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SNL2007

CHAPTER S-13.01

SECURITIES TRANSFER ACT

Amended:

CHAPTER S-13.01

AN ACT RESPECTING THE TRANSFER OF SECURITIES

(Assented to

June 14, 2007

Analysis

Short title

PART I

INTERPRETATION

Interpretation

Meaning of valid security

Notice and knowledge

Obligation of good faith

Variation of Act by agreement

Principles of law and equity apply

Clearing agency rules apply

Application to Crown

Existing proceedings

PART II

GENERAL MATTERS CONCERNING SECURITIES

AND

OTHER FINANCIAL ASSETS

Share, equity interest

Mutual fund security

Interest in partnership, limited liability company

Bill or exchange, promissory note

Depository bill or note

Clearing house option

Futures contract

Security and other financial asset acquisition

Notice of adverse claim

Notice of transfer

Delay

Statement on security certificate

Registration of financing statement

Purchaser's control of certificated security

Purchaser's control of uncertificated security

Purchasers control of security entitlement

Securities intermediaries control of security entitlement

Agreement re: control of uncertificated security

Agreement re: control of security entitlement

Effectiveness of endorsement

Effectiveness of endorsement made by representative

Endorsement remains effective

Date when effectiveness is determined

Warranties on transfer of certificated security

Warranties on transfer of uncertificated security

Warranties on endorsement of security certificate

Warranties on instruction re: uncertificated security

Warranty on presentation of security certificate

Warranties by agent delivering certificated security

Warranties on redelivery of security certificate

Brokers warranties

Warranties on entitlement order

Warranties on security credited to securities account

Securities intermediarys warranties

Law governing validity of security

Matters governed by law of securities intermediarys jurisdiction

Adverse claim governed by law of jurisdiction of security certificate

Seizure governed by laws re: civil enforcement of judgments

Seizure of interest in certificated security

Seizure of interest in uncertificated security

Seizure of interest in security entitlement

Notice of seizure to secured party

Enforceability of contracts

Rules of evidence re: certificated security

Securities intermediarys liability to adverse claimant

Securities intermediary as purchaser for value

PART

III

ISSUE

AND

ISSUER

Certificated security

Enforcement of security

Lack of genuineness of certificated security

Other defences

Right to cancel contract

Staleness as notice of defect or defence

Effect of issuers restriction on transfer

Completion of security certificate

Rights and duties of issuer re: registered owner

Warranties by person signing security certificate

Issuers lien

Overissue

PART IV

TRANSFER OF CERTIFICATED

AND

UNCERTIFICATED SECURITIES

Delivery of certificated security

Rights of purchaser

Protected purchaser

Form of endorsement

Endorsement of part of a security certificate

When endorsement is transfer of security

Endorsement missing

Notice of adverse claim on endorsement

Obligations of endorser

Completion of instruction

Obligations of person originating an instruction

Warranties by guarantor of endorsers signature

Warranties by guarantor of signature of originator of instruction

Warranties by special guarantor of signature of originator of instruction

Warranty re: rightfulness of transfer by guarantor

Guarantee may not be condition to registration of transfer

Liability of guarantor, endorser and originator

Purchasers right to requisites for registration of transfer

PART V

REGISTRATION

Duty of issuer to register transfer

Assurances re endorsement or instruction

Demand that issuer not register transfer

Duty of issuer re demand to not register transfer

Liability of issuer re: demand to not register transfer

Wrongful registration of transfer

Replacement of security lost certificate

Obligation to notify issuer of lost, destroyed or wrongfully taken security certificate

Obligation of authenticating trustee, transfer agent, etc.

PART VI

SECURITY ENTITLEMENTS

Acquisition of security entitlement

Protection of entitlement holders from adverse claim

Property interest of entitlement holders in financial asset

Duty of securities intermediary re: financial asset

Duty of securities intermediary re: payments and distributions

Duty of securities intermediary to exercise rights

Duty of securities intermediary to comply with entitlement order

Duty of securities intermediary re: entitlement holders direction

Compliance with other statute

Rights of purchaser re: adverse claim

Priority of entitlement holders to financial asset

PART

VII

CONSEQUENTIAL AMENDMENTS

RSNL1990 cC-36 Amdt.

SNL1995 cC-37.1 Amdt.

SNL1996 cJ-1.1 Amdt.

SNL1998 cP-7.1 Amdt.

RSNL1990 cS-13 Amdt.

PART VIII

COMMENCEMENT

Commencement

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

Short title

This Act may be cited as the Securities Transfer Act

2007 cS-13.01 s1

PART I

INTERPRETATION

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Interpretation

(1)In this Act

(a)

"adverse claim" means a claim that

(

i) the claimant has a property interest in a financial asset, and

(ii)

it is a violation of the rights of the claimant for another person to hold, transfer or deal with the financial asset;

(b)

"appropriate person" means,

(

i) with respect to an endorsement, the person specified by a security certificate or by an effective special endorsement to be entitled to the security,

(ii)

with respect to an instruction, the registered owner of an uncertificated security,

(iii)

with respect to an entitlement order, the entitlement holder,

(iv)

in the case of a person referred to in subparagraph (i), (ii) or (iii), being deceased, that person's successor taking under the law, other than this Act, or that person's personal representative acting for the estate of the deceased person, and

(

v) in the case of a person referred to in subparagraph (i), (ii) or (iii) lacking capacity, that person's guardian or other similar representative who has power under the law, other than this Act, to transfer the security or other financial asset;

(c)

"bearer form" means, in respect of a certificated security, a form in which the security is payable to the bearer of the security certificate according to the security certificate's terms but not by reason of an endorsement;

(d)

"broker" means a dealer as defined in the Securities Act

(e)

"certificated security" means a security that is represented by a certificate;

(f)

"clearing agency" means a person

(

i) that

carries on a business or activity as a clearing agency or clearing house within the meaning of the Securities Act

or the securities regulatory law of another province or territory in

Canada

(ii)

that is recognized or otherwise regulated as a clearing agency or clearing house by the superintendent or by a securities regulatory authority of another province or territory in

Canada

, and

(iii)

that

is a securities and derivatives clearing house for the purposes of

section 13.1 of the Payment Clearing and Settlement Act

(Canada) or whose clearing and settlement system is designated under

Part I of that Act;

(g)

"communicate" and "communication" means

(

i) sending a signed writing, and

(ii)

transmitting information by another means agreed by the person transmitting the information and the person receiving the information;

(h)

"control" has the meaning set out in sections 24 to 27;

(i)

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

(j)

"delivery", with respect to a certificated or uncertificated security, has the meaning set out in

section 69, and "deliver" has a corresponding meaning;

(k)

"effective", in relation to an endorsement, instruction or entitlement order, has the meaning set out in sections 30 to 33, and "effectiveness", "ineffective" and "ineffectiveness" have corresponding meanings;

(l)

"endorsement" means a signature that, alone or accompanied by other words, is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring or redeeming the security or granting a power to assign, transfer or redeem the security;

(m)

"entitlement holder" means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary and includes a person who acquires a security entitlement by virtue of paragraph 96(1)(

b) or (c);

(n)

"entitlement order" means a notice communicated to a securities intermediary directing the transfer or redemption of a financial asset to which the entitlement holder has a security entitlement;

(o)

"financial asset" means, except as otherwise provided in sections 11 to 17,

(

i) a security,

(ii)

an obligation of a person that,

(

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

(

B) is recognized in another market or area in which it is issued or dealt in as a medium for investment,

(iii)

a share, participation or other interest in a person, or in property or an enterprise of a person, that,

(

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

(

B) is recognized in another market or area in which it is issued or dealt in as a medium for investment,

(iv)

a property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this Act, or

(

v) a credit balance in a securities account, unless the securities intermediary has expressly agreed with the person for whom the account is maintained that the credit balance is not to be treated as a financial asset under this Act;

(p)

"genuine" means free of forgery or counterfeiting;

(q)

"government" means,

(

i) the Crown in right of

Canada

or in right of the province or another

province

Canada

(ii)

the government of a territory in

Canada

(iii)

a municipality in

Canada

, or

(iv)

the government of a foreign country or of a political subdivision of it;

(r)

"in collusion" means in concert, by conspiratorial arrangement or by agreement for the purpose of violating a person's rights in respect of a financial asset;

(s)

"instruction" means a notice communicated to the issuer of an uncertificated security that directs that the transfer of the security be registered or that the security be redeemed;

(t)

"issuer", with respect to a registration of a transfer of a security, means a person on whose behalf transfer books are maintained, and, with respect to an obligation on or a defence to a security, includes,

(

i) a person who places or authorizes the placing of the person's name on a security certificate, other than as authenticating trustee, registrar, transfer agent or another like person, to evidence a share, participation or other interest in the person's property or in an enterprise or the person's duty to perform an obligation represented by the security certificate,

(ii)

a person who creates a share, participation or other interest in the person's property or in an enterprise, or undertakes an obligation, that is an uncertificated security,

(iii)

a person who directly or indirectly creates a fractional interest in the person's rights or property, if the fractional interest is represented by a security certificate,

(iv)

a guarantor, to the extent of the guarantor's guarantee, whether or not the guarantor's obligation is noted on a security certificate, and

(

v) a person that becomes responsible for, or in place of, another person described as an issuer in this definition;

(u)

"knowledge", "know" and "known" means actual knowledge and actual knowing;

(v)

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

(w)

"person" means an individual, including an individual in his or her capacity as trustee, executor, administrator or other representative, a sole proprietorship, a partnership, an unincorporated association, an unincorporated syndicate, an unincorporated organization, a trust, including a business trust, a corporation, a government or agency of a government or another legal or commercial entity;

(x)

"protected purchaser" means a purchaser of a certificated or uncertificated security, or of an interest in the security, who

(

i) gives value,

(ii)

does not have notice of an adverse claim to the security, and

(iii)

obtains control of the security;

(y)

"purchase" means a taking by sale, discount, negotiation, mortgage, hypothec, pledge, security interest, issue or reissue, gift or any other voluntary transaction that creates an interest in property;

(z)

"purchaser" means a person who takes by purchase;

(aa)

"registered form" means, in respect of a certificated security, a form in which

(

i) the security certificate specifies a person entitled to the security, and

(ii)

a transfer of the security may be registered on books maintained for that purpose by or on behalf of the issuer, or the security certificate states that it may be so registered;

(bb)

"representative" means a person empowered to act for another, including an agent, an officer of a corporation or association and a trustee, executor or administrator of an estate;

(cc)

"secured party" means a secured party as defined in the Personal Property Security Act

(dd)

"securities account" means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that constitute the financial asset;

(ee)

"securities intermediary" means

(

i) a clearing agency, or

(ii)

a person, including a broker, bank or trust company, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity;

(ff)

"security" means, except as otherwise provided in sections 11 to 17, an obligation of an issuer or a share, participation or other interest in an issuer or in property or an enterprise of an issuer,

(

i) that is represented by a security certificate in bearer form or registered form, or the transfer of which may be registered on books maintained for that purpose by or on behalf of the issuer,

(ii)

that is one of a class or series, or by its terms is divisible into a class or series, of shares, participations, interests or obligations, and

(iii)

that,

(

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

(

B) is a medium for investment and by its terms expressly provides that it is a security for the purposes of this Act;

(gg)

"security certificate" means a certificate representing a security, but does not include a certificate in electronic form;

(hh)

"security entitlement" means the rights and property interest of an entitlement holder with respect to a financial asset

specified in

Part VI;

(ii)

"security interest" means a security interest as defined in the Personal Property Security Act

(jj)

"superintendent" means the superintendent as defined in the Securities Act

(kk)

"unauthorized" means, when used with reference to a signature or endorsement, a signature or endorsement that is made without actual, implied or apparent authority or that is forged;

(ll)

"uncertificated security" means a security that is not represented by a certificate; and

(mm)

"value" means a consideration sufficient to support a simple contract and includes an antecedent debt or liability.

(2) Notwithstanding paragraph (1)(o), as the context requires, "financial asset" means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated security, a security certificate and a security entitlement.

(3) The characterization of a person, business or transaction for the purposes of this Act does not determine the characterization of the person, business or transaction for the purposes of any other statute, law, regulation or rule.

2007 cS-13.01 s2

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Meaning of valid security

A security is valid where it is issued in accordance with the applicable law described in subsection 45(1) and constating provisions governing the issuer.

2007 cS-13.01 s3

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Notice and knowledge

(1)For the purposes of this Act, a person has notice of a fact if,

(

a) the person has knowledge of it;

(

b) the person has received notice of it; or

(

c) information comes to the person's attention under circumstances in which a reasonable person would take cognizance of it.

(2) A person gives notice to another person by taking those steps that may be reasonably required to inform the other person in the ordinary course, whether or not the other person actually comes to know of it.

(3) A person receives notice or knowledge when,

(

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

(

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

the notice is duly delivered to the place of business through which the contract was made; or

(

c) the notice is duly delivered to another place held out by that person as the place for receipt of those notices.

(4) Notice, knowledge or a notice received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction and from the time when it would have been brought to the attention of that individual if the organization had exercised due diligence.

(5) For the purpose of subsection (4), an organization exercises due diligence if it maintains reasonable routines for communicating significant information to the individual conducting the transaction and there is reasonable compliance with those routines.

(6) For the purpose of subsection (4), due diligence does not require an individual acting for the organization to communicate information unless,

(

a) that communication is part of the individual's regular duties; or

(

b) the individual has reason to know of the transaction and that the transaction would be materially affected by the information.

2007 cS-13.01 s4

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Obligation of good faith

(1)A contract to which this Act applies and a duty imposed by this Act imposes an obligation of good faith in its performance or enforcement.

(2) In this

section "good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.

2007 cS-13.01 s5

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Variation of Act by agreement

(1)The effect of provisions of this Act may be varied by agreement.

(2) Notwithstanding subsection (1), the obligations of good faith, diligence, reasonableness and care imposed by this Act may not be disclaimed

by agreement, but the parties may by agreement determine the standards by which the performance of those obligations is to be measured so long as

those

standards are not manifestly unreasonable.

2007 cS-13.01 s6

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Principles of law and equity apply

Except in so far as they are inconsistent with this Act, the principles of law and equity supplement this Act and continue to apply, including,

(

a) the law merchant;

(

b) the law relating to the capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion and mistake; and

(

c) other validating or invalidating rules of law.

2007 cS-13.01 s7

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Clearing agency rules apply

A rule adopted by a clearing agency governing rights and obligations between the clearing agency and its participants or between participants in the clearing agency is effective even where the rule conflicts with this Act or the Personal Property Security Act

and affects another person who does not consent to the rule.

2007 cS-13.01 s8

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Application to Crown

(1)This Act applies to the Crown.

(2) Nothing in this Act limits the application of the Proceedings Against the Crown Act.

2007 cS-13.01 s9

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Existing proceedings

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

section comes into force.

2007 cS-13.01 s10

PART II

GENERAL MATTERS CONCERNING SECURITIES

AND

OTHER FINANCIAL ASSETS

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Share, equity interest

A share or similar equity interest issued by a corporation, business trust or similar entity is a security.

2007 cS-13.01 s11

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Mutual fund security

(1)A mutual fund security is a security.

(2) In this section,

(a)

"mutual fund security" means a share, unit or similar equity interest issued by an open-end mutual fund, but does not include an insurance policy, endowment policy or annuity contract issued by an insurance company; and

(b)

"open-end mutual fund" means an entity that makes a distribution to the public of its shares, units or similar equity interests and that carries on the business of investing the consideration it receives for the shares, units or similar equity interests it issues, all or substantially all of which shares, units or similar equity interests are redeemable on the demand of their holders or owners.

2007 cS-13.01 s12

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Interest in partnership, limited liability company

(1)An interest in a partnership or limited liability company is not a security unless,

(

a) that interest is dealt in or traded on securities exchanges or in securities markets;

(

b) the terms of that interest expressly provide that the interest is a security for the purposes of this Act; or

(

c) that interest is a mutual fund security within the meaning of

section 11.

(2) An interest in a partnership or limited liability company is a financial asset if it is held in a securities account.

(3) In this

section "limited liability company" means an unincorporated association, other than a partnership, formed under the laws of another jurisdiction, that grants to each of its members limited liability with respect to the liabilities of the association.

2007 cS-13.01 s13

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Bill or exchange, promissory note

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

Canada

) applies is not a security, but is a financial asset if it is held in a securities account.

2007 cS-13.01 s14

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Depository bill or note

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

Canada

) applies is not a security, but is a financial asset if it is held in a securities account.

2007 cS-13.01 s15

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Clearing house option

(1)A clearing house option or similar obligation is not a security, but is a financial asset.

(2) In this

section "clearing house option" means an option, other than an option on futures, issued by a clearing house to its participants.

2007 cS-13.01 s16

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Futures contract

(1)A futures contract is not a security or a financial asset.

(2) In this

section "futures contract" means a futures contract as defined in the Personal Property Security Act.

2007 cS-13.01 s17

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Security and other financial asset acquisition

(1)A person acquires a security or an interest in a security under this Act where,

(

a) the person is a purchaser to whom a security is delivered under

section 69;

(

b) the person acquires a security entitlement to the security under

section 96.

(2) A person acquires a financial asset, other than a security, or an interest in a financial asset under this Act if the person acquires a security entitlement to the financial asset.

(3) A person who acquires a security entitlement to a security or other financial asset has the rights specified in

Part VI, but is a purchaser of a security, security entitlement or other financial asset held by a securities intermediary only to the extent provided in

section 98.

(4) Unless the context of another statute, law, regulation, rule or agreement shows that a different meaning is intended, a person who is required by that statute,

law, regulation, rule or agreement to transfer, deliver, present, surrender, exchange or otherwise put in the possession of another person a security or other financial asset satisfies that requirement by causing the other person to acquire an interest in the security or other

financial asset as set out

in subsection (1) or (2).

2007 cS-13.01 s18

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Notice of adverse claim

A person has notice of an adverse claim if

(

a) the person knows of the adverse claim;

(

b) the person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or

(

c) the person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists and the investigation, if carried out, would establish the existence of the adverse claim.

2007 cS-13.01 s19

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Notice of transfer

(1)Having knowledge that a financial asset, or an interest in a financial asset, is being or has been transferred by a representative does not impose a duty of inquiry into the rightfulness of the transaction and is not notice of an adverse claim.

(2) Notwithstanding subsection (1), a person has notice of an adverse claim if that person knows that,

(

a) a representative has transferred a financial asset, or an interest in a financial asset, in a transaction; and

(

b) the transaction

is, or the proceeds of the transaction are being used,

(

i) for the individual benefit of the representative, or

(ii)

otherwise in breach of a duty owed by the representative.

2007 cS-13.01 s20

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Delay

An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate, or that sets a date on or after which a security certificate is to be presented or surrendered for redemption or exchange, does not by itself constitute notice of an adverse claim except in the case of a transfer that takes place more than,

(

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

(b)

6 months after a date set for payment of money against presentation or surrender of the security certificate, where money was available for payment on that date.

2007 cS-13.01 s21

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Statement on security certificate

(1)A purchaser of a certificated security has notice of an adverse claim where the security certificate,

(

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

(

b) is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor.

(2) For the purposes of paragraph (1)(b), the mere writing of a name on a security certificate does not by itself constitute an unambiguous statement that the security certificate is the property of a person other than the transferor.

2007 cS-13.01 s22

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Registration of financing statement

The registration of a financing statement under the Personal Property Security Act

is not notice of an adverse claim.

2007 cS-13.01 s23

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Purchaser's control of certificated security

(1)A purchaser has control of a certificated security that is in bearer form where the certificated security is delivered to the purchaser.

(2) A purchaser has control of a certificated security that is in registered form where the certificated security is delivered to the purchaser and,

(

a) the security certificate is endorsed to the purchaser or in blank by an effective endorsement; or

(

b) the security certificate is registered in the name of the purchaser at the time of the original issue or registration of transfer by the issuer.

2007 cS-13.01 s24

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Purchaser's control of uncertificated security

(1)A purchaser has control of an uncertificated security where,

(

a) the uncertificated security is delivered to the purchaser; or

(

b) the issuer has agreed that the issuer will comply with instructions that are originated by the purchaser without the further consent of the registered owner.

(2) A purchaser to whom subsection (1) applies in relation to an uncertificated security has control of the uncertificated security, even if the registered owner retains the right,

(

a) to make substitutions for the uncertificated security;

(

b) to originate instructions to the issuer; or

(

c) to otherwise deal with the uncertificated security.

2007 cS-13.01 s25

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Purchasers control of security entitlement

(1)A purchaser has control of a security entitlement where,

(

a) the purchaser becomes the entitlement holder;

(

b) the securities intermediary has agreed that it will comply with entitlement orders that are originated by the purchaser without the further consent of the entitlement holder; or

(

c) another person has control of the security entitlement on behalf of the purchaser or, having previously obtained control of the security entitlement, acknowledges that the person has control on behalf of the purchaser.

(2) A purchaser to whom subsection (1) applies in relation to a security entitlement has control of the security entitlement even where the entitlement holder retains the right to

(

a) make substitutions for the security entitlement;

(

b) originate entitlement orders to the securities intermediary; or

(

c) otherwise deal with the security entitlement.

2007 cS-13.01 s26

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Securities intermediaries control of security entitlement

Where an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control of the security entitlement.

2007 cS-13.01 s27

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Agreement re: control of uncertificated security

(1)An issuer shall not enter into an agreement of the kind referred to in paragraph 25(1)(

b) without the consent of the registered owner.

(2) An issuer that

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

b) is not required to confirm the existence of the agreement to another person unless requested to do so by the registered owner.

(3) An issuer is not required to enter into an agreement of the kind referred to in paragraph 25(1)(

b) even where the registered owner requests the agreement.

2007 cS-13.01 s28

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Agreement re: control of security entitlement

(1)A securities intermediary shall not enter into an agreement of the kind referred to in paragraph 26(1)(

b) without the consent of the entitlement holder.

(2) A securities intermediary that has entered into an agreement of the kind referred to in paragraph 26(1)(

b) is not required to confirm the existence of the agreement to another person unless requested to make that confirmation by the entitlement holder.

(3) A securities intermediary is not required to enter into an agreement of the kind referred to in paragraph 26(1)(

b) even where the entitlement holder requests the agreement.

2007 cS-13.01 s29

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Effectiveness of endorsement

An endorsement, instruction or entitlement order is effective where,

(

a) it is made by the appropriate person;

(

b) it is made by a person who, in the case of an endorsement or instruction, has the power under the law of agency to transfer the security, or in the case of an entitlement order, has the power under the law of agency to transfer the financial asset, on behalf of the appropriate person, including,

(

i) in the case of an instruction referred to in paragraph 25(1)(b), the person who has control of the uncertificated security, or

(ii)

in the case of an entitlement order referred to in paragraph 26(1)(b), the person who has control of the security entitlement; or

(

c) the appropriate person has ratified it or is otherwise precluded from asserting its ineffectiveness.

2007 cS-13.01 s30

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Effectiveness of endorsement made by representative

An endorsement, instruction or entitlement order made by a representative is effective even where,

(

a) the representative has failed to comply with a controlling instrument or with the law of the jurisdiction governing the representative's rights and duties, including any law requiring the representative to obtain court approval of the transaction; or

(

b) the representative's action in making the endorsement, instruction or entitlement order or using the proceeds of the transaction is otherwise a breach of duty owed by the representative.

2007 cS-13.01 s31

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Endorsement remains effective

Where a security is registered in the name of or specially endorsed to a person described as a representative, or where a securities account is maintained in the name of a person described as a representative, an endorsement, instruction or entitlement order made by the person is effective even if the person is no longer serving in that capacity.

2007 cS-13.01 s32

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Date when effectiveness is determined

(1)The effectiveness of an endorsement, instruction or entitlement order is determined as of the date that the endorsement, instruction or entitlement order is made.

(2) An endorsement, instruction or entitlement order does not become ineffective by reason of a later change of circumstances.

2007 cS-13.01 s33

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Warranties on transfer of certificated security

A person who transfers a certificated security to a purchaser for value warrants to the purchaser and, where the transfer is by endorsement, also warrants to a subsequent purchaser, that,

(

a) the security

certificate is genuine and has not been materially altered;

(

b) the transferor does not know of a fact that might impair the validity of the security;

(

c) there is no adverse claim to the security;

(

d) the transfer does not violate a restriction on transfer;

(

e) where the transfer is by endorsement, the endorsement is made by the appropriate person or, where the endorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and

(

f) the transfer is otherwise effective and rightful.

2007 cS-13.01 s34

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Warranties on transfer of uncertificated security

(1)A person who originates an instruction for registration of transfer of an uncertificated security to a purchaser for value warrants to the purchaser that,

(

a) the instruction is made by the appropriate person or, where the instruction is made by an agent, the agent has actual authority to act on behalf of the appropriate person;

(

b) the security is valid;

(

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

(

d) at the time that the instruction is presented to the issuer,

(

i) the purchaser will be entitled to the registration of transfer,

(ii)

the transfer will be registered by the issuer free from all liens, security interests, restrictions and claims other than those specified in the instruction,

(iii)

the transfer will not violate a restriction on transfer, and

(iv)

the transfer will otherwise be effective and rightful.

(2) A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants to the purchaser that,

(

a) the security is valid;

(

b) there is no adverse claim to the security;

(

c) the transfer does not violate a restriction on transfer; and

(

d) the transfer is otherwise effective and rightful.

2007 cS-13.01 s35

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Warranties on endorsement of security certificate

A person who endorses a security certificate warrants to the issuer that

(

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

(

b) the endorsement is effective.

2007 cS-13.01 s36

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Warranties on instruction re: uncertificated security

A person who originates an instruction for the registration of transfer of an uncertificated security warrants to the issuer that,

(

a) the instruction is effective; and

(

b) at the time that the instruction is presented to the issuer, the purchaser will be entitled to the registration of transfer.

2007 cS-13.01 s37

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Warranty on presentation of security certificate

A person who presents a certificated security for the registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, but a purchaser for value and without notice of adverse claims to whom transfer is registered warrants to the issuer only that the person has no knowledge of an unauthorized signature in a necessary endorsement.

2007 cS-13.01 s38

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Warranties by agent delivering certificated security

Where,

(

a) a person acts as agent of another person in delivering a certificated security to a purchaser;

(

b) the identity of the principal was known to the person to whom the security certificate was delivered; and

(

c) the security certificate delivered by the agent was received by the agent from the principal or from another person at the direction of the principal,

the person delivering the security certificate warrants, to the purchaser,

only that the delivering person has authority to act for the principal and does not know of an adverse claim to the certificated security.

2007 cS-13.01 s39

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Warranties on redelivery of security certificate

A secured party who redelivers a security certificate received, or after payment and on order of the debtor delivers the security certificate to another person, makes only the warranties of an agent set out in

section 39.

2007 cS-13.01 s40

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Brokers warranties

(1)Except as otherwise provided in

section 39, a broker acting for a customer makes to the issuer and a purchaser the warranties set out in sections 34 to 38.

(2) A broker that delivers a security certificate to the broker's customer makes to the customer the warranties set out in

section 34 and has the rights and privileges of a purchaser provided under sections 34, 39 and 40.

(3) A broker that causes the broker's customer to be registered as the owner of an uncertificated security makes to the customer the warranties set out in

section 35 and has the rights and privileges of a purchaser provided under

section 35.

(4) The warranties of and in favour of the broker acting as an agent are in addition to applicable warranties given by and in favour of the customer.

2007 cS-13.01 s41

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Warranties on entitlement order

A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary,

(

a) that the entitlement order is made by the appropriate person or, if the entitlement order is made by an agent, that the agent has actual authority to act on behalf of the appropriate person; and

(

b) that there is no adverse claim to the security entitlement.

2007 cS-13.01 s42

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Warranties on security credited to securities account

(1)A person who delivers a security certificate to a securities intermediary for credit to a securities account makes to the securities intermediary the warranties set out in

section 34.

(2) A person who originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties set out in

section 35.

2007 cS-13.01 s43

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Securities intermediarys warranties

(1)Where a securities intermediary delivers a security certificate to its entitlement holder, the securities intermediary makes to the entitlement holder the warranties set out in

section 34.

(2) Where a securities intermediary causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties set out in

section 35.

2007 cS-13.01 s44

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Law governing validity of security

(1)The validity of a security is governed by the following laws:

(

a) where the issuer is incorporated under a law of

Canada

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

Canada

(

b) where the issuer is the Crown in right of

Canada

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

Canada

(

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

Canada

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

(

d) where the issuer is the Commissioner of a territory in

Canada

, the law, other than the conflict of law rules, of the territory; and

(

e) in another case, the law, other than the conflict of law rules, of the jurisdiction under which the issuer is incorporated or otherwise organized.

(2) The law of the issuers jurisdiction governs

(

a) the rights and duties of the issuer with respect to the registration of transfer;

(

b) the effectiveness of the registration of transfer by the issuer;

(

c) whether the issuer owes duties to an adverse claimant to a security; and

(

d) whether an adverse claim can be asserted against a person,

(

i) to whom the transfer of a certificated or uncertificated security is registered, or

(ii)

who obtains control of an uncertificated security.

(3) The following issuers may specify the law of another jurisdiction as the law governing the matters referred to in paragraphs (2) (

a) to (d):

(

a) an issuer incorporated or otherwise organized under the law of the province; and

(

b) the Crown in right of the province.

(4) Whether a security is enforceable against an issuer notwithstanding a defence or defect described in sections 58 to 60 is governed by the following laws:

(

a) where the issuer is incorporated under a law of

Canada

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

Canada

in which the issuer has its registered or head office;

(

b) where the issuer is the Crown in right of

Canada

, the law, other than the conflict of law rules, of the issuers jurisdiction;

(

c) where the issuer is the Crown in right of another province in

Canada

, the law, other than the conflict of law rules, of that province;

(

d) where the issuer is the Commissioner of a territory in

Canada

, the law, other than the conflict of law rules, of the territory; and

(

e) in another case, the law, other than the conflict of law rules, of the jurisdiction under which the issuer is incorporated or otherwise organized.

(5) In this

section "issuers jurisdiction" means the jurisdiction determined in accordance with the following rules:

(

a) where the issuer is incorporated under a law of Canada, the law, other than the conflict of law rules, of the province or territory in Canada in which the issuer has its registered or head office, if permitted by the law of Canada, the law of another jurisdiction specified by the issuer;

(

b) where the issuer is the Crown in right of

Canada

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

(

c) where the issuer is the Crown in right of another province in

Canada

, the law, other than the conflict of law rules, of that province or, if permitted by the law of that province, the law of another jurisdiction specified by the issuer;

(

d) where the issuer is the Commissioner of a territory in Canada, the law, other than the conflict of law rules, of the territory or if permitted by the law of that territory, the law of another jurisdiction specified by the issuer; and

(

e) in another case, the law, other than the conflict of law rules, of the jurisdiction under which the issuer is incorporated or otherwise organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer.

2007 cS-13.01 s45

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Matters governed by law of securities intermediarys jurisdiction

(1)The law, other than the conflict of law rules, of the securities intermediary's jurisdiction governs,

(

a) acquisition of a security entitlement from the securities intermediary;

(

b) the rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;

(

c) whether the securities intermediary owes a duty to a person asserting an adverse claim to a security entitlement; and

(

d) whether an adverse claim may be asserted against a person who,

(

i) acquires a security entitlement from the securities intermediary, or

(ii)

purchases a security entitlement, or interest in it, from an entitlement holder.

(2) In this section, "securities intermediary's jurisdiction" means the jurisdiction determined in accordance with the following rules where

(

a) an agreement between a securities intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for the purposes of the law of that jurisdiction, this Act or a provision of this Act, the jurisdiction expressly provided for is the securities intermediary's jurisdiction;

(

b) paragraph (

a) does not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;

(

c) neither paragraph (

a) nor (

b) applies and an agreement between a securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;

(

d) none of the preceding paragraphs applies, the securities intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's account is located; and

(

e) none of the preceding paragraphs applies, the securities intermediary's jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located.

(3) In determining a securities intermediary's jurisdiction, the following matters shall not be taken into account:

(

a) the physical location of certificates representing financial assets;

(

b) where an entitlement holder has a security entitlement with respect to a financial asset, the jurisdiction in which the issuer of the financial asset is incorporated or otherwise organized; and

(

c) the location of facilities for data processing or other record keeping concerning the securities account.

2007 cS-13.01 s46

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Adverse claim governed by law of jurisdiction of security certificate

The law, other than the conflict of law rules, of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim may be asserted against a person to whom the security certificate is delivered.

2007 cS-13.01 s47

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Seizure governed by laws re: civil enforcement of judgments

Subject to the necessary modifications for the purposes of permitting the operation of sections 49 to 52, the laws governing the civil enforcement of judgments apply to seizures described in

those

sections.

2007 cS-13.01 s48

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Seizure of interest in certificated security

(1)Except as otherwise provided in subsection (2) and in

section 52, the interest of a judgment debtor in a certificated security may be seized only by actual seizure of the security certificate by a sheriff.

(2) A certificated security for which the security certificate has been surrendered to the issuer may be seized by a sheriff serving a notice of seizure on the securities intermediary.

2007 cS-13.01 s49

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Seizure of interest in uncertificated security

Except as otherwise provided in

section 52, the interest of a judgment debtor in an uncertificated security may be seized only by a sheriff serving a notice of seizure on the issuer at the issuer's chief executive office.

2007 cS-13.01 s50

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Seizure of interest in security entitlement

Except as otherwise provided in

section 52, the interest of a judgment debtor in a security entitlement may be seized only by a sheriff serving a notice of seizure on the securities intermediary with whom the judgment debtor's securities account is maintained.

2007 cS-13.01 s51

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Notice of seizure to secured party

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

serving

a notice of seizure on the secured party:

(

a) a certificated security for which the security certificate is in the possession of a secured party;

(

b) an uncertificated security registered in the name of a secured party; and

(

c) a security entitlement maintained in the name of a secured party.

2007 cS-13.01 s52

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Enforceability of contracts

A contract or modification of a contract for the sale or purchase of a security is enforceable whether or not there is some writing signed or record authenticated by a person against whom enforcement is sought.

2007 cS-13.01 s53

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Rules of evidence re: certificated security

(1)The evidentiary rules set out in this

section apply to a legal proceeding on a certificated security against the issuer of that security.

(2) Unless specifically denied in the pleadings, a signature on a security certificate or in a necessary endorsement shall be

admitted.

(3) A signature on a security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature.

(4) Where signatures on a security certificate are admitted or established, the production of the security certificate entitles a holder to recover on the security certificate unless the defendant establishes a defence or defect that goes to the validity of the security.

(5) Where it is shown that a defence or defect that goes to the validity of the security exists, the plaintiff has the burden of establishing that the defence or defect cannot be asserted against,

(

a) the plaintiff; or

(

b) a person under whom the plaintiff claims.

(6) In this section,

(a)

"defendant" includes respondent; and

(b)

"plaintiff" means a person attempting to recover on a security ce

rtificate in a legal proceeding, whether described in that proceeding as a plaintiff, appellant, claimant, petitioner, applicant or another term.

2007 cS-13.01 s54

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Securities intermediarys liability to adverse claimant

(1)A securities intermediary that has transferred a financial asset in accordance with an effective entitlement order is not liable to a person having an adverse claim to, or a security interest in, the financial asset.

(2) A broker or other agent or bailee who has dealt with a financial asset at the direction of a customer or principal is not liable to a person having an adverse claim to, or a security interest in, the financial asset.

(3) Notwithstanding subsections (1) and (2), a securities intermediary referred to in subsection (1) or a broker or other agent or bailee referred to in subsection (2) is liable to a person having an adverse claim to, or a security interest in, the financial asset if the securities intermediary, broker or other agent or bailee did one or more of the following:

(

a) took the action described in subsection (1) or (2) after having been served with an injunction, restraining order or other legal process issued by a court of competent jurisdiction enjoining the securities intermediary, broker or other agent or bailee from doing so and after having had a reasonable opportunity to obey or otherwise abide by the injunction, restraining order or other legal process;

(

b) acted in collusion with the wrongdoer in violating the rights of the person who has the adverse claim or the person who has the security interest; and

(

c) in the case of a security certificate that has been stolen, acted with notice of the adverse claim.

2007 cS-13.01 s55

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Securities intermediary as purchaser for value

(1)A securities intermediary that receives a financial asset and establishes a security entitlement to the financial asset in favour of an entitlement holder is a purchaser for value of the financial asset.

(2) A securities intermediary that acquires a security entitlement to a financial asset from another securities intermediary acquires the security entitlement for value if the securities intermediary acquiring the security entitlement establishes a security entitlement to the financial asset in favour of an entitlement holder.

2007 cS-13.01 s56

PART

III

ISSUE

AND

ISSUER

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Certificated security

(1)Even against a purchaser for value and without notice, the terms of a certificated security include,

(

a) the terms stated on the security certificate; and

(

b) terms made part of the security by reference on the security certificate to another instrument, indenture or other document or to a statute, regulation, rule or order, to the extent that those terms do not conflict with the terms stated on the security certificate.

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

b) does not by itself constitute notice to a purchaser for value of a defect that goes to the validity of the security, even where the security certificate expressly states that a person accepting it admits notice.

(3) The terms of an uncertificated security include those stated in any instrument, indenture or other document or in a statute, regulation, rule, order or the like under which the security is issued.

2007 cS-13.01 s57

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Enforcement of security

(1)An unauthorized signature placed on a security certificate before or in the course of issue is ineffective except that the signature is effective in favour of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by,

(

a) an authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security certificate or of any similar security certificate or with the immediate preparation for signing of any of those security certificates; or

(

b) an employee of the issuer, or of persons referred to in paragraph (a), entrusted with responsible handling of the security certificate.

(2) Except as provided in subsection (3), a security issued with a defect going to its validity is enforceable where it is held by a purchaser for value without notice of the defect.

(3) Subsection (2) does not apply to a security issued by a government or agency of it unless

(

a) there has been substantial compliance with the legal requirements governing the issue; or

(

b) the issuer has received all or a substantial part of the consideration for the issue as a whole or for the particular security and the purpose of the issue is one for which the issuer has power to borrow money or issue the security.

2007 cS-13.01 s58

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Lack of genuineness of certificated security

Except as otherwise provided in subsection 58(1), lack of genuineness of a certificated security is a complete defence, even against a purchaser for value and without notice of the lack of genuineness.

2007 cS-13.01 s59

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Other defences

All other defences of the issuer of a security that are not referred to in sections 57 to 59, including non-delivery and conditional delivery of a security, are ineffective against a purchaser for value who has taken the security without notice of the particular defence.

2007 cS-13.01 s60

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Right to cancel contract

Nothing in sections 57 to 60 affects

the right of a party to a "when, as and if issued" contract or a "when distributed" contract to cancel the contract in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement under which the security is to be issued or distributed.

2007 cS-13.01 s61

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Staleness as notice of defect or defence

(1)After

an act or event that creates a right to immediate performance of the principal obligation represented by a certificated security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser shall be considered to have notice of a defect in the security's issue or of a defence of the issuer,

(

a) where,

(

i) the act or event requires that, on presentation or surrender of the security certificate, money be paid, a certificated security be delivered or a transfer of an uncertificated security be registered,

(ii)

the money or security is available on the date set for payment or exchange, and

(iii)

the purchaser takes delivery of the security more than one year after the date referred to in subparagraph (ii); or

(

b) where,

(

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

a) applies, and

(ii)

the purchaser takes delivery of

the security more than two years after the date on which performance became due or the date set for presentation or surrender.

(2) Subsection (1) does not apply to a call that has been revoked.

2007 cS-13.01 s62

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Effect of issuers restriction on transfer

A restriction on the transfer of a security imposed by the issuer, even where otherwise lawful, is ineffective against a person without knowledge of the restriction unless,

(

a) the security is a certificated security and the restriction is noted conspicuously on the security certificate; or

(

b) the security is an uncertificated security and the registered owner has received notice of the restriction by a person required to give that notice in order to make the restriction effective.

2007 cS-13.01 s63

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Completion of security certificate

(1)Where a security certificate contains the signatures necessary to the security's issue or transfer but is incomplete in another respect,

(

a) a person may complete the security certificate by filling in the blanks in accordance with the person's authority; and

(

b) even where a blank is incorrectly filled in, the security certificate as completed is enforceable by a purchaser who took the security certificate for value and without notice of the incorrectness.

(2) A complete security certificate that has been improperly altered, even if fraudulently, remains enforceable, but only according to its original terms.

2007 cS-13.01 s64

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Rights and duties of issuer re: registered owner

(1)Before due presentation for registration of transfer of a certificated security in registered form or the receipt of an instruction requesting registration of transfer of an uncertificated security, an issuer or indenture trustee may treat the registered owner as the person exclusively entitled,

(

a) to vote;

(

b) to receive notices;

(

c) to receive an interest, dividend or other payments; and

(

d) to otherwise exercise all the rights and powers of an owner.

(2) Nothing in this Act affects the liability of the registered owner of a security for a call, assessment or other like act.

2007 cS-13.01 s65

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Warranties by person signing security certificate

(1)A person signing a security certificate as authenticating trustee, registrar, transfer agent or other like person warrants to a purchaser for value of the certificated security, if the purchaser is without notice of a particular defect in respect of that security, that,

(

a) the security certificate is genuine;

(

b) the person's own participation in the issue of the security is within the person's capacity and within the scope of the authority received by the person from the issuer; and

(

c) the person has reasonable grounds to believe that the certificated security is in the form and within the amount the issuer is authorized to issue.

(2) Unless otherwise agreed, a person signing a security certificate under subsection (1) does not assume responsibility for the validity of the security in a respect other than

that set out in subsection (1).

2007 cS-13.01 s66

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Issuers lien

A lien in favour of an issuer on a certificated security is valid against a purchaser only where the right of the issuer to the lien is noted conspicuously on the security certificate.

2007 cS-13.01 s67

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Overissue

(1)Except as otherwise provided in subsections (2) and (3), the provisions of this Act that make a security enforceable against an issuer, notwithstanding a defence or defect that compels a securitys issue or reissue, do not apply to the extent that

the application of that provision

would result in an overissue.

(2) Where an identical security not constituting an overissue is reasonably available for purchase, a person entitled to the issue of a security or a person entitled to enforce a security against an issuer notwithstanding a defence or defect as provided under

section 58, 59 or 60 or under a similar law of another jurisdiction may compel the issuer to purchase the security and deliver it, if certificated, or register its transfer, if uncertificated, against surrender of a security certificate the person holds.

(3) Where an identical security not constituting an overissue is not reasonably available for purchase, a person entitled to issue of a security or a person entitled to enforce a security against an issuer notwithstanding a defence or defect as provided under

section 58, 59 or 60 or under a similar law of another jurisdiction may recover from the issuer the price that the last purchaser for value paid for the security with interest from the date of the person's demand.

(4) An overissue shall be considered not to have occurred if appropriate action has cured the overissue.

2007 cS-13.01 s68

PART IV

TRANSFER OF CERTIFICATED

AND

UNCERTIFICATED SECURITIES

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Delivery of certificated security

(1)Delivery of a certificated security to a purchaser occurs when,

(

a) the purchaser acquires possession of the security certificate;

(

b) another person, other than a securities intermediary, either,

(

i) acquires possession of the security certificate on behalf of the purchaser, or

(ii)

having previously acquired possession of the security certificate, acknowledges that the person holds the security certificate for the purchaser; or

(

c) a securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, the security certificate is in registered form and the security certificate is,

(

i) registered in the name of the purchaser,

(ii)

payable to the order of the purchaser, or

(iii)

specially endorsed to the purchaser by an effective endorsement and has not been endorsed to the securities intermediary or in blank.

(2) Delivery of an uncertificated security to a purchaser occurs when,

(

a) the issuer registers the purchaser as the registered owner, on the original issue or the registration of transfer; or

(

b) another person, other than a securities intermediary, either,

(

i) becomes the registered owner of the uncertificated security on behalf of the purchaser, or

(ii)

having previously become the registered owner, acknowledges that the person holds the uncertificated security for the purchaser.

2007 cS-13.01 s69

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Rights of purchaser

(1)Except as otherwise provided in subsections (2) and (3), a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.

(2) A purchaser of a limited interest in a security acquires rights only to the extent of the interest purchased.

(3) A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve that purchaser's position by virtue of taking from a protected purchaser.

2007 cS-13.01 s70

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Protected purchaser

A protected purchaser, in addition to acquiring the rights of a purchaser, also acquires the purchaser's interest in the security free of an adverse claim.

2007 cS-13.01 s71

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Form of endorsement

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

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

(3) For an endorsement to be a special endorsement, the endorsement must specify to whom the security is to be transferred or who has power to transfer the security.

(4) A holder may convert an endorsement in blank to a special endorsement.

2007 cS-13.01 s72

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Endorsement of part of a security certificate

An endorsement of a security certificate, if the endorsement purports to be in respect of only some of the units represented by the certificate, is effective to the extent of the endorsement if the units are intended by the issuer to be separately transferable.

2007 cS-13.01 s73

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When endorsement is transfer of security

An endorsement of a security certificate, whether special or in blank, does not constitute a transfer of the security,

(

a) until the delivery of the security certificate on which the endorsement appears; or

(

b) if the endorsement is on a separate document, until the delivery of both the security certificate and the document on which the endorsement appears.

2007 cS-13.01 s74

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Endorsement missing

Where a security certificate in registered form has been delivered to a purchaser without a necessary endorsement, the purchaser may become a protected purchaser only when the endorsement is supplied, but against the transferor, the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.

2007 cS-13.01 s75

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Notice of adverse claim on endorsement

A purported endorsement of a security certificate in bearer form may constitute notice of

an adverse claim to the security certificate, but the purported endorsement does not otherwise affect any right that the holder has.

2007 cS-13.01 s76

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Obligations of endorser

Unless otherwise agreed, a person making an endorsement makes only the warranties set out in sections 34 and 36 and does not warrant that the security will be honoured by the issuer.

2007 cS-13.01 s77

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Completion of instruction

Where an instruction has been originated by the appropriate person but is incomplete in another respect, a person may complete the instruction in accordance with the person's authority and the issuer may rely on the instruction as completed, even where

it has been completed incorrectly.

2007 cS-13.01 s78

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Obligations of person originating an instruction

Unless otherwise agreed, a person originating an instruction makes only the warranties set out in

sections 35 and 37 and does not warrant that the security will be honoured by the issuer.

2007 cS-13.01 s79

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Warranties by guarantor of endorsers signature

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

(

a) the signature was genuine;

(

b) the signer was the appropriate person to endorse or, if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

(

c) the signer had legal capacity to sign.

2007 cS-13.01 s80

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Warranties by guarantor of signature of originator of instruction

(1)A person who guarantees a signature of the originator of an instruction warrants that, at the time of signing,

(

a) the signature was genuine;

(

b) where a person specified in the instruction as being the registered owner was, in fact, the registered owner, the signer was the appropriate person to originate the instruction or, if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

(

c) the signer had legal capacity to sign.

(2) A person who guarantees a signature of the originator of an instruction does not by that guarantee warrant that the person who is specified in the instruction as the registered owner is in fact the registered owner.

2007 cS-13.01 s81

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Warranties by special guarantor of signature of originator of instruction

A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under

section 81 and also warrants that, at the time that the instruction is presented to the issuer,

(

a) the person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and

(

b) the transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions and claims other than those specified in the instruction.

2007 cS-13.01 s82

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Warranty re: rightfulness of transfer by guarantor

(1)A guarantor under

section 80 or 81 or a special guarantor under

section 82 does not otherwise warrant the rightfulness of the transfer.

(2) A person who guarantees an endorsement of a security certificate makes the warranties of a signature guarantor under

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

(3) A person who guarantees an instruction that requests the transfer of an uncertificated security makes the warranties of a special signature guarantor under

section 82 and also warrants the rightfulness of the transfer in all respects.

2007 cS-13.01 s83

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Guarantee may not be condition to registration of transfer

An issuer shall

not require a special guarantee of signature, a guarantee of endorsement or a guarantee of instruction as a condition to the registration of transfer.

2007 cS-13.01 s84

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Liability of guarantor, endorser and originator

(1)The warranties under sections 80 to 83 are made to a person taking or dealing with the security in reliance on the guarantee and the guarantor is liable to the person for a loss resulting from a breach of those warranties.

(2) An endorser or an originator of an instruction whose signature, endorsement or instruction has been guaranteed is liable to a guarantor for a loss suffered by the guarantor resulting from any breach of the warranties of the guarantor.

2007 cS-13.01 s85

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Purchasers right to requisites for registration of transfer

(1)Unless otherwise agreed, the transferor of a security shall, on demand, supply the purchaser with proof of authority to transfer or with another requisite necessary to obtain registration of the transfer of the security.

(2) Notwithstanding subsection (1), where the transfer is not for value, a transferor need not comply with a demand made under subsection (1) unless the purchaser pays the necessary expenses.

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

2007 cS-13.01 s86

PART V

REGISTRATION

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Duty of issuer to register transfer

(1)Where a certificated security in registered form is presented to an issuer with a request to register a transfer of the certificated security or an instruction is presented to an issuer with a request to register a transfer of an uncertificated security, the issuer shall register the transfer as requested if,

(

a) under the terms of the security, the proposed transferee is eligible to have the security registered in that person's name;

(

b) the endorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;

(

c) reasonable assurance is given that the endorsement or instruction is genuine and authorized;

(

d) an applicable law relating to the collection of taxes had been complied with;

(

e) the transfer does not violate a restriction on transfer imposed by statute or by the issuer in accordance with

section 63;

(

f) in the case of a demand made under

section 89 that the issuer not register a transfer,

(

i) the demand has not become effective under

section 90, or

(ii)

the issuer has complied with

section 90, but legal process has not been obtained or an indemnity bond has not been provided to the issuer in accordance with

section 91; and

(

g) the transfer is rightful or is to a protected purchaser.

(2) Where, under subsection (1), an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or an instruction for registration, or to that person's principal, for a loss resulting from unreasonable delay in registration or the failure or refusal to register the transfer.

2007 cS-13.01 s87

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Assurances re endorsement or instruction

(1)An issuer may require the following assurance that each necessary endorsement or each instruction is genuine and authorized:

(

a) in all cases, a guarantee of the signature of the person making the endorsement or originating the instruction, including, in the case of an instruction, reasonable assurance of identity;

(

b) where the endorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to act;

(

c) where the endorsement is made or the instruction is originated by a fiduciary or successor referred to in subparagraph (iv) or (

v) of the definition of "appropriate person" in paragraph 2(1)(b), appropriate evidence of appointment or incumbency;

(

d) where there is more than one fiduciary or successor referred to in subparagraph (iv) or (

v) of the definition of "appropriate person" in paragraph 2(1)(b), reasonable assurance that all who are required to sign have done so; and

(

e) where the endorsement is made or the instruction is originated by a person not referred to in paragraph (b), (

c) or (d), assurance appropriate to the case corresponding as nearly as may be to the assurance required by paragraph (b), (

c) or (d).

(2) An issuer may elect to require reasonable assurance beyond that specified in this section.

(3) In this section,

(a)

"appropriate evidence of appointment or incumbency" means,

(

i) in the case of a fiduciary appointed or qualified by a court, a document issued by or under the direction or supervision of the court or an officer of the court and dated within 60 days before the date of presentation for transfer,

(ii)

in another case,

(

A) a copy of a document showing the appointment,

(

B) a certificate certifying the appointment issued by or on behalf of a person reasonably believed by the issuer to be a responsible person, or

(

C) in the absence of a document or certificate referred to in clause (

A) or (

B) other evidence that the issuer reasonably considers appropriate;

(b)

"fiduciary" means a person acting in a fiduciary capacity, and includes a personal representative acting for the estate of a deceased person; and

(c)

"guarantee" means a guarantee signed by or on behalf of a person reasonably believed by the issuer to be a responsible person.

(4) For the purposes of the definition of "guarantee" in subsection (3), an issuer may adopt standards with respect to responsibility so long as

those standards are not manifestly unreasonable.

2007 cS-13.01 s88

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Demand that issuer not register transfer

(1)A person who is the appropriate person to make an endorsement or to originate an instruction may demand that the issuer not register a transfer of a security by communicating a notice

to the issuer setting out,

(

a) the identity of the registered owner;

(

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

(

c) an address of the person making the demand to which communications may be sent.

(2) A demand made under subsection (1) becomes effective when the issuer has had a reasonable opportunity to act on the demand, having regard to the time and manner of receipt of the demand by the issuer.

2007 cS-13.01 s89

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Duty of issuer re demand to not register transfer

(1)Where, after

a demand made under

section 89 becomes effective,

a certificated security in registered form is presented to an issuer with a request to register a transfer or an instruction is presented to an issuer with a request to register a transfer of an uncertificated security, the issuer shall promptly give a notice as described in subsection (2) to the following persons:

(

a) the person who initiated the demand, at the address provided in the demand; and

(

b) the person who presented the security for the registration of transfer or originated the instruction requesting the registration of transfer.

(2) A notice given by an issuer under subsection (1) must state

(

a) that the certificated security has been presented for the registration of transfer or the instruction for the registration of transfer of the uncertificated security has been received;

(

b) that a demand that the issuer not register a transfer had previously been received; and

(

c) that the issuer will withhold registration of transfer for a period of time stated in the

notice

in order to provide the person who initiated the demand an opportunity to obtain legal process or to provide an indemnity bond referred to in

section 91.

(3) The period of time that may be provided for under paragraph (2)(

c) shall not exceed 30 days from the date the notice was given and the issuer may specify a shorter period of time in the notice so long as

the shorter period of time being specified is not manifestly unreasonable.

2007 cS-13.01 s90

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Liability of issuer re: demand to not register transfer

(1)An issuer is not liable, to a person who initiated a demand under

section 89 that the issuer not register a transfer, for any loss that the person suffers as a result of the registration of a transfer in accordance with

an effective endorsement or instruction if the person who initiated the demand does not, within the time stated in the issuer's

notice

given under

section 90, either,

(

a) obtain an appropriate restraining order, injunction or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or

(

b) provide the issuer with an indemnity bond sufficient in the issuer's judgment to protect the issuer and a transfer agent, registrar or other agent of the issuer involved from any loss that those persons may suffer by refusing to register the transfer.

(2) Nothing in subsection (1) or in

section 89 or 90 relieves an issuer from liability for registering a transfer under an endorsement or instruction that was not effective.

2007 cS-13.01 s91

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Wrongful registration of transfer

(1)Except as otherwise provided in

section 94, an issuer is liable for wrongful registration of transfer where,

(

a) the issuer has registered a transfer of a security to a person not entitled to the security; and

(

b) the transfer was registered by the issuer,

(

i) under an ineffective endorsement or instruction,

(ii)

after a demand that the issuer not register a transfer became effective under

section 89 and the issuer did not comply with

section 90,

(iii)

after the issuer had been served with an injunction, restraining order or other legal process referred to in

section 91 enjoining the issuer from registering the transfer and the issuer had a reasonable opportunity to obey or otherwise abide by the injunction, restraining order or other legal process, or

(iv)

acting

in collusion with the wrongdoer.

(2) An issuer that is liable for the wrongful registration of transfer under subsection (1) shall, on demand, provide the person entitled to the security with,

(

a) a like certificated or uncertificated security; and

(

b) payments or distributions that the person did not receive as a result of the wrongful registration.

(3) Where the provision of a security under subsection (2) would result in an overissue, the issuer's liability to provide the person with a like security is governed by

section 68.

(4) Except as otherwise provided in subsection (1) or in another applicable law of Canada or of a province or territory of Canada relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of transfer of a security if the

registration was made under an effective endorsement or instruction.

2007 cS-13.01 s92

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Replacement of security lost certificate

(1)Where an owner of a certificated security, whether in registered form or bearer form, claims that the security certificate has been lost, destroyed or wrongfully taken, the issuer shall issue a new security certificate if the owner,

(

a) makes a request for that issue before the issuer has notice that the lost, destroyed or wrongfully taken

security certificate has been acquired by a protected purchaser;

(

b) provides the issuer with an indemnity bond sufficient in the issuer's judgment to protect the issuer from any loss that

the issuer may suffer by issuing a new certificate; and

(

c) satisfies other reasonable requirements imposed by the issuer.

(2) Where, after the issue of a new security certificate, a protected purchaser of the original security certificate presents the original security certificate for the registration of transfer, the issuer,

(

a) shall register the transfer unless the registration would result in an overissue, in which case the issuer's liability is governed by

section 68;

(

b) may exercise the rights the issuer may have under the indemnity bond referred to in paragraph(1)(b); and

(

c) may recover the new security certificate from a person to whom it was issued or from a person, other than a protected purchaser, taking under that person.

2007 cS-13.01 s93

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Obligation to notify issuer of lost, destroyed or wrongfully taken security certificate

An owner of a security may not assert against the issuer a claim for wrongful registration of transfer under

section 92 or a claim to a new security certificate under

section 93 if,

(

a) a security certificate has been lost, apparently destroyed or wrongfully taken and the owner fails to give a notice to

the issuer of that fact within a reasonable time after the owner has notice of it; and

(

b) the issuer registers a transfer of the security before receiving a notice

of the loss, apparent destruction or wrongful taking of the security certificate.

2007 cS-13.01 s94

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Obligation of authenticating trustee, transfer agent, etc.

A person acting as authenticating trustee, registrar, transfer agent or other agent for an issuer in the registration of a transfer of the issuer's securities, in the issue of new security certificates or uncertificated securities or in the cancellation of surrendered security certificates has the same obligation to the holder or owner of a certificated or uncertificated security with regard to the particular function performed as the issuer has in regard to that function.

2007 cS-13.01 s95

PART VI

SECURITY ENTITLEMENTS

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Acquisition of security entitlement

(1)Except as otherwise provided in subsections (3) and (4), a person acquires a security entitlement where a securities intermediary,

(

a) indicates by book entry that a financial asset has been credited to the person's securities account;

(

b) receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person's securities account; or

(

c) becomes obligated under another statute, law, regulation or rule to credit a financial asset to the person's securities account.

(2) Where a condition of subsection (1) has been met, a person has a security entitlement even if the securities intermediary does not itself hold the financial asset.

(3) A person shall be treated as holding a financial asset directly rather than as having a security entitlement with respect to the financial asset where a securities intermediary holds the financial asset for that person and the financial asset,

(

a) is registered in the name of, payable to the order of or specially endorsed to that person; and

(

b) has not been endorsed to the securities intermediary or in blank.

(4) Issuance of a security is not establishment of a security entitlement.

2007 cS-13.01 s96

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Protection of entitlement holders from adverse claim

A legal proceeding based on an adverse claim to a financial asset, however framed, shall not be brought against a person who acquires a security entitlement under

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

2007 cS-13.01 s97

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Property interest of entitlement holders in financial asset

(1)To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary,

(

a) are held by the securities intermediary for the entitlement holders;

(

b) are not the property of the securities intermediary; and

(

c) are not subject to claims of creditors of the securities intermediary, except as otherwise provided in

section 106.

(2) An entitlement holder's property interest with respect to a particular financial asset under subsection (1) is a proportionate property interest in all interests in that financial asset held by the securities intermediary, without regard to,

(

a) the time that the entitlement holder acquired the security entitlement; or

(

b) the time that the securities intermediary acquired the interest in that financial asset.

(3) An entitlement holder's property interest with respect to a particular financial asset under subsection (1) may be enforced against the securities intermediary only by the exercise of the entitlement holder's rights under sections 100 to 103.

(4) An entitlement holder's property interest with respect to a particular financial asset under subsection (1) may be enforced against a purchaser of the financial asset, or interest in it, only where,

(

a) bankruptcy or insolvency proceedings have been initiated by or against the securities intermediary;

(

b) the securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that financial asset;

(

c) the securities intermediary violated its obligations under

section 99 by transferring the financial asset, or interest in it, to the purchaser; and

(

d) the purchaser is not protected under subsection (7).

(5) For the purposes of subsection (4), a trustee or other liquidator acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset may recover the financial asset, or interest in it, from the purchaser.

(6) Where the trustee or other liquidator elects not to pursue the right provided under subsection (5), an entitlement holder whose security entitlement remains unsatisfied has the right to recover the entitlement holder's interest in the financial asset from the purchaser.

(7) A legal proceeding based on the entitlement holder's property interest with respect to a particular financial asset under subsection (1), however framed, may not be brought against a purchaser of a financial asset, or interest in it, who,

(

a) gives value;

(

b) obtains control or possession; and

(

c) does not act in collusion with the securities intermediary in violating the securities intermediary's obligations under

section 99.

2007 cS-13.01 s98

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Duty of securities intermediary re: financial asset

(1)A securities intermediary shall promptly obtain and then maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements that the securities intermediary has established in favour of its entitlement holders with respect to that financial asset.

(2) The securities intermediary may maintain the financial assets referred to in subsection (1) directly or through one or more other securities intermediaries.

(3) Except to the extent otherwise agreed to by its entitlement holder, a securities intermediary shall not grant a security interest in a financial asset it is obligated to maintain under subsection (1).

(4) A securities intermediary satisfies the duty imposed under subsection (1) where,

(

a) the securities intermediary acts with respect to the duty as agreed to by the entitlement holder and the securities intermediary; or

(

b) in the absence of an agreement referred to in paragraph (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset.

(5) This

section does not apply to a clearing agency that is itself the obligor of an option or similar obligation to which its entitlement holders have security entitlements.

2007 cS-13.01 s99

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Duty of securities intermediary re: payments and distributions

(1)A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset.

(2) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a financial asset if the payment or distribution is received by the securities intermediary.

(3) A securities intermediary satisfies the duty imposed under subsection (1) where,

(

a) the securities intermediary acts with respect to the duty as agreed to by the entitlement holder and the securities intermediary; or

(

b) in the absence of an agreement referred to in paragraph (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution.

2007 cS-13.01 s100

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Duty of securities intermediary to exercise rights

(1)A securities intermediary shall exercise rights with respect to a financial asset where directed to do so by an entitlement holder.

(2) A securities intermediary satisfies the duty imposed under subsection (1) where,

(

a) the securities intermediary acts with respect to the duty as agreed to by the entitlement holder and the securities intermediary; or

(

b) in the absence of an agreement referred to in paragraph (a), the securities intermediary either,

(

i) places the entitlement holder in a position to exercise the rights directly, or

(ii)

exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

2007 cS-13.01 s101

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Duty of securities intermediary to comply with entitlement order

(1)A securities intermediary shall comply with an entitlement order where,

(

a) the entitlement order is originated by the appropriate person;

(

b) the securities intermediary has had a reasonable opportunity to assure itself that the entitlement order is genuine and authorized; and

(

c) the securities intermediary has had a reasonable opportunity to comply with the entitlement order.

(2) Where a securities intermediary transfers a financial asset under an ineffective entitlement order, the securities intermediary shall,

(

a) re-establish a security entitlement in favour of the person entitled to it; and

(

b) pay or credit payments or distributions that the person did not receive as a result of the wrongful transfer.

(3) Where a securities intermediary does not re-establish a security entitlement in accordance with subsection (2), the securities intermediary is liable to the entitlement holder for damages.

(4) A securities intermediary satisfies the duty imposed under subsection (1) where,

(

a) the securities intermediary acts with respect to the duty as agreed to by the entitlement holder and the securities intermediary; or

(

b) in the absence of an agreement referred to in paragraph (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order.

2007 cS-13.01 s102

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Duty of securities intermediary re: entitlement holders direction

(1)A securities intermediary shall act at the direction of an entitlement holder,

(

a) to change a security entitlement into another available form of holding for which the entitlement holder is eligible; or

(

b) to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary.

(2) A securities intermediary satisfies the duty imposed under subsection (1) if,

(

a) the securities intermediary acts with respect to the duty as agreed to by the entitlement holder and the securities intermediary; or

(

b) in the absence of an agreement referred to in paragraph (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

2007 cS-13.01 s103

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Compliance with other statute

(1)If the substance of a duty imposed on a securities intermediary under

section 99, 100, 101, 102 or 103 is the subject of another statute, regulation or rule, compliance with that other statute, regulation or rule satisfies the duty.

(2) The obligation of a securities intermediary to perform the duties imposed under sections 99 to 103 is subject to,

(

a) the rights of the securities intermediary arising out of a security interest, whether that security interest arises under a security agreement with the entitlement holder or otherwise; and

(

b) the rights of the securities intermediary under another statute, law, regulation, rule or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.

(3) Nothing in sections 99 to 103 requires a securities intermediary to take an action that is prohibited by another statute, regulation or rule.

(4) To the extent that specific standards for the performance of duties of a securities intermediary or the exercise of the rights of an entitlement holder are not specified by another statute, regulation or rule or by agreement between the securities intermediary and the entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall exercise the entitlement holder's rights in a commercially reasonable manner.

2007 cS-13.01 s104

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Rights of purchaser re: adverse claim

(1)In a case not covered by the priority rules under the Personal Property Security Act

or the rules set out in subsection (3), a legal proceeding based on an adverse claim to a financial asset or a security entitlement, however framed, may not be brought against a person who purchases a security entitlement, or interest in it, from an entitlement holder if that purchaser,

(

a) gives value;

(

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

(

c) obtains control.

(2) If a legal proceeding based on an adverse claim could not have been brought against an entitlement holder under

section 97, a legal proceeding based on an adverse claim may not be brought against a person who purchases a security entitlement, or interest in it, from the entitlement holder.

(3) In a case not covered by the priority rules under the Personal Property Security Act

, the following rules apply:

(

a) a purchaser for value of a security entitlement, or interest in it, who obtains control has priority over a purchaser of a security entitlement, or interest in it, who does not obtain control; and

(

b) except as otherwise provided in subsection (4), purchasers who have control rank according to priority in time of

(

i) the purchaser's becoming the person for whom the securities account in which the securities entitlement is carried is maintained, if the purchaser obtained control under paragraph 26(1)(a),

(ii)

the securities intermediary's agreement to comply with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under paragraph 26(1)(b), or

(iii)

if the purchaser obtained control through another person under paragraph 26(1)(c), the time on which priority would be based under this subsection if the other person were the purchaser.

(4) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

2007 cS-13.01 s105

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Priority of entitlement holders to financial asset

(1)Except as otherwise provided in subsections (2) and (3), where a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both the securities intermediary's obligations to entitlement holders who have security entitlements to that financial asset and the securities intermediary's obligation to a creditor of the securities intermediary who has a security interest in that financial asset, the claims of entitlement holders, other than the creditor, have priority over the claim of the creditor.

(2) A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary's entitlement holders who have security entitlements with respect to that financial asset if the creditor has control over the financial asset.

(3) If a clearing agency does not have sufficient financial assets to satisfy both the clearing agency's obligations to entitlement holders who have security entitlements with respect to a financial asset and the clearing agency's obligation to a creditor of the clearing agency who has a security interest in that financial asset, the claim of the creditor has priority over the claims of entitlement holders.

2007 cS-13.01 s106

PART

VII

CONSEQUENTIAL AMENDMENTS

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RSNL1990 cC-36 Amdt.

(1)Section 2 of the Corporations Act

is amended by adding immediately after paragraph (

w) the following:

(w.1)

"registered form" means registered form as defined in the Securities Transfer Act

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

Transfers of securities

Except as otherwise provided in this Act and the Judgment Enforcement Act

, the transfer or transmission of a security shall be governed by the Securities Transfer Act

(3) Section 89 of the Act is repealed.

(4) Subsection 90(1) of the Act is amended by adding immediately after the word "series" the words "or shares convertible into that class or series".

(5) Subsection 102(1) of the Act is amended by adding immediately after the number and comma "223," the words "and the Judgment Enforcement Act

(6) Subsection 102(2) of the Act is amended by deleting the subsection reference "136(4)" and substituting the subsection reference and words "88(3) of the Securities Transfer Act

(7) Paragraph 106(1)(

b) of the Act is repealed and the following substituted:

(

b) the following documents, namely:

(

i) an affidavit or declaration of transmission made by a person referred to in paragraph 102(2)(

a) stating the particulars of the transmission, and

(ii)

the security certificate that was owned by the deceased holder

(

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

(

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

section 30 of the Securities Transfer Act

and accompanied by an assurance the corporation may require under

section 88 of the Securities Transfer Act

(8) Sections 107 to 144 of the Act are repealed and the following substituted:

Overissue

(1)Where there has been an overissue within the meaning of the Securities Transfer Act

and the corporation subsequently amends its articles or trust indenture to which it is a party, to increase its authorized securities to a number equal to or in excess of the number of securities previously authorized plus the amount of the overissued securities, the overissued securities are valid from the date of their issue.

(2) Subsection (1) does not apply if the issuer has purchased and delivered a security in accordance with subsection 68(2) or (3) of the Securities Transfer Act.

(3) A purchase or payment in accordance with subsection 68(2) or (3) of the Securities Transfer Act

is not a payment to which

section 62, 63, 64, 68, 69, 70, 71 or 72 applies.

(9) Section 245 of the Act is repealed and the following substituted:

Unanimous shareholder agreement

(1)A unanimous shareholder agreement may provide for

(

a) the regulation of the rights and liabilities of the shareholders, as shareholders, among themselves or between themselves and another party to the agreement;

(

b) the regulation of the election of directors;

(

c) the management of the business and affairs of the corporation, including the restriction or abrogation, in whole or in part, of the powers of the directors; and

(

d) another matter that may be contained in a unanimous shareholder agreement under another provision of this Act.

(2) Where a person who is the beneficial owner of all the issued shares of a corporation makes a written declaration that restricts in whole or in part the powers of the directors to manage the business and affairs of the corporation, the declaration constitutes a unanimous shareholder agreement.

(3) Where a unanimous shareholder agreement is in effect at the time a share is issued by a corporation to a person other than an existing shareholder,

(

a) that person shall be considered to be a party to the agreement whether or not the person had actual knowledge of it when the share certificate was issued;

(

b) the issue of the share certificate does not operate to terminate the agreement; and

(

c) where that person is a purchaser in good faith without actual knowledge of the unanimous shareholder agreement, that person may rescind the contract under which the shares were acquired by giving a notice to that effect to the corporation within a reasonable time after the person receives actual knowledge of the unanimous shareholder agreement.

(4) Where a unanimous shareholder agreement is in effect when a person who is not a party to the agreement acquires a share of the corporation, other than under subsection (3),

(

a) the person who acquired the share shall be considered to be a party to the agreement whether or not the person had actual knowledge of it when the person acquired the share; and

(

b) neither the acquisition of the share nor the registration of that person as a shareholder operates to terminate the agreement.

(5) Where

(

a) a person referred to in subsection (4) is a protected purchaser as defined in the Securities Transfer Act

and did not have actual knowledge of the unanimous shareholder agreement, and

(

b) the persons transferors share certificate did not contain a reference to the unanimous shareholder agreement,

that person may, within 30 days after the person acquires actual knowledge of the existence of the agreement, send to the corporation a notice of objection to the agreement.

(6) Where a person sends a notice of objection under subsection (5),

(

a) the person is entitled to be paid by the corporation the fair value of the shares held by the person, determined as of the close of business on the day on which the person became a shareholder; and

(b)

subsection 305(5) and sections 308 to 313 apply, with the necessary changes, as if the notice of objection under subsection (5) were a written objection sent to the corporation under subsection 304(6).

(7) A transferee who is entitled to be paid the fair value of the transferees shares under subsection (6) also has the right to recover from the transferor by action, the amount by which the value of the consideration paid for the transferees shares exceeds the fair value of those shares.

(8) A shareholder who is a party or is considered to be a party to a unanimous shareholder agreement has all the rights, powers and duties and incurs all the liabilities of a director of the corporation to which the agreement relates to the extent that the agreement restricts the powers of the directors to manage the business and affairs of the corporation and the directors are thereby relieved of their duties and liabilities.

(9) A unanimous shareholder agreement shall not be amended without the written consent of all those who are shareholders at the effective date of the amendment.

(10) A unanimous shareholder agreement may exclude the application of the agreement to all but not part of this section.

(11) Where a unanimous shareholder agreement is executed or terminated, written notice of that fact together with the date of the execution or termination of it shall be filed with the registrar within 15 days.

(10) Section 319 of the Act is repealed and the following substituted:

Takeover bid notice

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

section 318, the offeror shall send or deliver to the offeree corporation a copy of the offeror's notice, which constitutes a demand under subsection 89(1) of the Securities Transfer Act,

that the offeree corporation not register a transfer with respect to each share held by a dissenting offeree.

2007 cS-13.01 s107

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SNL1995 cC-37.1 Amdt.

The Credit Union Act

is amended by adding immediately after

section 58 the following:

Application of Securities Transfer Act

58.1

The Securities Transfer Act

applies, with the necessary changes, with respect to the transfer of securities, other than membership shares.

2007 cS-13.01 s108

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SNL1996 cJ-1.1 Amdt.

(1)Paragraph 2(1)(

g) of the Judgment Enforcement Act

is repealed.

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

(3) Subsection 2(1) of the Act is amended by adding immediately after paragraph (ww) the following:

(ww.1)

"security" means a security as defined in the Securities Transfer Act

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

(xx)

"security certificate" means a security certificate as defined in the Securities Transfer Act

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

(6) Section 55 of the Act is repealed and the following substituted:

Protected purchaser of security

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

has priority over a notice of judgment that binds the security where that person did not have knowledge of the notice of judgment at the time the person obtained control of the security.

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

(6) This

section does not apply to property held by a securities intermediary, as defined in the Securities Transfer Act

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

, against the securities intermediary with respect to that property.

(8) Subparagraph 81(i)(iv) of the Act is amended by deleting the word "market".

(9) Section 84 of the Act is amended by deleting the word "market" wherever it occurs.

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

Definitions

(1)In sections 90 to 98, "private company" means a corporation other than a distributing corporation within the meaning of the Corporations Act

(2) In sections 90 to 98, "appropriate person, "endorsement", "entitlement order", "instruction", "issuer", "securities intermediary" and "security entitlement" have the same meanings as in the Securities Transfer Act

Effecting seizure

(1)The sheriff may seize the interest of a debtor in a security or a security entitlement in accordance with sections 48 to 52 of the Securities Transfer Act

(2) Notwithstanding

section 49 of the Securities Transfer Act

the sheriff may seize the interest of a debtor in a security issued by a private company by serving a notice of seizure on the issuer at the issuers chief executive office.

(3) Where a seizure under this

section is by notice to an issuer or a securities intermediary, the seizure becomes effective when the issuer or the securities intermediary has had a reasonable opportunity to act on the seizure, having regard to the time and manner of the receipt of the notice.

(4) Where a debtors interest in a security or a security entitlement is seized in accordance with this

section and that interest is subject to a prior security interest,

(

a) the seizure does not affect the prior security interest; and

(

b) notwithstanding sections 91 to 97, the ability of the sheriff to deal with the security or security entitlement is limited to those rights and powers that the debtor would have had but for the seizure.

Powers of sheriff on seizure

(1)Where a debtors interest in a security or a security entitlement is seized in accordance with

section 90, the sheriff is the appropriate person for the purposes of dealing with or disposing of the seized property and, for the duration of the seizure, the debtor is not the appropriate person for the purposes of dealing with or disposing of the seized property.

(2) Upon seizure of a debtors interest in a security entitlement under

section 90, the sheriff may

(

a) do

an act or thing that would otherwise have to be done by the debtor; or

(

b) execute or endorse a document that would otherwise have to be executed or endorsed by the debtor.

(3) An endorsement, instruction or entitlement order made by the sheriff as the appropriate person under subsection (1) or by a receiver must be accompanied by a certificate of the sheriff or the receiver stating that the endorsement, instruction or entitlement order has been made by the sheriff or the receiver under this Act.

Duties of private company

A private company that has been served with a notice of seizure with respect to a security of which the debtor is the registered holder shall

(

a) send to the sheriff documents and allow the sheriff to inspect records that the debtor, as the registered holder of the security, is entitled to receive or inspect;

(

b) pay to the sheriff a dividend or other payment in respect of the security that would otherwise be payable by the private company to the debtor; and

(

c) comply with a direction given by the sheriff with respect to the seized security where the private company would be required to comply with the direction if that direction was given by the debtor while the security was not under seizure.

Sheriff may deal with seized property

Where the sheriff has seized a debtors interest in a security entitlement by serving a notice of seizure on a securities intermediary whose securities intermediarys jurisdiction within the meaning of the Securities Transfer Act

is the province, the following applies:

(

a) the sheriff is entitled to receive information or documents relating to the security entitlement that the securities intermediary is required to give to the debtor;

(

b) the securities intermediary shall pay to the sheriff a distribution, dividend or other payment in respect of the security entitlement that would otherwise be payable by the securities intermediary to the debtor; and

(

c) the sheriff is entitled to give a direction to the securities intermediary with respect to the seized security entitlement that the debtor would otherwise be entitled to give.

Liability of private company or securities intermediary

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

section 92 or 93 is liable for a pecuniary loss suffered by the creditors as a result of the failure.

Liquidation of security

(1)The sheriff may liquidate a seized security by a means that the nature of the security permits.

(2) A restriction on the transfer of a security issued by a private company shall not apply to the transfer of the security by the sheriff under this Act.

(3) A restriction on the transfer of a security issued by a co-operative, other than a restriction under paragraph 99(1)(

g) of the Co-operatives Act

applies to the transfer of that security by the sheriff under this Act.

Liquidation procedure re private company shares

(1)This

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

(2) Where a private company has been served with a notice of seizure with respect to certain shares, the private company shall inform a person of that service where he or she requests information from the private company regarding the debtors ownership of or ability to transfer those shares.

(3) On being instructed to sell seized shares, the sheriff shall serve a notice of the method of sale in the required form on

(

a) the private company;

(

b) a person who, to the knowledge of the sheriff, would have a preferential right to acquire the shares on a voluntary sale of the shares by the debtor; and

(

c) every registered shareholder of the private company, if there are not more than 15 registered shareholders.

(4) The notice of the method of sale under subsection (3) shall set out the procedure the sheriff intends to follow in selling the shares.

(5) After complying with subsection (3), the sheriff shall not take further steps to sell the shares until 15 days have elapsed from the day that the notice was served under that subsection.

(6) The sheriff shall, in selling shares, use a method of sale that

(

a) follows as closely as possible a procedure that the debtor would be required to follow in order to sell the shares; and

(

b) provides to the private company and the existing shareholders of the private company a reasonable opportunity to buy or redeem the shares before they are offered for sale to another person.

(7) The sheriff is not required to comply with subsection (6) to the extent that the method of sale referred to in that subsection would prevent the shares from being sold at all or prevent them from being sold within a reasonable time or at a reasonable price.

(8) A person who would otherwise be entitled to acquire or redeem the shares for a predetermined price or at price fixed by reference to a predetermined formula is entitled to buy or redeem the shares from the sheriff for that price unless the court determines that a sale at that price would unfairly prejudice the debtor or the creditor.

(9) Before the shares are sold by the sheriff, a person referred to in subsection (3) may pay to the sheriff an amount sufficient to discharge all related notices of judgment and outstanding sheriffs fees or charges and the taxable fees and disbursements of the instructing creditor, and on paying that amount to the sheriff that person has a lien on the shares for the amount paid to the sheriff, plus interest.

(10) Interest under subsection (9) shall be calculated in the same manner as for interest under the Judgment Interest Act

(11) The sheriff or an interested person may apply to the court for an order that it considers appropriate with respect to the method of liquidating seized shares and, notwithstanding subsection (6), including an order

(

a) respecting the method of sale, a term of a proposed sale or a proposed method of realising the value of the shares other than through sale;

(

b) suspending sale proceedings; or

(

c) directing that the private company that issued the shares be liquidated and its proceeds disposed of according to law.

(12) Where the sheriff has sent a notice of an intended sale to the persons mentioned in subsection (3) and an application is not made under subsection (11) before the shares are sold, the method of sale set out in the notice of intended sale shall be considered to have met the requirements of subsection (6).

Missing security certificate

The court on application by the sheriff may require the private company to acknowledge a transfer or other disposition of the security without presentation of the security certificate where

(

a) liquidation of the debtors interest in a security issued by the private company would ordinarily require presentation of a security certificate to the private company or its transfer agent;

(

b) the security certificate appears to have been lost, destroyed or wrongfully taken; and

(

c) the instructing creditor has made satisfactory provision for identification of the private company against a liability that the private company may incur in respect of the security certificate.

Effect of transfer

(1)In addition to an agreement to which a transferee is considered under

section 245 of the Corporations Act

to be a party, a transferee of a security from the sheriff shall be considered to be a party to a shareholders agreement with respect to

(

a) the management of the affairs of the private company; or

(

b) the exercise of voting rights attached to the seized shares,

to which the debtor was a party at the time of the seizure and of which the transferee had knowledge at the time of the transfer if the shareholders agreement contains provisions intended to have the effect of precluding the debtor from transferring the security except to a person who agrees to be a party to that shareholders agreement.

(2) Notwithstanding subsection (1) and

section 245 of the Corporations Act

, the court may grant a declaration that the transferee is not bound by a term or provision of an agreement, bylaw or

article that discriminates against the transferee because of the transferee acquiring the securities through notice of judgment proceedings.

(11) Subparagraph 111(b)(ii) of the Act is amended by deleting the word "market".

2007 cS-13.01 s109

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SNL1998 cP-7.1 Amdt.

(1)Section 2 of the Personal Property Security Act

is amended by renumbering it as subsection 2(1).

(2) Paragraph 2(

b) of the Act is repealed and the following substituted:

(b)

"account" means a monetary obligation not evidenced by chattel paper, a security or an instrument, whether or not the obligation has been earned by performance, but does not include investment property;

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

c) the following:

(c.1)

"broker" means a broker as define