Bill 31 (Legislature 11, Session 3)

L11 S3 7059

Alberta — Bills

Bill No. 31 of 1950. A BILL TO AMEND THE COMPANIES ACT NOTE. This Bill amends The Co'mpanies Act, being

chapter 240 of the Revised Statutes of Alberta,

Section 2 is amended by the addition of a definition of the term "dividend" which is defined as including a bonus or any distribution to shareholders as such.

Section 31 (1) is amended for purposes of clarificatiQn. The expression "when the minimum subscription has been subscribed" is appli<!able only to clauses (a,) and (

c) of subsection (1) and is not applicable to clause (b). The purpose of the amendment is to make this dear.

Section 52 is amended by striking out a portion of sub section (2) and by the addition of three new subsections. Subsection (2) is amended by striking out the general provision that in the case of conversion from a private company to a public company the company shall be required to comply with all the provisions of the Act. This general provision is replaced by specific provisions setting out the items with whi,ch such a company is required to comply.

Subsection (3) provides that when a private company is converted into a public company it may continue to carry on the business authorized by its memorandum of associa tion after the issue of the certificate of conversion. How ever, subsection (4) provides that it cannot allot any of its shares or exercise any of its borrowing powers unless it complies with certain conditions which are listed.

These conditions are that the company must file a prospectus naming a minimum subscription upon which the directors may proceed to allotment or, if the company doesn't issue any invitation to the public to subscribe for its shares it must file a statement in lieu of prospectus. In the case of a prospectus being filed the minimum subscription must be subscribed and paid to and received by the company. The prospectus or statement in lieu of prospectus is to be ac companied by a statutory declaration by the directors in the Forms which are set out in the Schedule.

Subsection (5) provides that when the company has complied with these conditions the Registrar may issue a certificate to the effect that it is entitled to allot its unissued shares and exercise its borrowing powers. Subsection (6) of

section 72 is struck out. The effect of this subs~ction ii to place a restriction on Alberta companies which does not apply to companies incorporated either

ii under the Dom,inion Companies :ict or. t~e E'I}UliBh Com,.panies Act. It works a hardshIp on ml.nlng, 011 and other companies whose assets are of a wasting character by unnecessarily restricting the extent to which they may pay dividends. This subsection is replaced by fo~r new sections relating- to the payment of dividends which are similar to

section 83 of the Dominion Companies Act and which are inserted in this Act immediately after

section 82.

Section 73 (4) is amended.

Section 73 presently provides for the creation of shares of various classes with special rights or restrictions being attached to the various classes of shares. The purpose of the amendment is to enable the articles of the company to provide that any class of shares shall have the right to select a certain portion of the board of directors. Four new sections are added immediately after secti~n 82 dealing with the payment of dividends. These sections are similar to the provisions of s~ction 83 of the Dominion Companies Act.

Section 82a provides that no dividends shall be declared when the company is insolvent or which renders the company insolvent or which will impair the capital of the company. If the directors declare and pay a dividend con trary to this

section they become personally liable to the company and its creditors for the debts of the company to the extent of the dividend so declared. Any dire~tor may evade this personal liability by protesting the payment at the board meeting and by reporting his protest to the Registrar of Companies. The new

section 82b provides for the issue of paid up shares in lieu of dividends or for the crediting of dividends or shares issued and not already paid for. The directors may only follow this procedure if authorized to do so by the company's articles or by a special resolution. Se,ctiol1 82c provides for the payment of dividends by a company whose assets are of a wasting character such as mining and oil companies. Such companies may pay dividends so long as the value of the remaining assets of the company are sufficient to meet all liabilities of the company exclusive of its paid up capital. The new

section 82d enables the directors to deduct from dividends payable to any shareholder such sums of money as are due by the shareholder to the company.

Section 254 (1) is amended. The amendment increases the fee payable for obtaining copies of registered documents from ten cents to twenty cents per folio of one hundred words. This fee has not been changed for thirty years and the new fee approximately equals the cost of having the copies prepared. Form 3 .in the Se,eond

Schedule is amended to correct an error. The reference to subsection (2) which presently appears should have been a reference to subsection (3).

iii Two new Forms 7 a and Sa are added. These are the statutory declarations required from the directors in the case of conversion from a private company to a public company. KENNETH A. McKENZIE, Acting Legislative Counsel. (Thi8 note does not form a'ny part of the Bill but is ojJwred in explanation of its provisions.)

BILL No. 31 of 1950.

An Act to amend The Companies Act. (Assented to , 1950.) HIS MAJESTY, by and with the advice and ~onsent of the Legislative Assembly of the Province of Alberta, enacts as follows: 1.. The Companies Act, being

chapter 240 of the Revised Statutes of Alberta, 1942, is hereby amended as to

section 2by adding immediately after clause (

m) the following new clause: "(ma) 'dividend' includes bonus or any distribution to shareholders as such;". 2. The said Act is further amended as to

section 31, subsection (1) ,- (

a) by striking out the words "When the minimum subscription has been subscribed,"; (

b) by adding immediately after the word "Schedule," where it occurs in clauses (

a) and (

c) the words "when the minimum subscription has been sub scribed," . 3. The said Act is further amended as to

section 52,- (

a) by striking out the words "and thereafter the ,company shall be required to comply with all of the provisions of this Act relating to public companies" where they occur in subsection (2) ; (

b) by adding immediately after subsection (2) the following new subsections: "

(3) Subject to subsection (4), upon the issue of the certificate of conversion pursuant to sub section (2), the company may carryon as a public company the business authorized by its memor andum of asso,ciation. II

(4) A private company converted into a public company shall not allot any of its shares not allotted prior to the date of the certificate issued pursuant to the provisions of subsection (2) or exercise any borrowing powers, unless,- "(

a) the company has filed with the Registrar a prospectus substantially complying with this Act naming therein an amount in cash as the minimum subscription upon which the direct-

2 ors may proceed to allotment, or if the company does not issue any invitation to the public to subscribe for its shares, a statement in lieu of prospectus substantially according to Form 5 of the Second Schedule; and " (

b) in the case of a prospectus being filed as pro vided in clause (a,), the minimum subscription named therein has been subscribed and the sum payable on application therefor, which shall not be less than five per cent of the nom inal amount of each share, or in the case of shares without nominal or par value, five per cent of the consideration for which each such share is being issued, has been' paid to and received by the company; and " (

c) the company has filed with the Registrar a statutory declaration by the directors,- " (

i) according to Form 7 a in the Second Schedule, in the case of a company which has filed a statement in lieu of prospectus; " (ii) according to Form 8a in the Se,cond

Schedule in the case of a company which has filed a prospectus. "(5) 'V'hen the 'company has -complied with the provisions of subsection (4), the Registrar may issue a certificate that the company is entitled to allot its unissued shares and exercise its borrowing powers.". 4. The said Act is further amended by striking out sub section (6) of

section 72. 5. The said Act is further amended as to

section 73, sub section (4) by adding immediately after the words "preference shares" the words "or any other class of shares". 6. The said Act is further amended by adding im mediately after

section 82 the following new heading and sections: "Division (2a) -Dividends "82a.-

(1) No dividend shall be declared, "(

a) when the company is insolvent; or " (

b) which renders the company insolvent; or "(

c) which will impair the capital of the company. "

(2) In determining the solvency of the company for the purposes of this

section no account shall be taken of any increase in the surplus or reserves of the company result ing merely from the writing-up of the value of the assets of the company, unless the writing-up was done more than five years before the date of the declaration of the dividend. "

(3) If the directors of the company declare and pav any dividend,- ~ "(

a) when the company is insolvent; or

3 " (

b) which renders the company insolvent; or "(

c) which impairs the capital of the company; they shall be jointly and severally liable to the company and to its creditors for the debts of the company then existing or thereafter contracted until repayment of the dividends so declared and paid to the extent that such dividends and interest have not been repaid to the company.

" (4.) If any director present, when such dividend is de clared, forthwith requests the entry on the minutes of the board of his protest against the same, or if any director then absent, within one week after he becomes a ware of such declaration and is able so to do, delivers to the presi dent, secretary or other officer of the company his protest against the same and within eight days thereafter delivers or mails by registered letter a duplicate copy of his protest to the Registrar of Companies, the director may thereby and not otherwise exonerate himself from such liability. "82'b.

For the amount of any dividend which the direct ors may lawfully declare payable in money, the directors, if authorized so to do by the company's articles or by a special resolution, may,- " (

a) issue therefor shares of the company as fully paid; or " (

b) credit the amount of such dividend on the shares of the company already issued but not fully paid and the liability of the holders of such shares thereon shall be reduced by the amount of the dividend. "82c.-

(1) Notwithstanding

section 82,- "(

a) a company at least seventy-five per cent in value of the assets of which are of a wasting chara~ter; or " (

b) a mining company which for the time being carries on as its principal business the business of operating producing mining properties owned or controlled by it; may declare and pay dividends out of its funds derived from the operations of the company notwithstanding that the paid up capital of the company may be thereby reduced or im paired, if such payment does not reduce the value of its remaining assets so that they will be insufficient to meet all the liabilities of the company then existing exclusive of its paid up ,capital. "

(2) If a dividend is declared in excess of the amount permitted by subsection (1), the directors are liable for the amount in excess of the amount permitted in the same manner and to the same extent as set out in

section 82a, subsection (3). "82d. The directors may deduct from the dividends pay able to any shareholder all such sums of money as are due from him to the company on account of calls or otherwise.". "I. The !aid Act is further amended as to

section 254, subsection (1) by striking out the word "ten" im.mediately following the word "exceeding", and by substituting the word "twenty".

4 8. The said Act is further amended as to Form 3 in the Second Schedule' by striking out the figure" (2)" where it occurs in the third paragraph and by substituting the figure "(8) ". 9. The said Act is further amended by adding im mediately after Form 7 in the Second

Schedule the follow ing new Form: "FORM 7((. "THE COMPANIES ACT. " (Section 52.) "STATUTORY DECLARATION FOR CERTIFICATE TO ALLOT UNISSUED SHARES AND TO EXERCISE BORROWING POWERS. PROVI~~!~:f~ERTA. } i~,t~:~~t~e~ .. ~~ .. ~~~.~~~~~~.~~ "To WIT: Limited. "We, ........................ , of.... .., and ....................... , of........... . hereby solemnly declare as follows: "

(1) We are duly appointed directors of the .................... , Limited (hereinafter referred to as 'the Company'). "

(2) The company has filed with the Registrar a state ment in lieu 'of prospectus in which no minimum subscrip tion was named because the company does not propose to issue an invitation to the public to subscribe for its shares. "

(3) A copy of the last balance sheet of the company signed by us was filed with the statement aforesaid. "( 4) No allotment of any share of the company has been made and no debenture has been issued since the date of the issue of a certificate converting the company from a private company to a public company. "

(5) Each of us has paid to the company (on each of the qualification shares) (in respect of the quaIifi.cation) which a director of the company is required to (take) (have) a proportion equal to the proportion paid on application for (each share (debenture» (membership) as aforesaid. "

(6) No prospectus (offering any shares (debentures) of the company for subscription) (inviting any persons to apply for membership) has been issued, and the company does not intend to issue any prospectus. HAnd we severally make this solemn declaration con scientiously believing it to be true, and knowing that it is of the same force and effect as if made under oath and by virtue of the Canada Evidence Act.

5 "Severally declared by each of the above named declarants at ......... . this ......... day of ... , 19 ..... . before me- "(Note-This form must be altered depending on whether the company has or has not a share capital, and subscription or applications for shares, debentures, or membership have been taken.)". 10. The said Act is further amended by adding im mediately after Form 8 in the Second

Schedule the following new Form: "FORM Sa. HTHE COMPANIES ACT. " (Section 52.) "STATUTORY DECLARATION FOR CERTIFICATE TO ALLOT UNISSUED SHARES AND TO EXERCISE BORROWING POWERS. PROVI~~:!Af~ERTA. } l~t,t~~:~t~e.r .. o.f .. ~~.~ .. ~~~~~~i~~ "To WIT: Limited. "We,.. . ...... , of.. .., and ...................... , of .................................... hereby solemnly decla-re as follows: "

(1) We are duly appointed directors of the ................... , Limited (hereinafter referred to as 'the Company'). "

(2) The ·company has filed with the Registrar a pro- spectus in which the amount of ...... ...... dollars in cash was named as the minimum subscription upon which the directors might proceed to allotment of its unissued shares. "

(3) The amount of.. .. ........ dollars payable in cash exclusively has been subscribed for unissued shares. "( 4) The amounts paid or payable as commission for subscribing or agreeing to subscribe, or procuring or agreeing to procure, the minimum subscription are respect- ively as 'follows: Paid, $..... ... ; payable, $ ................... . "

(5) The amounts allowed or to be allowed as discount ':<Only in t.hl' in respect to shares* (debentures) are respectively as case.~i a follows: Allowed, $.. . .. ; to be allowed,$................. irr:tedY "

(6) The sum payable on application (for each company. share (debenture) was ................... per cent of the nominal amount of each share (debenture» (for membership by

6 each new member was .................... dollars) and has been paid to and received by the company. "

(7) All money so paid to and received by the company was deposited to the credit of the company as trustee in the branch of the ... . . Bank, situated at. .................. -. ~ "( 8) A copy of the prospectus filed as aforesaid was furnished to every person who (subscribed for any share (debenture) offered) (.applied for any membership in vited) by the prospectus. "

(9) No allotment of any share of the company has been made and no debenture has been issued since the date of the issue of .a certificate converting the company from a private company to a public company. "

(10) Each of us has paid to the company (on each of the qualification shares) (in respect of the qualification) which a director of the company is required to (take) (have) a proportion equal to the proportion paid on applica tion for (each (share) debenture) (membership) as afore- said. "And we severally make this solemn declaration con scientiously believing it to be true, and knowing that it is of the same force and effect as if made under oath and by virtue of the Canada Evidence Act.

"Severally declared by each of the above named declarants at. ........ . this .......... day of ................ , 19 .... .. before me- "(Note-This form must be altered depending on whether the com:pa~y has or has not a share ,capital, and subscription or applIcatIOns for shares, debentures, or membership have been taken.)". 11. This Act shall come into force on the first day of July, 19'50.

No. 31 FIRST SESSION TWELFTH LEGISLA nJRE 14 GEORGE VI 1950 BILL

An Act to amend The COlllpanies Act. Recei ved and read the First time .................................... . Second time ................................... . Third time ..................................... . RON. MR. GERHART. Title: 1950 (11th, 3rd) Bill 31,

An Act to amend The Companies Act

Document details

Collection	Alberta — Bills
Citation	L11 S3 7059
Type	bill
Volume / chapter	L11 S3 7059
Language	en
Format	json
Source	PROVINCIAL
Identifier	5e8d102eb31cb9224cdd8be5b91d7cd2e3286037

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