Bill 15 — Fourth Session, 24Th Legislature, 49 Elizabeth Ii the Legislative Assembly of Alberta Bill 15 Business Corporations Amendment Act, 2000 (Legislature 24, Session 4)

L24 S4 835

Alberta — Bills

2000 BILL 15 Fourth Session, 24th Legislature, 49 Elizabeth II THE LEGISLATIVE ASSEMBLY OF ALBERTA BILL 15 BUSINESS CORPORATIONS AMENDMENT ACT, 2000 MR. MELCHIN First Reading Second Reading Committee of the Whole Third Reading Royal Assent Title: 2000 (24th, 4th) Bill 15, Business Corporations Amendment Act, 2000

Bill 15 Mr. Melchin BILL 15 2000 BUSINESS CORPORATIONS AMENDMENT ACT, 2000 (Assented to , 2000) HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows: Amends SA 1981 cB-15 1 The Business Corporations Act is amended by this Act. 2

Section 42 is repealed and the following is substituted: Financial assistance 42(1) In this section, “financial assistance” means financial assistance by means of a loan, guarantee or otherwise.

(2) A corporation may give financial assistance to any person for any purpose if it is in the best interest of the corporation to do so.

(3) Subject to subsection (4), a corporation must disclose to its shareholders, in accordance with the regulations, financial assistance that the corporation gives to (

a) a shareholder or director of the corporation or of an affiliated corporation, (

b) an associate of a shareholder or director of the corporation or of an affiliated corporation, or (

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

(4) A corporation is not required to disclose to its shareholders financial assistance that it gives 1

Explanatory Notes 1 Amends

chapter B-15 of the Statutes of Alberta, 1981. 2

Section 42 presently reads: 42(1) Except as permitted under subsection (2), a corporation shall not, directly or indirectly, give financial assistance by means of a loan, guarantee or otherwise (

a) to a shareholder or director of the corporation or of an affiliated corporation, (

b) to an associate of a shareholder or director of the corporation or of an affiliated corporation, or (

c) 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 an affiliated corporation, if there are reasonable grounds for believing that (

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

e) the realizable value of the corporation’s assets, excluding the amount of any financial assistance in the form of a loan or 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. 1 Explanatory Notes

(

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, (

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

i) to enable them to purchase or erect or to assist them in purchasing or erecting 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, or (

f) to any person if all the shareholders have consented to giving the financial assistance.

(5) 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. 3

Section 113 is amended in subsections (3)(d), (5), (6)(

a) and (8) by striking out “42” and substituting “42(2)”. 2

(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, or (

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.

(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.

(4) Unless disclosure is otherwise made by a corporation, a financial statement referred to in

section 149(1)(

a) shall contain the following information with respect to each case in which financial assistance is given by the corporation by way of loan, guarantee or otherwise, whether in contravention of this

section or not, to any of the persons referred to in subsection (1)(a), (

b) or (c), if the financial assistance was given during the financial year or period to which the statement relates or remains outstanding at the end of that financial year or period: (

a) the identity of the person to whom the financial assistance was given; (

b) the nature of the financial assistance given; (

c) the terms on which the financial assistance was given; (

d) the amount of the financial assistance initially given and the amount, if any, outstanding. 3

Section 113 presently reads: 113(1) Directors of a corporation who vote for or consent to a resolution authorizing the issue of a share under

section 25 for a consideration other than money are jointly and severally liable to the corporation to make good any amount by which the consideration received is less than the fair equivalent of the money that the corporation would have received if the share had been issued for money on the date of the resolution. 2 Explanatory Notes

(2) Subsection (1) does not apply if the shares, on allotment, are held in escrow pursuant to an escrow agreement required by the Executive Director and are surrendered for cancellation pursuant to that agreement.

(3) Directors of a corporation who vote for or consent to a resolution authorizing (

a) a purchase, redemption or other acquisition of shares contrary to

section 32, 33 or 34, (

b) a commission on a sale of shares not provided for in

section 39, (

c) a payment of a dividend contrary to

section 40, (

d) financial assistance contrary to

section 42, (

e) a payment of an indemnity contrary to

section 119, or (

f) a payment to a shareholder contrary to

section 184 or 234, are jointly and severally liable to restore to the corporation any amounts so paid and the value of any property so distributed, and not otherwise recovered by the corporation.

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

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

(5) If money or property of a corporation was paid or distributed to a shareholder or other recipient contrary to

section 32, 33, 34, 39, 40, 42, 119, 184 or 234, the corporation, any director or shareholder of the corporation, or any person who was a creditor of the corporation at the time of the payment or distribution, is entitled to apply to the Court for an order under subsection (6).

(6) On an application under subsection (5), the Court may, if it is satisfied that it is equitable to do so, do any or all of the following: (

a) order a shareholder or other recipient to restore to the corporation any money or property that was paid or distributed to him contrary to

section 32, 33, 34, 39, 40, 42, 119, 184 or 234; (

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

c) make any further order it thinks fit.

(7) A director is not liable under subsection (1) if he proves that he did not know and could not reasonably have known that the share was issued for a consideration less than the fair equivalent of the money that the corporation would have received if the share had been issued for money. 3 Explanatory Notes

Section 231(

b) is repealed and the following is substituted: (b) “complainant” means (

i) a registered holder or beneficial owner, or a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates, (ii) a director or an officer or a former director or officer of a corporation or of any of its affiliates, (iii) a creditor (

A) in respect of an application under

section 232, or (

B) in respect of an application under

section 234, if the Court exercises its discretion under subclause (iv), or (iv) any other person who, in the discretion of the Court, is a proper person to make an application under this Part. 5

Section 254(1) is amended by adding the following after clause (o): (

p) respecting the disclosure of financial assistance for the purpose of

section 42(3). 6 This Act comes into force on Proclamation. 4

(8) A director is not liable under subsection (3)(

d) if he proves that he did not know and could not reasonably have known that the financial assistance was given contrary to

section 42.

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

section may not be commenced after 2 years from the date of the resolution authorizing the action complained of 4

Section 231(

b) presently reads: 231 In this Part, (b) “complainant” means (

i) a registered holder or beneficial owner, or a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates, (ii) a director or an officer or a former director or officer of a corporation or of any of its affiliates, or (iii) any other person who, in the discretion of the Court, is a proper person to make an application under this Part. 5

Section 254(1) presently reads in part: 254(1) The Lieutenant Governor in Council may make regulations 6 Coming into force. Title: 2000 (24th, 4th) Bill 15, Business Corporations Amendment Act, 2000 4 Explanatory Notes

Document details

Collection	Alberta — Bills
Citation	L24 S4 835
Type	bill
Volume / chapter	L24 S4 835
Language	en
Format	json
Source	PROVINCIAL
Identifier	59574af8b96113e3ca0dbb54b7b72348d98c96a9

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