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R.S.M. 1987, c. C225

The Corporations Act

Table of contents

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART I

INTERPRETATION AND APPLICATION

Definitions.

1(1)

In this Act,

"affairs" means the relationships among a body corporate, its affiliates and the shareholders, directors and officers of those bodies corporate but does not include the business carried on by those bodies corporate; ("affaires internes")

"affiliate" means an affiliated body corporate within the meaning of subsection (2); ("groupe")

"articles" means the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of continuance, articles of reorganization, articles of arrangement, articles of dissolution, articles of revival and any amendments thereto, and includes any Act, statute or ordinance by or under which a body corporate has been incorporated, and any letters patent, supplementary letters patent, certificate of incorporation, memorandum of association, and any other document evidencing corporate existence: ("statuts")

"associate" when used to indicate a relationship with any person means

(

a) a body corporate of which that person beneficially owns or controls, directly or indirectly, shares or securities currently convertible into shares carrying more than ten per cent of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase such shares or such convertible securities, or

(

b) a partner of that person acting on behalf of the partnership of which they are partners, or

(

c) a trust or estate in which that person has a substantial beneficial interest or in respect of which he serves as a trustee or in a similar capacity, or

(

d) a spouse or child of that person, or

(

e) a relative of that person or of his spouse if that relative has the same residence as that person; ("liens")

"auditor" includes a partnership of auditors; ("vérificateur")

"beneficial interest" means an interest arising out of the beneficial ownership of securities; ("propriété véritable")

"beneficial ownership" includes ownership through a trustee, legal representative, agent or other intermediary; ("propriétaire véritable")

"body corporate" includes a company or other body corporate wherever or however incorporated; ("personne morale")

"business" includes the undertaking carried on by a body corporate, without share capital; ("entreprise" )

"commission" means The Manitoba Securities Commission; ("Commission" )

"corporation" means a body corporate heretofore or hereafter incorporated by or under

an Act of the Legislature; ("corporation")

"court" means the Court of Queen's Bench; ("tribunal")

"Crown" means the Crown in right of the province; ("Couronne")

"debt obligation" means a bond, debenture, note or other evidence of indebtedness or guarantee of a body corporate, whether secured or unsecured; ("titre de créance")

"Director" means the Director appointed under

section 253; ("directeur")

"director" means a person occupying the position of director by whatever name called, and "directors" and "board of directors" includes a single director; ("administrateur")

"extra-provincial body corporate" means a body corporate that is incorporated otherwise than by or under the authority of

an Act of the Legislature or of the Parliament of Canada; ("personne morale extra-provinciale")

"incorporator" means a person who signs articles of incorporation; ("fondateur")

"individual" means a natural person; ("particulier")

"liability" includes a debt of a corporation arising under

section 38, subsection 184(25) or clause 234(3)(

f) or 234(3)(g); ("passif")

"minister" means the member of the Executive Council charged by the Lieutenant Governor in Council with the administration of this Act; ("ministre")

"ordinary resolution" means a resolution passed by a majority of the votes cast by the shareholders who voted in respect of that resolution; ("résolution ordinaire" )

"person" includes an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative; ("personne")

"prescribed" means prescribed by the regulations; ("prescrit" ou " réglementaire")

"redeemable share" means a share issued by a corporation

(

a) that the corporation may purchase or redeem upon the demand of the corporation, or

(

b) that the corporation is required by its articles to purchase or redeem at a specified time or upon the demand of a shareholder; ("action rachetable")

"resident of Canada" means an individual who is

(

a) ordinarily resident in Canada, or

(

b) not ordinarily resident in Canada, but who is a member of a prescribed class of persons; ("résident canadien")

"security" means a share of any class or series of shares or a debt obligation of a body corporate and includes a certificate evidencing a share or debt obligation; ("valeur mobilière")

"security interest" means an interest in or charge on property of a corporation to secure payment of a debt or performance of any other obligation of the corporation; ("sûreté")

"send" includes deliver; ("envoyer" )

"series" in relation to shares means a division of a class of shares; ("série")

"shareholder" includes a member of a corporation without share capital except where inconsistent with the provisions of

Part XXII; ("actionnaire")

"special Act" means

an Act of the Legislature other than this Act or any Act for which this Act is substituted; ("loi spéciale")

"special resolution" means a resolution passed by a majority of not less than 2/3 of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution: ("résolution spéciale")

"unanimous shareholder agreement" means an agreement described in subsection 140(2) or a declaration of a shareholder described in subsection 140(3). ("convention unanime des actionnaires")

Affiliated corporations.

1(2)

For the purposes of this Act,

(

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

(

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

Control.

1(3)

For the purposes of this Act, a body corporate is controlled by a person if

(

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

(

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

Holding body corporate.

1(4)

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

Subsidiary body corporate.

1(5)

A body corporate is a subsidiary of another body corporate if it is controlled by that other body corporate.

Deemed distribution to the public.

1(6)

For the purposes of this Act, securities of a body corporate

(

a) issued upon a conversion of other securities; or

(

b) issued in exchange for other securities;

are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

Distribution to the public.

1(7)

For the purposes of this Act, a body corporate has made a distribution to the public, where a security of the body corporate

(

a) is part of a distribution to the public and in respect of the security, there has been a filing of a prospectus, statement of material facts, registration statement, securities exchange take-over bid circular or similar document under the laws of Manitoba or any jurisdiction outside Manitoba; or

(

b) is deemed to be part of a distribution to the public, and the security has been issued and a filing referred to in clause (

a) would be required if the security were being issued currently; or

(

c) is listed on a stock exchange.

Application of Act.

2(1)

Subject to subsections (2) and (3) and

section 3, this Act, except where it is otherwise expressly provided, applies to every corporation.

Inconsistent provisions.

2(2)

Where a provision of

Part XXI, XXII, XXIII, or XXIV is inconsistent with or repugnant to any other provision of this Act, the provision of that

Part in so far as it affects a corporation to which that Part applies supersedes and prevails over the other provision of this Act.

Where Part applies to class of corporation.

2(3)

Where in this Act, it is expressly provided that a Part applies to a particular type or class of corporations, that Part does not apply to a corporation that is not of that type or class.

Exceptions.

3(1)

Except where it is otherwise expressly provided,

(

a) this Act does not apply to a body corporate that is a bank or a railway incorporated under

an Act of Parliament; and

(

b) Parts II, V and VI, Division I of

Part X, and Parts XIII to XIX and Parts XXI to XXVI do not apply to a corporation created for government purposes or municipal purposes or to corporations created under The Public Schools Act or The Health Services Act.

Exceptions.

3(2)

This Act does not apply

(

a) to a corporation that is a cooperative within the meaning of The Cooperatives Act except to the extent that The Cooperatives Act makes this Act or any provision of this Act apply to cooperatives; or

(

b) to a corporation that is a credit union within the meaning of The Credit Unions and Caisses Populaires Act except to the extent that The Credit Unions and Caisses Populaires Act makes this Act or any provision of this Act apply to credit unions.

Objects of existing corporations.

4(1)

Where before the coming into force of this Act, the words "and capable forthwith of exercising all the functions of an incorporated company, with powers and privileges, and subject to the provisions and restrictions applicable thereto, set forth in the said Act, for the objects following, that is to say:" or words of like effect are contained in the articles of a corporation, those words are deemed to be struck out and the words "and capable forthwith of exercising all the functions of a corporation, subject to the provisions and restrictions applicable thereto, and the business of the corporation is restricted to the following:" are deemed to be substituted therefor.

Powers of existing corporation.

4(2)

Where the articles of a corporation excluded, immediately before the coming into force of this Act, any of the powers authorized by any former Companies Act, the articles are deemed to restrict the corporation from exercising the power so excluded.

PART II

INCORPORATION

Incorporators.

5(1)

One or more persons, being a body corporate or a natural person, may incorporate a corporation by signing and delivering to the Director articles of incorporation.

Exception.

5(2)

No person who

(

a) is less than 18 years of age; or

(

b) has the status of a bankrupt;

may incorporate a corporation.

Articles of incorporation.

6(1)

Articles of incorporation shall follow the prescribed form and shall set out, in respect of the proposed corporation,

(

a) the name of the corporation;

(

b) the place in Manitoba where the registered office is to be situated, and the address, giving the street and number, if any;

(

c) the classes and any maximum number of shares that the corporation is authorized to issue, and

(

i) if there will be two or more classes of shares, the rights, privileges, restrictions and conditions attaching to each class of shares, and

(ii) if a class of shares may be issued in series, the authority given to the directors to fix the number of shares in, and to determine the designation of, and the rights, privileges, restrictions and conditions attaching to, the shares of each series;

(

d) if the right to transfer shares of the corporation is to be restricted, a statement that the right to transfer shares is restricted and the nature of the restrictions;

(

e) the number of directors or, subject to clause 102(a), the minimum and maximum number of directors of the corporation, and in every case the names in full of each first director and his residence address giving the street and number, if any; and

(

f) any restrictions on the businesses that the corporation may carry on.

Additional provisions in articles.

6(2)

The articles may set out any provisions permitted by this Act or by law to be set out in the by-laws of the corporation.

Special majorities.

6(3)

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

Exception.

6(4)

The articles may not require a greater number of votes of shareholders to remove a director than the number required by

section 104.

Consent required.

6(5)

The articles shall have attached, in the prescribed form, the consent of any first director who is not an incorporator.

Filing of Articles.

An incorporator shall send to the Director articles of incorporation.

Certificate of incorporation.

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

section 255.

Effect of certificate.

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

Name of corporation.

10(1)

The word "Limited", "Limitee" , "Incorporated", "Incorporee" or " Corporation", or the abbreviation " Ltd.", "Ltee ", "Inc." or "Corp.", shall be part, other than only in a figurative or descriptive sense, of the name of every corporation, but a corporation may use and may be legally designated by either the full or the abbreviated form.

Alternative name.

10(2)

Name in any language form.

10(3)

Subject to subsection 12(2), a corporation may set out its name in its articles in any language form and it may be legally designated by any such form.

Publication of corporate name.

10(4)

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

Other name.

10(5)

Subject to subsection (4),

section 12 and the provisions of The Business Names Registration Act, a corporation may carry on business under or identify itself by a name other than its corporate name.

Offence.

10(6)

Any person that, while not incorporated, uses or carries on business under a name containing the word "Limited", "Limitée", "Incorporated", "Incorporée" or "Corporation", or the abbreviation "Ltd.", "Ltee.", "Inc." or "Corp.", is guilty of an offence and liable on

summary conviction to a fine not exceeding $500.

Reservation of name.

11(1)

The Director may, upon the request in writing of any person, and upon payment of the prescribed fee, reserve a corporate name for the use and benefit of the person or his nominee for a period of 90 days.

Designating number.

11(2)

If requested to do so by the incorporators, the Director shall assign to a corporation as its name, a designating number determined by him.

Notation of name.

11(3)

Any person, partnership or association may give the Director notice of the name under which his or its business or undertaking is carried on and thereupon the Director may, if in his opinion the name is not objectionable, make a notation of the name in his records.

Notice of use of name.

11(4)

The person, partnership or association may

(

a) within three years of the date when the notation is made pursuant to subsection (3); and

(

b) within three years of the date when the latest renewal date is noted pursuant to subsection (5); give the Director notice that he or it is still carrying on his or its business or undertaking under the name noted in his records.

Notice to be recorded.

11(5)

The director shall note in his records the date upon which he receives any notice given pursuant to subsection (3) or (4).

Cancellation of notice.

11(6)

Where the Director does not receive a notice pursuant to subsection (4) within the time required by that subsection, he shall cancel the notation, and thereupon it is deemed for the purposes of subsection 12(4) that the Director has not received notice of the name under this section.

"Business or association" defined.

12(1)

In this section, "business or association" means an individual, an association or a partnership carrying on business.

Prohibited names.

12(2)

A corporation shall not have a name

(

a) that, except as prescribed, is identical with the name of an existing body corporate or of a dissolved body corporate; or

(

b) that, except as prescribed and subject to subsection (4), is the same as the name of a business or association; or

(

d) that includes the words "Loan" or "Trust", unless it is a corporation to which

Part XXIV applies: or

(

e) that the Director for any good and valid reason disapproves; or

(

f) that is, as prescribed, prohibited or deceptively misdescriptive.

Corporation not to be given similar name.

12(3)

A corporation shall not have a name that is similar to the name of any other body corporate if the use of that name by the corporation would be likely to confuse or mislead, unless the body corporate consents in writing to its name being given in whole or in part to the corporation and, if required by the Director, the body corporate undertakes to dissolve or to change its name within six months after the incorporation of the corporation.

Corporation not to be given similar name of business or association.

12(4)

A corporation shall not have a name that is the same as or similar to the name of a business or association, if the use of that name by the corporation would be likely to confuse or mislead, unless the business or association consents in writing to its name being given in whole or in part to the corporation and, if required by the Director, the business or association undertakes to cease carrying on business or to change its name within six months after the incorporation of the corporation.

Reserved name.

12(5)

A corporation shall not have a name that is reserved for another body corporate, unless the consent in writing is obtained from the person for whose use and benefit the name is reserved.

Undertaking not carried out.

12(6)

Where a corporation obtains a name subject to an undertaking given under subsection (3) or (4) and the undertaking is not carried out within the specified time, the Director may direct the corporation that gives the undertaking or the corporation that has obtained the name to change its name to a name that complies with this Act; and if the corporation fails to comply with the directive within 60 days of the service thereof, the Director may revoke the name of the corporation and assign to it a number, and until changed in accordance with

section 167 the name of the corporation is thereafter the number so assigned.

Directing change of name.

12(7)

Where, through inadvertence or otherwise, a corporation

(

a) comes into existence or is continued with a name; or

(

b) upon a change of name, obtains a name;

that contravenes this section, the Director may direct the corporation to change its name in accordance with

section 167.

Directing change of name.

12(8)

Where a corporation has a designating number as its name, the Director may direct the corporation to change its name in accordance with

section 167, to a name that complies with this Act.

Revocation of name.

12(9)

Where a corporation has been directed under subsection (7) or (8) to change its name and has not within 60 days from the service of the directive to that effect changed its name to a name that complies with this Act, the Director may revoke the name of the corporation and assign to it a number and until changed in accordance with

section 167, the name of the corporation is thereafter the number so assigned.

Certificate of amendment

13(1)

Where a corporation has had its name revoked and a number assigned to it under subsection 12(6) or 12(9), the Director shall issue a certificate of amendment showing the new name of the corporation and shall forthwith give notice of the change of name in the Manitoba Gazette.

Effect of certificate.

13(2)

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

Personal liability in pre-incorporation contracts.

14(1)

Except as provided in this section, a person who enters into a written contract in the name of or on behalf of a corporation before it comes into existence is personally bound by the contract and is entitled to the benefits thereof.

Adoption of pre-incorporation contracts.

14(2)

A corporation may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound thereby, adopt a written contract made before it came into existence, in its name or on its behalf, and upon the adoption

(

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

(

b) the person who purported to act in the name of or on behalf of the corporation ceases, except as provided in subsection (3), to be bound by or entitled to the benefits of the contract.

Application to court.

14(3)

Except as provided in subsection (4), whether or not a written contract made before the coming into existence of a corporation is adopted by the corporation, a party to the contract may apply to a court for an order fixing obligations under the contract as joint and several or apportioning liability between or among the corporation and any person who purported to act in the name of or on behalf of the corporation, and upon the application the court may make any order it thinks fit.

Exemption from personal liability.

14(4)

If expressly so provided in the written contract, a person who purported to act in the name of or on behalf of the corporation before it came into existence is not in any event bound by the contract or entitled to the benefits thereof.

PART III

CAPACITY AND POWERS

Capacity of a corporation.

15(1)

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

Extra-territorial capacity.

15(2)

A corporation has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Manitoba to the extent that the laws of that jurisdiction permit.

Powers of a corporation.

16(1)

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

Restricted business or powers.

16(2)

A corporation shall not carry on any business or exercise any power that it is restricted by its articles from carrying on or exercising, nor shall the corporation exercise any of its powers in a manner contrary to its articles.

Rights preserved.

16(3)

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

No constructive notice.

No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a corporation by reason only that the document has been filed by the Director or is available for inspection at an office of the corporation.

Authority of directors, officers and agents.

A corporation or a guarantor of an obligation of the corporation may not assert against a person dealing with the corporation or with any person who has acquired rights from the corporation that

(

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

(

b) the persons named in the articles or in the most recent notice sent to the Director under

section 108 are not the. directors of the corporation; or

(

c) the place named in the most recent notice sent to the Director under

section 19 is not the registered office of the corporation; or

(

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

(

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

(

f) the financial assistance referred to in

section 42 or the sale, lease or exchange of property referred to in subsection 183(2) was not authorized;

except where the person has or ought to have, by virtue of his position with or relationship to the corporation, knowledge to the contrary.

PART IV

REGISTERED OFFICE AND RECORDS

Registered office.

19(1)

A corporation shall at all times have a registered office in the place within Manitoba specified in its articles or in a special resolution under subsection (2).

Change of location.

19(2)

A corporation may by special resolution change the location of its registered office to another place within Manitoba.

Change of address.

19(3)

The directors of a corporation may change the address of the registered office within the place specified in the articles or a special resolution.

Notice of change.

19(4)

A corporation shall send to the Director, within 15 days of any change in the location or address of its registered office, a notice of the change in prescribed form.

Annexation or amalgamation of municipalities.

19(5)

Where the location of the registered office of a corporation is changed by reason only of the annexation or amalgamation of the place in which the registered office is situate to or with another municipality, that change does not constitute and is not deemed to constitute a change within the meaning of subsection (2).

Exception.

19(6)

Notwithstanding this or any other Act or law, no corporation that is restricted by its articles to any undertaking that is in whole or part of a social nature, other than a corporation commonly known as a service club, shall change the location of any of its premises without the prior consent in writing of the minister.

Consent discretionary.

19(7)

The giving of the consent mentioned in subsection (6) is in the discretion of the minister.

Corporate records.

20(1)

A corporation shall prepare and maintain, at its registered office and, subject to subsection (5), at any other place in Manitoba designated by the directors, records containing

(

a) the articles and the by-laws and all amendments thereto, and a copy of any unanimous shareholder agreement:

(

b) minutes of meetings and resolutions of shareholders;

(

c) a register of directors setting out the names, addresses and other occupations, if any, of all persons who are or have been directors of the corporation with the several dates on which each became or ceased to be a director; and

(

d) a securities register complying with

section 46.

Other records.

20(2)

In addition to the records described in subsection (1), a corporation shall prepare and maintain adequate accounting records and records containing minutes of meetings and resolutions of the directors and any committee thereof.

Place kept.

20(3)

The records described in subsection (2) shall be kept at the registered office of the corporation or at such other place in Manitoba as the directors think fit and shall at all reasonable times be open to inspection by the directors.

Records in Manitoba.

20(4)

Where accounting records of a corporation are kept at a place outside Manitoba, there shall be kept at the registered office or other office in Manitoba accounting records adequate to enable the directors to ascertain the financial position of the corporation with reasonable accuracy on a quarterly basis or at any time upon reasonable notice.

Exception.

20(5)

Where a corporation

(

a) shows, to the satisfaction of the Director, the necessity of keeping any of the minutes, documents, registers, books of account and accounting records mentioned in subsections (1) and (2) at a place other than the registered office of the corporation; and

(

b) gives assurance, to the satisfaction of the Director, that those minutes, documents, registers, books of account and accounting records will at all reasonable times be open for inspection, at the registered office of the corporation or some other place in Manitoba approved by the Director, to any person who is entitled to inspect them and applies to the corporation for an inspection thereof;

the Director may, by order and upon such terms as he thinks fit, permit the corporation to keep such of them at such place or places, other than the registered office, as he thinks fit.

Rescind order.

20(6)

The Director for any good and valid reason may, by order upon such terms as he thinks fit, vary or rescind any order made under subsection (5).

Duplicate register of securities.

20(7)

The trustee for security holders may maintain at their office a duplicate register of securities.

Notice of order.

20(8)

The Director shall cause notice of every order made by him under this

section to be given forthwith in the Manitoba Gazette.

Offence.

20(9)

A corporation that, without reasonable cause, fails to comply with this

section is guilty of an offence and liable on

summary conviction to a fine not exceeding $5,000.

Access to corporate records.

21(1)

Shareholders and creditors of a corporation, their agents and legal representatives, and the Director may examine the records referred to in subsection 20(1) during the usual business hours of the corporation, and may take extracts therefrom free of charge and, where the corporation has made a distribution to the public, any other person may do so upon payment of a reasonable fee.

Copies of corporate record.

21(2)

A shareholder of a corporation is entitled upon request and without charge to one copy of the articles and by-laws and of any unanimous shareholder agreement.

Shareholder lists.

21(3)

Shareholders and creditors of a corporation, their agents and legal representatives, the Director and, where the corporation has made a distribution to the public, any other person may, upon payment of a reasonable fee and upon sending to the corporation or its transfer agent the affidavit referred to in subsection (7), require the corporation or its agent to furnish within 10 days from the receipt of the affidavit a list (in this

section referred to as the "basic list") made up to a date not more than 10 days before the date of receipt of the affidavit setting out the names of the shareholders of the corporation, the number of shares owned by each shareholder and the address of each shareholder as shown on the records of the corporation.

Supplemental lists.

21(4)

A person requiring a corporation to supply a basic list may, if he states in the affidavit referred to in subsection (3) that he requires supplemental lists, require the corporation or its agent upon payment of a reasonable fee to furnish supplemental lists setting out any changes from the basic list in the names and addresses of shareholders and the number of shares owned by each shareholder for each business day following the date the basic list is made up to.

When supplemental lists to be furnished.

21(5)

The corporation or its agent shall furnish a supplemental list required under subsection (4)

(

a) on the date the basic list is furnished, where the information relates to changes that took place prior to that date; and

(

b) on the business day following the day to which the supplemental list relates, where the information relates to changes that take place on or after the date the basic list is furnished.

Holders of options.

21(6)

A person requiring a corporation to supply a basic list or a supplemental list, may also require the corporation to include in that list the name and address of any known holder of an option or right to acquire shares of the corporation.

Contents of affidavit.

21(7)

The affidavit required under subsection (3) shall state

(

a) the name and address of the applicant;

(

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

(

c) that the basic list and any supplemental lists obtained pursuant to subsection (4) will not be used except as permitted under subsection (9).

Where applicant a body corporate.

21(8)

If the applicant is a body corporate, the affidavit shall be made by a director or officer of the body corporate.

Use of shareholder list.

21(9)

A list of shareholders obtained under this

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

(

a) an effort to influence the voting of shareholders of the corporation; or

(

b) an offer to acquire shares of the corporation; or

(

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

Offence.

21(10)

A person who, without reasonable cause, contravenes this

section is guilty of an offence and liable on

summary conviction to a fine not exceeding $5,000. or to imprisonment for a term not exceeding six months or to both.

Form of records.

22(1)

All registers and other records required by this Act to be prepared and maintained may be in a bound or loose-leaf form or in a photographic film form, or may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

Precautions.

22(2)

A corporation and its agents shall take reasonable precautions to

(

a) prevent loss or destruction of;

(

b) prevent falsification of entries in; and

(

c) facilitate detection and correction of inaccuracies in;

the registers and other records required by this Act to be prepared and maintained.

Offence.

22(3)

A person who without reasonable cause contravenes this

section is guilty of an offence and liable on

summary conviction to a fine not exceeding $5,000. or to imprisonment for a term not exceeding six months or to both.

Corporate seal.

An instrument or agreement executed on behalf of a corporation by a director, an officer or an agent of the corporation is not invalid merely because a corporate seal is not affixed thereto.

PART V

CORPORATE FINANCE

Shares.

24(1)

Shares of a corporation shall be in registered form and shall be without par value.

Transitional.

24(2)

Where a corporation is incorporated before the commencement of this Act or where a body corporate is continued under this Act, an issued share with par value of the corporation is, for the purpose of subsection (1), deemed to be a share without par value, and the maximum consideration for which the shares of a particular class may be issued shall not, for the purposes of this Part, exceed the total of the products of the number of shares of each class multiplied by the par value thereof.

Class of shares.

24(3)

The articles may provide for more than one class of shares and, if they so provide, there shall be set out therein the rights, privileges, restrictions and conditions attaching to the shares of each class.

Class voting.

24(4)

Unless the articles otherwise provide, each share of a corporation entitles the holder thereof

(

a) to vote at all meetings of shareholders except meetings at which only holders of a specified class of shares are entitled to vote:

(

b) to receive any dividend declared by the corporation: and

(

c) to receive the remaining property of the corporation upon a dissolution.

Pre-existing corporations.

24(5)

Where prior to November 16, 1964, conditions attaching to shares are set out in the by-laws of a corporation, those conditions are deemed to be conditions contained in the articles.

Transitional.

24(6)

Where conditions attaching to shares of a corporation incorporated before the commencement of this Act refer to par value, the reference shall be deemed to be to the equivalent of the par value as stated in the articles.

Issue of shares.

25(1)

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

section 28, shares may be issued at such times and to such persons and for such consideration as the directors may determine.

Shares non-assessable.

25(2)

Shares issued by a corporation are non-assessable and the holders are not liable to the corporation or to its creditors in respect thereof.

Consideration.

25(3)

A share shall not be issued until the consideration for the share is fully paid in money, or in property or past services that is not less in value than the fair equivalent of the money that the corporation would have received if the share had been issued for money.

Consideration other than money.

25(4)

In determining whether property or past services is the fair equivalent of a money consideration, the directors may take into account reasonable charges and expenses of organization and re-organization and payments for property and past services reasonably expected to benefit the corporation.

Property.

25(5)

For the purposes of this section, "property" does not include a promissory note or a promise to pay.

Stated capital account.

26(1)

A corporation shall maintain a separate stated capital account for each class and series of shares it issues.

Entries in stated capital account

26(2)

A corporation shall add to the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

Exception for non-arm's length transactions.

26(3)

Notwithstanding subsections 25(3) and 26(2), where a corporation issues shares in exchange for

(

a) property of a person who immediately before the exchange does not deal with the corporation at arm's length within the meaning of that term in the Income Tax Act (Canada);

(

b) shares of a body corporate that immediately before the exchange or that, because of the exchange, immediately after the exchange does not deal with the corporation at arm's length within the meaning of that term in the Income Tax Act (Canada);

the corporation may, subject to subsection (4), add to the stated capital accounts maintained for the shares of the classes or series issued the whole or any part of the amount of the consideration it received in the exchange.

Limit on addition to a stated capital account.

26(4)

On the issue of a share a corporation shall not add to a stated capital account in respect of the share it issues an amount greater than the amount of the consideration it received for the share.

Constraint on addition to a stated capital account.

26(5)

Where a corporation proposes to add any amount to a stated capital account it maintains in respect of a class or series of shares, if

(

a) the amount to be added was not received by the corporation as consideration for the issue of shares; and

(

b) the corporation has any outstanding shares of more than one class or series;

the addition to the stated capital account must be approved by special resolution.

Other additions to stated capital.

26(6)

Where a corporation is incorporated before the commencement of this Act. it may add to a stated capital account any consideration received by it for a share it issued.

Retained earnings added to stated capital.

26(7)

A corporation at any time may, subject to subsection (5), add to a stated capital account any amount it credited to a retained earnings or other surplus account.

Transitional.

26(8)

Where a corporation is incorporated before the commencement of this Act, subsection (2) does not apply to the consideration received by it before the commencement of this Act unless the share in respect of which the consideration is received is issued after the commencement of this Act.

Continuance.

26(9)

Where a body corporate is continued under this Act, subsection (2) does not apply to the consideration received by it before it was so continued unless the share in respect of which the consideration is received is issued after the corporation is so continued.

Transitional.

26(10)

Where a corporation is incorporated before the commencement of this Act, any amount unpaid in respect of a share issued by the body corporate before the commencement of this Act and paid after the commencement of this Act shall be added to the stated capital account maintained for the shares of that class or series.

Transitional.

26(11)

For the purposes of subsection 32(2), sections 36, 40 and 42 and clause 179(2)(a), where a corporation is incorporated before the commencement of this Act, its stated capital is deemed to include the amount that would have been included in the stated capital account if the corporation had been incorporated under this Act.

Restriction.

26(12)

A corporation shall not reduce its stated capital or any stated capital account except in the manner provided in this Act.

Exception for an open-end mutual fund.

26(13)

Subsections (1) to (12) and any other provisions of this Act relating to stated capital do not apply to an open-end mutual fund.

"Open-end mutual fund" defined.

26(14)

For the purposes of this section, "open-end mutual fund" means a corporation that makes a distribution to the public of its shares and that carries on only the business of investing the consideration it receives for the shares it issues, and all or substantially all of those shares are redeemable upon the demand of a shareholder.

Shares in series.

27(1)

The articles may authorize the issue of any class of shares in one or more series and may authorize the directors to fix the number of shares in and to determine the designation, rights, privileges, restrictions and conditions attaching to, the shares of each series, subject to the limitations set out in the articles.

Series participation.

27(2)

If any cumulative dividends or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.

Restrictions on series.

27(3)

No rights, privileges, restrictions or conditions attached to a series of shares authorized under this

section shall confer upon a series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.

Amendment of articles.

27(4)

Before the issue of shares of a series authorized under this section, the directors shall send to the Director articles of amendment in prescribed form to designate a series of shares.

Certificate of amendment.

27(5)

Upon receipt of articles of amendment designating a series of shares, the Director shall issue a certificate of amendment in accordance with

section 255.

Effect of certificate.

27(6)

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

Pre-emptive right.

28(1)

If the articles so provide, no shares of a class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a preemptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.

Exception.

28(2)

Notwithstanding that the articles provide the pre-emptive right referred to in subsection (1), shareholders have no pre-emptive right in respect of shares to be issued

(

a) for a consideration other than money; or

(

b) as a share dividend; or

(

c) pursuant to the exercise of conversion privileges, options or rights previously granted by the corporation.

Options and rights.

29(1)

A corporation may issue certificates, warrants or other evidences of conversion privileges, options or rights to acquire securities of the corporation, and shall set out the conditions thereof

(

a) in the certificates, warrants or other evidences; or

(

b) in certificates evidencing the securities to which the conversion privileges, options or rights are attached.

Transferable rights.

29(2)

Conversion privileges, options and rights to purchase securities of a corporation may be made transferable or non-transferable, and options and rights to purchase may be made separable or inseparable from any securities to which they are attached.

Convertible shares.

29(3)

Where shares of a class are converted into shares of another class, the shares converted become the same in all respects as the shares of the class or classes respectively into which they are converted and the number of shares of each class affected by the conversion is changed and the articles are amended accordingly.

Convertible debt obligations.

29(4)

Where a corporation has granted privileges to convert any debt obligation into shares or has issued or granted options or rights to acquire shares, the corporation shall reserve and continue to reserve sufficient authorized shares to meet the exercise of the conversion privileges, options and rights.

Corporation holding its own shares.

30(1)

Except as provided in subsection (2) and sections 31 to 34 a corporation

(

a) shall not hold shares in itself or in its holding body corporate; and

(

b) shall not permit any of its subsidiary bodies corporate to acquire shares of the corporation.

Subsidiary holding shares of a corporation.

30(2)

A corporation shall cause a subsidiary body corporate of the corporation that holds shares of the corporation to sell or otherwise dispose of those shares within five years from the date that the body corporate became a subsidiary of the corporation.

Exception.

31(1)

A corporation may in the capacity of a legal representative hold shares in itself or in its holding body corporate unless it or the holding body corporate or a subsidiary of either of them has a beneficial interest in the shares.

Exception.

31(2)

A corporation may hold shares in itself or in its holding body corporate by way of security for the purposes of a transaction entered into by it in the ordinary course of a business that includes the lending of money.

Exception.

31(3)

A subsidiary corporation that, before November 16, 1964, held shares in itself or in its holding body corporate may continue to hold those shares.

Voting shares.

31(4)

A corporation holding shares in itself or in its holding body corporate, or a subsidiary corporation holding shares as described in subsection (3), shall not vote or permit those shares to be voted unless the corporation or subsidiary

(

a) holds the shares in the capacity of a legal representative; and

(

b) has complied with

section 147.

Acquisition of corporation's own shares.

32(1)

Subject to subsection (2) and to its articles, a corporation may purchase or otherwise acquire shares issued by it.

Limitation.

32(2)

A corporation shall not make any payment to purchase or otherwise acquire shares issued by it if there are reasonable grounds for believing that

(

a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or

(

b) the realizable value of the corporation's assets would after the payment be less than the aggregate of its liabilities and stated capital of all classes.

Alternative acquisition of corporation's own shares.

33(1)

Notwithstanding subsection 32(2), but subject to subsection (3) and to its articles, a corporation may purchase or otherwise acquire shares issued by it to

(

a) settle or compromise a debt or claim asserted by or against the corporation; or

(

b) eliminate fractional shares; or

(

c) fulfil the terms of a non-assignable agreement under which the corporation has an option or is obliged to purchase shares owned by a director, an officer or an employee of the corporation.

Alternative acquisition of corporation's own shares.

33(2)

Notwithstanding subsection 32(2), a corporation may purchase or otherwise acquire shares issued by it to

(

a) satisfy the claim of a shareholder who dissents under

section 184; or

(

b) comply with an order under

section 234.

Limitation.

33(3)

A corporation shall not make any payment to purchase or acquire under subsection (1) shares issued by it if there are reasonable grounds for believing that

(

a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or

(

b) the realizable value of the corporation's assets would after the payment be less than the aggregate of its liabilities and the amounts required for payment on a redemption or in a liquidation of all shares the holders of which have the right to be paid prior to the holders of the shares to be purchased or acquired.

Redemption of shares.

34(1)

Notwithstanding subsection 32(2) or 33(3), but subject to subsection (2) and to its articles, a corporation may purchase or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof stated in the articles or calculated according to a formula stated in the articles.

Limitation.

34(2)

A corporation shall not make any payment to purchase or redeem any redeemable shares issued by it if there are reasonable grounds for believing that

(

a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or

(

b) the realizable value of the corporation's assets would after the payment be less than the aggregate of

(

i) its liabilities, and

(ii) the amount that would be required to pay the holders of shares that have a right to be paid, on a redemption or in a liquidation, rateably with or prior to the holders of the shares to be purchased or redeemed.

Donated shares.

Subject to subsection 37(5), a corporation may accept from any shareholder a share of the corporation surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on the share except in accordance with

section 36.

Other reduction of stated capital.

36(1)

Subject to subsection (3), a corporation may by special resolution reduce its stated capital for any purpose, including, without limiting the generality of the foregoing, for the purpose of

(

a) extinguishing or reducing a liability in respect of an amount unpaid on any share;

(

b) distributing to the holder of an issued share of any class or series of shares an amount not exceeding the stated capital of the class or series; and

(

c) declaring its stated capital to be reduced by an amount that is not represented by realizable assets.

Contents of special resolution.

36(2)

A special resolution under this

section shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

Limitation.

36(3)

A corporation shall not reduce its stated capital for any purpose other than the purpose mentioned in clause (1)(

c) if there are reasonable grounds for believing that

(

a) the corporation is, or would after the reduction be unable to pay its liabilities as they become due; or

(

b) the realizable value of the corporation's assets would thereby be less than the aggregate of its liabilities.

Recovery.

36(4)

A creditor of a corporation is entitled to apply to a court for an order compelling a shareholder or other recipient

(

a) to pay to the corporation an amount equal to any liability of the shareholder that was extinguished or reduced contrary to this section: or

(

b) to pay or deliver to the corporation any money or property that was paid or distributed to the shareholder or other recipient as a consequence of a reduction of capital made contrary to this section.

Limitation.

36(5)

An action to enforce a liability imposed by this

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

Remedy preserved.

36(6)

This

section does not affect any liability that arises under

section 113.

Adjustment of stated capital account.

37(1)

Upon a purchase, redemption or other acquisition by a corporation under

section 32, 33, 34, 43 or 184 or clause 234(3)(f), of shares or fractions thereof issued by it, the corporation shall deduct from the stated capital account maintained for the class or series of shares purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series or fractions thereof purchased, redeemed or otherwise acquired, divided by the number of issued shares of that class or series immediately before the purchase, redemption or other acquisition.

Adjustment of stated capital account.

37(2)

A corporation shall deduct the amount of a payment made by the corporation to a shareholder under clause 234(3)(

g) from the stated capital account maintained for the class or series of shares in respect of which the payment was made.

Adjustment of stated capital account.

37(3)

A corporation shall adjust its stated capital account or accounts in accordance with any special resolution referred to in subsection 36(2).

Adjustment of stated capital account.

37(4)

Upon a conversion of issued shares of a class into shares of another class or upon a change under

section 167, 185 or 234 of issued shares of a corporation into shares of another class or series, a corporation shall

(

a) deduct from the stated capital account maintained for the class or series of shares changed or converted an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series changed or converted, divided by the number of issued shares of that class or series immediately before the change or conversion; and

(

b) add the result obtained under clause (

a) and any additional consideration received by the corporation pursuant to the change or conversion to the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been changed or converted.

Stated capital of interconvertible shares.

37(5)

For the purposes of subsection (4) and subject to its articles, where a corporation issues two classes of shares and there is attached to each class a right to convert a share of the one class into a share of the other class, if a share of one class is converted into a share of the other class, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of issued shares of both classes immediately before the conversion.

Cancellation or restoration of shares.

37(6)

Shares or fractions thereof issued by a corporation and purchased, redeemed or otherwise acquired by it shall be cancelled or, if the articles limit the number of authorized shares, may be restored to the status of authorized but unissued shares.

Exception.

37(7)

For the purposes of this section, a corporation holding shares in itself as permitted by subsections 31(1) and (2) is deemed not to have purchased, redeemed or otherwise acquired the shares.

Conversion or change of shares.

37(8)

Shares issued by a corporation and converted or changed under

section 167, 185 or 234 into shares of another class or series shall become issued shares of the class or series of shares into which the shares have been converted or changed.

Repayment.

37(9)

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

Acquisition and reissue of debt obligations.

37(10)

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

Enforceability of contract.

38(1)

A contract with a corporation providing for the purchase of shares of the corporation is specifically enforceable against the corporation except to the extent that the corporation cannot perform the contract without thereby being in breach of

section 32 or 33.

Burden of proof.

38(2)

In any action brought on a contract referred to in subsection (1), the corporation has the burden of proving that performance thereof is prevented by

section 32 or 33.

Status of contracting party.

38(3)

Until the corporation has fully performed a contract referred to in subsection (1), the other party retains the status of a claimant entitled to be paid as soon as the corporation is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors but in priority to the other shareholders.

Commission for sale of shares.

The directors of a corporation may authorize the corporation to pay a commission to any person in consideration of his purchasing or agreeing to purchase shares of the corporation from the corporation or from any other person, or procuring or agreeing to procure purchasers for the shares.

Dividends.

A corporation shall not declare or pay a dividend if there are reasonable grounds for believing that

(

a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or

(

b) the realizable value of the corporation's assets would thereby be less than the aggregate of its liabilities and stated capital of all classes.

Form of dividend.

41(1)

A corporation may pay a dividend by issuing fully paid shares of the corporation and, subject to

section 40, a corporation may pay a dividend in money or property.

Adjustment of stated capital account.

41(2)

If shares of a corporation are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money shall be added to the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend.

Dividends payable on transition.

41(3)

Where dividends are payable on shares with par value of a corporation incorporated before the commencement of this Act, the dividends shall be calculated in accordance with the provisions set forth in the articles of the corporation.

Prohibited loans and guarantees.

42(1)

Except as permitted under subsection (2), a corporation or any corporation with which it is affiliated shall not, directly or indirectly, give financial assistance by means of a loan, guarantee or otherwise

(

a) to any shareholder, director, officer or employee of the corporation or of an affiliated corporation or to an associate of any of those persons for any purpose; or

(

b) to any person for the purpose of or in connection with a purchase of a share issued or to be issued by the corporation or affiliated corporation;

where there are reasonable grounds for believing that

(

c) the corporation is or, after giving the financial assistance, would be unable to pay its liabilities as they become due; or

(

d) the realizable value of the corporation's assets, excluding the amount of any financial assistance in the form of a loan and in the form of assets pledged or encumbered to secure a guarantee, after giving the financial assistance, would be less than the aggregate of the corporation's liabilities and stated capital of all classes.

Permitted loans and guarantees.

42(2)

A corporation may give financial assistance by means of a loan, guarantee or otherwise

(

a) to any person in the ordinary course of business if the lending of money is part of the ordinary business of the corporation;

(

b) to any person on account of expenditures incurred or to be incurred on behalf of the corporation;

(

c) to a holding body corporate if the corporation is a wholly-owned subsidiary of the holding body corporate;

(

d) to a subsidiary body corporate of the corporation; and

(

e) to employees of the corporation or any of its affiliates

(

i) to enable or assist them to purchase or erect living accommodation for their own occupation, or

(ii) in accordance with a plan for the purchase of shares of the corporation or any of its affiliates to be held by a trustee.

Enforceability.

42(3)

A contract made by a corporation in contravention of this

section may be enforced by the corporation or by a lender for value in good faith without notice of the contravention.

Shareholder immunity.

43(1)

The shareholders of a corporation are not, as shareholders, liable for any liability, act or default of the corporation except under subsections 36(4), 140(4) and 219(5).

Lien on shares.

43(2)

Subject to subsection 45(8), the articles may provide that the corporation has a lien on a share registered in the name of a shareholder or his legal representative for a debt of that shareholder to the corporation, including an amount unpaid in respect of a share issued by a body corporate on the date it was continued under this Act.

Enforcement of lien.

43(3)

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

Liability continues.

43(4)

Except as provided in subsection 36(1), a shareholder of a corporation incorporated before the commencement of this Act remains liable for any amount unpaid in respect of an issued share and the corporation may call in and by notice in writing demand from a shareholder the whole or any part of the amount unpaid on a share and if the call is not paid in accordance with the demand, the corporation may forfeit any share on which the call is not paid.

PART VI

SECURITY CERTIFICATES, REGISTERS AND TRANSFERS

Application of Part.

44(1)

The transfer or transmission of a security shall be governed by this Part.

Definitions.

44(2)

In this Part,

"adverse claim" includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in the security; ("opposition")

"bearer" means the person in possession of a security payable to bearer or endorsed in blank; ("porteur")

"bona fide purchaser" means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or of a security in registered form issued to him or endorsed to him or endorsed in blank; ("acheteur de bonne foi")

"broker" means a person who is engaged for all or part of his time in the business of buying and selling securities and who, in the transaction concerned, acts for , or buys a security from, or sells a security to a customer; ("courtier")

"delivery" means voluntary transfer of possession; ("livraison")

"fiduciary" means a trustee, guardian, committee, curator, tutor, executor, administrator or representative of a deceased person, or any other person acting in a fiduciary capacity; ("représentant" )

"fungible" in relation to securities means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; ("fongibles")

"genuine" means free of forgery or counterfeiting; ("authentique")

"good faith" means honesty in fact in the conduct of the transaction concerned; ("bonne foi")

"holder" means a person in possession of a security issued or endorsed to him or to bearer or in blank; ("détenteur")

"issuer" includes a corporation

(

a) that is required by this Act to maintain a securities register, or

(

b) that directly or indirectly creates fractional interests in its rights or property and that issues securities as evidence of such fractional interests; ("émetteur")

"overissue" means the issue of securities in excess of any maximum number of securities that the issuer is authorized by its articles or a trust indenture to issue; ("émission excédentaire")

"purchaser" means a person who takes by sale, mortgage, hypothec, pledge, issue, reissue, gift or any other voluntary transaction creating an interest in a security; ("acquéreur")

"security" or "security certificate" means an instrument issued by a corporation that is

(

a) in bearer or registered or order form,

(

b) of a type commonly dealt in upon securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,

(

c) one of a class or series or by its terms divisible into a class or series of instruments, and

(

d) evidence of a share, participation or other interest in or obligation of a corporation; ("valeur mobilière" ou "certificat de valeur mobilière")

"transfer" includes transmission by operation of law; ("transfert")

"trust indenture" means a trust indenture as defined in

section 77; ("acte de fiducie")

"unauthorized" in relation to a signature or an endorsement means made without actual, implied or apparent authority and includes a forgery; ("non autorisé")

"valid" means issued in accordance with the applicable law and the articles of the issuer or validated under

section 48. ("valide")

Negotiable instruments.

44(3)

Except where its transfer is restricted and noted on a security in accordance with subsection 45(8), a security is a negotiable instrument.

Registered form.

44(4)

A security is in registered form if

(

a) it specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; or

(

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

Order form.

44(5)

A debt obligation is in order form where, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to him or his order.

Bearer form.

44(6)

A security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.

Guarantor for issuer.

44(7)

A guarantor for an issuer is deemed to be an issuer to the extent of his guarantee whether or not his obligation is noted on the security.

Rights of holder.

45(1)

Every security holder is entitled at his option to a security certificate that complies with this Act or a non-transferable written acknowledgment of his right to obtain a security certificate from a corporation in respect of the securities of that corporation held by him.

Fee for certificate.

45(2)

A corporation may charge a fee of not more than $3. for a security certificate issued in respect of a transfer.

Joint holders.

45(3)

A corporation is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a certificate to one of several joint holders is sufficient delivery to all.

Signatures.

45(4)

A security certificate shall be signed manually by at least one director or officer of the corporation or by or on behalf of a registrar, transfer agent or branch transfer agent of the corporation, or by a trustee who certifies it in accordance with a trust indenture, and any additional signatures required on a security certificate may be printed or otherwise mechanically reproduced thereon.

No manual signature required.

45(5)

Notwithstanding subsection (4), a manual signature is not required on

(

a) a security certificate representing

(

i) a promissory note that is not issued under a trust indenture,

(ii) a fractional share, or

(iii) an option or a right to acquire a security; or

(

b) a scrip certificate.

Continuation of signature.

45(6)

If a security certificate contains a printed or mechanically reproduced signature of a person, the corporation may issue the security certificate, notwithstanding that the person has ceased to be a director or an officer of the corporation, and the security certificate is as valid as if he were a director or an officer at the date of its issue.

Contents of share certificate.

45(7)

There shall be stated upon the face of each share certificate issued by a corporation

(

a) the name of the corporation;

(

b) the words "Incorporated under the Laws of Manitoba" or words of like effect;

(

c) the name of the person to whom it was issued; and

(

d) the number and class of shares and the designation of any series that the certificate represents.

Restrictions.

45(8)

If a security certificate issued by a corporation, or by a body corporate before the body corporate was continued under this Act, is or becomes subject to

(

a) a restriction on its transfer other than a constraint under

section 168; or

(

b) a lien in favour of the corporation; or

(

c) a unanimous shareholder agreement; or

(

d) an endorsement under subsection 184(10);

the restriction, lien, agreement or endorsement is ineffective against a transferee of the security who has no actual knowledge of it, unless it or a reference to it is noted conspicuously on the security certificate.

Limit on restriction.

45(9)

A corporation any of the issued shares of which are or. were part of a distribution to the public and remain outstanding and are held by more than one person shall not restrict the transfer of those shares except by way of a constraint permitted under

section 168.

Transitional.

45(10)

Where a corporation or body corporate continued under this Act has outstanding security certificates, and the words "private company" appear on the certificates, those words are deemed to be a notice of a restriction, lien, agreement or endorsement for the purpose of subsection (8).

Particulars of class.

45(11)

There shall be stated legibly on a share certificate issued by a corporation that is authorized to issue shares of more than one class or series

(

a) the rights, privileges, restrictions and conditions attached to the shares of each class and series that exists when the share certificate is issued; or

(

b) that the class or series of shares that it represents has rights, privileges restrictions or conditions attached thereto and that the corporation will furnish to a shareholder, on demand and without charge, a full copy of the text of

(

i) the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as the same have been fixed by the directors, and

(ii) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series.

Duty.

45(12)

Where a share certificate issued by a corporation contains the statement mentioned in clause (ll)(b), the corporation shall furnish to a shareholder on demand and without charge a full copy of the text of

(

a) the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as the same have been fixed by the directors; and

(

b) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series.

Fractional share.

45(13)

A corporation may issue a certificate for a fractional share or may issue in place thereof scrip certificates in bearer form that entitle the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.

Scrip certificates.

45(14)

The directors may attach conditions to any scrip certificates issued by a corporation, including conditions that

(

a) the scrip certificates become void if not exchanged for a share certificate representing a full share before a specified date; and

(

b) any shares for which such scrip certificates are exchangeable may, notwithstanding any pre-emptive right, be issued by the corporation to any person and the proceeds thereof distributed rateably to the holders of the scrip certificates.

Holder of fractional share.

45(15)

A holder of a fractional share issued by a corporation is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share, unless

(

a) the fractional share results from a consolidation of shares; or

(

b) the articles of the corporation otherwise provide.

Holder of scrip certificate.

45(16)

A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.

Securities records.

46(1)

A corporation shall maintain a securities register in which it records the securities issued by it in registered form showing with respect to each class or series of securities

(

a) the names, alphabetically arranged, and the latest known address of each person who is or has been a security holder;

(

b) the number of securities held by each security holder; and

(

c) the date and particulars of the issue and transfer of each security.

Central and branch registers.

46(2)

A corporation may appoint an agent to maintain a central securities register and branch securities registers.

Place of register.

46(3)

A central securities register shall be maintained by a corporation at its registered office or at any other place in Manitoba designated by the directors, and any branch securities registers may be kept at any place in or out of Manitoba designated by the directors.

Effect of registration.

46(4)

Registration of the issue or transfer of a security in the central securities register or in a branch securities register is a complete and valid registration for all purposes.

Branch register.

46(5)

A branch securities register shall only contain particulars of securities issued or transferred at that branch.

Central register.

46(6)

Particulars of each issue or transfer of a security registered in a branch securities register shall also be kept in the corresponding central securities register.

Destruction of certificates.

46(7)

A corporation, its agent or a trustee defined in subsection 77(1) is not required to produce

(

a) a cancelled security certificate in registered form, an instrument referred to in subsection 29(1) that is cancelled or a like cancelled instrument in registered form six years after the date of its cancellation;

(

b) a cancelled security certificate in bearer form or an instrument referred to in subsection 29(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or

(

c) an instrument referred to in subsection 29(1) or a like instrument, irrespective of its form, after the date of its expiry.

Dealings with registered holder.

47(1)

A corporation or a trustee defined in subsection 77(1) may, subject to sections 128, 129 and 132, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payments in respect of the security, and otherwise to exercise all the rights and powers of an owner of the security.

Constructive registered holder.

47(2)

Notwithstanding subsection (1), a corporation whose articles restrict the right to transfer its securities shall, and any other corporation may, treat a person as a registered security holder entitled to exercise all the rights of the security holder he represents, if that person furnishes evidence as described in subsection 72(4) to the corporation that he is

(

a) the executor, administrator, heir or legal representative of the heirs, of the estate of a deceased security holder; or

(

b) a guardian, committee, trustee, curator or tutor representing a registered security holder who is an infant, an incompetent person or a missing person; or

(

c) a liquidator of, or a trustee in bankruptcy for, a registered security holder.

Permissible registered holder.

47(3)

If a person upon whom the ownership of a security devolves by operation of law, other than a person described in subsection (2), furnishes proof of his authority to exercise rights or privileges in respect of a security of the corporation that is not registered in his name, the corporation shall treat that person as entitled to exercise those rights or privileges.

Immunity of corporation.

47(4)

A corporation is not required to inquire into the existence of, or see to the performance or observance of any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this section, as the owner or registered holder thereof.

Infants.

47(5)

If an infant exercises any rights of ownership in the securities of a corporation, no subsequent repudiation or avoidance is effective against the corporation.

Joint holders.

47(6)

A corporation may treat as the owner of a security any survivor of the persons to whom the security was issued as joint holders, if it receives proof satisfactory to it of the death of any of the joint holders.

Transmission of securities.

47(7)

Subject to any applicable law relating to the collection of taxes, a person referred to in clause (2)(

a) is entitled to become a registered holder or to designate a registered holder, if he deposits with the corporation or its transfer agent

(

a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by

(

i) the court that granted the probate or letters of administration, or

(ii) a trust company incorporated under the laws of Canada or a province, or

(iii) a lawyer or notary acting on behalf of the person referred to in clause (2)(a); or

(

b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province;

together with

(

c) an affidavit or declaration of transmission made by the person referred to in clause (2)(a), stating particulars of the transmission; and

(

d) the security certificate that was owned by the deceased holder

(

i) in case of a transfer to the person referred to in clause (2)(a), with or without the endorsement of that person, and

(ii) in case of a transfer to any other person, endorsed in accordance with

section 61, and accompanied by any assurance the corporation may require under

section 72.

Excepted transmissions.

47(8)

Notwithstanding subsection (7), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a legal representative of the deceased holder is entitled, subject to any applicable law relating to the collection of taxes, to become a registered holder or to designate a registered holder, if he deposits with the corporation or its transfer agent

(

a) the security certificate that was owned by the deceased holder; and

(

b) reasonable proof of the governing laws, of the deceased holder's interest in the security and of the right of the legal representative or the person he designates to become the registered holder.

Right of corporation.

47(9)

Deposit of the documents required by subsection (7) or (8) empowers a corporation or its agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in clause (2)(

a) or to such person as the person referred to in that clause may designate and, thereafter, to treat the person who thus becomes a registered holder as the owner of those securities.

Overissue.

48(1)

The provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that validation, issue or reissue would result in overissue; but

(

a) if a valid security, similar in all respects to the security involved in the overissue, is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to him against surrender of the security that he holds; or

(

b) if a valid security, similar in all respects to the security involved in the overissue, is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.

Retroactive validation.

48(2)

Where an issuer subsequently amends its articles or a 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 securities overissued, the securities so overissued are valid from the date of their issue.

Payment not a purchase or redemption.

48(3)

A purchase or payment by an issuer under subsection (1) is not a purchase or payment to which

section 32, 33, 34 or 37 applies.

Burden of proof.

In an action on a security,

(

a) unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;

(

b) a signature on the 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;

(

c) if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; and

(

d) if the defendant establishes that a defence or a defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against him or some person under whom he claims.

Securities fungible.

Unless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to him or in blank.

Notice of defect.

51(1)

Even against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referenced do not conflict with the stated terms, but the reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits such notice.

Purchaser for value.

51(2)

A security is valid in the hands of a purchaser for value without notice of any defect going to its validity.

Lack of genuineness.

51(3)

Except as provided in

section 53, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.

Ineffective defences.

51(4)

All other defences of an issuer, including non-delivery and conditional delivery of a security, are ineffective against a purchaser for value without notice of the particular defence.

Staleness as notice of defect.

After an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuer,

(

a) if the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and those funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or

(

b) if the purchaser takes the security more than two years after the date set for surrender or presentation or the date on which the performance became due.

Unauthorized signature.

An unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if 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, or of similar securities, or their immediate preparation for signing; or

(

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

a) who in the ordinary course of his duties handles the security.

Completion or alteration.

54(1)

Where a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,

(

a) any person may complete it by filling in the blanks in accordance with his authority; and

(

b) notwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

Enforceability.

54(2)

A completed security that has been improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.

Warranties of agents.

55(1)

A person signing a security as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice that

(

a) the security is genuine;

(

b) his acts in connection with the issue of the security are within his authority; and

(

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

Limitation of liability.

55(2)

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

Title of purchaser.

56(1)

Upon delivery of a security the purchaser acquires the rights in the security that his transferor had or had authority to convey, except that a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim does not improve his position by taking from a later bona fide purchaser.

Title of bona fide purchaser.

56(2)

A bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.

Limited interest.

56(3)

A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

Deemed notice of adverse claim.

57(1)

A purchaser of a security, or any broker for a seller or purchaser, is deemed to have notice of an adverse claim if

(

a) the security, whether in bearer or registered form, has been endorsed "for collection" or "for surrender" or for some other purpose not involving transfer; or

(

b) the security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.

Notice of fiduciary duty.

57(2)

Notwithstanding that a purchaser, or any broker for a seller or purchaser, has notice that a security is held for a third person or is registered in the name of or endorsed by a fiduciary, he has no duty to inquire into the rightfulness of the transfer and has no notice of an adverse claim, except that where a purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary's duty, the purchaser is deemed to have notice of an adverse claim.

Staleness as notice of adverse claim.

An event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchase

(

a) after one year from any date set for the presentation or surrender for redemption or exchange; or

(

b) after six months from any date set for payment of money against presentation or surrender of the security if funds are available for payment on that date.

Warranties to issuer.

59(1)

A person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that he is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that he has no knowledge of any unauthorized signature in a necessary endorsement.

Warranties to purchaser.

59(2)

A person by transferring a security to a purchaser for value warrants only that

(

a) the transfer is effective and rightful;

(

b) the security is genuine and has not been materially altered; and

(

c) he knows of nothing that might impair the validity of the security.

Warranties of intermediary.

59(3)

Where a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against the delivery, the intermediary by the delivery warrants only his own good faith and authority even if he has purchased or made advances against the draft or other claim to be collected against the delivery.

Warranties of pledgee.

59(4)

A pledgee or other holder for purposes of security who re-delivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).

Warranties of broker.

59(5)

A broker gives to his customer, to the issuer and to a purchaser, as the case may be, the warranties provided in this

section and has the rights and privileges of a purchaser under this section; and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by his customer and warranties given in favour of his customer.

Right to compel endorsement.

Where a security in registered form is delivered to a purchaser without a necessary endorsement, he may become a bona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.

"Appropriate person" defined.

61(1)

In this section, "appropriate person" means

(

a) the person specified by the security or by special endorsement to be entitled to the security; or

(

b) if the person described in clause (

a) is described as a fiduciary but is no longer serving in the described capacity, either that person or his successor; or

(

c) if the security or endorsement mentioned in clause (

a) specifies more than one person as fiduciaries and one or more are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified; or

(

d) if the person described in clause (

a) is an individual and is without capacity to act by reason of death, incompetence, infancy, minority or otherwise, his fiduciary; or

(

e) if the security or endorsement mentioned in clause (

a) specifies more than one person with right of survivorship and by reason of death all cannot sign, the survivor or survivors; or

(

f) a person having power to sign under applicable law or a power of attorney; or

(

g) to the extent that the person described in any of clauses (

a) to (

f) may act through an agent, his authorized agent.

Determining "appropriate person".

61(2)

Whether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by the person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.

Endorsement.

61(3)

An endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more upon the back of the security.

Special or blank.

61(4)

An endorsement may be special or in blank.

Blank endorsement.

61(5)

An endorsement in blank includes an endorsement to bearer.

Special endorsement.

61(6)

A special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.

Right of holder.

61(7)

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

Immunity of endorser.

61(8)

Unless otherwise agreed, the endorser by his endorsement assumes no obligation that the security will be honoured by the issuer.

Partial endorsement

61(9)

An endorsement purporting to be only of part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

Failure of fiduciary to comply.

61(10)

Failure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render his endorsement unauthorized for the purposes of this Part.

Effect of endorsement without delivery.

An endorsement of a security whether special or in blank does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.

Endorsement in bearer form.

An endorsement of a security in bearer form may give notice of an adverse claim under

section 57 but does not otherwise affect any right to registration that the holder has.

Effect of unauthorized endorsement.

64(1)

The owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim who has in good faith received a new, reissued or reregistered security on registration of transfer, unless the owner

(

a) has ratified an unauthorized endorsement of the security; or

(

b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

Liability of issuer.

64(2)

An issuer who registers the transfer of a security upon an unauthorized endorsement is liable for improper registration.

Warranties of guarantor of signature.

65(1)

A person who guarantees a signature of an endorser of a security warrants that at the time of signing

(

a) the signature was genuine;

(

b) the signer was an appropriate person as defined in

section 61 to endorse: and

(

c) the signer had legal capacity to sign.

Limitation of liability.

65(2)

A person who guarantees a signature of an endorser does not otherwise warrant the rightfulness of the particular transfer

Warranties of guarantor of endorsement

65(3)

A person who guarantees an endorsement of a security warrants both the signature and the rightfulness of the transfer in all respects, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

Extent of liability.

65(4)

The warranties referred to in this

section are made to any person taking or dealing with the security relying on the guarantee, and the guarantor is liable to the person for any loss resulting from breach of warranty.

Constructive delivery of a security.

66(1)

Delivery to a purchaser occurs when

(

a) he or a person designated by him acquires possession of a security ; or

(

b) his broker acquires possession of a security endorsed to or issued in the name of the purchaser; or

(

c) his broker sends him confirmation of the purchase and the broker in his records identifies a specific security as belonging to the purchaser; or

(

d) with respect to an identified security to be delivered while still in the possession of a third person, that person acknowledges that he holds it for the purchaser.

Constructive ownership.

66(2)

A purchaser is the owner of a security held for him by his broker, but a purchaser is not a holder except in the cases referred to in clauses (l)(

b) and(l)(c).

Ownership of part of fungible bulk.

66(3)

If a security is part of a fungible bulk, a purchaser of the security is the owner of a proportionate interest in the fungible bulk.

Notice to broker.

66(4)

Notice of an adverse claim received by a broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security as to which no notice of an adverse claim has been received.

Delivery of security.

67(1)

Unless otherwise agreed, if a sale of a security is made on an exchange or otherwise through brokers,

(

a) the selling customer fulfils his duty to deliver when he delivers the security to the selling broker or to a person designated by the selling broker or causes an acknowledgment to be made to the selling broker that it is held for him; and

(

b) the selling broker, including a correspondent broker, acting for a selling customer fulfils his duty to deliver by delivering the security or a like security to the buying broker or to a person designated by the buying broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

Duty to deliver.

67(2)

Except as otherwise provided in this

section and unless otherwise agreed, a transferor's duty to deliver a security under a contract of purchase is not fulfilled until he delivers the security in negotiable form to a purchaser or to a person designated by the purchaser, or causes an acknowledgment to be made to the purchaser that the security is held for him.

Delivery to broker.

67(3)

A sale to a broker purchasing for his own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

Right to reclaim possession.

68(1)

A person against whom the transfer of a security is wrongful for any reason, including his incapacity, may against anyone except a bona fide purchaser reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights or claim damages.

Recovery if unauthorized endorsement.

68(2)

If the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a bona fide purchaser if the ineffectiveness of the purported endorsement may be asserted against the purchaser under

section 64.

Remedies.

68(3)

The right to reclaim possession of a security may be specifically enforced, its transfer may be restrained and the security may be impounded pending litigation.

Right to requisites for registration.

69(1)

Unless otherwise agreed, a transferor shall on demand supply a purchaser with proof of his authority to transfer or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value a transferor need not do so unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

Rescission of transfer.

69(2)

If the transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.

Seizure of security.

70(1)

No seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.

No conversion if good faith delivery by agent.

70(2)

An agent or bailee who in good faith, including observance of reasonable commercial standards if he is in the business of buying, selling or otherwise dealing with securities of a corporation, has received the securities and sold, pledged or delivered them according to the instructions of his principal is not liable for conversion or for participation in breach of fiduciary duty although the principal has no right to dispose of them.

Duty to register transfer.

71(1)

Where a security in registered form is presented for transfer, the issuer shall register the transfer if

(

a) the security is endorsed by an appropriate person, as defined in

section 61:

(

b) reasonable assurance is given that the endorsement to which reference is made in clause (

a) is genuine and effective;

(

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

(

d) any applicable law relating to the collection of taxes has been complied with;

(

e) the transfer is rightful or is to a bona fide purchaser; and

(

f) any fee referred to in subsection 45(2) has been paid.

Liability for delay.

71(2)

Where an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for loss resulting from any unreasonable delay in registration or from failure or refusal to register the transfer.

Assurance that endorsement effective.

72(1)

An issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing, and by requiring

(

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

(

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

(

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

(

d) in any other case, assurance that corresponds as closely as practicable to the foregoing.

"Guarantee of the signature" defined.

72(2)

For the purposes of subsection (1), a "guarantee of the signature" means a guarantee signed by or on behalf of a person reasonably believed by the issuer to be responsible.

Standards.

72(3)

An issuer may adopt reasonable standards to determine responsible persons for the purpose of subsection (2).

"Evidence of appointment or incumbency" defined.

72(4)

"Evidence of appointment or incumbency" in clause (1)(

b) means

(

a) in the case of a fiduciary appointed by a court, a copy of the order certified in accordance with subsection 47(7), and dated not earlier than 60 days before the date a security is presented for transfer; and

(

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

Standards.

72(5)

An issuer may adopt reasonable standards with respect to evidence for the purposes of clause (4)(b).

No notice to issuer.

72(6)

An issuer is deemed not to have notice of the contents of any document obtained pursuant to subsection (4) except to the extent that the contents relate directly to appointment or incumbency.

Notice from excess documentation.

72(7)

If an issuer demands assurance additional to that specified in this

section for a purpose other than that specified in subsection (4) and obtains a copy of a will, trust or partnership agreement, by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.

Limited duty of inquiry.

73(1)

An issuer to whom a security is presented for registration has a duty to inquire into adverse claims if

(

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

(

b) the issuer is deemed to have notice of an adverse claim from a document that is obtained under subsection 72(7).

Discharge of duty.

73(2)

An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address furnished by him or, if no such address has been furnished, to his residence or regular place of business, that a security has been presented for registration of transfer by a named person, and that the transfer will be registered unless within thirty days from the date of mailing the notice either

(

a) the issuer is served with a restraining order or other order of a court; or

(

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

Inquiry into adverse claims.

73(3)

Unless an insurer is deemed to have notice of an adverse claim from a document that it obtained under subsection 72(7) or has received notice of an adverse claim under subsection (1), if a security presented for registration is endorsed by the appropriate person as defined in

section 61, the issuer has no duty to inquire into adverse claims, and in particular,

(

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

(

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

(

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

Duration of notice.

73(4)

A written notice of adverse claim received by an issuer is effective for 12 months from the date when it was received unless the notice is renewed in writing.

Limitation of issuer's liability.

74(1)

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

(

a) the necessary endorsements were on or with the security; and

(

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

Duty of issuer in default.

74(2)

If an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unless

(a) subsection (1) applies; or

(

b) the owner is precluded by subsection 75(1) from asserting any claim; or

(

c) the delivery would result in overissue, in which case the issuer's liability is governed by

section 48.

Notice of lost or stolen security.

75(1)

Where a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of his adverse claim within a reasonable time after he knows of the loss, destruction or taking and if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.

Duty of issuer to issue a new security.

75(2)

Where the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the owner

(

a) so requests before the issuer has notice that the security has been acquired by a bona fide purchaser:

(

b) furnishes the issuer with a sufficient indemnity bond; and

(

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

Duty to register transfer.

75(3)

If, after the issue of a new security under subsection (2), a bona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in overissue, in which case the issuer's liability is governed by

section 48.

Right of issuer to recover.

75(4)

In addition to any rights on an indemnity bond, the issuer may recover a new security issued under subsection (2) from the person to whom it was issued or any person taking under him other than a bona fide purchaser.

Agent's duties and rights.

76(1)

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

(

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

(

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

Notice to agent.

76(2)

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

PART VII

TRUST INDENTURES

Definitions.

77(1)

In this Part,

"event of default" means an event specified in a trust indenture on the occurrence of which

(

a) a security interest constituted by the trust indenture becomes enforceable, or

(

b) the principal, interest and other moneys payable thereunder become or may be declared to be payable before maturity, but the event is not an event of default until all conditions prescribed by the trust indenture in connection with the event for the giving of notice or the lapse of time or otherwise have been satisfied; ("cas de défaut")

"trustee" means any person appointed as trustee under the terms of a trust indenture to which a corporation is a party and includes any successor trustee; ("fiduciaire")

"trust indenture" means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a corporation after its incorporation or continuance under this Act, under which the corporation issues debt obligations and in which a person is appointed as trustee for the holders of the debt obligations issued thereunder. ("acte de fiducie")

Application.

77(2)

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

Conflict of interest.

78(1)

No person shall be appointed as trustee if there is a material conflict of interest between his role as trustee and his role in any other capacity.

Eliminating conflict of interest.

78(2)

A trustee shall, within 90 days after he becomes aware that a material conflict of interest exists

(

a) eliminate the conflict of interest; or

(

b) resign from office.

Validity.

78(3)

A trust indenture, any debt obligations issued thereunder and a security interest effected thereby are valid notwithstanding a material conflict of interest of the trustee.

Removal of trustee.

78(4)

If a trustee contravenes subsection (1) or (2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.

Qualification of trustee.

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

List of security holders.

80(1)

A holder of debt obligations issued under a trust indenture may, upon payment to the trustee of a reasonable fee, require the trustee to furnish within 15 days after delivering to the trustee the statutory declaration referred to in subsection (4), a list setting out

(

a) the names and addresses of the registered holders of the outstanding debt obligations;

(

b) the principal amount of outstanding debt obligations owned by each of the holders described in clause (a); and

(

c) the aggregate principal amount of the debt obligations outstanding;

as shown on the records maintained by the trustee on the day that the statutory declaration is delivered to that trustee.

Duty of issuer.

80(2)

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

Corporate applicant.

80(3)

If the person requiring the trustee to furnish a list under subsection (1) is a body corporate, the statutory declaration required under that subsection shall be made by a director or officer of the body corporate.

Contents of statutory declaration.

80(4)

The statutory declaration required under subsection (1) shall state

(

a) the name and address of the person requiring the trustee to furnish the list and, if the person is a body corporate, the address for service thereof; and

(

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

Use of list

80(5)

A list obtained under this

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

(

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

(

b) an offer to acquire debt obligations; or

(

c) any other matter relating to the debt obligations or the affairs of the issuer or guarantor thereof.

Offence.

80(6)

A person who, without reasonable cause, contravenes subsection (5) is guilty of an offence and liable on

summary conviction to a fine not exceeding $5,000. or to imprisonment for a term not exceeding six months or to both.

Evidence of compliance.

81(1)

An issuer or a guarantor of debt obligations issued or to be issued under a trust indenture shall, before doing any act under clause (a), (

b) or (c), furnish the trustee with evidence of compliance with the conditions in the trust indenture relating to

(

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

(

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

(

c) the satisfaction and discharge of the trust indenture.

Duty of issuer or guarantor.

81(2)

Upon the demand of a trustee, the issuer or guarantor of debt obligations issued or to be issued under a trust indenture shall furnish the trustee with evidence of compliance with the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.

Contents of declarations.

Evidence of compliance as required by

section 81 shall consist of

(

a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in that

section have been complied with; and

(

b) where the trust indenture requires compliance with conditions that are subject to review

(

i) by legal counsel, an opinion of legal counsel that the conditions referred to in that

section have been complied with, and (ii) by an auditor or accountant, an opinion or report of the auditor of the issuer or guarantor, or such other accountant as the trustee may select, that the conditions referred to in that

section have been complied with.

Further evidence of compliance.

The evidence of compliance referred to in

section 82 shall include a statement by the person giving the evidence

(

a) declaring that he has read and understands the conditions of the trust indenture described in

section 81;

(

b) describing the nature and scope of the examination or investigation upon which he based the certificate, statement or opinion; and

(

c) declaring that he has made such examination or investigation as he believes necessary to enable him to make the statements or give the opinions contained or expressed therein.

Trustee may require evidence of compliance.

84(1)

Upon the demand of a trustee, the issuer or guarantor of debt obligations issued under a trust indenture shall furnish the trustee with evidence in such form as the trustee may require as to compliance with any condition thereto relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

Certificate of compliance.

84(2)

At least once in each 12 month period beginning on the date of the trust indenture and at any other time upon the demand of a trustee, the issuer or guarantor of debt obligations issued under a trust indenture shall furnish the trustee with a certificate that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.

Notice of default

The trustee shall give to the holders of debt obligations issued under a trust indenture, within 30 days after the trustee becomes aware of the occurrence thereof, notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee reasonably believes that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs the issuer or guarantor in writing.

Duty of care.

A trustee in exercising his powers and discharging his duties shall

(

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

(

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

Reliance on statements.

Notwithstanding

section 86, a trustee is not liable if he relies in good faith upon statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

No exculpation.

No term of a trust indenture or of any agreement between a trustee and the holders of debt obligations issued thereunder or between the trustee and the issuer or guarantor shall operate so as to relieve a trustee from the duties imposed upon him by

section 86.

PART VIII

RECEIVERS AND RECEIVER-MANAGERS

Functions of receiver.

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

Functions of receiver-manager.

A receiver of a corporation may, if he is also appointed receiver-manager of the corporation, carry on any business of the corporation to protect the security interest of those on behalf of whom he is appointed.

Directors' powers cease.

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

Duty to act.

A receiver or receiver-manager appointed by a court shall act i