Fourth

Session, 45th General Assembly

Elizabeth II, 2007

BILL 12

AN ACT RESPECTING THE

TRANSFER OF SECURITIES

Received and Read the First Time ...................................................................................................

Second Reading .................................................................................................................................

Committee ............................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE

DIANNE WHALEN

Minister

of Government Services

Ordered

to be printed by the Honourable House of Assembly

EXPLANATORY NOTE

The purpose of this Bill is to revise

the law with respect to the transfer of securities in the province. All provinces in Canada

have uniformly implemented or are about to implement the same legislation.

A BILL

AN ACT RESPECTING THE TRANSFER OF

SECURITIES

Analysis

Short title

PART

INTERPRETATION

Interpretation

Meaning of valid security

Notice and knowledge

Obligation of good faith

Variation of Act by agreement

Principles of law and equity apply

Clearing agency rules apply

Application to Crown

Existing proceedings

PART

GENERAL MATTERS CONCERNING SECURITIES ANDOTHER FINANCIAL ASSETS

Share, equity interest

Mutual fund security

Interest in partnership, limited

liability company

Bill or exchange, promissory note

Depository bill or note

Clearing house option

Futures contract

Security and other financial asset

acquisition

Notice of adverse claim

Notice of transfer

Delay

Statement on security certificate

Registration of financing statement

Purchaser's control of certificated

security

Purchaser's control of uncertificated

security

Purchaser's control of security

entitlement

Securities intermediaries control of

security entitlement

Agreement re: control of uncertificated

security

Agreement re: control of security

entitlement

Effectiveness of endorsement

Effectiveness of endorsement made by

representative

Endorsement remains effective

Date when effectiveness is determined

Warranties on transfer of certificated

security

Warranties on transfer of uncertificated

security

Warranties on endorsement of security

certificate

Warranties on instruction re:

uncertificated security

Warranty on presentation of security

certificate

Warranties by agent delivering

certificated security

Warranties on redelivery of security

certificate

Broker's warranties

Warranties on entitlement order

Warranties on security credited to

securities account

Securities intermediary's warranties

Law governing validity of security

Matters governed by law of securities

intermediary's jurisdiction

Adverse claim governed by law of

jurisdiction of security certificate

Seizure governed by laws re: civil

enforcement of judgments

Seizure of interest in certificated

security

Seizure of interest in uncertificated

security

Seizure of interest in security

entitlement

Notice of seizure to secured party

Enforceability of contracts

Rules of evidence re: certificated

security

Securities intermediary's liability to

adverse claimant

Securities intermediary as purchaser for

value

PART

III

ISSUE AND ISSUER

Certificated security

Enforcement of security

Lack of genuineness of certificated

security

Other defences

Right to cancel contract

Staleness as notice of defect or defence

Effect of issuer's restriction on

transfer

Completion of security certificate

Rights and duties of issuer re:

registered owner

Warranties by person signing security

certificate

Issuer's lien

Overissue

PART

TRANSFER OF CERTIFICATED AND UNCERTIFICATED SECURITIES

Delivery of certificated security

Rights of purchaser

Protected purchaser

Form of endorsement

Endorsement of part of a security

certificate

When endorsement is transfer of security

Endorsement missing

Notice of adverse claim on endorsement

Obligations of endorser

Completion of instruction

Obligations of person originating an

instruction

Warranties by guarantor of endorser's

signature

Warranties by guarantor of signature of

originator of instruction

Warranties by special guarantor of

signature of originator of instruction

Warranty re: rightfulness of transfer by

guarantor

Guarantee may not be condition to

registration of transfer

Liability of guarantor, endorser and

originator

Purchaser's right to requisites for

registration of transfer

PART

REGISTRATION

Duty of issuer to register transfer

Assurances re endorsement or instruction

Demand that issuer not register transfer

Duty of issuer re demand to not register

transfer

Liability of issuer re: demand to not

register transfer

Wrongful registration of transfer

Replacement of security lost certificate

Obligation to notify issuer of lost,

destroyed or wrongfully taken security certificate

Obligation of authenticating trustee,

transfer agent, etc.

PART

SECURITY ENTITLEMENTS

Acquisition of security entitlement

Protection of entitlement holders from

adverse claim

Property interest of entitlement holders

in financial asset

Duty of securities intermediary re:

financial asset

Duty of securities intermediary re: payments

and distributions

Duty of securities intermediary to

exercise rights

Duty of securities intermediary to

comply with entitlement order

Duty of securities intermediary re:

entitlement holder's direction

Compliance with other statute

Rights of purchaser re: adverse claim

Priority of entitlement holders to

financial asset

PART

VII

CONSEQUENTIAL AMENDMENTS

RSNL1990 cC-36 Amdt.

SNL1995 cC-37.1 Amdt.

SNL1996 cJ-1.1 Amdt.

SNL1998 cP-7.1 Amdt.

RSNL1990 cS-13 Amdt.

PART

VIII

COMMENCEMENT

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

Short title

1. This

Act may be cited as the Securities

Transfer Act .

PART I

INTERPRETATION

Interpretation

(1) In

this Act

(a) "adverse claim" means a claim that

(

i) the claimant has a property interest in a

financial asset, and

(ii) it is a violation of the rights of the

claimant for another person to hold, transfer or deal with the financial asset;

(b) "appropriate person" means,

(

i) with respect to an endorsement, the person

specified by a security certificate or by an effective special endorsement to

be entitled to the security,

(ii) with respect to an instruction, the registered

owner of an uncertificated security,

(iii) with respect to an entitlement order, the

entitlement holder,

(iv) in the case of a person referred to in

subparagraph (i), (ii) or (iii), being deceased, that person's successor taking

under the law, other than this Act, or that person's personal representative

acting for the estate of the deceased person, and

(

v) in the case of a person referred to in subparagraph

(i), (ii) or (iii) lacking capacity, that person's guardian or other similar representative

who has power under the law, other than this Act, to transfer the security or

other financial asset;

(c) "bearer form" means, in respect of a

certificated security, a form in which the security is payable to the bearer of

the security certificate according to the security certificate's terms but not

by reason of an endorsement;

(d) "broker" means a dealer as defined

in the Securities Act ;

(e) "certificated security" means a

security that is represented by a certificate;

(f) "clearing agency" means a person

(

i) that carries on a business or

activity as a clearing agency or clearing house within the meaning of the Securities

Act or the securities regulatory law of another province or territory in Canada ,

(ii) that is recognized or otherwise regulated as a

clearing agency or clearing house by the superintendent or by a securities regulatory

authority of another province or territory in Canada ,

and

(iii) that is a securities and

derivatives clearing house for the purposes of

section 13.1 of the Payment

Clearing and Settlement Act (Canada) or whose clearing and settlement

system is designated under

Part I of that Act;

(g) "communicate" and "communication"

means

(

i) sending a signed writing, and

(ii) transmitting information by another means

agreed by the person transmitting the information and the person receiving the

information;

(h) "control" has the meaning set out in

sections 24 to 27;

(i) " corporation "

means a corporation whether or not it is incorporated under the laws of the

province;

(j) "delivery", with respect to a

certificated or uncertificated security, has the meaning set out in

section 69,

and "deliver" has a corresponding meaning;

(k) "effective", in relation to an

endorsement, instruction or entitlement order, has the meaning set out in

sections 30 to 33, and "effectiveness", "ineffective" and

"ineffectiveness" have corresponding meanings;

(l) "endorsement" means a signature

that, alone or accompanied by other words, is made on a security certificate in

registered form or on a separate document for the purpose of assigning,

transferring or redeeming the security or granting a power to assign, transfer

or redeem the security;

(m) "entitlement holder" means a person

identified in the records of a securities intermediary as the person having a

security entitlement against the securities intermediary and includes a person

who acquires a security entitlement by virtue of paragraph 96(1)(

b) or (c);

(n) "entitlement order" means a notice communicated

to a securities intermediary directing the transfer or redemption of a

financial asset to which the entitlement holder has a security entitlement;

(o) "financial asset" means, except as

otherwise provided in sections 11 to 17,

(

i) a security,

(ii) an obligation of a person that,

(

A) is, or is of a type, dealt in or traded on

financial markets, or

(

B) is recognized in another market or area in

which it is issued or dealt in as a medium for investment,

(iii) a share, participation or other interest in a

person, or in property or an enterprise of a person, that,

(

A) is, or is of a type, dealt in or traded on

financial markets, or

(

B) is recognized in another market or area in

which it is issued or dealt in as a medium for investment,

(iv) a property that is held by a securities intermediary

for another person in a securities account if the securities intermediary has

expressly agreed with the other person that the property is to be treated as a

financial asset under this Act, or

(

v) a credit balance in a securities account,

unless the securities intermediary has expressly agreed with the person for

whom the account is maintained that the credit balance is not to be treated as

a financial asset under this Act;

(p) "genuine" means free of forgery or

counterfeiting;

(q) "government" means,

(

i) the Crown in right of Canada or

in right of the province or another province of Canada ,

(ii) the government of a territory in Canada ,

(iii) a municipality in Canada ,

(iv) the government of a foreign country or of a

political subdivision of it;

(r) "in collusion" means in concert, by

conspiratorial arrangement or by agreement for the purpose of violating a

person's rights in respect of a financial asset;

(s) "instruction" means a notice

communicated to the issuer of an uncertificated security that directs that the

transfer of the security be registered or that the security be redeemed;

(t) "issuer", with respect to a

registration of a transfer of a security, means a person on whose behalf

transfer books are maintained, and with respect to an obligation on or a

defence to a security, includes,

(

i) a person who places or authorizes the placing

of the person's name on a security certificate, other than as authenticating

trustee, registrar, transfer agent or another like person, to evidence a share,

participation or other interest in the person's property or in an enterprise or

the person's duty to perform an obligation represented by the security certificate,

(ii) a person who creates a share, participation or

other interest in the person's property or in an enterprise, or undertakes an

obligation, that is an uncertificated security,

(iii) a person who directly or indirectly creates a

fractional interest in the person's rights or property, if the fractional

interest is represented by a security certificate,

(iv) a guarantor, to the extent of the guarantor's

guarantee, whether or not the guarantor's obligation is noted on a security

certificate, and

(

v) a person that becomes responsible for, or in

place of, another person described as an issuer in this definition;

(u) "knowledge", "know" and "known"

means actual knowledge and actual knowing;

(v) "overissue" means the issue of

securities in excess of the amount that the issuer is authorized to issue;

(w) "person" means an individual, including

an individual in his or her capacity as trustee, executor, administrator or

other representative, a sole proprietorship, a partnership, an unincorporated

association, an unincorporated syndicate, an unincorporated organization, a

trust, including a business trust, a corporation, a government or agency of a

government or another legal or commercial entity;

(x) "protected purchaser" means a

purchaser of a certificated or uncertificated security, or of an interest in

the security, who

(

i) gives value,

(ii) does not have notice of an adverse claim to

the security, and

(iii) obtains control of the security;

(y) "purchase" means a taking by sale,

discount, negotiation, mortgage, hypothec, pledge, security interest, issue or

reissue, gift or any other voluntary transaction that creates an interest in

property;

(z) "purchaser" means a person who takes

by purchase;

(aa) "registered form" means, in respect

of a certificated security, a form in which

(

i) the security certificate specifies a person

entitled to the security, and

(ii) a transfer of the security may be registered

on books maintained for that purpose by or on behalf of the issuer, or the

security certificate states that it may be so registered;

(bb) "representative" means a person

empowered to act for another, including an agent, an officer of a corporation

or association and a trustee, executor or administrator of an estate;

(cc) "secured party" means a secured

party as defined in the Personal Property Security Act ;

(dd) "securities account" means an

account to which a financial asset is or may be credited in accordance with an

agreement under which the person maintaining the account undertakes to treat

the person for whom the account is maintained as entitled to exercise the

rights that constitute the financial asset;

(ee) "securities intermediary" means

(

i) a clearing agency, or

(ii) a person, including a broker, bank or trust

company, that in the ordinary course of its business maintains securities

accounts for others and is acting in that capacity;

(ff) "security" means, except as

otherwise provided in sections 11 to 17, an obligation of an issuer or a share,

participation or other interest in an issuer or in property or an enterprise of

an issuer,

(

i) that is represented by a security certificate

in bearer form or registered form, or the transfer of which may be registered

on books maintained for that purpose by or on behalf of the issuer,

(ii) that is one of a class or series, or by its

terms is divisible into a class or series, of shares, participations, interests

or obligations, and

(iii) that,

(

A) is, or is of a type, dealt in or traded on

securities exchanges or securities markets, or

(

B) is a medium for investment and by its terms expressly

provides that it is a security for the purposes of this Act;

(gg) "security certificate" means a

certificate representing a security, but does not include a certificate in

electronic form;

(hh) "security entitlement" means the

rights and property interest of an entitlement holder with respect to a

financial asset specified in

Part VI;

(ii) "security interest" means a security

interest as defined in the Personal Property Security Act ;

(jj) "superintendent" means the

superintendent as defined in the Securities

Act ;

(kk) "unauthorized" means, when used with

reference to a signature or endorsement, a signature or endorsement that is

made without actual, implied or apparent authority or that is forged;

(ll) "uncertificated security" means a

security that is not represented by a certificate; and

(mm) "value" means a consideration

sufficient to support a simple contract and includes an antecedent debt or

liability.

(2) Notwithstanding paragraph (1)(o), as the

context requires, "financial asset" means either the interest itself

or the means by which a person's claim to it is evidenced, including a

certificated or uncertificated security, a security certificate and a security

entitlement.

(3) The characterization of a person, business or

transaction for the purposes of this Act does not determine the

characterization of the person, business or transaction for the purposes of any

other statute, law, regulation or rule.

Meaning of valid

security

3. A

security is valid where it is issued in accordance with the applicable law

described in subsection 45(1) and constating provisions governing the issuer.

Notice and knowledge

(1) For

the purposes of this Act, a person has notice of a fact if,

(

a) the person has knowledge of it;

(

b) the person has received notice of it; or

(

c) information comes to the person's attention

under circumstances in which a reasonable person would take cognizance of it.

(2) A person gives notice to another person by

taking those steps that may be reasonably required to inform the other person

in the ordinary course, whether or not the other person actually comes to know

of it.

(3) A person receives notice or knowledge when,

(

a) the notice or knowledge comes to the person's

attention;

(

b) in the case of a notice under a contract,

the notice is duly delivered to the place of business through which

the contract was made; or

(

c) the notice is duly delivered to another place

held out by that person as the place for receipt of those notices.

(4) Notice, knowledge or a notice received by an

organization is effective for a particular transaction from the time when it is

brought to the attention of the individual conducting that transaction and from

the time when it would have been brought to the attention of that individual if

the organization had exercised due diligence.

(5) For the purpose of subsection (4), an

organization exercises due diligence if it maintains reasonable routines for

communicating significant information to the individual conducting the

transaction and there is reasonable compliance with those routines.

(6) For the purpose of subsection (4), due

diligence does not require an individual acting for the organization to

communicate information unless,

(

a) that communication is part of the individual's

regular duties; or

(

b) the individual has reason to know of the

transaction and that the transaction would be materially affected by the information.

Obligation of

good faith

(1) A

contract to which this Act applies and a duty imposed by this Act imposes an

obligation of good faith in its performance or enforcement.

(2) In this

section "good faith" means

honesty in fact and the observance of reasonable commercial standards of fair

dealing.

Variation of Act

by agreement

(1) The

effect of provisions of this Act may be varied by agreement.

(2) Notwithstanding subsection (1), the

obligations of good faith, diligence, reasonableness and care imposed by this

Act may not be disclaimed by agreement, but the parties may by

agreement determine the standards by which the performance of those obligations

is to be measured so long as those standards are not manifestly unreasonable.

Principles of law

and equity apply

7. Except

in so far as they are inconsistent with this Act, the principles of law and

equity supplement this Act and continue to apply, including,

(

a) the law merchant;

(

b) the law relating to the capacity to contract,

principal and agent, estoppel, fraud, misrepresentation, duress, coercion and

mistake; and

(

c) other validating or invalidating rules of law.

Clearing agency

rules apply

8. A

rule adopted by a clearing agency governing rights and obligations between the

clearing agency and its participants or between participants in the clearing

agency is effective even where the rule conflicts with this Act or the Personal

Property Security Act and affects another person who does not consent to

the rule.

Application to

Crown

(1) This

Act applies to the Crown.

(2) Nothing in this Act limits the application of

the Proceedings Against the Crown Act.

Existing proceedings

10. This

Act shall not affect a legal proceeding that was commenced before this

section

comes into force.

PART II

GENERAL MATTERS CONCERNING SECURITIES ANDOTHER FINANCIAL ASSETS

Share, equity

interest

11. A

share or similar equity interest issued by a corporation, business trust or similar

entity is a security.

Mutual fund security

(1) A

mutual fund security is a security.

(2) In this section,

(a) "mutual fund security" means a

share, unit or similar equity interest issued by an open-end mutual fund, but

does not include an insurance policy, endowment policy or annuity contract

issued by an insurance company; and

(b) "open-end mutual fund" means an

entity that makes a distribution to the public of its shares, units or similar

equity interests and that carries on the business of investing the consideration

it receives for the shares, units or similar equity interests it issues, all or

substantially all of which shares, units or similar equity interests are

redeemable on the demand of their holders or owners.

Interest in

partnership, limited liability company

(1) An

interest in a partnership or limited liability company is not a security

unless,

(

a) that interest is dealt in or traded on

securities exchanges or in securities markets;

(

b) the terms of that interest expressly provide

that the interest is a security for the purposes of this Act; or

(

c) that interest is a mutual fund security within

the meaning of

section 11.

(2) An interest in a partnership or limited

liability company is a financial asset if it is held in a securities account.

(3) In this

section "limited liability

company" means an unincorporated association, other than a partnership,

formed under the laws of another jurisdiction, that grants to each of its

members limited liability with respect to the liabilities of the association.

Bill or exchange,

promissory note

14. A

bill of exchange or promissory note to which the Bills of Exchange Act

( Canada ) applies is not a security, but is a financial asset if it is held

in a securities account.

Depository bill

or note

15. A

depository bill or depository note to which the Depository Bills and Notes

Act ( Canada ) applies is not a security, but is a financial asset if it is held

in a securities account.

Clearing house

option

(1) A

clearing house option or similar obligation is not a security, but is a

financial asset.

(2) In this

section "clearing house

option" means an option, other than an option on futures, issued by a

clearing house to its participants.

Futures contract

(1) A

futures contract is not a security or a financial asset.

(2) In this

section "futures contract"

means a futures contract as defined in the Personal

Property Security Act.

Security and

other financial asset acquisition

(1) A

person acquires a security or an interest in a security under this Act where,

(

a) the person is a purchaser to whom a security

is delivered under

section 69; or

(

b) the person acquires a security entitlement to

the security under

section 96.

(2) A person acquires a financial asset, other

than a security, or an interest in a financial asset under this Act if the

person acquires a security entitlement to the financial asset.

(3) A person who acquires a security entitlement

to a security or other financial asset has the rights specified in

Part VI, but

is a purchaser of a security, security entitlement or other financial asset

held by a securities intermediary only to the extent provided in

section 98.

(4) Unless the context of another statute, law,

regulation, rule or agreement shows that a different meaning is intended, a

person who is required by that statute, law, regulation, rule

or agreement to transfer, deliver, present, surrender, exchange or otherwise

put in the possession of another person a security or other financial asset

satisfies that requirement by causing the other person to acquire an interest

in the security or other financial asset as set out in

subsection (1) or (2).

Notice of adverse

claim

19. A

person has notice of an adverse claim if

(

a) the person knows of the adverse claim;

(

b) the person is aware of facts sufficient to

indicate that there is a significant probability that the adverse claim exists

and deliberately avoids information that would establish the existence of the

adverse claim; or

(

c) the person has a duty, imposed by statute or

regulation, to investigate whether an adverse claim exists and the investigation,

if carried out, would establish the existence of the adverse claim.

Notice of

transfer

(1) Having

knowledge that a financial asset, or an interest in a financial asset, is being

or has been transferred by a representative does not impose a duty of inquiry

into the rightfulness of the transaction and is not notice of an adverse claim.

(2) Notwithstanding subsection (1), a person has

notice of an adverse claim if that person knows that,

(

a) a representative has transferred a financial

asset, or an interest in a financial asset, in a transaction; and

(

b) the transaction is, or the

proceeds of the transaction are being used,

(

i) for the individual benefit of the representative,

(ii) otherwise in breach of a duty owed by the

representative.

Delay

21. An

act or event that creates a right to immediate performance of the principal

obligation represented by a security certificate, or that sets a date on or

after which a security certificate is to be presented or surrendered for

redemption or exchange, does not by itself constitute notice of an adverse

claim except in the case of a transfer that takes place more than,

(

a) one year after a date set for presentation or

surrender for redemption or exchange; or

(b) 6 months after a date set for payment of money

against presentation or surrender of the security certificate, where money was

available for payment on that date.

Statement on security

certificate

(1) A

purchaser of a certificated security has notice of an adverse claim where the

security certificate,

(

a) whether in bearer form or registered form, has

been endorsed "for collection" or "for surrender" or for

some other purpose not involving a transfer; or

(

b) is in bearer form and has on it an unambiguous

statement that it is the property of a person other than the transferor.

(2) For the purposes of paragraph (1)(b), the mere

writing of a name on a security certificate does not by itself constitute an unambiguous

statement that the security certificate is the property of a person other than

the transferor.

Registration of

financing statement

23. The

registration of a financing statement under the Personal Property Security

Act is not notice of an adverse claim.

Purchaser's

control of certificated security

(1) A

purchaser has control of a certificated security that is in bearer form where

the certificated security is delivered to the purchaser.

(2) A purchaser has control of a certificated

security that is in registered form where the certificated security is

delivered to the purchaser and,

(

a) the security certificate is endorsed to the

purchaser or in blank by an effective endorsement; or

(

b) the security certificate is registered in the

name of the purchaser at the time of the original issue or registration of

transfer by the issuer.

Purchaser's

control of uncertificated security

(1) A

purchaser has control of an uncertificated security where,

(

a) the uncertificated security is delivered to

the purchaser; or

(

b) the issuer has agreed that the issuer will

comply with instructions that are originated by the purchaser without the

further consent of the registered owner.

(2) A purchaser to whom subsection (1) applies in

relation to an uncertificated security has control of the uncertificated

security even if the registered owner retains the right,

(

a) to make substitutions for the uncertificated

security;

(

b) to originate instructions to the issuer; or

(

c) to otherwise deal with the uncertificated

security.

Purchaser's

control of security entitlement

(1) A

purchaser has control of a security entitlement where,

(

a) the purchaser becomes the entitlement holder;

(

b) the securities intermediary has agreed that it

will comply with entitlement orders that are originated by the purchaser

without the further consent of the entitlement holder; or

(

c) another person has control of the security

entitlement on behalf of the purchaser or, having previously obtained control

of the security entitlement, acknowledges that the person has control on behalf

of the purchaser.

(2) A purchaser to whom subsection (1) applies in

relation to a security entitlement has control of the security entitlement even

where the entitlement holder retains the right to

(

a) make substitutions for the security

entitlement;

(

b) originate entitlement orders to the securities

intermediary; or

(

c) otherwise deal with the security entitlement.

Securities intermediaries control of security entitlement

27. Where

an interest in a security entitlement is granted by the entitlement holder to

the entitlement holder's own securities intermediary, the securities

intermediary has control of the security entitlement.

Agreement re:

control of uncertificated security

(1) An

issuer shall not enter into an agreement of the kind referred to in paragraph

25(1)(

b) without the consent of the registered owner.

(2) An issuer that has entered

into an agreement of the kind referred to in paragraph 25(1) (

b) is not

required to confirm the existence of the agreement to another person unless

requested to do so by the registered owner.

(3) An issuer is not required to enter into an

agreement of the kind referred to in paragraph 25(1)(

b) even where the

registered owner requests the agreement.

Agreement re:

control of security entitlement

(1) A

securities intermediary shall not enter into an agreement of the kind referred

to in paragraph 26(1)(

b) without the consent of the entitlement holder.

(2) A securities intermediary that has entered

into an agreement of the kind referred to in paragraph 26(1)(

b) is not required

to confirm the existence of the agreement to another person unless requested to

make that confirmation by the entitlement holder.

(3) A securities intermediary is not required to enter

into an agreement of the kind referred to in paragraph 26(1)(

b) even where the

entitlement holder requests the agreement.

Effectiveness of

endorsement

30. An

endorsement, instruction or entitlement order is effective where,

(

a) it is made by the appropriate person;

(

b) it is made by a person who, in the case of an

endorsement or instruction, has the power under the law of agency to transfer

the security, or in the case of an entitlement order, has the power under the

law of agency to transfer the financial asset, on behalf of the appropriate

person, including,

(

i) in the case of an instruction referred to in

paragraph 25(1)(b), the person who has control of the uncertificated security,

(ii) in the case of an entitlement order referred

to in paragraph 26(1)(b), the person who has control of the security entitlement;

(

c) the appropriate person has ratified it or is

otherwise precluded from asserting its ineffectiveness.

Effectiveness of

endorsement made by representative

31. An

endorsement, instruction or entitlement order made by a representative is

effective even where,

(

a) the representative has failed to comply with a

controlling instrument or with the law of the jurisdiction governing the

representative's rights and duties, including any law requiring the

representative to obtain court approval of the transaction; or

(

b) the representative's action in making the

endorsement, instruction or entitlement order or using the proceeds of the

transaction is otherwise a breach of duty owed by the representative.

Endorsement remains

effective

32. Where

a security is registered in the name of or specially endorsed to a person described

as a representative, or where a securities account is maintained in the name of

a person described as a representative, an endorsement, instruction or

entitlement order made by the person is effective even if the person is no

longer serving in that capacity.

Date when effectiveness

is determined

(1) The

effectiveness of an endorsement, instruction or entitlement order is determined

as of the date that the endorsement, instruction or entitlement order is made.

(2) An endorsement, instruction or entitlement

order does not become ineffective by reason of a later change of circumstances.

Warranties on

transfer of certificated security

34. A

person who transfers a certificated security to a purchaser for value warrants

to the purchaser and, where the transfer is by endorsement, also warrants to a

subsequent purchaser, that,

(

a) the security certificate is

genuine and has not been materially altered;

(

b) the transferor does not know of a fact that

might impair the validity of the security;

(

c) there is no adverse claim to the security;

(

d) the transfer does not violate a restriction on

transfer;

(

e) where the transfer is by endorsement, the

endorsement is made by the appropriate person or, where the endorsement is by

an agent, the agent has actual authority to act on behalf of the appropriate

person; and

(

f) the transfer is otherwise effective and

rightful.

Warranties on

transfer of uncertificated security

(1) A

person who originates an instruction for registration of transfer of an

uncertificated security to a purchaser for value warrants to the purchaser

that,

(

a) the instruction is made by the appropriate person

or, where the instruction is made by an agent, the agent has actual authority

to act on behalf of the appropriate person;

(

b) the security is valid;

(

c) there is no adverse claim to the security; and

(

d) at the time that the instruction is presented

to the issuer,

(

i) the purchaser will be entitled to the

registration of transfer,

(ii) the transfer will be registered by the issuer

free from all liens, security interests, restrictions and claims other than

those specified in the instruction,

(iii) the transfer will not violate a restriction on

transfer, and

(iv) the transfer will otherwise be effective and

rightful.

(2) A person who transfers an uncertificated

security to a purchaser for value and does not originate an instruction in

connection with the transfer warrants to the purchaser that,

(

a) the security is valid;

(

b) there is no adverse claim to the security;

(

c) the transfer does not violate a restriction on

transfer; and

(

d) the transfer is otherwise effective and

rightful.

Warranties on

endorsement of security certificate

36. A

person who endorses a security certificate warrants to the issuer that

(

a) there is no adverse claim to the security; and

(

b) the endorsement is effective.

Warranties on

instruction re: uncertificated security

37. A

person who originates an instruction for the registration of transfer of an

uncertificated security warrants to the issuer that,

(

a) the instruction is effective; and

(

b) at the time that the instruction is presented

to the issuer, the purchaser will be entitled to the registration of transfer.

Warranty on presentation

of security certificate

38. A

person who presents a certificated security for the registration of transfer or

for payment or exchange warrants to the issuer that the person is entitled to

the registration, payment or exchange, but a purchaser for value and without

notice of adverse claims to whom transfer is registered warrants to the issuer

only that the person has no knowledge of an unauthorized signature in a

necessary endorsement.

Warranties by

agent delivering certificated security

39. Where,

(

a) a person acts as agent of another person in

delivering a certificated security to a purchaser;

(

b) the identity of the principal was known to the

person to whom the security certificate was delivered; and

(

c) the security certificate delivered by the

agent was received by the agent from the principal or from another person at

the direction of the principal,

the person delivering the security

certificate warrants, to the purchaser, only that the

delivering person has authority to act for the principal and does not know of

an adverse claim to the certificated security.

Warranties on

redelivery of security certificate

40. A

secured party who redelivers a security certificate received, or after payment

and on order of the debtor delivers the security certificate to another person,

makes only the warranties of an agent set out in

section 39.

Broker's

warranties

(1) Except

as otherwise provided in

section 39, a broker acting for a customer makes to

the issuer and a purchaser the warranties set out in sections 34 to 38.

(2) A broker that delivers a security certificate

to the broker's customer makes to the customer the warranties set out in

section 34 and has the rights and privileges of a purchaser provided under

sections 34, 39 and 40.

(3) A broker that causes the broker's customer to

be registered as the owner of an uncertificated security makes to the customer

the warranties set out in

section 35 and has the rights and privileges of a purchaser

provided under

section 35.

(4) The warranties of and in favour of the broker

acting as an agent are in addition to applicable warranties given by and in

favour of the customer.

Warranties on

entitlement order

42. A

person who originates an entitlement order to a securities intermediary

warrants to the securities intermediary,

(

a) that the entitlement order is made by the

appropriate person or, if the entitlement order is made by an agent, that the

agent has actual authority to act on behalf of the appropriate person; and

(

b) that there is no adverse claim to the security

entitlement.

Warranties on

security credited to securities account

(1) A

person who delivers a security certificate to a securities intermediary for

credit to a securities account makes to the securities intermediary the

warranties set out in

section 34.

(2) A person who originates an instruction with

respect to an uncertificated security directing that the uncertificated

security be credited to a securities account makes to the securities

intermediary the warranties set out in

section 35.

Securities intermediary's

warranties

(1) Where

a securities intermediary delivers a security certificate to its entitlement

holder, the securities intermediary makes to the entitlement holder the

warranties set out in

section 34.

(2) Where a securities intermediary causes its

entitlement holder to be registered as the owner of an uncertificated security,

the securities intermediary makes to the entitlement holder the warranties set

out in

section 35.

Law governing

validity of security

(1) The

validity of a security is governed by the following laws:

(

a) where the issuer is incorporated under a law

of Canada , the law, other than the conflict of law rules, of Canada ;

(

b) where the issuer is the Crown in right of Canada ,

the law, other than the conflict of law rules, of Canada ;

(

c) where the issuer is the Crown in right of a

province in Canada , the law, other than the conflict of law rules, of the province;

(

d) where the issuer is the Commissioner of a

territory in Canada , the law, other than the conflict of law rules, of the territory;

and

(

e) in another case, the law, other than the conflict

of law rules, of the jurisdiction under which the issuer is incorporated or otherwise

organized.

(2) The law of the issuer's jurisdiction governs

(

a) the rights and duties of the issuer with

respect to the registration of transfer;

(

b) the effectiveness of the registration of

transfer by the issuer;

(

c) whether the issuer owes duties to an adverse

claimant to a security; and

(

d) whether an adverse claim can be asserted

against a person,

(

i) to whom the transfer of a certificated or

uncertificated security is registered, or

(ii) who obtains control of an uncertificated

security.

(3) The following issuers may specify the law of

another jurisdiction as the law governing the matters referred to in paragraphs

(2) (

a) to (d):

(

a) an issuer incorporated or otherwise organized

under the law of the province; and

(

b) the Crown in right of the province.

(4) Whether a security is enforceable against an

issuer notwithstanding a defence or defect described in sections 58 to 60 is

governed by the following laws:

(

a) where the issuer is incorporated under a law

of Canada , the law, other than the conflict of law rules, of the province or

territory in Canada in which the issuer has its registered or head office;

(

b) where the issuer is the Crown in right of Canada ,

the law, other than the conflict of law rules, of the issuer's jurisdiction;

(

c) where the issuer is the Crown in right of

another province in Canada , the law, other than the conflict of law rules, of that province;

(

d) where the issuer is the Commissioner of a

territory in Canada , the law, other than the conflict of law rules, of the territory;

and

(

e) in another case, the law, other than the

conflict of law rules, of the jurisdiction under which the issuer is

incorporated or otherwise organized.

(5) In this

section "issuer's jurisdiction"

means the jurisdiction determined in accordance with the following rules:

(

a) where the issuer is incorporated under a law

of Canada, the law, other than the conflict of law rules, of the province or

territory in Canada in which the issuer has its registered or head office, if

permitted by the law of Canada, the law of another jurisdiction specified by

the issuer;

(

b) where the issuer is the Crown in right of Canada ,

the law, other than the conflict of law rules, of the jurisdiction specified by

the issuer;

(

c) where the issuer is the Crown in right of

another province in Canada , the law, other than the conflict of law rules, of that province

or, if permitted by the law of that province, the law of another jurisdiction

specified by the issuer;

(

d) where the issuer is the Commissioner of a territory

in Canada, the law, other than the conflict of law rules, of the territory or

if permitted by the law of that territory, the law of another jurisdiction

specified by the issuer; and

(

e) in another case, the law, other than the

conflict of law rules, of the jurisdiction under which the issuer is

incorporated or otherwise organized or, if permitted by the law of that jurisdiction,

the law of another jurisdiction specified by the issuer.

Matters governed

by law of securities intermediary's jurisdiction

(1) The

law, other than the conflict of law rules, of the securities intermediary's

jurisdiction governs,

(

a) acquisition of a security entitlement from the

securities intermediary;

(

b) the rights and duties of the securities

intermediary and entitlement holder arising out of a security entitlement;

(

c) whether the securities intermediary owes a

duty to a person asserting an adverse claim to a security entitlement; and

(

d) whether an adverse claim may be asserted

against a person who,

(

i) acquires a security entitlement from the

securities intermediary, or

(ii) purchases a security entitlement, or interest

in it, from an entitlement holder.

(2) In this section, "securities

intermediary's jurisdiction" means the jurisdiction determined in accordance

with the following rules where

(

a) an agreement between a securities intermediary

and its entitlement holder governing the securities account expressly provides

that a particular jurisdiction is the securities intermediary's jurisdiction

for the purposes of the law of that jurisdiction, this Act or a provision of

this Act, the jurisdiction expressly provided for is the securities

intermediary's jurisdiction;

(

b) paragraph (

a) does not apply and an agreement

between the securities intermediary and its entitlement holder governing the

securities account expressly provides that the agreement is governed by the law

of a particular jurisdiction, that jurisdiction is the securities

intermediary's jurisdiction;

(

c) neither paragraph (

a) nor (

b) applies and an

agreement between a securities intermediary and its entitlement holder

governing the securities account expressly provides that the securities account

is maintained at an office in a particular jurisdiction, that jurisdiction is

the securities intermediary's jurisdiction;

(

d) none of the preceding paragraphs applies, the

securities intermediary's jurisdiction is the jurisdiction in which the office

identified in an account statement as the office serving the entitlement

holder's account is located; and

(

e) none of the preceding paragraphs applies, the

securities intermediary's jurisdiction is the jurisdiction in which the chief

executive office of the securities intermediary is located.

(3) In determining a securities intermediary's

jurisdiction, the following matters shall not be taken into account:

(

a) the physical location of certificates

representing financial assets;

(

b) where an entitlement holder has a security

entitlement with respect to a financial asset, the jurisdiction in which the issuer

of the financial asset is incorporated or otherwise organized; and

(

c) the location of facilities for data processing

or other record keeping concerning the securities account.

Adverse claim

governed by law of jurisdiction of security certificate

47. The

law, other than the conflict of law rules, of the jurisdiction in which a

security certificate is located at the time of delivery governs whether an

adverse claim may be asserted against a person to whom the security certificate

is delivered.

Seizure governed

by laws re: civil enforcement of judgments

48. Subject

to the necessary modifications for the purposes of permitting the operation of

sections 49 to 52, the laws governing the civil enforcement of judgments apply

to seizures described in those sections.

Seizure of

interest in certificated security

(1) Except

as otherwise provided in subsection (2) and in

section 52, the interest of a

judgment debtor in a certificated security may be seized only by actual seizure

of the security certificate by a sheriff.

(2) A certificated security for which the security

certificate has been surrendered to the issuer may be seized by a sheriff serving

a notice of seizure on the securities intermediary.

Seizure of

interest in uncertificated security

50. Except

as otherwise provided in

section 52, the interest of a judgment debtor in an

uncertificated security may be seized only by a sheriff serving a notice of

seizure on the issuer at the issuer's chief executive office.

Seizure of

interest in security entitlement

51. Except

as otherwise provided in

section 52, the interest of a judgment debtor in a

security entitlement may be seized only by a sheriff serving a notice of

seizure on the securities intermediary with whom the judgment debtor's

securities account is maintained.

Notice of seizure

to secured party

52. The

interest of a judgment debtor in one or more of the following may be seized by

a sheriff serving a notice of seizure on the secured party:

(

a) a certificated security for which the security

certificate is in the possession of a secured party;

(

b) an uncertificated security registered in the

name of a secured party; and

(

c) a security entitlement maintained in the name

of a secured party.

Enforceability of

contracts

53. A

contract or modification of a contract for the sale or purchase of a security

is enforceable whether or not there is some writing signed or record

authenticated by a person against whom enforcement is sought.

Rules of evidence

re: certificated security

(1) The

evidentiary rules set out in this

section apply to a legal proceeding on a

certificated security against the issuer of that security.

(2) Unless specifically denied in the pleadings, a

signature on a security certificate or in a necessary endorsement shall be

admitted.

(3) A signature on a security is presumed to be

genuine and authorized but, if the effectiveness of the signature is put in

issue, the burden of establishing that it is genuine and authorized is on the

party claiming under the signature.

(4) Where signatures on a security certificate are

admitted or established, the production of the security certificate entitles a

holder to recover on the security certificate unless the defendant establishes

a defence or defect that goes to the validity of the security.

(5) Where it is shown that a defence or defect

that goes to the validity of the security exists, the plaintiff has the burden

of establishing that the defence or defect cannot be asserted against,

(

a) the plaintiff; or

(

b) a person under whom the plaintiff claims.

(6) In this section,

(a) "defendant" includes respondent; and

(b) "plaintiff" means a person

attempting to recover on a security ce rtificate

in a legal proceeding, whether described in that proceeding as a plaintiff,

appellant, claimant, petitioner, applicant or another term.

Securities intermediary's

liability to adverse claimant

(1) A

securities intermediary that has transferred a financial asset in accordance

with an effective entitlement order is not liable to a person having an adverse

claim to, or a security interest in, the financial asset.

(2) A broker or other agent or bailee who has

dealt with a financial asset at the direction of a customer or principal is not

liable to a person having an adverse claim to, or a security interest in, the

financial asset.

(3) Notwithstanding subsections (1) and (2), a

securities intermediary referred to in subsection (1) or a broker or other

agent or bailee referred to in subsection (2) is liable to a person having an

adverse claim to, or a security interest in, the financial asset if the

securities intermediary, broker or other agent or bailee did one or more of the

following:

(

a) took the action described in subsection (1) or

(2) after having been served with an injunction, restraining order or other

legal process issued by a court of competent jurisdiction enjoining the

securities intermediary, broker or other agent or bailee from doing so and

after having had a reasonable opportunity to obey or otherwise abide by the

injunction, restraining order or other legal process;

(

b) acted in collusion with the wrongdoer in

violating the rights of the person who has the adverse claim or the person who

has the security interest; and

(

c) in the case of a security certificate that has

been stolen, acted with notice of the adverse claim.

Securities intermediary

as purchaser for value

(1) A

securities intermediary that receives a financial asset and establishes a

security entitlement to the financial asset in favour of an entitlement holder

is a purchaser for value of the financial asset.

(2) A securities intermediary that acquires a

security entitlement to a financial asset from another securities intermediary

acquires the security entitlement for value if the securities intermediary

acquiring the security entitlement establishes a security entitlement to the

financial asset in favour of an entitlement holder.

PART III

ISSUE AND ISSUER

Certificated

security

(1) Even

against a purchaser for value and without notice, the terms of a certificated

security include,

(

a) the terms stated on the security certificate;

and

(

b) terms made part of the security by reference

on the security certificate to another instrument, indenture or other document

or to a statute, regulation, rule or order, to the extent that those terms do

not conflict with the terms stated on the security certificate.

(2) A reference described in paragraph (1) (

b) does not by itself constitute notice to a purchaser for value of a defect that

goes to the validity of the security, even where the security certificate

expressly states that a person accepting it admits notice.

(3) The terms of an uncertificated security

include those stated in any instrument, indenture or other document or in a

statute, regulation, rule, order or the like under which the security is

issued.

Enforcement of

security

(1) An

unauthorized signature placed on a security certificate before or in the course

of issue is ineffective except that the signature is effective in favour of a

purchaser for value of the certificated security if the purchaser is without

notice of the lack of authority and the signing has been done by,

(

a) an authenticating trustee, registrar, transfer

agent or other person entrusted by the issuer with the signing of the security

certificate or of any similar security certificate or with the immediate

preparation for signing of any of those security certificates; or

(

b) an employee of the issuer, or of persons

referred to in paragraph (a), entrusted with responsible handling of the

security certificate.

(2) Except as provided in subsection (3), a

security issued with a defect going to its validity is enforceable where it is held

by a purchaser for value without notice of the defect.

(3) Subsection (2) does not apply to a security

issued by a government or agency of it unless

(

a) there has been substantial compliance with the

legal requirements governing the issue; or

(

b) the issuer has received all or a substantial

part of the consideration for the issue as a whole or for the particular security

and the purpose of the issue is one for which the issuer has power to borrow

money or issue the security.

Lack of

genuineness of certificated security

59. Except

as otherwise provided in subsection 58(1), lack of genuineness of a

certificated security is a complete defence, even against a purchaser for value

and without notice of the lack of genuineness.

Other defences

60. All

other defences of the issuer of a security that are not referred to in sections

57 to 59, including non-delivery and conditional delivery of a security, are

ineffective against a purchaser for value who has taken the security without

notice of the particular defence.

Right to cancel

contract

61. Nothing

in sections 57 to 60 affects the right of a party to a

"when, as and if issued" contract or a "when distributed"

contract to cancel the contract in the event of a material change in the

character of the security that is the subject of the contract or in the plan or

arrangement under which the security is to be issued or distributed.

Staleness as

notice of defect or defence

(1) After

an act or event that creates a right to immediate performance of the principal

obligation represented by a certificated security or that sets a date on or

after which the security is to be presented or surrendered for redemption or

exchange, a purchaser shall be considered to have notice of a defect in the

security's issue or of a defence of the issuer,

(

a) where,

(

i) the act or event requires that, on

presentation or surrender of the security certificate, money be paid, a certificated

security be delivered or a transfer of an uncertificated security be

registered,

(ii) the money or security is available on the date

set for payment or exchange, and

(iii) the purchaser takes delivery of the security

more than one year after the date referred to in subparagraph (ii); or

(

b) where,

(

i) the act or event is not one to which paragraph

(

a) applies, and

(ii) the purchaser takes delivery of the

security more than two years after the date on which performance became due or

the date set for presentation or surrender.

(2) Subsection (1) does not apply to a call that

has been revoked.

Effect of

issuer's restriction on transfer

63. A

restriction on the transfer of a security imposed by the issuer, even where

otherwise lawful, is ineffective against a person without knowledge of the

restriction unless,

(

a) the security is a certificated security and

the restriction is noted conspicuously on the security certificate; or

(

b) the security is an uncertificated security and

the registered owner has received notice of the restriction by a person required

to give that notice in order to make the restriction effective.

Completion of

security certificate

(1) Where

a security certificate contains the signatures necessary to the security's

issue or transfer but is incomplete in another respect,

(

a) a person may complete the security certificate

by filling in the blanks in accordance with the person's authority; and

(

b) even where a blank is incorrectly filled in,

the security certificate as completed is enforceable by a purchaser who took

the security certificate for value and without notice of the incorrectness.

(2) A complete security certificate that has been

improperly altered, even if fraudulently, remains enforceable, but only

according to its original terms.

Rights and duties

of issuer re: registered owner

(1) Before

due presentation for registration of transfer of a certificated security in

registered form or the receipt of an instruction requesting registration of

transfer of an uncertificated security, an issuer or indenture trustee may

treat the registered owner as the person exclusively entitled,

(

a) to vote;

(

b) to receive notices;

(

c) to receive an interest, dividend or other

payments; and

(

d) to otherwise exercise all the rights and

powers of an owner.

(2) Nothing in this Act affects the liability of

the registered owner of a security for a call, assessment or other like act.

Warranties by

person signing security certificate

(1) A

person signing a security certificate as authenticating trustee, registrar,

transfer agent or other like person warrants to a purchaser for value of the

certificated security, if the purchaser is without notice of a particular

defect in respect of that security, that,

(

a) the security certificate is genuine;

(

b) the person's own participation in the issue of

the security is within the person's capacity and within the scope of the authority

received by the person from the issuer; and

(

c) the person has reasonable grounds to believe

that the certificated security is in the form and within the amount the issuer

is authorized to issue.

(2) Unless otherwise agreed, a person signing a

security certificate under subsection (1) does not assume responsibility for the

validity of the security in a respect other than that set out

in subsection (1).

Issuer's lien

67. A

lien in favour of an issuer on a certificated security is valid against a

purchaser only where the right of the issuer to the lien is noted conspicuously

on the security certificate.

Overissue

(1) Except

as otherwise provided in subsections (2) and (3), the provisions of this Act

that make a security enforceable against an issuer, notwithstanding a defence

or defect that compels a security's issue or reissue, do not apply to the

extent that the application of that provision would

result in an overissue.

(2) Where an identical security not constituting

an overissue is reasonably available for purchase, a person entitled to the issue

of a security or a person entitled to enforce a security against an issuer notwithstanding

a defence or defect as provided under

section 58, 59 or 60 or under a similar

law of another jurisdiction may compel the issuer to purchase the security and

deliver it, if certificated, or register its transfer, if uncertificated,

against surrender of a security certificate the person holds.

(3) Where an identical security not constituting

an overissue is not reasonably available for purchase, a person entitled to

issue of a security or a person entitled to enforce a security against an

issuer notwithstanding a defence or defect as provided under

section 58, 59 or

60 or under a similar law of another jurisdiction may recover from the issuer

the price that the last purchaser for value paid for the security with interest

from the date of the person's demand.

(4) An overissue shall be considered not to have

occurred if appropriate action has cured the overissue.

PART IV

TRANSFER OF CERTIFICATED AND UNCERTIFICATED SECURITIES

Delivery of certificated

security

(1) Delivery

of a certificated security to a purchaser occurs when,

(

a) the purchaser acquires possession of the

security certificate;

(

b) another person, other than a securities

intermediary, either,

(

i) acquires possession of the security

certificate on behalf of the purchaser, or

(ii) having previously acquired possession of the

security certificate, acknowledges that the person holds the security

certificate for the purchaser; or

(

c) a securities intermediary acting on behalf of

the purchaser acquires possession of the security certificate, the security

certificate is in registered form and the security certificate is,

(

i) registered in the name of the purchaser,

(ii) payable to the order of the purchaser, or

(iii) specially endorsed to the purchaser by an

effective endorsement and has not been endorsed to the securities intermediary

or in blank.

(2) Delivery of an uncertificated security to a

purchaser occurs when,

(

a) the issuer registers the purchaser as the

registered owner, on the original issue or the registration of transfer; or

(

b) another person, other than a securities

intermediary, either,

(

i) becomes the registered owner of the

uncertificated security on behalf of the purchaser, or

(ii) having previously become the registered owner,

acknowledges that the person holds the uncertificated security for the

purchaser.

Rights of

purchaser

(1) Except

as otherwise provided in subsections (2) and (3), a purchaser of a certificated

or uncertificated security acquires all rights in the security that the

transferor had or had power to transfer.

(2) A purchaser of a limited interest in a

security acquires rights only to the extent of the interest purchased.

(3) A purchaser of a certificated security who as

a previous holder had notice of an adverse claim does not improve that

purchaser's position by virtue of taking from a protected purchaser.

Protected

purchaser

71. A

protected purchaser, in addition to acquiring the rights of a purchaser, also

acquires the purchaser's interest in the security free of an adverse claim.

Form of endorsement

(1) An

endorsement may be in blank or special.

(2) An endorsement in blank includes an

endorsement to bearer.

(3) For an endorsement to be a special

endorsement, the endorsement must specify to whom the security is to be

transferred or who has power to transfer the security.

(4) A holder may convert an endorsement in blank

to a special endorsement.

Endorsement of

part of a security certificate

73. An

endorsement of a security certificate, if the endorsement purports to be in

respect of only some of the units represented by the certificate, is effective

to the extent of the endorsement if the units are intended by the issuer to be

separately transferable.

When endorsement

is transfer of security

74. An

endorsement of a security certificate, whether special or in blank, does not

constitute a transfer of the security,

(

a) until the delivery of the security certificate

on which the endorsement appears; or

(

b) if the endorsement is on a separate document,

until the delivery of both the security certificate and the document on which

the endorsement appears.

Endorsement missing

75. Where

a security certificate in registered form has been delivered to a purchaser

without a necessary endorsement, the purchaser may become a protected purchaser

only when the endorsement is supplied, but against the transferor, the transfer

is complete on delivery and the purchaser has a specifically enforceable right

to have any necessary endorsement supplied.

Notice of adverse

claim on endorsement

76. A

purported endorsement of a security certificate in bearer form may constitute

notice of an adverse claim to the security certificate, but

the purported endorsement does not otherwise affect any right that the holder

has.

Obligations of

endorser

77. Unless

otherwise agreed, a person making an endorsement makes only the warranties set

out in sections 34 and 36 and does not warrant that the security will be

honoured by the issuer.

Completion of

instruction

78. Where

an instruction has been originated by the appropriate person but is incomplete

in another respect, a person may complete the instruction in accordance with

the person's authority and the issuer may rely on the instruction as completed,

even where it has been completed incorrectly.

Obligations of

person originating an instruction

79. Unless

otherwise agreed, a person originating an instruction makes only the warranties

set out in sections 35 and 37 and does not warrant that the

security will be honoured by the issuer.

Warranties by

guarantor of endorser's signature

80. A

person who guarantees a signature of an endorser of a security certificate

warrants that, at the time of signing,

(

a) the signature was genuine;

(

b) the signer was the appropriate person to

endorse or, if the signature is by an agent, the agent had actual authority to

act on behalf of the appropriate person; and

(

c) the signer had legal capacity to sign.

Warranties by

guarantor of signature of originator of instruction

(1) A

person who guarantees a signature of the originator of an instruction warrants

that, at the time of signing,

(

a) the signature was genuine;

(

b) where a person specified in the instruction as

being the registered owner was, in fact, the registered owner, the signer was

the appropriate person to originate the instruction or, if the signature is by

an agent, the agent had actual authority to act on behalf of the appropriate

person; and

(

c) the signer had legal capacity to sign.

(2) A person who guarantees a signature of the

originator of an instruction does not by that guarantee warrant that the person

who is specified in the instruction as the registered owner is in fact the registered

owner.

Warranties by

special guarantor of signature of originator of instruction

82. A

person who specially guarantees the signature of an originator of an

instruction makes the warranties of a signature guarantor under

section 81 and

also warrants that, at the time that the instruction is presented to the

issuer,

(

a) the person specified in the instruction as the

registered owner of the uncertificated security will be the registered owner;

and

(

b) the transfer of the uncertificated security

requested in the instruction will be registered by the issuer free from all liens,

security interests, restrictions and claims other than those specified in the

instruction.

Warranty re: rightfulness

of transfer by guarantor

(1) A

guarantor under

section 80 or 81 or a special guarantor under

section 82 does

not otherwise warrant the rightfulness of the transfer.

(2) A person who guarantees an endorsement of a

security certificate makes the warranties of a signature guarantor under

section 80 and also warrants the rightfulness of the transfer in all respects.

(3) A person who guarantees an instruction that

requests the transfer of an uncertificated security makes the warranties of a

special signature guarantor under

section 82 and also warrants the rightfulness

of the transfer in all respects.

Guarantee may not

be condition to registration of transfer

84. An

issuer shall not require a special guarantee of signature, a

guarantee of endorsement or a guarantee of instruction as a condition to the

registration of transfer.

Liability of

guarantor, endorser and originator

(1) The

warranties under sections 80 to 83 are made to a person taking or dealing with

the security in reliance on the guarantee and the guarantor is liable to the

person for a loss resulting from a breach of those warranties.

(2) An endorser or an originator of an instruction

whose signature, endorsement or instruction has been guaranteed is liable to a

guarantor for a loss suffered by the guarantor resulting from any breach of the

warranties of the guarantor.

Purchaser's right

to requisites for registration of transfer

(1) Unless

otherwise agreed, the transferor of a security shall, on demand, supply the

purchaser with proof of authority to transfer or with another requisite

necessary to obtain registration of the transfer of the security.

(2) Notwithstanding subsection (1), where the

transfer is not for value, a transferor need not comply with a demand made

under subsection (1) unless the purchaser pays the necessary expenses.

(3) Where the transferor fails within a reasonable

time to comply with the demand made under subsection (1), the purchaser may

reject or rescind the transfer.

PART V

REGISTRATION

Duty of issuer to

register transfer

(1) Where

a certificated security in registered form is presented to an issuer with a

request to register a transfer of the certificated security or an instruction

is presented to an issuer with a request to register a transfer of an

uncertificated security, the issuer shall register the transfer as requested

if,

(

a) under the terms of the security, the proposed

transferee is eligible to have the security registered in that person's name;

(

b) the endorsement or instruction is made by the

appropriate person or by an agent who has actual authority to act on behalf of

the appropriate person;

(

c) reasonable assurance is given that the

endorsement or instruction is genuine and authorized;

(

d) an applicable law relating to the collection

of taxes had been complied with;

(

e) the transfer does not violate a restriction on

transfer imposed by statute or by the issuer in accordance with

section 63;

(

f) in the case of a demand made under

section 89

that the issuer not register a transfer,

(

i) the demand has not become effective under

section 90, or

(ii) the issuer has complied with

section 90, but

legal process has not been obtained or an indemnity bond has not been provided

to the issuer in accordance with

section 91; and

(

g) the transfer is rightful or is to a protected

purchaser.

(2) Where, under subsection (1), an issuer is

under a duty to register a transfer of a security, the issuer is liable to a

person presenting a certificated security or an instruction for registration,

or to that person's principal, for a loss resulting from unreasonable delay in

registration or the failure or refusal to register the transfer.

Assurances re

endorsement or instruction

(1) An

issuer may require the following assurance that each necessary endorsement or

each instruction is genuine and authorized:

(

a) in all cases, a guarantee of the signature of

the person making the endorsement or originating the instruction, including, in

the case of an instruction, reasonable assurance of identity;

(

b) where the endorsement is made or the

instruction is originated by an agent, appropriate assurance of actual

authority to act;

(

c) where the endorsement is made or the

instruction is originated by a fiduciary or successor referred to in subparagraph

(iv) or (

v) of the definition of "appropriate person" in paragraph 2(1)(b),

appropriate evidence of appointment or incumbency;

(

d) where there is more than one fiduciary or

successor referred to in subparagraph (iv) or (

v) of the definition of

"appropriate person" in paragraph 2(1)(b), reasonable assurance that

all who are required to sign have done so; and

(

e) where the endorsement is made or the

instruction is originated by a person not referred to in paragraph (b), (

c) or

(d), assurance appropriate to the case corresponding as nearly as may be to the

assurance required by paragraph (b), (

c) or (d).

(2) An issuer may elect to require reasonable assurance

beyond that specified in this section.

(3) In this section,

(a) "appropriate evidence of appointment or

incumbency" means,

(

i) in the case of a fiduciary appointed or

qualified by a court, a document issued by or under the direction or supervision

of the court or an officer of the court and dated within 60 days before the

date of presentation for transfer,

(ii) in another case,

(

A) a copy of a document showing the appointment,

(

B) a certificate certifying the appointment

issued by or on behalf of a person reasonably believed by the issuer to be a

responsible person, or

(

C) in the absence of a document or certificate

referred to in clause (

A) or (

B) other evidence that the issuer reasonably

considers appropriate;

(b) "fiduciary" means a person acting in

a fiduciary capacity, and includes a personal representative acting for the

estate of a deceased person; and

(c) "guarantee" means a guarantee signed

by or on behalf of a person reasonably believed by the issuer to be a

responsible person.

(4) For the purposes of the definition of

"guarantee" in subsection (3), an issuer may adopt standards with

respect to responsibility so long as those standards are not

manifestly unreasonable.

Demand that

issuer not register transfer

(1) A

person who is the appropriate person to make an endorsement or to originate an

instruction may demand that the issuer not register a transfer of a security by

communicating a notice to the issuer setting out,

(

a) the identity of the registered owner;

(

b) the issue of which the security is a part; and

(

c) an address of the person making the demand to

which communications may be sent.

(2) A demand made under subsection (1) becomes

effective when the issuer has had a reasonable opportunity to act on the

demand, having regard to the time and manner of receipt of the demand by the

issuer.

Duty of issuer re

demand to not register transfer

(1) Where,

after a demand made under

section 89 becomes effective,

a certificated security in registered form is presented to an issuer

with a request to register a transfer or an instruction is presented to an

issuer with a request to register a transfer of an uncertificated security, the

issuer shall promptly give a notice as described in subsection (2) to the

following persons:

(

a) the person who initiated the demand, at the

address provided in the demand; and

(

b) the person who presented the security for the

registration of transfer or originated the instruction requesting the registration

of transfer.

(2) A notice given by an issuer under subsection

(1) must state,

(

a) that the certificated security has been

presented for the registration of transfer or the instruction for the

registration of transfer of the uncertificated security has been received;

(

b) that a demand that the issuer not register a

transfer had previously been received; and

(

c) that the issuer will withhold registration of

transfer for a period of time stated in the notice in

order to provide the person who initiated the demand an opportunity to obtain legal

process or to provide an indemnity bond referred to in

section 91.

(3) The period of time that may be provided for

under paragraph (2)(

c) shall not exceed 30 days from the date the notice was

given and the issuer may specify a shorter period of time in the notice so long

as the shorter period of time being specified is not

manifestly unreasonable.

Liability of

issuer re: demand to not register transfer

(1) An

issuer is not liable, to a person who initiated a demand under

section 89 that

the issuer not register a transfer, for any loss that the person suffers as a

result of the registration of a transfer in accordance with an

effective endorsement or instruction if the person who initiated the demand

does not, within the time stated in the issuer's notice

given under

section 90, either,

(

a) obtain an appropriate restraining order,

injunction or other process from a court of competent jurisdiction enjoining

the issuer from registering the transfer; or

(

b) provide the issuer with an indemnity bond

sufficient in the issuer's judgment to protect the issuer and a transfer agent,

registrar or other agent of the issuer involved from any loss that those

persons may suffer by refusing to register the transfer.

(2) Nothing in subsection (1) or in

section 89 or 90

relieves an issuer from liability for registering a transfer under an

endorsement or instruction that was not effective.

Wrongful registration

of transfer

(1) Except

as otherwise provided in

section 94, an issuer is liable for wrongful

registration of transfer where,

(

a) the issuer has registered a transfer of a

security to a person not entitled to the security; and

(

b) the transfer was registered by the issuer,

(

i) under an ineffective endorsement or

instruction,

(ii) after a demand that the issuer not register a

transfer became effective under

section 89 and the issuer did not comply with

section 90,

(iii) after the issuer had been served with an

injunction, restraining order or other legal process referred to in

section 91

enjoining the issuer from registering the transfer and the issuer had a

reasonable opportunity to obey or otherwise abide by the injunction,

restraining order or other legal process, or

(iv) acting in collusion with the

wrongdoer.

(2) An issuer that is liable for the wrongful

registration of transfer under subsection (1) shall, on demand, provide the

person entitled to the security with,

(

a) a like certificated or uncertificated

security; and

(

b) payments or distributions that the person did

not receive as a result of the wrongful registration.

(3) Where the provision of a security under

subsection (2) would result in an overissue, the issuer's liability to provide

the person with a like security is governed by

section 68.

(4) Except as otherwise provided in subsection

(1) or in another applicable law of Canada or of a province or territory of Canada

relating to the collection of taxes, an issuer is not liable to an owner or

other person suffering loss as a result of the registration of transfer of a

security if the registration was made under an effective

endorsement or instruction.

Replacement of

security lost certificate

(1) Where

an owner of a certificated security, whether in registered form or bearer form,

claims that the security certificate has been lost, destroyed or wrongfully

taken, the issuer shall issue a new security certificate if the owner,

(

a) makes a request for that issue before the

issuer has notice that the lost, destroyed or wrongfully taken security

certificate has been acquired by a protected purchaser;

(

b) provides the issuer with an indemnity bond

sufficient in the issuer's judgment to protect the issuer from any loss that

the issuer may suffer by issuing a new certificate; and

(

c) satisfies other reasonable requirements

imposed by the issuer.

(2) Where, after the issue of a new security

certificate, a protected purchaser of the original security certificate

presents the original security certificate for the registration of transfer,

the issuer,

(

a) shall register the transfer unless the registration

would result in an overissue, in which case the issuer's liability is governed

section 68;

(

b) may exercise the rights the issuer may have

under the indemnity bond referred to in paragraph(1)(b); and

(

c) may recover the new security certificate from

a person to whom it was issued or from a person, other than a protected

purchaser, taking under that person.

Obligation to

notify issuer of lost, destroyed or wrongfully taken security certificate

94. An

owner of a security may not assert against the issuer a claim for wrongful

registration of transfer under

section 92 or a claim to a new security

certificate under

section 93 if,

(

a) a security certificate has been lost,

apparently destroyed or wrongfully taken and the owner fails to give a notice

to the issuer of that fact within a reasonable time after the

owner has notice of it; and

(

b) the issuer registers a transfer of the

security before receiving a notice of the loss, apparent

destruction or wrongful taking of the security certificate.

Obligation of authenticating

trustee, transfer agent, etc.

95. A

person acting as authenticating trustee, registrar, transfer agent or other

agent for an issuer in the registration of a transfer of the issuer's

securities, in the issue of new security certificates or uncertificated

securities or in the cancellation of surrendered security certificates has the

same obligation to the holder or owner of a certificated or uncertificated

security with regard to the particular function performed as the issuer has in

regard to that function.

PART VI

SECURITY ENTITLEMENTS

Acquisition of security

entitlement

(1) Except

as otherwise provided in subsections (3) and (4), a person acquires a security

entitlement where a securities intermediary,

(

a) indicates by book entry that a financial asset

has been credited to the person's securities account;

(

b) receives a financial asset from the person or

acquires a financial asset for the person and, in either case, accepts it for

credit to the person's securities account; or

(

c) becomes obligated under another statute, law,

regulation or rule to credit a financial asset to the person's securities account.

(2) Where a condition of subsection (1) has been

met, a person has a security entitlement even if the securities intermediary

does not itself hold the financial asset.

(3) A person shall be treated as holding a

financial asset directly rather than as having a security entitlement with

respect to the financial asset where a securities intermediary holds the

financial asset for that person and the financial asset,

(

a) is registered in the name of, payable to the

order of or specially endorsed to that person; and

(

b) has not been endorsed to the securities

intermediary or in blank.

(4) Issuance of a security is not establishment of

a security entitlement.

Protection of entitlement

holders from adverse claim

97. A

legal proceeding based on an adverse claim to a financial asset, however

framed, shall not be brought against a person who acquires a security

entitlement under

section 96 for value and without notice of the adverse claim.

Property interest

of entitlement holders in financial asset

(1) To

the extent necessary for a securities intermediary to satisfy all security

entitlements with respect to a particular financial asset, all interests in

that financial asset held by the securities intermediary,

(

a) are held by the securities intermediary for

the entitlement holders;

(

b) are not the property of the securities

intermediary; and

(

c) are not subject to claims of creditors of the

securities intermediary, except as otherwise provided in

section 106.

(2) An entitlement holder's property interest with

respect to a particular financial asset under subsection (1) is a proportionate

property interest in all interests in that financial asset held by the

securities intermediary, without regard to,

(

a) the time that the entitlement holder acquired

the security entitlement; or

(

b) the time that the securities intermediary

acquired the interest in that financial asset.

(3) An entitlement holder's property interest with

respect to a particular financial asset under subsection (1) may be enforced

against the securities intermediary only by the exercise of the entitlement

holder's rights under sections 100 to 103.

(4) An entitlement holder's property interest with

respect to a particular financial asset under subsection (1) may be enforced

against a purchaser of the financial asset, or interest in it, only where,

(

a) bankruptcy or insolvency proceedings have been

initiated by or against the securities intermediary;

(

b) the securities intermediary does not have

sufficient interests in the financial asset to satisfy the security

entitlements of all of its entitlement holders to that financial asset;

(

c) the securities intermediary violated its

obligations under

section 99 by transferring the financial asset, or interest

in it, to the purchaser; and

(

d) the purchaser is not protected under

subsection (7).

(5) For the purposes of subsection (4), a trustee

or other liquidator acting on behalf of all entitlement holders having security

entitlements with respect to a particular financial asset may recover the financial

asset, or interest in it, from the purchaser.

(6) Where the trustee or other liquidator elects

not to pursue the right provided under subsection (5), an entitlement holder

whose security entitlement remains unsatisfied has the right to recover the

entitlement holder's interest in the financial asset from the purchaser.

(7) A legal proceeding based on the entitlement

holder's property interest with respect to a particular financial asset under

subsection (1), however framed, may not be brought against a purchaser of a financial

asset, or interest in it, who,

(

a) gives value;

(

b) obtains control or possession; and

(

c) does not act in collusion with the securities

intermediary in violating the securities intermediary's obligations under

section

Duty of

securities intermediary re: financial asset

(1) A

securities intermediary shall promptly obtain and then maintain a financial

asset in a quantity corresponding to the aggregate of all security entitlements

that the securities intermediary has established in favour of its entitlement

holders with respect to that financial asset.

(2) The securities intermediary may maintain the

financial assets referred to in subsection (1) directly or through one or more

other securities intermediaries.

(3) Except to the extent otherwise agreed to by

its entitlement holder, a securities intermediary shall not grant a security interest

in a financial asset it is obligated to maintain under subsection (1).

(4) A securities intermediary satisfies the duty

imposed under subsection (1) where,

(

a) the securities intermediary acts with respect

to the duty as agreed to by the entitlement holder and the securities intermediary;

(

b) in the absence of an agreement referred to in paragraph

(a), the securities intermediary exercises due care in accordance with

reasonable commercial standards to obtain and maintain the financial asset.

(5) This

section does not apply to a clearing

agency that is itself the obligor of an option or similar obligation to which

its entitlement holders have security entitlements.

Duty of

securities intermediary re: payments and distributions

(1) A

securities intermediary shall take action to obtain a payment or distribution

made by the issuer of a financial asset.

(2) A securities intermediary is obligated to its

entitlement holder for a payment or distribution made by the issuer of a

financial asset if the payment or distribution is received by the securities

intermediary.

(3) A securities intermediary satisfies the duty

imposed under subsection (1) where,

(

a) the securities intermediary acts with respect

to the duty as agreed to by the entitlement holder and the securities intermediary;

(

b) in the absence of an agreement referred to in paragraph

(a), the securities intermediary exercises due care in accordance with

reasonable commercial standards to attempt to obtain the payment or

distribution.

Duty of

securities intermediary to exercise rights

(1) A

securities intermediary shall exercise rights with respect to a financial asset

where directed to do so by an entitlement holder.

(2) A securities intermediary satisfies the duty

imposed under subsection (1) where,

(

a) the securities intermediary acts with respect

to the duty as agreed to by the entitlement holder and the securities intermediary;

(

b) in the absence of an agreement referred to in paragraph

(a), the securities intermediary either,

(

i) places the entitlement holder in a position to

exercise the rights directly, or

(ii) exercises due care in accordance with

reasonable commercial standards to follow the direction of the entitlement

holder.

Duty of

securities intermediary to comply with entitlement order

(1) A

securities intermediary shall comply with an entitlement order where,

(

a) the entitlement order is originated by the

appropriate person;

(

b) the securities intermediary has had a

reasonable opportunity to assure itself that the entitlement order is genuine

and authorized; and

(

c) the securities intermediary has had a

reasonable opportunity to comply with the entitlement order.

(2) Where a securities intermediary transfers a

financial asset under an ineffective entitlement order, the securities

intermediary shall,

(

a) re-establish a security entitlement in favour

of the person entitled to it; and

(

b) pay or credit payments or distributions that

the person did not receive as a result of the wrongful transfer.

(3) Where a securities intermediary does not

re-establish a security entitlement in accordance with subsection (2), the

securities intermediary is liable to the entitlement holder for damages.

(4) A securities intermediary satisfies the duty

imposed under subsection (1) where,

(

a) the securities intermediary acts with respect

to the duty as agreed to by the entitlement holder and the securities intermediary;

(

b) in the absence of an agreement referred to in

paragraph (a), the securities intermediary exercises due care in accordance

with reasonable commercial standards to comply with the entitlement order.

Duty of

securities intermediary re: entitlement holder's direction

(1) A

securities intermediary shall act at the direction of an entitlement holder,

(

a) to change a security entitlement into another

available form of holding for which the entitlement holder is eligible; or

(

b) to cause the financial asset to be transferred

to a securities account of the entitlement holder with another securities intermediary.

(2) A securities intermediary satisfies the duty

imposed under subsection (1) if,

(

a) the securities intermediary acts with respect

to the duty as agreed to by the entitlement holder and the securities intermediary;

(

b) in the absence of an agreement referred to in paragraph

(a), the securities intermediary exercises due care in accordance with

reasonable commercial standards to follow the direction of the entitlement

holder.

Compliance with

other statute

(1) If

the substance of a duty imposed on a securities intermediary under

section 99,

100, 101, 102 or 103 is the subject of another statute, regulation or rule,

compliance with that other statute, regulation or rule satisfies the duty.

(2) The obligation of a securities intermediary to

perform the duties imposed under sections 99 to 103 is subject to,

(

a) the rights of the securities intermediary

arising out of a security interest, whether that security interest arises under

a security agreement with the entitlement holder or otherwise; and

(

b) the rights of the securities intermediary

under another statute, law, regulation, rule or agreement to withhold performance

of its duties as a result of unfulfilled obligations of the entitlement holder

to the securities intermediary.

(3) Nothing in sections 99 to 103 requires a

securities intermediary to take an action that is prohibited by another

statute, regulation or rule.

(4) To the extent that specific standards for the

performance of duties of a securities intermediary or the exercise of the

rights of an entitlement holder are not specified by another statute,

regulation or rule or by agreement between the securities intermediary and the

entitlement holder, the securities intermediary shall perform its duties and

the entitlement holder shall exercise the entitlement holder's rights in a

commercially reasonable manner.

Rights of

purchaser re: adverse claim

(1) In

a case not covered by the priority rules under the Personal Property

Security Act or the rules set out in subsection (3), a legal proceeding

based on an adverse claim to a financial asset or a security entitlement,

however framed, may not be brought against a person who purchases a security

entitlement, or interest in it, from an entitlement holder if that purchaser,

(

a) gives value;

(

b) does not have notice of the adverse claim; and

(

c) obtains control.

(2) If a legal proceeding based on an adverse

claim could not have been brought against an entitlement holder under

section 97,

a legal proceeding based on an adverse claim may not be brought against a

person who purchases a security entitlement, or interest in it, from the

entitlement holder.

(3) In a case not covered by the priority rules

under the Personal Property Security Act , the following rules apply:

(

a) a purchaser for value of a security

entitlement, or interest in it, who obtains control has priority over a

purchaser of a security entitlement, or interest in it, who does not obtain control;

and

(

b) except as otherwise provided in subsection

(4), purchasers who have control rank according to priority in time of

(

i) the purchaser's becoming the person for whom

the securities account in which the securities entitlement is carried is

maintained, if the purchaser obtained control under paragraph 26(1)(a),

(ii) the securities intermediary's agreement to

comply with the purchaser's entitlement orders with respect to security

entitlements carried or to be carried in the securities account in which the

security entitlement is carried, if the purchaser obtained control under paragraph

26(1)(b), or

(iii) if the purchaser obtained control through

another person under paragraph 26(1)(c), the time on which priority would be

based under this subsection if the other person were the purchaser.

(4) A securities intermediary as purchaser has

priority over a conflicting purchaser who has control unless otherwise agreed

by the securities intermediary.

Priority of

entitlement holders to financial asset

(1) Except

as otherwise provided in subsections (2) and (3), where a securities

intermediary does not have sufficient interests in a particular financial asset

to satisfy both the securities intermediary's obligations to entitlement

holders who have security entitlements to that financial asset and the

securities intermediary's obligation to a creditor of the securities

intermediary who has a security interest in that financial asset, the claims of

entitlement holders, other than the creditor, have priority over the claim of

the creditor.

(2) A claim of a creditor of a securities

intermediary who has a security interest in a financial asset held by a

securities intermediary has priority over claims of the securities

intermediary's entitlement holders who have security entitlements with respect

to that financial asset if the creditor has control over the financial asset.

(3) If a clearing agency does not have sufficient

financial assets to satisfy both the clearing agency's obligations to

entitlement holders who have security entitlements with respect to a financial

asset and the clearing agency's obligation to a creditor of the clearing agency

who has a security interest in that financial asset, the claim of the creditor

has priority over the claims of entitlement holders.

PART VII

CONSEQUENTIAL AMENDMENTS

RSNL1990 cC-36 Amdt.

(1) Section 2 of the Corporations Act is amended by adding immediately after paragraph

(

w) the following:

(w.1) "registered form" means registered

form as defined in the Securities

Transfer Act ;

(2) Sections 85 and 86 of the Act are repealed and

the following substituted:

Transfers of

securities

85. Except

as otherwise provided in this Act and the Judgment

Enforcement Act , the transfer or transmission of a security shall be governed

by the Securities Transfer Act .

(3) Section 89 of the Act is repealed.

(4) Subsection 90(1) of the Act is amended by adding

immediately after the word "series" the words "or shares

convertible into that class or series".

(5) Subsection 102(1) of the Act is amended by

adding immediately after the number and comma "223," the words "and

the Judgment Enforcement Act ".

(6) Subsection 102(2) of the Act is amended by

deleting the subsection reference "136(4)" and substituting the subsection

reference and words "88(3) of the Securities

Transfer Act ".

(7) Paragraph 106(1)(

b) of the Act is repealed and

the following substituted:

(

b) the following documents, namely:

(

i) an affidavit or declaration of transmission

made by a person referred to in paragraph 102(2)(

a) stating the particulars of

the transmission, and

(ii) the security certificate that was owned by the

deceased holder

(

A) in the case of a transfer to a person referred

to in paragraph 102(2)(a), with or without the endorsement of the person, and

(

B) in the case of a transfer to another person,

endorsed in accordance with

section 30 of the Securities Transfer Act ,

and accompanied by an assurance the

corporation may require under

section 88 of the Securities Transfer Act .

(8) Sections 107 to 144 of the Act are repealed

and the following substituted:

Overissue

(1) Where

there has been an overissue within the meaning of the Securities Transfer

Act and the corporation subsequently amends its articles or trust

indenture to which it is a party, to increase its authorized securities to a

number equal to or in excess of the number of securities previously authorized

plus the amount of the overissued securities, the overissued securities are

valid from the date of their issue.

(2) Subsection (1) does not apply if the issuer

has purchased and delivered a security in accordance with subsection 68(2) or

(3) of the Securities Transfer Act.

(3) A purchase or payment in accordance with

subsection 68(2) or (3) of the Securities

Transfer Act is not a payment to which

section 62, 63, 64, 68, 69, 70, 71

or 72 applies.

(9) Section 245 of the Act is repealed and the

following substituted:

Unanimous shareholder

agreement

(1) A

unanimous shareholder agreement may provide for

(

a) the regulation of the rights and liabilities

of the shareholders, as shareholders, among themselves or between themselves

and another party to the agreement;

(

b) the regulation of the election of directors;

(

c) the management of the business and affairs of

the corporation, including the restriction or abrogation, in whole or in part,

of the powers of the directors; and

(

d) another matter that may be contained in a

unanimous shareholder agreement under another provision of this Act.

(2) Where a person who is the beneficial owner of

all the issued shares of a corporation makes a written declaration that

restricts in whole or in part the powers of the directors to manage the

business and affairs of the corporation, the declaration constitutes a

unanimous shareholder agreement.

(3) Where a unanimous shareholder agreement is in

effect at the time a share is issued by a corporation to a person other than an

existing shareholder,

(

a) that person shall be considered to be a party

to the agreement whether or not the person had actual knowledge of it when the

share certificate was issued;

(

b) the issue of the share certificate does not

operate to terminate the agreement; and

(

c) where that person is a purchaser in good faith

without actual knowledge of the unanimous shareholder agreement, that person

may rescind the contract under which the shares were acquired by giving a

notice to that effect to the corporation within a reasonable time after the

person receives actual knowledge of the unanimous shareholder agreement.

(4) Where a unanimous shareholder agreement is in

effect when a person who is not a party to the agreement acquires a share of

the corporation, other than under subsection (3),

(

a) the person who acquired the share shall be

considered to be a party to the agreement whether or not the person had actual

knowledge of it when the person acquired the share; and

(

b) neither the acquisition of the share nor the

registration of that person as a shareholder operates to terminate the agreement.

(5) Where

(

a) a person referred to in subsection (4) is a

protected purchaser as defined in the

Securities Transfer Act and did not have actual knowledge of the unanimous

shareholder agreement, and

(

b) the person's transferor's share certificate

did not contain a reference to the unanimous shareholder agreement,

that person may, within 30 days after the

person acquires actual knowledge of the existence of the agreement, send to the

corporation a notice of objection to the agreement.

(6) Where a person sends a notice of objection

under subsection (5),

(

a) the person is entitled to be paid by the

corporation the fair value of the shares held by the person, determined as of

the close of business on the day on which the person became a shareholder; and

(b) subsection 305(5) and sections 308 to 313

apply, with the necessary changes, as if the notice of objection under subsection

(5) were a written objection sent to the corporation under subsection 304(6).

(7) A transferee who is entitled to be paid the

fair value of the transferee's shares under subsection (6) also has the right

to recover from the transferor by action, the amount by which the value of the

consideration paid for the transferee's shares exceeds the fair value of those

shares.

(8) A shareholder who is a party or is considered

to be a party to a unanimous shareholder agreement has all the rights, powers

and duties and incurs all the liabilities of a director of the corporation to

which the agreement relates to the extent that the agreement restricts the powers

of the directors to manage the business and affairs of the corporation and the

directors are thereby relieved of their duties and liabilities.

(9) A unanimous shareholder agreement shall not be

amended without the written consent of all those who are shareholders at the

effective date of the amendment.

(10) A unanimous shareholder agreement may exclude

the application of the agreement to all but not part of this section.

(11) Where a unanimous shareholder agreement is

executed or terminated, written notice of that fact together with the date of

the execution or termination of it shall be filed with the registrar within 15

days.

(10) Section 319 of the Act is repealed and the

following substituted:

Takeover bid

notice

319. In

the case of a take-over bid, concurrently with sending the offeror's notice

under

section 318, the offeror shall send or deliver to the offeree corporation

a copy of the offeror's notice, which constitutes a demand under subsection 89(1)

of the Securities Transfer Act, that the offeree corporation not

register a transfer with respect to each share held by a dissenting offeree.

SNL1995 cC-37.1

Amdt.

108. The Credit

Union Act is amended by adding immediately after

section 58 the following:

Application of Securities

Transfer Act

58.1 The Securities Transfer Act applies,

with the necessary changes, with respect to the transfer of securities, other

than membership shares.

SNL1996 cJ-1.1

Amdt.

109. (1) Paragraph 2(1)(

g) of the Judgment Enforcement Act is repealed.

(2) Paragraph 2(1)(ee) of the Act is repealed.

(3) Subsection 2(1) of the Act is amended by

adding immediately after paragraph (ww) the following:

(ww.1) "security" means a security as

defined in the Securities Transfer Act ;

(4) Paragraph 2(1)(xx) of the Act is repealed and

the following substituted:

(xx) "security certificate" means a

security certificate as defined in the Securities

Transfer Act ;

(5) Subsection 54(4) of the Act is repealed.

(6) Section 55 of the Act is repealed and the

following substituted:

Protected purchaser

of security

55. A

person who is a protected purchaser of a security within the meaning of the Securities Transfer Act has priority

over a notice of judgment that binds the security where that person did not

have knowledge of the notice of judgment at the time the person obtained

control of the security.

(7) Subsection 74(6) of the Act is repealed and

the following substituted:

(6) This

section does not apply to property held

by a securities intermediary, as defined in the Securities Transfer Act , if the debtor has a security entitlement,

as defined in the Securities Transfer Act ,

against the securities intermediary with respect to that property.

(8) Subparagraph 81(i)(iv) of the Act is amended

by deleting the word "market".

(9) Section 84 of the Act is amended by deleting

the word "market" wherever it occurs.

(10) Sections 89 to 99 of the Act are repealed and

the following substituted:

Definitions

(1) In

sections 90 to 98, "private company" means a corporation other than a

distributing corporation within the meaning of the Corporations Act .

(2) In sections 90 to 98, "appropriate

person', "endorsement", "entitlement order", "instruction",

"issuer", "securities intermediary" and "security

entitlement" have the same meanings as in the Securities Transfer Act .

Effecting seizure

(1) The

sheriff may seize the interest of a debtor in a security or a security

entitlement in accordance with sections 48 to 52 of the Securities Transfer Act .

(2) Notwithstanding

section 49 of the Securities Transfer Act the sheriff may

seize the interest of a debtor in a security issued by a private company by

serving a notice of seizure on the issuer at the issuer's chief executive

office.

(3) Where a seizure under this

section is by

notice to an issuer or a securities intermediary, the seizure becomes effective

when the issuer or the securities intermediary has had a reasonable opportunity

to act on the seizure, having regard to the time and manner of the receipt of

the notice.

(4) Where a debtor's interest in a security or a

security entitlement is seized in accordance with this

section and that interest

is subject to a prior security interest,

(

a) the seizure does not affect the prior security

interest; and

(

b) notwithstanding sections 91 to 97, the ability

of the sheriff to deal with the security or security entitlement is limited to

those rights and powers that the debtor would have had but for the seizure.

Powers of sheriff

on seizure

(1) Where

a debtor's interest in a security or a security entitlement is seized in

accordance with

section 90, the sheriff is the appropriate person for the purposes

of dealing with or disposing of the seized property and, for the duration of

the seizure, the debtor is not the appropriate person for the purposes of

dealing with or disposing of the seized property.

(2) Upon seizure of a debtor's interest in a security

entitlement under

section 90, the sheriff may

(

a) do

an act or thing that would otherwise have

to be done by the debtor; or

(

b) execute or endorse a document that would

otherwise have to be executed or endorsed by the debtor.

(3) An endorsement, instruction or entitlement

order made by the sheriff as the appropriate person under subsection (1) or by

a receiver must be accompanied by a certificate of the sheriff or the receiver

stating that the endorsement, instruction or entitlement order has been made by

the sheriff or the receiver under this Act.

Duties of private

company

92. A

private company that has been served with a notice of seizure with respect to a

security of which the debtor is the registered holder shall

(

a) send to the sheriff documents and allow the

sheriff to inspect records that the debtor, as the registered holder of the security,

is entitled to receive or inspect;

(

b) pay to the sheriff a dividend or other payment

in respect of the security that would otherwise be payable by the private

company to the debtor; and

(

c) comply with a direction given by the sheriff

with respect to the seized security where the private company would be required

to comply with the direction if that direction was given by the debtor while

the security was not under seizure.

Sheriff may deal

with seized property

93. Where

the sheriff has seized a debtor's interest in a security entitlement by serving

a notice of seizure on a securities intermediary whose securities

intermediary's jurisdiction within the meaning of the Securities Transfer Act is the province, the following applies:

(

a) the sheriff is entitled to receive information

or documents relating to the security entitlement that the securities intermediary

is required to give to the debtor;

(

b) the securities intermediary shall pay to the

sheriff a distribution, dividend or other payment in respect of the security entitlement

that would otherwise be payable by the securities intermediary to the debtor;

and

(

c) the sheriff is entitled to give a direction to

the securities intermediary with respect to the seized security entitlement

that the debtor would otherwise be entitled to give.

Liability of

private company or securities intermediary

94. A

private company or securities intermediary who fails to comply with a duty

under

section 92 or 93 is liable for a pecuniary loss suffered by the creditors

as a result of the failure.

Liquidation of

security

(1) The

sheriff may liquidate a seized security by a means that the nature of the

security permits.

(2) A restriction on the transfer of a security

issued by a private company shall not apply to the transfer of the security by

the sheriff under this Act.

(3) A restriction on the transfer of a security

issued by a co-operative, other than a restriction under paragraph 99(1)(

g) of

the Co-operatives Act applies to the

transfer of that security by the sheriff under this Act.

Liquidation procedure

re private company shares

(1) This

section applies only to shares that are issued by a private company.

(2) Where a private company has been served with a

notice of seizure with respect to certain shares, the private company shall

inform a person of that service where he or she requests information from the

private company regarding the debtor's ownership of or ability to transfer

those shares.

(3) On being instructed to sell seized shares, the

sheriff shall serve a notice of the method of sale in the required form on

(

a) the private company;

(

b) a person who, to the knowledge of the sheriff,

would have a preferential right to acquire the shares on a voluntary sale of

the shares by the debtor; and

(

c) every registered shareholder of the private

company, if there are not more than 15 registered shareholders.

(4) The notice of the method of sale under

subsection (3) shall set out the procedure the sheriff intends to follow in

selling the shares.

(5) After complying with subsection (3), the

sheriff shall not take further steps to sell the shares until 15 days have

elapsed from the day that the notice was served under that subsection.

(6) The sheriff shall, in selling shares, use a

method of sale that

(

a) follows as closely as possible a procedure

that the debtor would be required to follow in order to sell the shares; and

(

b) provides to the private company and the

existing shareholders of the private company a reasonable opportunity to buy or

redeem the shares before they are offered for sale to another person.

(7) The sheriff is not required to comply with

subsection (6) to the extent that the method of sale referred to in that

subsection would prevent the shares from being sold at all or prevent them from

being sold within a reasonable time or at a reasonable price.

(8) A person who would otherwise be entitled to

acquire or redeem the shares for a predetermined price or at price fixed by

reference to a predetermined formula is entitled to buy or redeem the shares

from the sheriff for that price unless the court determines that a sale at that

price would unfairly prejudice the debtor or the creditor.

(9) Before the shares are sold by the sheriff, a

person referred to in subsection (3) may pay to the sheriff an amount

sufficient to discharge all related notices of judgment and outstanding

sheriff's fees or charges and the taxable fees and disbursements of the

instructing creditor, and on paying that amount to the sheriff that person has

a lien on the shares for the amount paid to the sheriff, plus interest.

(10) Interest under subsection (9) shall be

calculated in the same manner as for interest under the Judgment Interest Act .

(11) The sheriff or an interested person may apply

to the court for an order that it considers appropriate with respect to the

method of liquidating seized shares and, notwithstanding subsection (6),

including an order

(

a) respecting the method of sale, a term of a

proposed sale or a proposed method of realising the value of the shares other

than through sale;

(

b) suspending sale proceedings; or

(

c) directing that the private company that issued

the shares be liquidated and its proceeds disposed of according to law.

(12) Where the sheriff has sent a notice of an

intended sale to the persons mentioned in subsection (3) and an application is

not made under subsection (11) before the shares are sold, the method of sale

set out in the notice of intended sale shall be considered to have met the

requirements of subsection (6).

Missing security

certificate

97. The

court on application by the sheriff may require the private company to

acknowledge a transfer or other disposition of the security without

presentation of the security certificate where

(

a) liquidation of the debtor's interest in a

security issued by the private company would ordinarily require presentation of

a security certificate to the private company or its transfer agent;

(

b) the security certificate appears to have been

lost, destroyed or wrongfully taken; and

(

c) the instructing creditor has made satisfactory

provision for identification of the private company against a liability that

the private company may incur in respect of the security certificate.

Effect of

transfer

(1) In

addition to an agreement to which a transferee is considered under

section 245

of the Corporations Act to be a

party, a transferee of a security from the sheriff shall be considered to be a

party to a shareholders' agreement with respect to

(

a) the management of the affairs of the private

company; or

(

b) the exercise of voting rights attached to the

seized shares,

to which the debtor was a party at the

time of the seizure and of which the transferee had knowledge at the time of

the transfer if the shareholders' agreement contains provisions intended to

have the effect of precluding the debtor from transferring the security except

to a person who agrees to be a party to that shareholders' agreement.

(2) Notwithstanding subsection (1) and

section 245

of the Corporations Act , the court

may grant a declaration that the transferee is not bound by a term or provision

of an agreement, bylaw or

article that discriminates against the transferee

because of the transferee acquiring the securities through notice of judgment

proceedings.

(11) Subparagraph 111(b)(ii) of the Act is amended

by deleting the word "market".

SNL1998 cP-7.1

Amdt.

(1) Section 2 of the Personal Property Security Act is amended by renumbering it as

subsection 2(1).

(2) Paragraph 2(

b) of the Act is repealed and the

following substituted:

(b) "account" means a monetary

obligation not evidenced by chattel paper, a security or an instrument, whether

or not the obligation has been earned by performance, but does not include

investment property;

(3) Section 2 of the Act is amended by adding immediately

after paragraph (

c) the following:

(c.1) "broker" means a broker as defined

in the Securities Transfer Act ;

(4) Section 2 of the Act is amended by adding immediately

after paragraph (

e) the following:

(e.1) "certificated security" means a

certificated security as defined in the Securities Transfer Act ;

(5) Section 2 of the Act is amended by adding immediately

after paragraph (

f) the following:

(f.1) "clearing house" means an

organization through which trades in options or standardized futures are

cleared and settled;

(f.2) "clearing house option" means an

option, other than an option on futures, issued by a clearing house to its

participants;

(6) Section 2 of the Act is amended by adding immediately

after paragraph (

o) the following:

(o.1) "entitlement holder" means an

entitlement holder as defined in the Securities Transfer Act ;

(o.2) "entitlement order" means an entitlement

order as defined in the Securities Transfer Act ;

(7) Section 2 of the Act is amended by adding immediately

after paragraph (

p) the following:

(p.1) "financial asset" means a financial

asset as defined in the Securities Transfer Act ;

(8) Section 2 of the Act is amended by adding immediately

after paragraph (

t) the following:

(t.1) "futures account" means an account

maintained by a futures intermediary in which a futures contract is carried for

a futures customer;

(t.2) "futures contract" means a

standardized future or an option on futures, other than a clearing house

option, that is

(

i) traded on or subject to the rules of a futures

exchange recognized or otherwise regulated by the superintendent as defined in

the Securities Act or by a securities

regulatory authority of another province or territory of Canada, or

(ii) traded on a foreign futures exchange and

carried on the books of a futures intermediary for a futures customer;

(t.3) "futures customer" means a person

for which a futures intermediary carries a futures contr