C-4 2 40 57-58 Elizabeth II 2009

An Act respecting not-for-profit corporations and certain other corporations

Canada Not-for-profit Corporations Act

Canada Not-for-profit Corporations 2009 6 23 23 2009 90470

SUMMARY

This enactment establishes a framework for the governance of not-for-profit corporations and other corporations without share capital, mainly based on the

Canada Business Corporations Act .

The enactment replaces the “letters patent” system of incorporation by an “as of right” system of incorporation. The current requirement for ministerial review of letters patent and by-laws prior to incorporation is replaced by the granting of incorporation upon the sending of required information and payment of a fee.

The enactment provides for modern corporate governance standards, including the rights, powers, duties and liabilities of directors and officers, along with related defences, and financial accountability and disclosure requirements.

The enactment sets out the capacity and powers of a corporation as a natural person, including its right to buy and sell property, make investments, borrow funds and issue debt obligations.

The enactment sets out the rights of members, including the right to vote at a meeting of members, call a special meeting of members, advance proposals for consideration at meetings of members and access corporate records.

The enactment provides requirements for financial review by a public accountant and financial disclosure based on whether a corporation has solicited funds and its level of annual revenue.

The enactment gives the Director powers of administration, including the power to make inquiries related to compliance and to access key corporate documents such as financial statements and membership lists.

The enactment includes remedies for members and other interested persons to address the conduct of a corporation that is oppressive or unfairly prejudicial to or unfairly disregards the interests of any creditor, director, officer or member.

The enactment provides procedures for the amalgamation, continuance, liquidation and dissolution of a corporation and other fundamental corporate changes. The continuance provisions govern the continuance of bodies incorporated under other Acts and provide a power for the Governor in Council to require a federal body corporate without share capital to apply for continuance under the enactment or be dissolved.

The enactment modernizes the legal regime that applies to corporations without share capital created by special Acts of Parliament by providing that those corporations are natural persons, requiring the holding of an annual meeting and the sending of an annual return, and regulating a change of a corporation’s name and its dissolution.

The enactment gives corporations with share capital created by special Acts of Parliament and subject to

Part IV of the Canada Corporations Act six months to apply for continuance under the

Canada Business Corporations Act or be dissolved.

The enactment makes a number of consequential amendments to other federal Acts. It provides for a phased repeal of the Canada Corporations Act as corporations cease being subject to the Parts of that Act.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Short title

This Act may be cited as the Canada Not-for-profit Corporations Act .

PART 1

INTERPRETATION AND APPLICATION

Interpretation

Definitions

(1) The following

definitions apply in this Act.

activities

activité

activities includes any conduct of a corporation to further its purpose and any business carried on by a body corporate, but does not include the affairs of a body corporate.

affairs

affaires internes

affairs means the relationships among a corporation, its affiliates and the directors, officers, shareholders or members of those bodies corporate.

articles

statuts

articles means original or restated articles of incorporation or articles of amendment, amalgamation, continuance, reorganization, arrangement, dissolution or revival.

body corporate

personne morale

body corporate includes a company or other organization with legal personality wherever or however incorporated.

corporation

organisation

corporation means a body corporate incorporated or continued under this Act and not discontinued under this Act.

court

tribunal

court means

(

a) in Newfoundland and Labrador and Prince Edward Island, the trial division of the Supreme Court of the province;

(

b) in Ontario, the Superior Court of Justice;

(

c) in Nova Scotia and British Columbia, the Supreme Court of the province;

(

d) in Manitoba, Saskatchewan, Alberta and New Brunswick, the Court of Queen’s Bench for the province;

(

e) in Quebec, the Superior Court of the province; and

(

f) in Yukon and the Northwest Territories, the Supreme Court of the territory, and in Nunavut, the Nunavut Court of Justice.

creditor

créancier

creditor includes a debt obligation holder.

debt obligation

titre de créance

debt obligation means a bond, debenture, note or other evidence of indebtedness or guarantee of a corporation, whether secured or unsecured.

Director

directeur

Director means an individual appointed under

section 281.

director

administrateur

director means an individual occupying the position of director by whatever name called.

entity

entité

entity means a body corporate, a partnership, a trust, a joint venture or an unincorporated association or organization.

incorporator

fondateur

incorporator means a person who signs articles of incorporation.

issuer

émetteur

issuer means a corporation that is required by this Act to maintain a debt obligations register.

officer

dirigeant

officer means an individual appointed as an officer under

section 142, the chairperson of the board of directors, the president, a vice-president, the secretary, the treasurer, the comptroller, the general counsel, the general manager or a managing director of a corporation, or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any of those offices.

ordinary resolution

ordinaire

ordinary resolution means a resolution passed by a majority of the votes cast on that resolution.

person

personne

person means an individual or entity.

personal representative

représentant personnel

personal representative means a person who stands in place of and represents another person, including a trustee, an executor, an administrator, a receiver, an agent, a mandatary, a liquidator of a succession, a guardian, a tutor, a curator or a legal counsel.

prescribed

Version anglaise seulement

prescribed means prescribed by the regulations.

public accountant

expert-comptable

public accountant , in respect of a corporation, means the public accountant appointed for the corporation under paragraph 127(1)(

e) or subsection 181(1) or 186(1) or who fills a vacancy under subsection 184(2) or 185(1).

send

envoyer

send includes deliver.

series

série

series means a division of a class of debt obligations.

soliciting corporation

organisation ayant recours à la sollicitation

soliciting corporation means a corporation that is referred to in subsection (5.1).

special resolution

extraordinaire

special resolution means a resolution passed by a majority of not less than two thirds of the votes cast on that resolution.

unanimous member agreement

convention unanime des membres

unanimous member agreement means an agreement described in subsection 170 (1) or a declaration of a member described in subsection 170 (2).

Affiliated bodies corporate

(2) For the purposes of this Act,

(

a) one body corporate is the affiliate of another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person; and

(

b) if two bodies corporate are affiliates of the same body corporate at the same time, they are deemed to be affiliates of each other.

Control

(3) For the purposes of this Act, a body corporate is controlled by a person or by two or more bodies corporate if

(

a) shares or memberships of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are held, other than by way of security only, by or for the benefit of that person or by or for the benefit of those bodies corporate; and

(

b) the votes attached to those shares or memberships are sufficient, if exercised, to elect a majority of the directors of the body corporate.

Holding body corporate

(4) A body corporate is the holding body corporate of another if that other body corporate is its subsidiary.

Subsidiary body corporate

(5) A body corporate is a subsidiary of another body corporate if

(

a) it is controlled by

(

i) that other body corporate,

(ii)

that other body corporate and one or more bodies corporate each of which is controlled by that other body corporate, or

(iii)

two or more bodies corporate each of which is controlled by that other body corporate; or

(

b) it is a subsidiary of a body corporate that is itself a subsidiary of that other body corporate.

Soliciting corporation

(5.1) A corporation becomes a soliciting corporation for a prescribed duration from the prescribed date, if it received, during the prescribed period, income in excess of the prescribed amount in the form of

(

a) donations or gifts or, in Quebec, gifts or legacies of money or other property requested from any person who is not

(

i) a member, director, officer or employee of the corporation at the time of the request,

(ii)

the spouse of a person referred to in subparagraph (

i) or an individual who is cohabiting with that person in a conjugal relationship, having so cohabited for a period of at least one year, or

(iii)

a child, parent, brother, sister, grandparent, uncle, aunt, nephew or niece of a person referred to in subparagraph (

i) or of the spouse or individual referred to in subparagraph (ii);

(

b) grants or similar financial assistance received from the federal government or a provincial or municipal government, or an agency of such a government; or

(

c) donations or gifts or, in Quebec, gifts or legacies of money or other property from a corporation or other entity that has, during the prescribed period, received income in excess of the prescribed amount in the form of donations, gifts or legacies referred to in paragraph (

a) or grants or similar financial assistance referred to in paragraph ( b ).

Application to be deemed non-soliciting

(6) On the application of a corporation, the Director may decide that the corporation is, for the purposes of this Act, to be considered as not being — or not having been — a soliciting corporation if the Director is satisfied that the determination would not be prejudicial to the public interest.

Application

Application of Act

(1) This Act applies to every corporation and, to the extent provided for in

Part 19, to bodies corporate without share capital incorporated by a special Act of Parliament.

Certain Acts do not apply

(2) The following do not apply to a corporation:

(

a) the

Canada Business Corporations Act ;

(

b) the Canada Corporations Act ,

chapter C-32 of the Revised Statutes of Canada, 1970; and

(

c) the Winding-up and Restructuring Act .

Limitations on business that may be carried on

(3) No corporation shall carry on the business of

(

a) a bank;

(

b) an association to which the Cooperative Credit Associations Act applies;

(

c) a company or society to which the Insurance Companies Act applies; or

(

d) a company to which the Trust and Loan Companies Act applies.

Limitation — granting degrees or regulating activities

(4) Incorporation or continuance under this Act does not confer any authority on a corporation to carry on activities as a degree-granting educational institution or to regulate any activity, including a profession or trade.

Purpose

Purpose

The purpose of this Act is to allow the incorporation or continuance of bodies corporate as corporations without share capital, including certain bodies corporate incorporated or continued under various other Acts of Parliament, for the purposes of carrying on legal activities and to impose obligations on certain bodies corporate without share capital incorporated by a special Act of Parliament.

Designation of Minister

Power of Governor in Council

The Governor in Council may designate any member of the Queen’s Privy Council for Canada to be the Minister for the purposes of this Act.

PART 2

INCORPORATION

Incorporators

(1) One or more individuals or bodies corporate may incorporate a corporation by signing articles of incorporation and complying with

section 8 .

Individuals

(2) No individual may incorporate a corporation under subsection (1) if that individual

(

a) is less than 18 years of age;

(

b) has been declared incapable by a court in Canada or in another country; or

(

c) has the status of a bankrupt.

Articles of incorporation

(1) Articles of incorporation shall follow the form that the Director fixes and shall set out, in respect of the proposed corporation,

(

a) the name of the corporation;

(

b) the province where the registered office is to be situated;

(

c) the classes, or regional or other groups, of members that the corporation is authorized to establish and, if there are two or more classes or groups, any voting rights attaching to each of those classes or groups;

(

d) the number of directors or the minimum and maximum number of directors;

(

e) any restrictions on the activities that the corporation may carry on;

(

f) a statement of the purpose of the corporation; and

(

g) a statement concerning the distribution of property remaining on liquidation after the discharge of any liabilities of the corporation.

Other required provisions

(2) Articles of incorporation shall set out, in respect of the proposed corporation, any provision required by any other Act of Parliament to be set out in the articles.

Additional provisions in articles

(3) The articles may set out any provisions that may be set out in the by-laws.

Equivalency

(3.1) Any requirement under this Act to set out a provision in the by-laws is deemed met by setting out the provision in the articles.

Special majorities

(4) Subject to subsection (5), if the articles or a unanimous member agreement requires a greater number of votes of directors or members than that required by this Act to effect any action, the provisions of the articles or of the unanimous member agreement prevail.

Removal of directors

(5) The articles may not require a greater number of votes of members to remove a director than the number required by

section 130 .

Delivery of articles of incorporation

One of the incorporators shall send to the Director articles of incorporation and the documents required by sections 20 and 128 .

Certificate of incorporation

On receipt of articles of incorporation, the Director shall issue a certificate of incorporation in accordance with

section 276 .

Effect of certificate

A corporation comes into existence on the date shown in the certificate of incorporation.

Alternate name

(1) Subject to subsection 13 (1), the name of a corporation may be set out in its articles in an English form, a French form, an English form and a French form, or a combined English and French form, so long as the combined form meets any prescribed criteria. The corporation may use and may be legally designated by any such form.

Alternate name outside Canada

(2) Subject to subsection 13 (1), a corporation may, for use outside Canada, set out its name in its articles in any language form and it may use and may be legally designated by any such form outside Canada.

Publication of name

(3) A corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the corporation.

Other name

(4) Subject to subsections (3) and 13 (1), a corporation may carry on activities under or identify itself by a name other than its corporate name.

Reserving name

(1) The Director may, on request, reserve for a prescribed period a name for an intended corporation or for a corporation about to change its name.

Designating number

(2) If requested to do so by the incorporators or a corporation, the Director shall assign to the corporation as its name a designating number followed by the word “Canada” and a prescribed term.

Prohibited names

(1) A corporation shall not be incorporated or continued under this Act with, change its name to, or have, carry on activities under or identify itself by, a name that is prohibited by the regulations or that does not meet the prescribed requirements.

Directing change of name

(2) The Director may direct a corporation to change its name in accordance with

section 197 if, through inadvertence or otherwise, the corporation acquires a name that is prohibited by the regulations or that does not meet the prescribed requirements.

Directing change of numbered name

(3) If a corporation has a designating number as its name, the Director may direct the corporation to change its name to a name other than a designating number in accordance with

section 197 .

Undertaking to dissolve or change name

(4) If a corporation acquires a name as a result of a person undertaking to dissolve or to change names, and the undertaking is not honoured, the Director may direct the corporation to change its name in accordance with

section 197 , unless the undertaking is honoured within the period specified in subsection (5).

Revoking name

(5) If a corporation has not followed a directive under subsection (2), (3) or (4) within the prescribed period, the Director may revoke the name of the corporation and assign a name to it and, until changed in accordance with

section 197 , the name of the corporation is the name assigned by the Director.

Certificate of amendment

(1) If the Director assigns a new name to a corporation under subsection 13 (5), the Director shall issue a certificate of amendment showing the name and shall publish notice of the change of name as soon as practicable in a publication generally available to the public.

Effect of certificate

(2) The articles of the corporation are amended accordingly on the date shown in the certificate of amendment.

Pre-incorporation and pre-amalga­mation contracts

(1) Subject to this

section and unless the contract expressly provides otherwise, a person who enters into, or purports to enter into, a written contract in the name of or on behalf of a corporation before it comes into existence is personally bound by the contract and is entitled to its benefits.

Adoption or ratification of contract

(2) The corporation may, within a reasonable time after it comes into existence, adopt or, in Quebec, ratify the contract by any action or conduct signifying its intention to be bound by the contract, and on the adoption or ratification

(

a) the corporation is bound by the contract and is entitled to its benefits as if the corporation had been in existence at the date of the contract and had been a party to it; and

(

b) the person ceases to be bound by or entitled to the benefits of the contract, except as provided for in subsection (3).

Application to court

(3) Whether or not a written contract made before the coming into existence of a corporation is adopted or, in Quebec, ratified by the corporation, a party to the contract may apply to a court for an order respecting the nature and extent of the obligations and liability under the contract of the corporation and the person who is bound by the contract under subsection (1). On the application, the court may make any order that it thinks fit.

PART 3

CAPACITY AND POWERS

Capacity of a corporation

(1) A corporation has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.

Activities

(2) A corporation may carry on activities throughout Canada.

Extra-territorial capacity

(3) A corporation has the capacity to carry on its activities, conduct its affairs and exercise its powers in a jurisdiction outside Canada to the extent that the laws of that jurisdiction permit.

Powers of a corporation

(1) It is not necessary for a by-law to be passed in order to confer any particular power on a corporation or its directors.

Restricted activities or powers

(2) A corporation shall not carry on any activities or exercise any power in a manner contrary to its articles.

Rights preserved

(3) No act of a corporation, including any transfer of property to or by a corporation, is invalid by reason only that the act or transfer is contrary to its articles or this Act.

No constructive notice

No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a corporation by reason only that the person can examine it under

section 279 or at an office of the corporation.

Authority of directors, officers, agents and mandataries

(1) No corporation, no guarantor of an obligation of a corporation and, in Quebec, no surety may assert against a person dealing with the corporation or against a person who acquired rights from the corporation that

(

a) the articles, the by-laws or any unanimous member agreement has not been complied with;

(

b) the individuals named in the last notice that was sent by the corporation in accordance with

section 128 or 134 and received by the Director are not the directors of the corporation;

(

c) the place named in the last notice accepted by the Director under

section 20 is not the registered office of the corporation;

(

d) a person held out by a corporation as a director, an officer, an agent or a mandatary of the corporation has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the activities of the corporation or usual for a director, an officer, an agent or a mandatary;

(

e) a document issued by any director, officer, agent or mandatary of a corporation with actual or usual authority to issue the document is not valid or not genuine; or

(

f) a sale, a lease or an exchange of property referred to in subsection 214 (1) was not authorized.

Exception

(2) Subsection (1) does not apply in respect of a person who has, or ought to have, knowledge of a situation described in that subsection by virtue of their relationship to the corporation.

PART 4

REGISTERED OFFICE AND RECORDS

Registered office

(1) A corporation shall at all times have a registered office in the province in Canada specified in its articles.

Notice of registered office

(2) A notice of registered office in the form that the Director fixes shall be sent to the Director together with any articles that designate or change the province where the registered office of the corporation is to be located.

Change of address

(3) The directors of a corporation may change the corporation’s registered office to another place within the province specified in the articles, in which case the corporation shall send to the Director a notice of registered office in the form that the Director fixes.

Notice of registered office effective on acceptance

(4) A notice of registered office becomes effective when the Director accepts it.

Corporate records

(1) A corporation shall prepare and maintain, at its registered office or at any other place in Canada designated by the directors, records containing

(

a) the articles and the by-laws, and amendments to them, and a copy of any unanimous member agreement;

(

b) the minutes of meetings of members and any committee of members;

(

c) the resolutions of members and any committee of members;

(

d) if any debt obligation is issued by the corporation, a debt obligations register that complies with

section 44 ;

(

e) a register of directors;

(

f) a register of officers; and

(

g) a register of members.

Register

(2) The registers referred to in paragraphs (1)(

e) to (

g) shall contain the prescribed information.

Directors’ records

(3) A corporation shall prepare and maintain adequate accounting records and records containing minutes of meetings of the directors and any committee of directors as well as resolutions adopted by the directors or any committee of directors.

Retention of accounting records

(4) Subject to any other Act of Parliament or of the legislature of a province that provides for a longer retention period, a corporation shall retain the accounting records referred to in subsection (3) for the prescribed period.

Records of continued corporations

(5) For the purposes of paragraphs (1)(

b) and (

c) and subsection (3), where a body corporate is continued under this Act, “records” includes similar records required by law to be maintained by the body corporate before it was so continued.

Place of directors’ records

(6) The records described in subsection (3) shall be kept at the registered office of the corporation or at any other place that the directors think fit.

Directors’ access to records

(7) The records described in subsections (1) and (3) shall at all reasonable times be open to inspection by the directors. The corporation shall, at the request of any director, provide them with any extract of the records free of charge.

Records in Canada

(8) If accounting records of a corporation are kept outside Canada, accounting records adequate to enable the directors to ascertain the financial position of the corporation with reasonable accuracy on a quarterly basis shall be kept at the registered office or any other place in Canada designated by the directors.

When records or registers kept outside Canada

(9) Despite subsections (1) and (8), but subject to the Income Tax Act , the Excise Tax Act , the Customs Act and any other Act administered by the Minister of National Revenue, a corporation may keep all or any of its corporate records and accounting records referred to in subsection (1) or (3) at a place outside Canada, if

(

a) the records are available for inspection, by means of any technology, during regular office hours at the registered office or any other place in Canada designated by the directors; and

(

b) the corporation provides the technical assistance to facilitate an inspection referred to in paragraph ( a ).

Access to corporate records

(1) A member, a member’s personal representative and a creditor of a corporation may examine and, on payment of any reasonable fee, take extracts from the records referred to in paragraphs 21 (1)(

a) to (

f) during the corporation’s usual business hours.

Requirement for statutory declaration — debt obligations register

(2) Any person described in subsection (1) who wishes to examine the debt obligations register of a corporation shall first make a request to the corporation or its agent or mandatary accompanied by a statutory declaration referred to in subsection (5). Within the prescribed period, the corporation or its agent or mandatary shall allow the applicant access to the register during the corporation’s usual business hours and, on payment of any reasonable fee, provide the applicant with an extract from the register.

Copies of corporate records

(3) A member of a corporation is entitled on request and free of charge to one copy of the articles and by-laws, any amendments to them, and any unanimous member agreement.

Debt obligation holders lists

(4) Any person described in subsection (1), on payment of any reasonable fee and on sending to a corporation or its agent or mandatary the statutory declaration referred to in subsection (5), may on application require the corporation or its agent or mandatary to furnish within the prescribed period a list of debt obligation holders setting out the prescribed information and updated in accordance with the regulations.

Contents of statutory declaration

(5) The statutory declaration required under subsection (2) or (4) shall

(

a) state the name and address of the applicant and, if the applicant is a body corporate, its address for service; and

(

b) state that the list of debt obligation holders or the information contained in the debt obligations register obtained under subsection (2) will not be used except as permitted under subsection (7).

Person making statutory declaration

(6) If the applicant is a body corporate, the statutory declaration shall be made by a director or officer of the body corporate.

Use of information or list of debt obligation holders

(7) A list of debt obligation holders or information from a debt obligations register obtained under this

section shall not be used by any person except in connection with

(

a) an effort to influence the voting of debt obligation holders of the corporation;

(

b) an offer to acquire debt obligations of the corporation; or

(

c) any other matter relating to the debt obligations or affairs of the corporation.

Requirement for statutory declaration — register of members

(1) A member or a member’s personal representative who wishes to examine the register of members of a corporation shall first make a request to the corporation or its agent or mandatary accompanied by a statutory declaration referred to in subsection (5). Within the prescribed period, the corporation or its agent or mandatary shall allow the applicant access to the register during the corporation’s usual business hours and, on payment of any reasonable fee, provide the applicant with an extract from the register.

List of members

(2) Any person described in subsection (1) and debt obligation holders, on payment of any reasonable fee and on sending to a corporation or its agent or mandatary the statutory declaration referred to in subsection (5), may on application require the corporation or its agent or mandatary to furnish within the prescribed period a list of members setting out the prescribed information and updated in accordance with the regulations.

Limitation

(3) A person described in subsection (1) may only make an application under subsection (2) once in each calendar year. In addition, an application may be made before each special meeting of members of which the person receives notice.

Application of debt obligation holder

(4) A debt obligation holder may make an application to obtain a list of members only after receiving notice of a meeting of members at which the holder has the right to vote.

Contents of statutory declaration

(5) The statutory declaration required under subsection (1) or (2) shall

(

a) state the name and address of the applicant and, if the applicant is a body corporate, its address for service; and

(

b) state that the list of members or the information contained in the register of members obtained under subsection (1) will not be used except as permitted under subsection (7) or (8).

Person making statutory declaration

(6) If the applicant is a body corporate, the statutory declaration shall be made by a director or officer of the body corporate.

Use of information or list by members

(7) A member or a member’s personal representative who obtains a list of members or information from a register of members under this

section shall not use the list or information except in connection with

(

a) an effort to influence the voting of members;

(

b) requisitioning a meeting of members; or

(

c) any other matter relating to the affairs of the corporation.

Use of information or list by debt obligation holders

(8) A debt obligation holder who obtains a list of members under this

section shall not use the list except in connection with an effort to influence the voting of members on any issue that the holder has a right to vote on.

Examination by Director

(1) The Director may examine the records described in subsection 21 (1) during the corporation’s usual business hours and may take extracts from the records free of charge.

Requirement to provide list

(2) The Director may require the corporation or its agent or mandatary to furnish to the Director within the prescribed period a list of members or debt obligation holders setting out the prescribed information and updated in accordance with the regulations.

Application for authorization — corporation

(1) On the application of a corporation, the Director may authorize the corporation, on any terms that the Director thinks fit, to refuse, in whole or in part, to allow access to corporate records or to furnish information that the corporation is otherwise under this Part obligated to allow or furnish, if the Director reasonably believes that allowing the access or furnishing the information would be detrimental to any member or the corporation.

Application for direction — member

(2) On the application of any member, the Director may direct the corporation, on any terms that the Director thinks fit, not to allow, in whole or in part, access to corporate records or not to furnish, in whole or in part, information that the corporation is otherwise under this Part obligated to allow or furnish, if the Director reasonably believes that allowing the access or furnishing the information would be detrimental to any member or the corporation.

Form of records

(1) All registers and other records required by this Act to be prepared and maintained may be in any form, provided that the records are capable of being reproduced in intelligible written form within a reasonable time.

Precautions

(2) A corporation and its agents and mandataries shall take reasonable precautions to prevent the loss or destruction of the registers and other records required under this Act, to prevent the falsification of entries in those registers and records and to facilitate the detection and correction of inaccuracies in them.

Validity of unsealed documents

A document executed or, in Quebec, signed on behalf of a corporation is not invalid merely because a corporate seal is not affixed to it.

PART 5

CORPORATE FINANCE

Borrowing powers

(1) Unless the articles, the by-laws or a unanimous member agreement otherwise provides, the directors of a corporation may, without authorization of the members,

(

a) borrow money on the credit of the corporation;

(

b) issue, reissue, sell, pledge or hypothecate debt obligations of the corporation;

(

c) give a guarantee on behalf of the corporation to secure performance of an obligation of any person; and

(

d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the corporation, owned or subsequently acquired, to secure any obligation of the corporation.

Delegation of borrowing powers

(2) Despite subsection 138 (2) and paragraph 142 ( a ), unless the articles, the by-laws or a unanimous member agreement otherwise provides, the directors may, by resolution, delegate the powers referred to in subsection (1) to a director, a committee of directors or an officer.

Repayment

(1) Debt obligations issued, pledged, hypothecated or deposited by a corporation are not redeemed by reason only that the indebtedness evidenced by the debt obligations or in respect of which the debt obligations are issued, pledged, hypothecated or deposited is repaid.

Acquisition and reissue of debt obligations

(2) Debt obligations issued by a corporation and purchased, redeemed or otherwise acquired by it may be cancelled or, subject to any applicable trust indenture or other agreement, may be reissued, pledged or hypothecated to secure any existing or future obligation of the corporation, and such an acquisition and reissue, pledge or hypothecation is not a cancellation of the debt obligations.

Annual contributions or dues

Subject to the articles, the by-laws and any unanimous member agreement, the directors may require members to make an annual contribution or pay annual dues and may determine the manner in which the contribution is to be made or the dues are to be paid.

Ownership of property

A corporation owns any property of any kind that is transferred to or otherwise vested in the corporation and does not hold any property in trust unless that property was transferred to the corporation expressly in trust for a specific purpose or purposes.

Directors not trustees

Directors are not, in that capacity, trustees for any property of the corporation, including property held in trust by the corporation.

Investments by corporation

Subject to the limitations accompanying any gift and the articles or by-laws, a corporation may invest its funds as its directors think fit.

Distribution of property, accretions or profits

(1) Subject to subsection (2), no part of a corporation’s profits or of its property or accretions to the value of the property may be distributed, directly or indirectly, to a member, a director or an officer of the corporation except in furtherance of its activities or as otherwise permitted by this Act.

Distribution to member

(2) If a member of a corporation is an entity that is authorized to carry on activities on behalf of the corporation, the corporation may distribute any of its money or other property to the member to carry on those activities.

Surrendered memberships

A corporation may accept a membership in the corporation surrendered to it as a gift including, in Quebec, a legacy and may extinguish or reduce a liability respecting an amount unpaid on that membership.

Liability

(1) The members of a corporation are not, in that capacity, liable for any liability of the corporation, including any arising under paragraph 253 (3)(

f) or ( g ), or any act or default of the corporation, except as otherwise provided by this Act.

Lien on membership

(2) Subject to subsection 42 (2), the articles may provide that the corporation has a lien on a membership registered in the name of a member or the member’s personal representative for a debt of that member to the corporation, including an amount unpaid in respect of a membership issued by a body corporate on the date it was continued as a corporation under this Act.

Enforcement of lien

(3) A corporation may enforce a lien referred to in subsection (2) in accordance with its by-laws.

PART 6

DEBT OBLIGATIONS, CERTIFICATES, REGISTERS AND TRANSFERS

Interpretation

Definitions

(1) The following

definitions apply in this Part.

adverse claim

opposition

adverse claim , in respect of a debt obligation, includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest or right in the debt obligation.

bearer

porteur

bearer means the person who is in possession of a debt obligation that is payable to bearer or endorsed in blank.

broker

courtier

broker means a person who is engaged in whole or in

part in the business of buying and selling debt obligations and who, in the transaction concerned, acts for, buys a debt obligation from or sells a debt obligation to a customer.

delivery

livraison ou remise

delivery means voluntary transfer of possession.

fiduciary

représentant

fiduciary means any person who acts in a fiduciary capacity or as the administrator of the property of others and includes a personal representative of a deceased person.

good faith

bonne foi

good faith means honesty in fact in the conduct of the transaction concerned.

good faith purchaser

acquéreur de bonne foi

good faith purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a debt obligation.

holder

détenteur

holder means a person who is in possession of a debt obligation that is issued or endorsed to the person, to bearer or in blank.

overissue

émission excédentaire

overissue means the issue of debt obligations in excess of any maximum number of debt obligations that the issuer is authorized by a trust indenture to issue.

purchaser

acquéreur

purchaser means a person who takes an interest or right in a debt obligation by sale, mortgage, hypothec, pledge, issue, reissue, gift or any other voluntary transaction.

transfer

transfert

transfer includes transmission by operation of law.

trust indenture

acte de fiducie

trust indenture means a trust indenture as defined in subsection 104 (1).

valid

valide

valid means issued in accordance with the applicable law and the by-laws of the issuer, or validated under

section 54 .

Negotiable instruments

(2) Except when a transfer is restricted and noted on a debt obligation in accordance with subsection 42 (2), a debt obligation is a negotiable instrument.

Registered form

(3) A debt obligation is in registered form if

(

a) it specifies a person who is entitled to the debt obligation or to the rights it evidences, and its transfer is capable of being recorded in a debt obligations register; or

(

b) it bears a statement that it is in registered form.

Order form

(4) A debt obligation is in order form if, by its terms, it is payable to the order of a person specified with reasonable certainty in it or to a person to whom it is assigned.

Bearer form

(5) A debt obligation is in bearer form if it is payable to bearer according to its terms and not by reason of an endorsement.

Guarantor or surety for issuer

(6) A guarantor or, in Quebec, a surety for an issuer is deemed to be an issuer to the extent of the guarantee, whether or not the obligation is noted on the debt obligation.

Debt Obligation Certificates

Debt obligation certificate

An issuer shall provide a debt obligation holder, on request, with

(

a) a debt obligation certificate that complies with this Act; or

(

b) a non-transferable written acknowledgement of their right to obtain a debt obligation certificate.

Fee

An issuer may charge a reasonable fee for a debt obligation certificate issued in respect of a transfer.

Jointly held debt obligations

If debt obligations are held by more than one person,

(

a) an issuer is not required to issue more than one debt obligation certificate in respect of those debt obligations; and

(

b) delivery of a debt obligation certificate to one of the holders is sufficient delivery to them all.

Signatures

(1) A debt obligation certificate shall be signed by at least one of the following persons, or a facsimile of the signature shall be reproduced on the certificate:

(

a) a director or officer of the issuer;

(

b) a transfer agent or branch transfer agent of the issuer, or an individual acting on their behalf; or

(

c) a trustee who certifies it in accordance with a trust indenture.

Former director or officer

(2) An issuer may issue debt obligation certificates that contain the signature of a person who is no longer a director or officer and the validity of the certificate is not adversely affected.

Contents of certificate

(1) The following information shall be stated on the face of each debt obligation certificate issued by an issuer:

(

a) the name of the issuer;

(

b) the words “Incorporated under the Canada Not-for-profit Corporations Act ”, “ constituée sous l’autorité de la

Loi canadienne sur les organisations à but non lucratif ”, “Subject to the Canada Not-for-profit Corporations Act ” or “ assujettie à la

Loi canadienne sur les organisations à but non lucratif ”;

(

c) the name of the person to whom it was issued unless it is in bearer form; and

(

d) the value represented by the certificate.

Restrictions

(2) No restriction on transfer, lien or hypothec in favour of the issuer or unanimous member agreement is effective against a transferee of a debt obligation, issued by an issuer or by a body corporate before it is continued under this Act, who has no actual knowledge of the restriction, lien, hypothec or agreement unless it or a reference to it is noted conspicuously on the debt obligation certificate.

Restrictions

(3) If the issued debt obligations of an issuer remain outstanding and are held by more than one person, the issuer shall not restrict the transfer or ownership of its debt obligations of any class or series.

Contents of certificate

(1) Every debt obligation certificate, if the articles authorize more than one class or series of debt obligations, shall legibly

(

a) state the rights, privileges, restrictions and conditions attached to the debt obligations of each class and series that exist when the debt obligation certificate is issued; or

(

b) state that the class or series of debt obligations that it represents has rights, privileges, restrictions or conditions attached to it and that the issuer will provide a debt obligation holder, on demand and without charge, with a full copy of the text of the rights, privileges, restrictions and conditions attached to each class or series authorized to be issued.

Copy of text

(2) If a debt obligation certificate contains a statement referred to in paragraph (1)( b ), the issuer shall, on request, provide the debt obligation holder with the copy of the text referred to in that paragraph.

Registers

Registers

(1) A corporation that issues debt obligations shall maintain a debt obligations register in which it records the debt obligations issued by it in registered form, showing the prescribed information with respect to each class or series.

Location of register

(2) The debt obligations register shall be maintained at the issuer’s registered office or at any other place in Canada designated by the directors.

Branch registers

(3) An issuer may maintain additional branch debt obligations registers in other places designated by the directors.

Contents of branch register

(4) A branch debt obligations register shall only contain particulars of debt obligations issued or transferred at the branch. The same information shall also be recorded in the central register.

Production of certificates

(5) An issuer, its agent or mandatary, or a trustee as defined in subsection 104 (1) is not required to produce a cancelled debt obligation certificate in registered form after the prescribed period.

Agent or mandatary

An issuer may appoint an agent or mandatary to maintain debt obligations registers on its behalf.

Registration

The registration of the issue or transfer of a debt obligation in any debt obligations register is complete and valid registration for all purposes.

Trustee

An issuer or a trustee as defined in subsection 104 (1) may treat the person whose name appears on the debt obligations register as the debt obligation’s owner for all purposes.

Constructive registered holder

If an issuer restricts the right to transfer its debt obligations, the issuer may, despite

section 47 , treat a person as the registered holder of a debt obligation if the person provides the issuer with evidence that meets the requirements of the issuer that the person is

(

a) the heir or legatee of a deceased debt obligation holder or the fiduciary of the estate or succession of a deceased debt obligation holder or of a registered debt obligation holder who is a minor, an incapable person or a missing person; or

(

b) a liquidator of, or a trustee in bankruptcy for, a registered debt obligation holder.

Proof of ownership

An issuer shall treat a person, other than one described in

section 48 , as being entitled to exercise the rights and privileges attached to a debt obligation if the person provides proof that the person has acquired ownership of the debt obligation by operation of law or has legal authority to exercise the rights and privileges.

Joint holder

If satisfactory proof of the death of a joint holder of a debt obligation with a right of survivorship is provided to an issuer, the issuer may treat any surviving joint holder as the owner of the debt obligation.

Duties of issuer

An issuer is not required to inquire into the existence of, or see to the performance of, any duty owed to a third person by a registered holder, or a person who may be treated as a registered holder, of a debt obligation.

Minors

If a minor exercises a right of ownership in a debt obligation of an issuer, no subsequent repudiation or avoidance or, in Quebec, nullity or reduction of obligations is effective against the issuer.

Deceased owner

(1) Subject to any applicable law relating to the collection of taxes, a person who is an heir or a fiduciary of an estate or succession of a deceased debt obligation holder is entitled to become the registered holder or to designate a registered holder if the person deposits the following information with the issuer or its transfer agent, together with any reasonable assurances that the issuer may require:

(

a) the debt obligation certificate or, in default of one, a document proving that the deceased was the debt obligation holder;

(

b) a document proving the death of the debt obligation holder; and

(

c) a document proving that the heir or fiduciary has the right under the law of the place in which the deceased was domiciled immediately before their death to deal with the debt obligation.

Endorsement

(2) A debt obligation certificate referred to in paragraph (1)(

a) shall be endorsed

(

a) in the case of a transfer to an heir or fiduciary, by that person; and

(

b) in any other case, in a manner acceptable to the issuer.

Right of issuer

(3) Deposit of the documents required by subsection (1) empowers an issuer or its transfer agent to record in a debt obligations register the transmission of a debt obligation from the deceased holder to the heir or fiduciary or to any person that the heir or fiduciary may designate and to treat the person who becomes a registered holder as the owner of the debt obligation.

Overissue

(1) Subject to this section, the provisions of this Part that validate a debt obligation or compel its issue or reissue do not apply if the validation, issue or reissue of a debt obligation would result in overissue.

Identical debt obligation

(2) A person who is entitled to a validation or issue may, if there has been an overissue and if a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is reasonably available for purchase, compel the issuer to purchase and deliver that debt obligation against the surrender of the debt obligation that the person holds.

If identical debt obligation not available

(3) If a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is not reasonably available for purchase, the person who is entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid debt obligation.

Increase in capital

(4) The overissued debt obligations are valid from the date they were issued only if the issuer increases the number of its authorized debt obligations to a number equal to or greater than the number of debt obligations previously authorized plus the number of the debt obligations overissued.

Proceedings

Rules of action

The following rules apply in an action on a debt obligation:

(

a) each signature on the debt obligation certificate or in a necessary endorsement is admitted unless specifically denied in the pleadings;

(

b) a signature on the debt obligation is presumed to be genuine and authorized but, if the effectiveness of the signature is in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

(

c) if a signature is admitted or established, production of a debt obligation certificate entitles the holder to recover on it unless the other party establishes a defence or defect going to the validity of the debt obligation; and

(

d) if the other party establishes the defence or defect, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or some other person under whom the claim is made.

Delivery

Delivery of debt obligations

(1) A person who is required to deliver debt obligations may deliver any debt obligation of the specified issue

(

a) in bearer form;

(

b) in registered form in the name of the transferee; or

(

c) endorsed to the person or in blank.

Limitation

(2) Subsection (1) is subject to any agreement to the contrary, to any applicable Act of Parliament or of the legislature of a province, to any applicable regulation or to any applicable rule of a stock exchange or other regulatory body.

General

Incorporation by reference

(1) The terms of a debt obligation include those stated on the debt obligation and those incorporated by reference to another document,

an Act of Parliament or of the legislature of a province, a regulation, a rule or an order to the extent that the incorporated terms do not conflict with those stated on the debt obligation.

Purchaser without notice

(2) Subsection (1) applies to a good faith purchaser but the incorporation by reference is itself not notice of a defect to the purchaser even if the debt obligation expressly states that a person accepting it admits that notice.

Validity of debt obligation

A debt obligation is valid in the hands of a good faith purchaser.

Defence

Subject to

section 62 , the fact that a debt obligation is not genuine is a complete defence for the issuer even against a good faith purchaser.

Defences

All other defences of an issuer, including non-delivery and conditional delivery of a debt obligation, are ineffective against a good faith purchaser.

Deemed notice

(1) A purchaser is deemed to have notice of any defect in the issue of a debt obligation or any defence of the issuer if the debt obligation becomes stale within the meaning of subsection (2).

Stale 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 is 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.

Unauthorized signature

(1) Subject to subsection (2), an unauthorized signature on a debt obligation is ineffective.

Limited effectiveness

(2) An unauthorized signature on a debt obligation is effective in favour of a good faith purchaser if the signature was made by

(

a) an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation, or similar debt obligations, or to prepare them for signing; or

(

b) an employee of the issuer or a person referred to in paragraph (

a) who handles the debt obligation in the ordinary course of their duties.

Completion of debt obligation

If a debt obligation contains the signatures necessary for its issue or transfer but is incomplete in another respect, any person may complete it in accordance with their authority.

Enforceability

A debt obligation that was completed incorrectly is enforceable by a good faith purchaser.

Fraud

A completed debt obligation that was improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.

Guarantees

(1) A person signing a debt obligation as an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation guarantees to a good faith purchaser that

(

a) the debt obligation is genuine;

(

b) the person’s acts in connection with the debt obligation are within the person’s authority; and

(

c) the person has reasonable grounds for believing that the debt obligation is in the form and within the amount the issuer is authorized to issue.

Liability

(2) Unless agreed otherwise, a person referred to in subsection (1) does not assume any further liability for the validity of the debt obligation.

Acquisition of rights

(1) On delivery of a debt obligation, the purchaser of the debt obligation acquires the rights in it that the transferor had or had authority to convey.

Claim free

(2) A good faith purchaser of a debt obligation acquires it free from any adverse claim.

No better position

(3) A purchaser who was a party to a fraud or illegality affecting a debt obligation or who, as a prior holder, had notice of an adverse claim does not have a better position by taking from a later good faith purchaser.

Limitation of the purchase

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

Deemed notice

(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.

Name

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

No duty to inquire

(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.

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.

Deemed notice

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.

Staleness

(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.

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.

Guarantee

(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.

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.

Content of guarantee

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.

Guarantee of intermediary

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

Guarantee of broker

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.

Right to compel endorsement

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.

Definition of appropriate

(1) 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 other incapacity, 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.

Time for determination

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

Endorsement

(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.

Blank or special

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

Blank endorsement

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

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.

Right of holder

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

Immunity of endorser

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

Partial endorsement

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.

Effect of failure by fiduciary to comply

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.

Effect of endorsement

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.

Endorsement in bearer form

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.

Effect of unauthorized endorsement

(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.

Liability of issuer

(2) An issuer who registers the transfer of a debt obligation on an unauthorized endorsement is liable for improper registration.

Warranties of guarantor of signature

(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.

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.

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.

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.

Presumption of delivery

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.

Presumption of ownership

(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 ).

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.

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.

Delivery of debt obligation

(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.

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.

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.

Right to reclaim possession

(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.

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 .

Right to requisites for registration

(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.

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.

Seizure of debt obligation

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.

Not liable if good faith delivery

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.

Duty to register transfer

(1) If a debt obligation in registered form is presented for transfer, the issuer shall register the transfer if

(

a) the debt obligation is endorsed by an appropriate person;

(

b) reasonable assurance is given that the endorsement is genuine and effective;

(

c) the issuer has no duty to inquire into adverse claims or has discharged that duty;

(

d) all applicable laws relating to the collection of taxes have been complied with;

(

e) the transfer is rightful or is to a good faith purchaser; and

(

f) any transfer fee referred to in

section 39 has been paid.

Liability for delay

(2) An issuer who has a duty to register a transfer of a debt obligation is liable to the person presenting it for registration for any loss resulting from an unreasonable delay in registration or from the failure or refusal to register the transfer.

Assurance of endorsement

(1) An issuer may require an assurance that each necessary endorsement on a debt obligation is genuine and effective by requiring a guarantee of the signature of the person endorsing the debt obligation and by requiring

(

a) if the endorsement is by an agent or mandatary, reasonable assurance of authority to sign;

(

b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;

(

c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

(

d) in any other case, assurance that corresponds as closely as is feasible to the cases set out in paragraphs (

a) to ( c ).

Sufficiency of guarantee

(2) For the purpose of subsection (1), a guarantee of the signature of a person is sufficient if it is signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.

Standards

(3) An issuer may adopt reasonable standards to determine responsible persons.

Sufficiency of evidence of appointment or incumbency

(4) For the purpose of paragraph (1)( b ), the following constitute sufficient evidence of appointment or incumbency of a fiduciary:

(

a) in the case of a fiduciary of a deceased debt obligation holder’s estate or succession, a certified or notarial copy of the document referred to in paragraph 53 (1)(

c) and dated not earlier than the first day of the prescribed period before a debt obligation is presented for transfer; or

(

b) in the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.

Standards

(5) An issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)( b ).

No notice to issuer

(6) An issuer is deemed not to have notice of the contents of a document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.

Notice from additional documentation

If an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 95 (1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained in the document that affect the transfer.

Limited duty of inquiry

(1) An issuer to whom a debt obligation is presented for registration has a duty to inquire into adverse claims if

(

a) the issuer receives written notice of an adverse claim at a time and in a manner that provide the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered debt obligation and the notice discloses the name and address of the claimant, the registered owner and the issue of which the debt obligation is a part; or

(

b) the issuer is deemed to have notice of an adverse claim from a document that it obtained under

section 96 .

Discharge of duty

(2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a debt obligation has been presented for registration of transfer by a named person and that the transfer will be registered unless, no later than the prescribed period after the date of sending the notice, the issuer

(

a) is served with a court order; or

(

b) is provided with an indemnity bond or, in Quebec, a guarantee sufficient in the issuer’s judgement to protect the issuer and any transfer agent or other agent or mandatary of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.

Inquiry into adverse claim

Unless an issuer is deemed to have notice of an adverse claim from a document that is obtained under

section 96 or has received notice of an adverse claim under subsection 97 (1), if a debt obligation presented for registration is endorsed by an appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,

(

a) an issuer registering a debt obligation in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and the issuer may then assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular debt obligation;

(

b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

(

c) an issuer is deemed not to have notice of the contents of a court record or a registered document even if the record or document is in the issuer’s possession and the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.

Duration of notice of adverse claim

A written notice of adverse claim received by an issuer is effective for the prescribed period unless the notice is renewed in writing.

Limitation on issuer’s liability

(1) Except as provided otherwise in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a debt obligation if

(

a) the necessary endorsements were on or with the debt obligation; and

(

b) the issuer had no duty to inquire into adverse claims or had discharged that duty.

Duty of issuer on wrongful registration

(2) If an issuer has registered a transfer of a debt obligation to a person not entitled to it, the issuer shall on demand deliver a similar debt obligation to the owner unless

(

a) the issuer is not liable by virtue of subsection (1);

(

b) the owner is precluded by subsection 101 (1) from asserting a claim; or

(

c) the delivery would result in an overissue to which

section 54 applies.

Lost or stolen debt obligation

(1) The owner of a debt obligation who fails to notify the issuer of an adverse claim, in writing, within a reasonable time after the owner knows of the loss, apparent destruction or wrongful taking of the debt obligation is precluded from asserting against the issuer a claim to a new debt obligation if the issuer has registered a transfer of the debt obligation.

Duty to issue new debt obligation

(2) If the owner of a debt obligation claims that the debt obligation has been lost, destroyed or wrongfully taken, the issuer shall issue a new debt obligation in place of the original one if the owner

(

a) so requests before the issuer has notice that the debt obligation has been acquired by a good faith purchaser;

(

b) provides the issuer with a sufficient indemnity bond or, in Quebec, a sufficient guarantee; and

(

c) satisfies any other reasonable requirements imposed by the issuer.

Duty to register transfer

(3) If, after the issue of a new debt obligation under subsection (2), a good faith purchaser of the original debt obligation presents the original one for registration of transfer, the issuer shall register the transfer unless registration would result in an overissue to which

section 54 applies.

Right of issuer to recover

(4) In addition to the rights that an issuer has by reason of an indemnity bond or, in Quebec, a guarantee, the issuer may recover the new debt obligation issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a good faith purchaser.

Duty

An authenticating trustee, transfer agent or other agent or mandatary of an issuer has, in respect of the issue, registration of transfer and cancellation of a debt obligation of the issuer,

(

a) a duty to the issuer to exercise good faith and reasonable diligence; and

(

b) the same obligations to the holder or owner of the debt obligation and the same rights, privileges and immunities as the issuer.

Notice to agent or mandatary

Notice to an authenticating trustee, transfer agent or other agent or mandatary of an issuer is notice to the issuer in respect of the functions performed by the agent or mandatary.

PART 7

TRUST INDENTURES

Definitions

(1) The following

definitions apply in this Part.

event of default

défaut

event of default means an event specified in a trust indenture on the occurrence of which a security interest effected by the trust indenture becomes enforceable, or the principal, interest or other money payable under the trust indenture becomes or may be declared to be payable before maturity, once all conditions — such as the giving of notice or the lapse of time — provided for by the trust indenture in connection with the event have been satisfied.

trustee

fiduciaire

trustee means any person appointed as trustee, including the administrator of the property of others, under the terms of a trust indenture to which a corporation is a party and includes any successor trustee.

trust indenture

acte de fiducie

trust indenture means any deed, indenture or other instrument or act, including any supplement or amendment to one, made by a corporation after its incorporation or continuance under this Act, under which the corporation issues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations issued under the deed, indenture or other instrument.

Application

(2) This Part applies to a trust indenture if the debt obligations issued or to be issued under the trust indenture are part of a distribution to the public.

Application for exemption

(3) On application, the Director may exempt a trust indenture from the application of this

Part if the trust indenture, the debt obligations issued under it and the security interest effected by it are subject to a law of a province or a country other than Canada that is substantially equivalent to this Part.

Conflict of interest

(1) No person shall accept an appointment as trustee if there is a material conflict of interest between their role as trustee and their role in any other capacity.

Eliminating conflict of interest

(2) A trustee shall, within the prescribed period after becoming aware that a material conflict of interest exists, eliminate the conflict of interest or resign.

Validity

(3) A trust indenture, any debt obligations issued under it and a security interest effected by it are valid despite a material conflict of interest of the trustee.

Removal of trustee

(4) The court may, on the application of an interested person, order, on any terms that it thinks fit, that a trustee who has contravened subsection (1) or (2) be replaced.

Qualification of trustee

A trustee, or at least one of the trustees if more than one is appointed, shall be a body corporate incorporated under the laws of Canada or a province and authorized to carry on the business of a trust company.

List of debt obligation holders

(1) A holder of debt obligations issued under a trust indenture may, on payment to the trustee of any reasonable fee and on sending to the trustee the statutory declaration referred to in subsection (4), require the trustee to furnish, within the prescribed period, a list of debt obligation holders setting out the prescribed information and updated in accordance with the regulations.

Duty of issuer

(2) On the demand of a trustee, the issuer of debt obligations shall furnish the trustee with the information required to enable the trustee to comply with subsection (1).

Corporate applicant

(3) If the applicant is a body corporate, the statutory declaration shall be made by a director or officer of the body corporate.

Contents of statutory declaration

(4) The statutory declaration shall

(

a) state the name and address of the applicant and, if the applicant is a body corporate, its address for service; and

(

b) state that the list will not be used except as permitted under subsection (5).

Use of list

(5) A list obtained under this

section shall not be used by any person except in connection with

(

a) an effort to influence the voting of the holders of debt obligations;

(

b) an offer to acquire debt obligations; or

(

c) any other matter relating to the debt obligations or the affairs of the issuer, the guarantor or, in Quebec, the surety of the debt obligations.

Evidence of compliance

(1) An issuer, a guarantor or, in Quebec, a surety of debt obligations issued or to be issued under a trust indenture shall, before taking any of the following actions, provide the trustee with evidence of compliance with the conditions, if any, in the trust indenture for taking that action:

(

a) the issue, certification or delivery of debt obligations under the trust indenture;

(

b) the release or release and substitution of property subject to a security interest effected by the trust indenture; or

(

c) the satisfaction and discharge of the trust indenture.

Duty of issuer, guarantor or surety

(2) On the demand of a trustee, the issuer, the guarantor or, in Quebec, the surety of debt obligations issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the trust indenture by the issuer, guarantor or surety in respect of any act to be done by the trustee at their request.

Contents of declaration, etc.

Evidence of compliance as required by

section 108 shall consist of a statutory declaration or certificate made by a director or an officer of the issuer, the guarantor or, in Quebec, the surety stating that the conditions referred to in that

section have been complied with. If compliance with any of those conditions is subject to review by legal counsel, evidence of compliance also includes an opinion of legal counsel that those conditions have been complied with. If compliance with any of those conditions is subject to review by an auditor or accountant, evidence of compliance also includes an opinion or report of the public accountant of the issuer, guarantor or surety, or any other accountant that the trustee selects, that those conditions have been complied with.

Further evidence of compliance

The evidence of compliance referred to in

section 109 shall include a statement by the person giving the evidence

(

a) declaring that they have read and understand the conditions of the trust indenture referred to in

section 108 ;

(

b) describing the nature and scope of the examination or investigation on which the statutory declaration, certificate, opinion or report is based; and

(

c) declaring that they have made the examination or investigation that they believe necessary to enable them to make their statutory declaration, certificate, opinion or report.

Trustee may require evidence of compliance

(1) On the demand of a trustee, the issuer, the guarantor or, in Quebec, the surety of debt obligations issued under a trust indenture shall provide the trustee with evidence in any form that the trustee may require for compliance with any condition relating to any action required or permitted to be taken by the issuer, guarantor or surety under the trust indenture.

Certificate of compliance

(2) At least once in each prescribed period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer, the guarantor or, in Quebec, the surety of debt obligations issued under a trust indenture shall provide the trustee with

(

a) a certificate that the issuer, the guarantor or, in Quebec, the surety has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default; or

(

b) a certificate of the particulars of any failure to comply with the requirements.

Notice of default

The trustee shall give notice to the holders of debt obligations issued under a trust indenture of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee reasonably believes that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs in writing the issuer, the guarantor or, in Quebec, the surety. The notice shall be given within the prescribed period.

Duties of trustee

A trustee in exercising their powers and discharging their duties shall

(

a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and

(

b) exercise the care, diligence and skill of a reasonably prudent trustee.

Reliance on statements

Despite

section 113 , a trustee is not liable if they rely in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

No exculpation

No term of a trust indenture or of any agreement between a trustee and the holders of debt obligations issued under the trust indenture or between the trustee and the issuer, the guarantor or, in Quebec, the surety shall operate so as to relieve a trustee from the duties imposed on the trustee by

section 113.

PART 8

RECEIVERS, RECEIVER-MANAGERS AND SEQUESTRATORS

Functions of receiver or sequestrator

A receiver or sequestrator of any property of a corporation may, subject to the rights of secured creditors, receive the income from the property, pay the liabilities connected with the property and realize the security interest of those on behalf of whom the receiver or sequestrator is appointed, but, except to the extent permitted by a court, the receiver or sequestrator may not carry on the activities of the corporation.

Functions of receiver-manager

A receiver-manager of the corporation may carry on any activities of the corporation to protect the security interest of those on behalf of whom the receiver-manager is appointed.

Directors’ powers cease

If a receiver-manager or sequestrator is appointed by a court or under an instrument or act, the powers of the directors of the corporation that a receiver-manager or sequestrator is authorized to exercise may not be exercised by the directors until the receiver-manager or sequestrator is discharged.

Duty to act

A receiver, receiver-manager or sequestrator appointed by a court shall act in accordance with the orders of the court.

Duty under instrument or act

A receiver, receiver-manager or sequestrator appointed under an instrument or act shall act in accordance with that instrument or act and any order of a court made under

section 122.

Duty of care

A receiver, receiver-manager or sequestrator of a corporation appointed under an instrument or act shall

(

a) act honestly and in good faith; and

(

b) deal with any property of the corporation in their possession or control in a commercially reasonable manner.

Orders given by court

On the application of a receiver, receiver-manager or sequestrator, whether appointed by a court or under an instrument or act, or of any interested person, a court may make

(

a) an order appointing, replacing or discharging a receiver, receiver-manager or sequestrator and approving their accounts;

(

b) an order determining the notice to be given to any interested person or dispensing with notice to any person;

(

c) an order fixing the remuneration of the receiver, receiver-manager or sequestrator;

(

d) an order requiring the receiver, receiver-manager or sequestrator, or a person by or on behalf of whom the receiver, receiver-manager or sequestrator is appointed, to make good any default in connection with the receiver’s, receiver-manager’s or sequestrator’s custody or management of the property and activities of the corporation, or relieving the receiver, receiver-manager or sequestrator, or a person by or on behalf of whom the receiver, receiver-manager or sequestrator was appointed, from any default on any terms that the court thinks fit;

(

e) an order confirming any act of the receiver, receiver-manager or sequestrator;

(

f) an order giving directions on any matter relating to the duties of the receiver, receiver-manager or sequestrator; and

(

g) any other order that it thinks fit.

Duties of receiver and receiver-manager

A receiver or receiver-manager shall

(

a) immediately notify the Director of their appointment and discharge;

(

b) take into their custody and control the property of the corporation in accordance with the court order, instrument or act under which they are appointed;

(

c) open and maintain a bank account in their name as receiver or receiver-manager of the corporation for the money of the corporation coming under their control;

(

d) keep detailed accounts of all transactions carried out as receiver or receiver-manager;

(

e) keep accounts of their administration that shall be available during usual business hours for inspection by the directors of the corporation;

(

f) prepare at least once in every prescribed period after the date of their appointment financial statements of their administration as far as is practicable in the form required by

section 172 ; and

(

g) on completion of their duties, render a final account of their administration in the form adopted for interim accounts under paragraph ( f ).

PART 9

DIRECTORS AND OFFICERS

Duty to manage or supervise management

Subject to this Act, the articles and any unanimous member agreement, the directors shall manage or supervise the management of the activities and affairs of a corporation.

Number of directors

A corporation shall have one or more directors, but a soliciting corporation shall not have fewer than three directors, at least two of whom are not officers or employees of the corporation or its affiliates.

Qualifications of directors

(1) The following persons are disqualified from being a director of a corporation:

(

a) anyone who is less than 18 years of age;

(

b) anyone who has been declared incapable by a court in Canada or in another country;

(

c) a person who is not an individual; and

(

d) a person who has the status of a bankrupt.

Membership

(2) Unless the by-laws otherwise provide, a director of a corporation is not required to be a member of the corporation.

No alternate directors

(3) No person shall act for an absent director at a meeting of directors.

Organization meeting

(1) After the issue of the certificate of incorporation, the directors of a corporation shall hold a meeting at which the directors may

(

a) make by-laws;

(

b) adopt forms of debt obligation certificates and corporate records;

(

c) authorize the issue of debt obligations;

(

d) appoint officers;

(

e) appoint a public accountant to hold office until the first annual meeting of members;

(

f) issue memberships;

(

g) make banking arrangements; and

(

h) transact any other business.

Exception

(2) Subsection (1) does not apply to a body corporate to which a certificate of amalgamation has been issued under subsection 208 (4) or to which a certificate of continuance has been issued under subsection 211 (5).

Calling meeting

(3) An incorporator or a director may call the meeting by giving notice of the time and place of the meeting to each director within the prescribed period.

Waiver of notice

(4) A director may waive notice of the meeting, and attendance of a director at the meeting is a waiver of notice of the meeting, except if the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

Resolution in lieu of meeting

(5) If all directors sign a resolution dealing with any matter referred to in paragraphs (1)(

a) to ( g ), they are not required to hold the meeting referred to in subsection (1).

Filing resolution

(6) A copy of the resolution shall be kept with the minutes of the meetings of directors.

Notice of directors

(1) At the time of sending articles of incorporation, a notice of directors in the form that the Director fixes shall be sent to the Director.

Term of office

(2) Each director named in the notice holds office from the issue of the certificate of incorporation until the first meeting of members.

Election of directors

(3) Members shall, by ordinary resolution at each annual meeting at which an election of directors is required, elect directors to hold office for a term expiring within the prescribed period.

Staggered terms

(4) It is not necessary that all directors elected at a meeting of members hold office for the same term.

No stated terms

(5) A director not elected for an expressly stated term ceases to hold office at the close of the first annual meeting of members following the director’s election.

Incumbent directors

(6) Despite subsections (2), (3) and (5), if directors are not elected at a meeting of members, the incumbent directors continue in office until their successors are elected.

Vacancy among candidates

(7) If a meeting of members fails to elect the number or the minimum number of directors required by the articles by reason of the lack of consent, the disqualification, the incapacity or the death of any candidate, the directors elected at that meeting may exercise all the powers of the directors if the number of directors so elected constitutes a quorum.

Appointment of directors

(8) The directors may, if the articles of the corporation so provide, appoint one or more additional directors, who shall hold office for a term expiring not later than the close of the next annual meeting of members, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of members.

Election or appointment as director

(9) An individual who is elected or appointed to hold office as a director is not a director, and is deemed not to have been elected or appointed to hold office as a director, unless

(

a) the individual 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 individual was not present at the meeting when the election or appointment took place and

(

i) consented to hold office as a director in writing before the election or appointment or within the prescribed period, or

(ii)

has acted as a director after the election or appointment.

Ceasing to hold office

(1) A director of a corporation ceases to hold office when the director dies, resigns, is removed in accordance with

section 130 or becomes disqualified under

section 126 .

Effective date of resignation

(2) A resignation of a director becomes effective at the time a written resignation is sent to the corporation or at the time specified in the resignation, whichever is later.

Removal of directors

(1) The members of a corporation may by ordinary resolution at a special meeting remove any director or directors from office.

Exception

(2) A director elected by a class or group of members that has an exclusive right to elect the director may only be removed by an ordinary resolution of those members.

Vacancy

(3) A vacancy created by the removal of a director may be filled at the meeting of the members at which the director is removed or, if not so filled, may be filled under

section 132 .

Resignation or removal

(4) If all of the directors have resigned or have been removed without replacement, a person who manages or supervises the management of the activities or affairs of the corporation is deemed to be a director for the purposes of this Act.

Exception

(5) Subsection (4) does not apply to

(

a) an officer who manages the activities or affairs of the corporation under the direction or control of a member or other person;

(

b) a lawyer, a notary, an accountant or other professional who participates in the management of the corporation solely by providing professional services; or

(

c) a trustee in bankruptcy, receiver, receiver-manager, sequestrator or secured creditor who participates in the management of the corporation or exercises control over its property solely for the purpose of the realization of security or, in the case of bankruptcy, the administration of a bankrupt’s estate.

Statement of director

(1) Subject to the by-laws, a director is entitled to submit to the corporation a written statement giving reasons for resigning or for opposing the removal or replacement of the director if a meeting is called for that purpose.

Circulating statement

(2) A corporation shall immediately give notice to the members of the statement in the manner referred to in

section 162 .

Statement to Director

(3) A corporation shall immediately send a copy of the statement to the Director.

Immunity

(4) No corporation or person acting on its behalf incurs any liability by reason only of complying with this section.

Filling vacancy

(1) Subject to subsections (4) and (5), a quorum of directors may fill a vacancy among the directors, except a vacancy resulting from an increase in the number or the minimum or maximum number of directors provided for in the articles or a failure to elect the number or minimum number of directors provided for in the articles.

Calling meeting

(2) If there is not a quorum of directors or if there has been a failure to elect the number or minimum number of directors provided for in the articles, the directors then in office shall without delay call a special meeting of members to fill the vacancy and, if they fail to call a meeting or if there are no directors then in office, the meeting may be called by any member.

Order of appointment

(3) If a corporation has neither directors nor members, the court may, on the application of an interested party, make an order appointing the required number or minimum number of directors provided for in the articles.

Director elected by class or group

(4) If any class or group of members has an exclusive right to elect one or more directors and a vacancy occurs among those directors,

(

a) subject to subsection (5), the remaining directors elected by the class or group may fill the vacancy, except a vacancy resulting from an increase in the number or the minimum or maximum number of directors provided for in the articles for that class or group or from a failure to elect the number or minimum number of directors provided for in the articles for the class or group; or

(

b) if there are no remaining directors, any member of the class or group may call a meeting of the class or group to fill the vacancy.

Member filling vacancy

(5) The by-laws may provide that a vacancy among the directors shall be filled only by a vote of the members, or by a vote of the members of any class or group having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by that class or group.

Unexpired term

(6) A director appointed or elected to fill a vacancy holds office for the unexpired term of their predecessor.

Change in number of directors

(1) The members of a corporation may amend the articles to increase or decrease the number of directors, or the minimum or maximum number of directors, but no decrease shall shorten the term of an incumbent director.

Election of directors where articles amended

(2) If the members at a meeting adopt an amendment to the articles of a corporation to increase or decrease the number or minimum or maximum number of directors, the members may, at the meeting, elect the number of directors authorized by the amendment, and for that purpose, despite subsections 202 (1) and 276 (3), on the issue of a certificate of amendment the articles are deemed to be amended as of the date the members adopt the amendment.

Fixing the number of directors

(3) If a minimum and maximum number of directors is provided for in the articles, the members may, from time to time by ordinary resolution, fix the number of directors of the corporation and the number of directors to be elected at annual meetings of the members or delegate those powers to the directors. No decrease in the number of directors shall shorten the term of an incumbent director.

Notice of change of director or director’s address

(1) A corporation shall send to the Director a notice, within the prescribed period and in the form that the Director fixes, setting out any change among its directors or of the address of a director.

Director’s change of address

(2) A director shall, within the prescribed period, send the corporation a notice of any change in his or her address.

Application to court

(3) The court may, on the application of an interested person or the Director, make an order requiring a corporation to comply with subsection (1) and make any further order that it thinks fit.

Attendance at meeting

A director is entitled to attend and be heard at every meeting of members.

Meeting of directors

(1) Unless the articles or by-laws otherwise provide, the directors may meet at any place and on any notice that the by-laws require.

Quorum

(2) Subject to the articles or by-laws, a majority of the number of directors or minimum number of directors required by the articles constitutes a quorum at any meeting of directors, and, despite any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

Notice of meeting

(3) A notice of a meeting of directors shall specify any matter referred to in subsection 138 (2) that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not specify the purpose of or the business to be transacted at the meeting.

Waiver of notice

(4) A director may waive notice of a meeting of directors, and attendance of a director at a meeting of directors is a waiver of notice of the meeting, except if the director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

Adjournment

(5) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting is announced at the original meeting.

One director meeting

(6) If a corporation has only one director, that director may constitute a meeting.

Participation

(7) Subject to the by-laws, a director may, in accordance with the regulations, if any, and if all the directors of the corporation consent, participate in a meeting of directors or of a committee of directors by means of a telephonic, an electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. A director so participating in a meeting is deemed for the purposes of this Act to be present at that meeting.

Decisions made by consensus

(1) The by-laws may provide that the directors or members shall make any decision by consensus, including a decision required to be made by a vote, except a decision taken

(

a) by a resolution referred to in subsection 182 (1);

(

b) by special resolution; or

(

c) by a vote if consensus cannot be reached.

Meaning of consensus, etc.

(2) By-laws that provide for consensus decision-making shall define the meaning of consensus, provide for how to determine when consensus cannot be reached and establish the manner of referring any matter on which consensus cannot be reached to a vote.

Voting requirements satisfied

(3) A decision made by consensus in accordance with this

section is deemed to satisfy any requirement under this Act for the taking of a vote.

Delegation

(1) Directors of a corporation may appoint from their number a managing director or a committee of directors and delegate to the managing director or committee any of the powers of the directors.

Limits on authority

(2) Despite subsection (1), no managing director and no committee of directors has authority to

(

a) submit to the members any question or matter requiring the approval of members;

(

b) fill a vacancy among the directors or in the office of public accountant or appoint additional directors;

(

c) issue debt obligations except as authorized by the directors;

(

d) approve any financial statements referred to in

section 172 ;

(

e) adopt, amend or repeal by-laws; or

(

f) establish contributions to be made, or dues to be paid, by members under

section 30 .

Validity of acts of directors and officers

An act of a director or an officer is valid despite an irregularity in their election or appointment or a defect in their qualification.

Validity of signed resolutions

(1) A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors or of a committee of directors, is as valid as if it had been passed at a meeting of directors or committee of directors.

Filing resolution

(2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of directors.

Evidence

(3) Unless a ballot is demanded, an entry in the minutes of a meeting to the effect that the chairperson of the meeting declared a resolution to be carried or defeated is, in the absence of evidence to the contrary, proof of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

Disclosure of interest

(1) A director or an officer of a corporation shall disclose to the corporation, in writing or by requesting to have it entered in the minutes of meetings of directors or of committees of directors, the nature and extent of any interest that the director or officer has in a material contract or material transaction, whether made or proposed, with the corporation, if the director or officer

(

a) is a party to the contract or transaction;

(

b) is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction; or

(

c) has a material interest in a party to the contract or transaction.

Time of disclosure for director

(2) The disclosure required by subsection (1) shall be made, in the case of a director,

(

a) at the meeting at which a proposed contract or transaction is first considered;

(

b) if the director was not, at the time of the meeting referred to in paragraph ( a ), interested in the proposed contract or transaction, at the first meeting after the director becomes so interested;

(

c) if the director becomes interested after a contract or transaction is made, at the first meeting after the director becomes so interested; or

(

d) if an individual who is interested in a contract or transaction later becomes a director, at the first meeting after the individual becomes a director.

Time of disclosure for officer

(3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,

(

a) immediately after the officer becomes aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting;

(

b) if the officer becomes interested after a contract or transaction is made, immediately after the officer becomes so interested; or

(

c) if an individual who is interested in a contract or transaction later becomes an officer, immediately after the individual becomes an officer.

Time of disclosure for director or officer

(4) If a material contract or material transaction, whether entered into or proposed, is one that, in the ordinary course of the corporation’s activities, would not require approval by the directors or members, a director or an officer shall, immediately after they become aware of the contract or transaction, disclose in writing to the corporation, or request to have entered in the minutes of meetings of directors or of committees of directors, the nature and extent of their interest.

Voting

(5) A director required to make a disclosure under subsection (1) shall not vote on any resolution to approve the contract or transaction unless the contract or transaction

(

a) relates primarily to the director’s remuneration as a director, an officer, an employee, an agent or a mandatary of the corporation or an affiliate;

(

b) is for indemnity or insurance under

section 151 ; or

(

c) is with an affiliate.

Continuing disclosure

(6) For the purposes of this section, a general notice to the directors declaring that a director or an officer is to be regarded as interested, for any of the following reasons, in a contract or transaction made with a party, is a sufficient declaration of interest in relation to the contract or transaction:

(

a) the director or officer is a director or an officer, or acting in a similar capacity, of a party referred to in paragraph (1)(

b) or ( c );

(

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 the officer’s interest in the party.

Access to disclosures

(7) The members of the corporation may examine the portions of any minutes of meetings of directors or of committees of directors that contain disclosures under this section, and of any other documents that contain those disclosures, during the corporation’s usual business hours.

Avoidance standards

(8) A contract or transaction for which disclosure is required under subsection (1) is not invalid, and the director or officer is not accountable to the corporation or its members for any profit realized from the contract or transaction, because of the director’s or officer’s interest in the contract or transaction or because the director was present or was counted to determine whether a quorum existed at the meeting of directors or of the committee of directors that considered the contract or transaction, if

(

a) disclosure of the interest was made in accordance with this section;

(

b) the directors approved the contract or transaction; and

(

c) the contract or transaction was reasonable and fair to the corporation when it was approved.

Confirmation by members

(9) Even if the conditions of subsection (8) are not met, a director or an officer, acting honestly and in good faith, is not accountable to the corporation or to its members for any profit realized from a contract or transaction for which disclosure is required under subsection (1), and the contract or transaction is not invalid by reason only of the interest of the director or officer in the contract or transaction, if

(

a) the contract or transaction is approved or confirmed by special resolution at a meeting of the members;

(

b) disclosure of the interest was made to the members in a manner sufficient to indicate its nature and extent before the contract or transaction was approved or confirmed; and

(

c) the contract or transaction was reasonable and fair to the corporation when it was approved or confirmed.

Application to court

(10) If a director or an officer of a corporation fails to comply with this section, a court may, on the application of the corporation or any of its members, set aside or annul the contract or transaction on any terms that it thinks fit, require the director or officer to account to the corporation for any profit or gain realized on the contract or transaction or make any other order that the court thinks fit.

Officers

Subject to the articles, the by-laws and any unanimous member agreement,

(

a) the directors may designate the offices of the corporation, appoint as officers persons of full capacity, specify their duties and delegate to them powers to manage the activities and affairs of the corporation, except powers to do anything referred to in subsection 138 (2);

(

b) a director may be appointed to any office of the corporation; and

(

c) two or more offices of the corporation may be held by the same person.

Remuneration

(1) Subject to the articles, the by-laws and any unanimous member agreement, the directors of a corporation may fix the reasonable remuneration of the directors, officers and employees of the corporation.

Services performed in other capacity

(2) Subject to the by-laws, a director, an officer or a member may receive reasonable remuneration and expenses for any services to the corporation that are performed in any other capacity.

Indemnification

Unless the by-laws of the corporation otherwise provide, a director, an officer or an employee may receive indemnification for their expenses incurred on behalf of the corporation as a director, an officer or an employee.

Directors’ liability

(1) Directors of a corporation who vote for or consent to a resolution authorizing any of the following are jointly and severally, or solidarily, liable to restore to the corporation any money or other property so paid or distributed and not otherwise recovered by the corporation:

(

a) a payment or distribution to a member, a director or an officer contrary to this Act; or

(

b) a payment of an indemnity contrary to this Act.

Recovery of shares

(2) A director who has satisfied a judgment rendered under this

section is entitled to recover from the other directors who voted for or consented to the unlawful act on which the judgment was founded their respective shares.

Recovery

(3) A director liable under subsection (1) is entitled to apply to a court for an order compelling a member or other recipient to pay or deliver to the director any money or other property that was paid or distributed to the member or other recipient contrary to this Act.

Order of court

(4) On an application under subsection (3), a court may, if it is satisfied that it is equitable to do so, order a member or other recipient to pay or deliver to a director any money or other property that was paid or distributed to the member or other recipient contrary to this Act and make any further order that it thinks fit.

Limitation

(5) An action to enforce a liability imposed by this

section may not be commenced after two years from the date of the resolution authorizing the action complained of.

Liability of directors for wages

(1) Directors of a corporation are joint