph (6)(a).

Marginal note:Tipping — compensation to sellers and purchasers

• 276.1 (1) An insider of a company who discloses confidential information with respect to the company that has not been generally disclosed and that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the company is liable to compensate any person who subsequently sells securities of the company to or purchases them from any person who received the information unless the insider establishes that

  • (a) the insider reasonably believed that the information had been generally disclosed;

  • (b) the information was known or ought reasonably to have been known by the person who alleges that they suffered the loss;

  • (c) if the insider is not a person described in subsection 276(3) or (4), the disclosure of the information was necessary in the course of their business; or

  • (d) if the insider is a person described in subsection 276(3) or (4), the disclosure of the information was necessary to effect the take-over bid or business combination.

• Marginal note:Tipping — compensation to company

  (2) The insider is accountable to the company for any benefit or advantage received or receivable by them as a result of a disclosure of information as described in subsection (1) unless they establish the circumstances described in paragraph (1)(a), (c) or (d).

Marginal note:Measure of damages

• 277 (1) The court may assess damages under subsection 276(6) or 276.1(1) in accord­ance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in respect of a security of a distributing company, the court shall consider the following:

  • (a) if the plaintiff is a purchaser, the price that they paid for the security less the average market price of the security over the 20 trading days immediately following general disclosure of the information; and

  • (b) if the plaintiff is a seller, the average market price of the security over the 20 trading days immediately following general disclosure of the information, less the price that they received for the security.

• Marginal note:Liability — more than one insider

  (2) If more than one insider is liable under subsection 276(6) or 276.1(1) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.

• Marginal note:Limitation

  (3) An action to enforce a right created by subsection 276(6) or (7) or section 276.1 may be commenced only within two years after discovery of the facts that gave rise to the cause of action.

Prospectus

Marginal note:Distribution

• 278 (1) No person including a company shall distribute securities of a company except in accordance with the regulations made under subsection (2).

• Marginal note:Regulations

  (2) The Governor in Council may make regulations respecting the distribution of securities of a company, including

  • (a) respecting the information that is to be disclosed by a company before the distribution of any of its securities, including the information that is to be included in a prospectus;

  • (b) respecting the manner of disclosure and the form of the information that is to be disclosed; and

  • (c) exempting any class of distribution of securities from the application of subsection (1).

Marginal note:Order of exemption

• 279 (1) On application by a company or any person proposing to make a distribution, the Superintendent may, by order, exempt that distribution from the application of any regulations made under subsection 278(2) if the Superintendent is satisfied that the company has disclosed or is about to disclose, in compliance with the laws of the relevant jurisdiction, information relating to the distribution that in form and content substantially complies with the requirements of those regulations.

• Marginal note:Conditions

  (2) An order under subsection (1) may contain any conditions or limitations that the Superintendent deems appropriate.

Going-private Transactions and Squeeze-out Transactions

Marginal note:Going-private transactions

280 A company may carry out a going-private transaction if it complies with any applicable provincial securities laws.

Marginal note:Squeeze-out transactions

281 No company may carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the company’s by-laws, the transaction is approved by ordinary resolution of the holders of each class of shares affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:

• (a) affiliates of the company; and

• (b) holders of shares that following the squeeze-out transaction would be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.

Marginal note:Right to dissent

• 282 (1) A holder of shares of a company may dissent if the company resolves to carry out a going-private transaction or squeeze-out transaction that affects those shares.

• Marginal note:Payment for shares

  (2) In addition to any other right that the shareholder may have, but subject to subsection (25), a shareholder who complies with this section is, when the action approved by the resolution from which the shareholder dissents becomes effective, entitled to be paid by the company the fair value of the shares in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted by the shareholders.

• Marginal note:No partial dissent

  (3) A dissenting shareholder may claim under this section only with respect to all of the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder.

• Marginal note:Objection

  (4) A dissenting shareholder shall send to the company, at or before any meeting of shareholders at which a resolution referred to in subsection (2) is to be voted on by the shareholders, a written objection to the resolution unless the company did not give notice to the shareholder of the purpose of the meeting and their right to dissent.

• Marginal note:Notice that resolution was adopted

  (5) The company shall within 10 days after the day on which the shareholders adopt the resolution send to each shareholder who sent an objection under subsection (4) notice that the resolution was adopted. If it is necessary for the Minister or Superintendent to approve the transaction within the meaning of subsection 527.2(1) before it becomes effective, the company shall send notice within 10 days after the approval. Notice is not required to be sent to a shareholder who voted for the resolution or one who has withdrawn their objection.

• Marginal note:Demand for payment

  (6) A dissenting shareholder shall within 20 days after receiving the notice referred to in subsection (5) — or, if they do not receive it, within 20 days after learning that the resolution was adopted by the shareholders — send to the company a written notice containing

  • (a) their name and address;

  • (b) the number and class of shares in respect of which they dissent; and

  • (c) a demand for payment of the fair value of those shares.

• Marginal note:Share certificates

  (7) A dissenting shareholder shall within 30 days after sending a notice under subsection (6) send the certificates representing the shares in respect of which they dissent to the company or its transfer agent.

• Marginal note:Forfeiture

  (8) A dissenting shareholder who fails to comply with subsection (7) has no right to make a claim under this section.

• Marginal note:Endorsing certificate

  (9) A company or its transfer agent shall endorse on any share certificate received in accordance with subsection (7) a notice that the holder is a dissenting shareholder under this section and shall without delay return the share certificates to the dissenting shareholder.

• Marginal note:Suspension of rights

  (10) On sending a notice under subsection (6), a dissenting shareholder ceases to have any rights as a shareholder other than to be paid the fair value of their shares as determined under this section. However, the shareholder’s rights are reinstated as of the date the notice was sent if

  • (a) the shareholder withdraws the notice before the company makes an offer under subsection (11);

  • (b) the company fails to make an offer in accordance with subsection (11) and the shareholder withdraws the notice; or

  • (c) the directors revoke under section 225 the special resolution that was made in respect of the going-private transaction or squeeze-out transaction.

• Marginal note:Offer to pay

  (11) A company shall, no later than seven days after the later of the day on which the action approved by the resolution from which the shareholder dissents becomes effective and the day on which the company received the notice referred to in subsection (6), send to each dissenting shareholder who sent a notice

  • (a) a written offer to pay for their shares in an amount considered by the directors of the company to be the fair value, accompanied by a statement showing how the fair value was determined; or

  • (b) if subsection (25) applies, a notice that it is unable to lawfully pay dissenting shareholders for their shares.

• Marginal note:Same terms

  (12) Every offer made under subsection (11) for shares of the same class or series is to be on the same terms.

• Marginal note:Payment

  (13) Subject to subsection (25), a company shall pay for the shares of a dissenting shareholder within 10 days after the day on which an offer made under subsection (11) is accepted, but the offer lapses if the company does not receive an acceptance within 30 days after the day on which the offer is made.

• Marginal note:Court may fix fair value

  (14) If a company fails to make an offer under subsection (11) or if a dissenting shareholder fails to accept an offer, the company may, within 50 days after the day on which the action approved by the resolution from which the shareholder dissents becomes effective or within any further period that a court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder.

• Marginal note:Shareholder application

  (15) If a company fails to apply to a court under subsection (14), a dissenting shareholder may apply to a court for the same purpose within a further period of 20 days or within any further period that the court may allow.

• Marginal note:Venue

  (16) An application under subsection (14) or (15) is to be made to a court having jurisdiction where the company’s head office is situated or, if the company carries on business in the province in which the dissenting shareholder resides, in that province.

• Marginal note:No security for costs

  (17) A dissenting shareholder is not required to give security for costs in an application made under subsection (14) or (15).

• Marginal note:Parties

  (18) On an application to a court under subsection (14) or (15),

  • (a) all dissenting shareholders whose shares have not been purchased by the company are to be joined as parties and are bound by the decision of the court;

  • (b) the company shall notify each of them of the date, place and consequences of the application and their right to appear and be heard in person or by counsel; and

  • (c) the company shall notify the Superintend­ent of the date and place of the application and the Superintendent may appear and be heard in person or by counsel.

• Marginal note:Powers of court

  (19) On an application to a court under subsection (14) or (15), the court may determine whether any other person is a dissenting shareholder and is to be joined as a party and the court shall then fix a fair value for the shares of all dissenting shareholders.

• Marginal note:Appraisers

  (20) The court may appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders.

• Marginal note:Final order

  (21) The final order of the court is to be rendered against the company in favour of each dissenting shareholder for the value of the shares as fixed by the court.

• Marginal note:Interest

  (22) The court may allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution from which the shareholder dissents becomes effective until the date of payment.

• Marginal note:Notice that s. (25) applies

  (23) If subsection (25) applies, the company shall within 10 days after an order is made under subsection (21) notify each dissenting shareholder that it is unable to lawfully pay dissenting shareholders for their shares.

• Marginal note:Effect of s. (25)

  (24) If subsection (25) applies, a dissenting shareholder may by written notice delivered to the company within 30 days after receiving notice under subsection (23)

  • (a) withdraw their notice of dissent, in which case the company is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; or

  • (b) retain their status as a claimant against the company, to be paid as soon as the company is able to lawfully pay them or, in a liquidation, to be ranked subordinate to the rights of the company’s creditors but in priority to its shareholders.

• Marginal note:Limitation

  (25) A company may not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that the company is or the payment would cause the company to be in contravention of a regulation referred to in subsection 473(1) or (2) or of an order made under subsection 473(3).