19~() BILL 85 Second Session. 19th Legislature. 29 Elizaheth II TilE LEGISLATIVE ASSEf\.IBL Y OF ALBERTA BILL 85 THE BUSINESS CORPORATIONS ACT THE MINISTER OF CONSUMER AND CORPORATE AFFAIRS First Reading ................................................................ . Second Reading ............................................................ . Committee of the \Vholc .................................................. . Third Reading ............................................................... . Royal Assent ................................................................ .

THE BUSINESS CORPORATIONS ACT TABLE OF CONTENTS

PART 1

INTERPRETATION AND APPLICATION

Definitions Relationship of corporal ions Distribution to the public Ex(!CUlion in counterpart

PART 2 INCORPORATION Incorporation Articles of incorporation Delivery of ,uticJes of incorporation Ceniticate of incorporation Effect of certificate of incorporation Corporate name Reservation of name ProhibilCd names Certificate nf ounendment Pre-incorporation contracts

PART 3 CAPACITY AND POWERS Capacity of H corpomlion Restriction on powers No constructive notice Authority of directors. officers and .. ~cnb 1

Section No. I 2 3 4 5 {) 7 8 9 J() 11 12 13 14 15 16 17 18

PART 4 REGISTERED OFFICE, RECORDS AND SEAL RI?~i"terl?d office. rl?cord~ officI? addrl?"" for ~erv ice by mai I Corporate record" Al'l'l'"'' to l'orpuratl? rl?cllrd~ Form of record" Corporatl? "eal

PART 5 CORPORATE FINANCE Sharl?~ and L'ia""I?" of "hare" "'"ue of "harl?" Statl?d capital accnunh Shan.'" in "I?ril?~ Sharl?holdl?r'~ rrl?-emptivl? ri~ht Optillm and other ri~ht'> tll aCljuire "I?curitie" Prohibited "harl? holding" EXl'l?ption ACljui"ition by l'orp,)ratiun llf it'> uwn ~hare" Altcrnativl? aCljui"ition by corporatilln of it'> own "harc'> Redl'lIlptloll of ~Ilarl''' DUllated and e"Cfl)v.

I?d ~hare,> Other reduction of ~tatl'd capital AdJu"tllll?llt of ~tatl?d l'apital al'count Rl?pay:nent. acqui~iti(ln and rei~"ul? of dl?bt ohligation~ Enforceability of contract again"t cnrporation Commi""ion on "alt: of .,hare" Dividend" Form of dividend Prohibited financial a""i"tance hy corporation Shareholdl?r immunity 2 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 -'4 35 3() 37 37,1 38 39 40 41 42 43

PART 6 SECURITY CERTIFICATES, REGISTERS AND TRANSFERS

Interpretation and General [)cfinition~ and

interpretation Security certificate" Sccuritie, records IJcalim!s with rc,!!j"k'rcd holdcr~ :tnd transmission on dc~.th Overissue Burden of proof in actions Securities arc fungible Issue - Issuer Notice of dcfects Staleness is notice of defect Unauthorizcd signature Completion or .. ltemtion Warranties of 'lgents Purchase Title of purchaser Deemed nolil:c uf ,Idver"c chtirn ... Staleness as notice of adverse claims Warranties Right to l~ompcl endorsement Endorsement Effect of endorsement without dclivcr\' Endorsement in bearer form .

Effecl of unauthorized endorsement Warranties of glli.mUlt .. ~c~ of ~i!!nature~ or endorscrnenll\ Constructive de I ivcl"\' .lOd constructive ownership Oclivery of security Right to reclaim possession of security Right tll requisites of tmnsfer ~ Seizurc of sccuritv No conversion if good faith ddiver~ by ~lgenl Duty to fCeistcr transfcr Assurance that cndorsement is c'Tectivc 3 -17 48 -19 50 51 52 :B 54 55 65 66 67 68 69 70 70.1 71 72

Limited duty of inquiry as to adverse claims Limitation of issuer'" liahility Rights and obligations on loss or theft Rights, duties, etc. of issuer'" agent

PART 7 CORPORATE BORROWING DIVISION 1 TRUST INDENTURES

Interpretation and application Contlict of interest Qualification of trustee List of security holders Evidence of compliance Contents of declaration Further evidence of compliance Trustee may require evidence of compliance Notice of default Trustee's duty of care Trustee's rei iance on statemenh No exculpation of trustee hy agreement DIVISION 2 REGISTRATION OF DEBT OBLIGATIONS

Definitions Registration of mortgage Extension of time for registration and rectification of register Duty to register Corporation's register of mortgages Inspection of register of mortgages Copies of register Notice of appointment of receiver or receiver-manager Transitional registration 4 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 88.1 88.2 88.3 88.4 88.5 88.6 88.7 88.8 88.9

PART 8 RECEIVERS AND RECEIVER-MANAGERS FUIJ(:ti\ln~ \If receivcr Fum:tions of rccciver-m,uMgc:r Dircclor~' powcr~ during receivership Duty of Court-appointed receiver or recci\'cr-manaccr Duty under debt obligation DuW of ctlrc Po~crs of the Coun Duties nf receiver ilnd receivcr-manager Dircctor:o; By·law~

PART 9 DIRECTORS AND OFFICERS Gencml hon-owing powers Organization meeting Qualilil'alion~ of dirccwfS Election and appointment nf director" Cumulativc voting Ceasing co hold office Removal 01" director~ Attendance at meeting Filling v"caneics Change in number of dircctor~ Notice of ch.mgc uf directors Meeting.s of dircctorl\ Dcle!!3tion to m.maging director or cmnmittcc Valitlity of acts of directors. officer:. and commitlecs Resolution in lieu of meeting Lhlbility of dircctor~ ;md others Dircctur!\' liabilllV for \"',U!l'~ Disclosure bv directors all<l OfticCI~ in relation to contracts Officers Duty of care of dircctors ~md officers Dissent b". director Indemniti·cation by corportllion Remunel1u ion 5 89 l)() 91 97 9H 98.1 99 100 101 102 103 104 105 106 107 1U8 109 110 III 112 113 114 115 116 117 118 119 12()

PART 10 INSIDER TRADING

Definitions Deemed insiders Business combination defined Civil liability of insiders

PART 11 SHAREHOLDERS Place of shareholders' meetings Calling meeting Rccord dates Notice of meeting. adjournment. business and notice of business \\'aiver of notice Shareholder propo.,als Shareholder list Quorum Right to votc Voting Resolution in lieu of meetings Meeting on requisition of shareholders Meeting called by Court Court review of election Pooling agreement Unanimous shareholder agreement

Definitions Appointing proxy holder Mandatory solicitation Soliciting proxies Exemption orders

PART 12 PROXIES Rights and duties of proxyholder Duties of registrant Court orders 121 122.123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 139.1 140 141 142 143 144 145 146 147 148

PART 13 FINANCIAL DISCLOSURE bnual financial ~tatelTI(~nt ... Exemption Consolidated statements ~pproval of financial ~taternenl~ Copies to ~hareh()lders Copies to Director Oualification of the auditor Auditor's appointment and n:l1luneration Dispensing with auditor Auditor ccasing to hold offil..'e Removal of auditor Filling vacancy Court-appointed auditor Rights and liabilities of auditor or former auditl)r Auditor's duty tn I..',amine Auditor\ right to IIlfnrmallnn Audit con1l111ttec Qualified prinlc!!e

PART 14 FUNDAMENTAL CHANGES Amendment of articles Con ... trained shares Proposal for amendment Class votes Delivery of articles of amendment Certificate of amendment Effect of I..'crtificate Rc .. talcd artidcs of incorporation Amalgamation Amalgamation agreement Shareholder approval of amalgamation agrecmcnt Vertical and horilOnt.ll short form amalgamation Deliverv of artKles of amall!amation and sta[~tory declaration to kcgi ... trar Effect of cel1ificah: of amalgamation AmalgamatillO of an Alberta corporation and an c.'tra-provincial I..'orporation where one is the w hoHy-ow ned sU0sidiary of the other Cllntinuanl..'c of an e\tra-provinl..'ial I..'orporation a!'l an Alberta corporation Contlnuanl..'l..' of an Alo~rta l..'llrpOralilln IIltll anlllh~r juri.,dll..,tilln 141) 150 151 15~ 153 154 155 156 157 15X 151) 160 161 16~ Ill) 164 165 166 167 I fiX 169 t70 171 lil 173 174 175 17ll 177 17K 179 tHO IHO.

I IXI IK~

Extraordinary sale, lease or exchange Shareholder's right to dissent

PART 15 183 184 CORPORATE REORGANIZATION AND ARRANGEMENTS Articles of reorganization re~ulting from Court order Court-approved arrangemenh

PART 16 TAKE-OVER BIDS - COMPULSORY PURCHASE

Definitions Compubory acquisition of ~hare ... of dissenting offeree Offeror's notices Surrender of "hare certificate and payment of money Offeree corporation's obligation... Offeror's right to apply No security for costs Procedure on application Court to fix fair value Power of Court Final order Additional powers of Court Corporation's offer to repurchase it" own "hares

PART 17 LIQUIDATION AND DISSOLUTION Staying proceedings Revival Dissolution by directors or shareholders in special cases Voluntary liquidation and dissolution Dissolution by Registrar Dissolution by court order Other grounds for liquidation and dis ... olution pur"uant to l.'ourt llrdcr 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201,202 203 204 205 206 207

Applic:ation for coun supcrvi~ion Show cause order powers of the Coun Commencement of liquidation Effect of liquidation order Appointment of liquidator Duties of liquidator powers of liquidator final accounts and discharge of liquid;ator Shareholder's right to distribution in monc\' Cuslod\' of records aftcr dissolution Continuation of actions aflCr dis~olution Unknown claimants Property not disposed of

PART 18 INVESTIGATION Definition Court order ror invcstig"lion P()w~r~ of the Court Powers of in~pcctor Hcarin!!~ by inspector CompclJjn~ evidence Absolutc privilege Enquiries by invc~.ig"h)r Solicitor·client privi le!!c Inspector's report as evidcnce

PART 19 REMEDIES, OFFENCES AND PENALTIES

Definitions Commencing derivative action Powers of tile Court Relief bv Ihe Court on the eround of oppression or unfairness Court aPJ'lrovul of SI'.}'. dismis~al. discontinuance or scUlemcnl Court order to rectify records Court order for dircl'tions Refusal by Rcgislnlf to file Appeal from decision of Registmr or Direclor Compliance or rcstr.lining order 9 20K 20t) 210 211 212 213 214 115 216 217 218 219 22() 221 221.1 222 223 224 225 226 227 22K 229 230 2~1 132 233 234 235 236 237 23K 239 2~(}

Summary application to Court Appeals from court orders Offences relating to reports. returns, etc. General offence Order to comply

PART 20 GENERAL Sending of notices and documents to shareholders and directors Notice to and service on a corporation Notice to and service on Director Waiver of notice • Certificate of Registrar and evidence Certificate of corporation as evidence Copies Proof required by Registrar Appointment of Registrar. sen'ice Registrar's publication Agreements regarding payment of fces Regulations. publication of proposed regulation Issuing of certificates by Regi.,trar Annual return Alteration of documents Errors in certificates Inspection and copies Records of Registrar Continuance of Alberta companies as corporations under thi., Act Continuance of revived Alberta companies

PART 21 EXTRA-PROVINCIAL CORPORATIONS

Definitions Carrying on busine.,s in Alberta Application 241 242 243 244 245 246 247 247.1 248 249 250 251 252 253 253.1 253.2 254 255 256 257 258 259 260 261 262 263 264 265

~equircmcnt In n:),!I'tl'r 'pplic~'tion f(lf rq!I\tr.ltllln Reservation of n~lIl1e Division 1 Registration \.lame of extra-prm ilh:lal I.'l)rporatioll Registratitln hy p'l'lIdlln~ III :cnificate lIf rl.'\!

I "Iral 11111 :anccllation tll ~q!i'lrall\ln New certlficLltl' III rl'),!I"I';ltllln Division 2 Information Use of C\lrp\lrat\.· naill\.' Attunll'~ Itlr ,l'!"\Xl' III ,Ill n.lra­ pro\ IIh:lal l 111"1" llallllll Change, in Ch.lrtl'f, head \ltlll'l'. director, Filing of in,{nIiIlCIiI III ;1I1l.d 12 <1111,11 II III Notice," ,tnt! rl.'turn ... rl· ... r"·dlll~ IiqulJatloll Annual and othl'r r~:tllrn' Ccrtifi~:ate 01 l'lIlllpllanl.'l' Division 3 Capacity, Disabilities and Penalties VabJlt\ III ,H:" Capal.:,iv ttl com!llelll.:C and m;tllliain k~al pr()~'el'din~, - General pl.·n,dly

PART 22 CONSEOUENTIAl AND COMMENCEMENT Cun,e4111.·l1ll<d allll.·ndllll'n" COlli 1l1l' I h.: I.' III I.' III III ,\,[ ... ~ ... -,- 27-' 27X 271) 2XO 2XI

Bill 85 BILL 85 1980 THE BUSINESS CORPORATIONS ACT (Assented to . 1980) HER MAJESTY. by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows:

PART 1

INTERPRETATION AND APPLICATION 1 In this Act, (a) "affairs" means the relationships among a corporation, its affiliates and the shareholders, directors and officers of those bodies corporate but does not include the business carried on by those bodies corporate; (a. I ) "affiliate" means an affiliated body corporate within the meaning of

section 2( I ); (b) "Alberta company" means a body corporate incorporated and registered under The Companies Act or any of its predeces­ sors; (b. I) "articles" means the original or restated articles of in­ corporation, articles of amendment. articles of amalgamation. articles of continuance. articles of reorganization, articles of ar­ rangement. articles of dissolution and articles of revival and in­ cludes an amendment to any of them: (c) "associate". when used to indicate a relationship with any person. means (

i) a body corporate of which that person beneficiall~ owns or controls. directly or indirectly. shares or securitie .... cur­ rently convertible into shares carry'ing more than I00( of the voting rights under all circum .... tances or under any circum- 1

Definitions

stances that have occurred and are continuing. or a currently exercisable option or right to purchase those shares or those convertible securities. (ii) a partner of that person acting on behalf of the partnership of which they are partners. (iii) a trust or estate in which that person has a substantial interest or in respect of which he serves as a trustee or in a similar capacity. (iv) a spouse of that person. or (

v) a relative of that person or of his spouse if that relative has the same residence as that person: (c. I) "auditor" includes a partnership of auditors: (d) "beneficial interest" means an interest arising out of the beneficial ownership of securities: (d. I ) "beneficial ownership" includes ownership through a trustee. legal representative. agent or other intermediary: (e) "body corporate" includes a company or other body cor­ porate wherever or however incorporated: (e. I ) "Canada corporation" means a body corporate incorpor­ ated by or under

an Act of the Parliament of Canada: (f) "Commission" means the Alberta Securities Commission; (f. I) "corporation" means a body corporate incorporated or continued under this Act and not discontinued under this Act; (g) "Court" means the Court of Queen's Bench of Alberta: (g. I ) "debt obligation" means a bond. debenture. note or other evidence of indebtedness or guarantee of a corporation. whether secured or unsecured; (h) "Director" means the Director or any Deputy Director of the Commission; (h.

I ) "director" means a person occupying the position of di­ rector by whatever name called and "directors" and "board of directors" includes a single director; (i) "distributing corporation" means a corporation (

i) any of whose issued shares, or securities which mayor might be exchanged for or converted into shares, were part of a distribution to the public. and

(ii) which ha~ Ilwn: than I S ~han:hoh.lcr~: (i. I) "cxtra-pnl\'illl.:ial 1..·llIpllration" Illl..'an, a hody I..·orporate (

i) incorporatcd 01 hI..' 1'\\ i~c than hy or under an Ad of the Lcgislaturc or an Onlinalll..'e of the ~(lI1h\, 1..',( Tl'n'itorics, or (ii) inl..·orporated hy or 1I111kr an Ordin.lIlcl' 01 thl..· Northwest Tcrri!(}ne~ .md nllt ~lIhlCd lil the Iq.!i,bti\e ;llIlh\lrity of the Prminn: hy ,Cl..'lion 16 01 The' ;\Ih(',.,o Act: (H .. irKorporalllr" llIean, a person v.l1o sign .... arlll·le: .... 01 InCor­ poration: (j.I) "individual" mean .... a natural pcrson; (k) "Iiahility" indude .... a deht of a ellrporation an .... ing under sCI.·tion )X. IX-+( 1'1) or 23-+(3)(

g) or {h): (I) "M ini~ler" mcans the Mlni....rer of (\lIl .... umer ,lilt! Corporate Alfairs; (

i) pa ........ ed hy a majority of the votl'S ca .... t h~ the .... h.lfehoIJcrs who voll..'d in re .... pel·t 01 that rc .... olution. or (ii) ~iL!llI..·d h\ all thl' .... hardlOldcrs entitkd III vote on that resolution: (n) .. person" ilh:lude .... an individual. partncr .... hip. a ........ ouatlon body \"·orporatc. trusk'e. e\Cl·utor. administrator (lr legal rcpre~ ~cntati\'c: (p) .. prok ........ ional cllrporation" Illcan~ a corp"ratillil that has the wllrd ...... Prok ........ illnal Corporati(ln" a .... thl' la"t \\Ol\b of i ..... name; Iq) "redl..'l..'tllahk .... h;lrl..· .. I1I\:an .... a sharI..' i ........ lIed hy a I.·orporation Ihal thl' l·orplH'aliotl. hy il\ artidcs (

i) i .... rl'qllirl..'d 10 purdla .... l..· Ill' l'I..'lkl·1l\ at "pl..'l'illl..'d timc or on thl' happcnin,!! of a \"·I'I1'lItl e\l'nt. Iii) I' rcquirl'd tll purdlasc or redl'cm Oil till' dcmand of a sharl'llOldcr. or (iii) Illay purl..·ha,l' or rl'lk'CtlllHllll'rnand Ill' thl' l'orporation. 3

and includes a share issued by a corporation that is purchased or redeemed by a combination of any of the methods referred to in subclauses (

i) to (iii); (r) .. Registrar" means the Registrar of Corporations or a Deputy Registrar of Corporations appointed under

section 253; (s) "Registrar's periodical" means the periodical referred to in

section 253. I ; (t) "resident Albertan" means an individual who is ordinarily resident in Alberta or, if not ordinarilv resident in Alherta, is a member of a prescribed class of pers()ns and. in any ca"e. (

i) is a Canadian citizen. or (ii) has been lawfully admitted to Canada for permanent residence; (u) "security," except in

Part 6. means a share of any class or series of shares or a debt ohligation of a corporation and includes a certificate evidencing such a share or deht ohligation: (v) "security interest" means an interest in or charge on property of a corporation to secure payment of a deht or performance of any other obligation of the corporation: (w) "send" includes deliver; (x) "series" means. in relation to shares. a division of a class of shares; (y) "special resolution" means a resolution passed by a majority of not less than 2/3 of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution; (z) .. unani mous shareholder agreement" means (

i) a written agreement to which all the shareholders of a corporation are or are deemed to be parties. whether or not any other person is abo a party, or (ii) a written declaration by a person who is the heneficial owner of all the issued shares of a corporation. that provides for any of the matters enumerated in

section I-.fO( I). 2(

I) For the purposes of thi" Act. (

a) one body corporate. is affiliated with another body corporate if one of thelll is the subsidiary of the other or hoth an: 'iuh"idiaries 2 Relationship of corporations 2

of the same body corporate or each of them is controlled by the same person, and (

b) if 2 bodies corporate are affiliated with the same body cor­ porate at the same time, they are deemed to be affiliated with each other.

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

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

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

(3) For the purposes of this Act. a body corporate is the holding body corporate of another if that other body corporate is its subsid­ iary.

(4) For the purposes of this Act. a body corporate i .... a subsidiary of another body corporate if (

a) it is controlled by or (

i) that other, (ii) that other and one or more bodies corporate. each of which is controlled by that other. or (iii) 2 or more bodies corporate. each of which is controlled by that other, (

b) it is a subsidiary of a body corporate that i" that other's .... ubsidiary. 3(

I) For the purposes of this Act. securities of a corporation (

a) issued on a conversion of other securities. or (

b) issued in exchange for other securities are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

(2) Subject to subsection (3), for the purposes of this Act. a security of a body corporate 3 Distribution to the public

(

a) is part of a distribution to the public if. in respect of the security, there has been a filing of a prospectus, statement of material facts, registration statement, securities exchange take­ over bid circular or similar document under the laws of Canada, a province or territory of Canada or a jurisdiction outside Canada, or (

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

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

(3) On the application of a corporation, the Director may determine that a security of the corporation is not or was not part of a distribution to the public if he is satisfied that his determination would not pre­ judice any security holder of the corporation. 4 A document or writing required or permitted by this Act may be signed or executed in separate counterparts and the signing or exe­ cution of a counterpart shall have the same effect as the signing or execution of the original. 4 Execution in counterpart

PART 2 INCORPORATION 5 One or more persons may incorporate a corporation by signing articles of incorporation and complying with

section 7. 5 IncorRoration 6(

I) Articles of incorporation shall be in the prescribed form and shall set out, in respect of the proposed corporation, (

a) the name of the corporation, (

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

i) if there are 2 or more classes of shares, the special rights, privileges, restrictions and conditions attaching to each class of shares, and (ii) if a class of shares may be issued in series, the authority given to the directors to fix the number of share", in, and. to determine the designation of each series, and the rights, PrIV­ ileges, restrictions and conditions attaching to the shares of each series, (

c) if the right to transfer shares of the corporation is to be restricted, a statement that the right to tran ... fer shares i" restricted 6 Articles of incorporation 6

and the nature of the restrictions, (

d) the number of directors or, subject to

section 102(a), the minimum and maximum number of directors of the corporation, and (

e) any restrictions on the busi nesses that the corporation may carryon.

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

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

(4) The articles may not require a greater number of votes of share­ holders to remove a director than the number required by

section 104. i( I) :-\n incorporator shall "end to the Regi-.trar (

a) articles of incorporation, and (

b) the document-. required by sections 1<) and 101,

(2) If the name of the corporation set out in the articles of incor­ poration contains the words" Professional Corporation". the incor­ porator shall also send to the Regi"trar evidence satisfactory to him of the approval of the articles by or on behalf of (

a) the Institute of Chartered Accountants of Alberta. (

b) the Alberta Dental Association. (

c) the College of Physicians and Surgeon" of the Province of Alberta. or (

d) the Law Society of Alberta. as the case may be. 7 Delivery of articles of incorporation 8 On receipt of the documents and evidence required under

section 7 and the prescribed fees, the Registrar shall issue a certificate of incorporation in accordance with

section 255. 8 Certificate of incorporation 9(

I) A corporation comes into existence on the date shov.'n in the certificate of incorporation. 9 Effect of certificate of incorporation 7

m A certificate of incorporation is conclusive proof for the purposes of this Act and for all other purposes (

a) that the provisions of this Act in respect of incorporation and all requirements precedent and incidental to incorporation have been complied with. and (

b) that the corporation has been incorporated under thi~ Act as of the date shown in the certificate of incorporation. 10(

I) The word" Limited". "Limitee". "Incorporated". "Incor­ poree" or "Corporation" or the abbreviation .. Ltd. ". .. Ltee" . .. Inc." or "Corp." shall be the last word of the name of every corporation but a corporation may use and may be legally designated by either the full or the abhreviated form.

(2) Notwithstanding ~ubsection (I). the words .. Professional Cor­ poration" shall be the last words of the name of every corporation whose incorporation is approved in accordance with

section 7(2).

(3) No person other than a hody corporate shall carryon husiness within Alberta under any name or titk that contain.., the word" Lim­ ;ted". "Limitee". .. Incorporated". .. Incorporec" or "Corpora­ tion" or the ahbreviation "Ltd.". "Ltee". "Inc." or "Corp." or the word'i .. Professional Corporation". ( ..

l) A person carrying on business in contravention of suhsection

n) is guilty of an offence and liable on

summary conviction to a fine of not more than S5000.

(5) A corporation may file a notice 111 prescribed form with the Registrar designating an additional form or forms of its name in accordance with subsection (6).

(6) Subject to

section I 2( I). the name of the corporation or an additional form of its name in a notice filed under subsection (5) may be in an English form or a French form or in a combined English and French form and the corporation may use and may be legally designated by any of those forms.

(7) Subject to

section 12( I). a corporation may. outside Canada, use and may be legally designated by a name in any language form. (

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

(9) Subject to subsection (8) and

section 12(

I) and

section 85 of The Partnership Act, a corporation may carryon business under or identify itself by a name other than its corporate name. 10 Corporate name 8

11 (

l) The Registrar may, on request, reserve for 90 days a name for (

a) an intended corporation, (

b) a corporation about to change its name. or (

c) an extra-provincial corporation about to continue as a cor­ poration pursuant to

section 181.

(2) If requested to do so by the incorporators, a corporation or an extra-provincial corporation referred to in subsection ( I )( c). the Re­ gistrar shall assign to the corporation as its name a designated number determined by him. 11 Reservation of name 12(

I) A corporation shall not be incorporated with. have. carryon busines~ under, identify itself by or change its name to a name that is (

a) prohibited by the regulations. (

b) identical to the name of a body corporate incorporated under the laws of Alberta, (

c) reserved for an intended corporation or a corporation under

section I I ( 1 )(

b) or (c). or (

d) disapproved by the Registrar pursuant to subsection Ln.

(2) The Registrar may disapprove the name or the proposed name of a corporation if. in his opinion, the name (

a) is objectionable, (

b) is likely to mislead or confuse, or (

c) is similar to the name of any other body corporate or to the name of any association, partnership or firm known to the Re­ gistrar. if the use of that name would be likely to confuse or mislead, unless the body corporate, association, partnership or firm consents in writing to the use of that name in whole or in part, and, if ,required by the Registrar. undertakes to dissolve or change its name to a dissimilar name within 6 months after the filing of articles by which the corporation's name was acquired.

(3) Notwithstanding anything in this section, a corporation may be incorporated with a name similar to that of a corporation or an Alberta company which has been struck from the register if (

a) the corporation or Alberta company was struck from the register more than 3 years before such incorporation and has not 12 Prohibited names 9

since been restored to the register, (

b) the Registrar approves the use of the name, and (

c) the name of the new corporation includes the year in which it is incorporated.

(4) If. through inadvertence or otherwise. (

a) a corporation coml"· into existence with or acquires a name that contravenes subsection ( I ). or (

b) the Registrar disapproves a corporation's name after it is acquired by the corporation, the Registrar may, by notice in \Hiting. gi\'ing his reasons. direct the corporation to change its name to one that he approves within 60 days of the date of the notice.

(5) The Registrar may give a notice under subsection (..

f) on his own initiative or at the request of a per,>on who feels aggrieved by the name that contravenes subsection ( I).

(6) If a corporation (

a) i" directed to change it'> name under ,>ub..,ection (..f). and (0) does not appeal the reque'>t of the Registrar within 60 days of the date of the notice. the Registrar may revoke the name of the corporation and assign to it a designated number, and until changed in accordance with

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

(7) If 2 or more corporations amalgamate, the amalgamated cor­ poration may have the name of one of the amalgamating corporations, or. with the prior approval in writing of the Registrar, (

a) a distinctive combination. that i" not confusing, of the names of the amalgamating corporations, or (

b) a distinctive new name that complies with subsection (I). no The amalgamating corporations shall be deemed to be bodies corporate for the purposes of this section.

(9) If an application is made to revive a corporation under this Act and, between the date of dissolution of the corporation and the date of its revival, another corporation has come into existence with or has acquired a name that is likely to be confused with the name of the corporation to be revived, the Registrar may require, as a con­ dition of the revival, that the revived corporation does not carryon business or, if it seeks to carryon business, that it change its name 10

to a designated number immediately after it is revived.

(10) If the Registrar is satisfied that a professional corporation has ceased to be the holder of a subsisting permit as a professional corporation issued under The Chartered Accollntants Act. The Dental Association Act. The Legal Profession Act or The Medical Profession Act. 1975. he may. on giving notice to the professional corPoration of his intention to do so. change the name of the corporation to exclude the words" Professional Corporation" and replace them with the word "Limited" or the abbreviation "Ltd.". 13( I) \Vhen a corporation ha~ had its name revoked and a name assigned to it under

section 12(6), the Registrar shall issue a certi­ ficate of amendment ~howing the nev,,' name or the corporation.

(2) The articles of the corporation are amended accordingly on the date shown in the certificate of amendment. 13 Ceritficate of amendment 14(

I) This

section applies unless the person referred to in subsection (2) and all parties to the contract referred to in that subsection (

a) believe that the body corporate exi"ts and i~ incurporated under. or (

b) intend that the body corporate i~ to be incorporated under the laws of a jurisdiction other than Alberta.

(2) Except as provided in this section, if a person enters into a written contract in the name of or on behalf of a body corporate before it comes into existence, (

a) that person is deemed to warrant to the other party to the contract (

i) that the body corporate will come into existence within a reasonable time, and (ii) that the contract will be adopted within a reasonable time after the body corporate comes into existence, (

b) that person is liable to the other party to the contract for damages for a breach of that warranty. and (

c) the measure of damages for that breach of warranty shall be the same as if the body corporate existed when the contract was made. the person who made the contract on behalf of the body corporate had no authority to do so and the body corporate refused to ratify the contract.

(3) A corporation may, within a reasonable time after it comes into existence, by any act or conduct signifying its intention t\J be bound 14 Pre-incorporation contracts .,.,

thereby, adopt a written contract made before it came into existence in its name or on its behalf. and on the adoption (

a) the corporation is bound by the contract and is entitled to the benefits of the contract as if the corporation had been in existence at the date of the contract and had been a party to it, and (

b) a person who purported to act in tht: name of or on behalf of the corporation ceases. except as providt:d in sub~t:ction (5), to be liable under subsection (2) in respt:ct of tht: contract.

(4) If a person entt:rs into a contract in the name of or on behalf of a corporation befort: it comt:s into t:xistt:nct: and tht: contract is not adopted by tht: corporation \\ ithin a rt:asonahk tirnt: after it comes into existence, that person or tht: otht:r party to the contract may apply to the Court for an order dirt:cting tht: corporation to restore to the applicant. in specie or otherwise, any benefit rect:ived by the corporation under tht: contract.

(5) Except as provided in suhst:ction (6). whether or not a written contract made befort: tht: coming into existence of a corporation is adopted by the corporation. a party to the contract Illay apply to the Court for an order (

a) fixing obligations undt:r tht: contract as joint or joint and several, or (

b) apportioning liability between or among tht: corporation and a person who purported to act in the name of or on hehalf of the corporation, and on the application the Court may make any order it thinks fit.

(6) A person who enters into a written contract in the name of or on behalf of a body corporate before it comes into t:xistt:nce is not in any event liable for damages under subsection (2) if tht: contract expressly provides that he is not to be so liable.

PART 3 CAPACITY AND POWERS 15(

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

(2) A corporation has the capacity to carryon its busint:ss. conduct its affairs and exercise its powers in any jurisdiction outside Alberta to the extent that the laws of that jurisdiction permit. 15 Capacity of a corporation

16(

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

(2) A corpo~ation .shall nO.t canyon ,any busin.ess or exercise any power that It IS restncted by ItS artIcles from carryIng on or exercising, nor shall the corporation exercise any of its powers in a manner contrary to its articles.

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

Restriction on powers 17 No person is affected by or is deemed to have notice or know­ ledge of the contents of a document concerning a corporation by reason only that the document has been filed hy the Registrar or is available for inspection at an office of the corporation. 17 No constructive notice 18 A corporation. a guarantor of an ohligation of the corporation or a person claiming through the corporation may not assert against a person dealing with the corporation or dealing with any person who has acquired rights from the corporation (

a) that the articles. by-laws or any unanimous shareholder agreement have not been complied with. (

b) that the persons named in the most recent notice filed by the Registrar under

section 101 or lOX are not the directors of the corporation. (

c) that the place named as the registered office in the most recent notice filed by the Registrar under

section 19 is not the registered office of the corporation. (c.

I) that the post office box designated as the address for service by mail in the most recent notice filed hy the Registrar under

section 19 is not the address for service by mail of the corporation, (

d) that a person held out by the corporation as a director. an officer or an agent of the corporation (

i) has not been duly appointed. or (ii) has no authority to exercise a power or perform a duty which the director. officer or agent might reasonably be ex­ pected to exercise or perform. (

e) that a document issued by any director. officer or agent of the corporation with actual· or usual authority to issue the doc­ ument is not valid or not genuine. or Authority of directors, officers and agents 13

(0 that financial assistance referred to in

section 42 or a sale lease or exchange of property referred to in

section 183 was not authorized. unless the person has, or by virtue of his position with or relationship to the corporation ought to have, knowledge to the contrary.

PART 4 REGISTERED OFFICE, RECORDS AND SEAL 19(

I) A corporation shall at all time" ha\e a registered office within Alberta.

(2) A notice of (

a) the registered office, (

b) a separate records office, if any, and (

c) the post office box designated a" the address for "cn'ice by mail. if any, shall be sent to the Registrar in the prescribed form togethcr with the articles of incorporation.

(3) Subject to subsection (4), the directors of the corporation may at any time (

a) change the address of the registered office within Alberta, (

b) designate, or revoke or change a designation of. a records office within Alberta, or (

c) designate, or revoke or change a designation of. a post office box within Alberta as the address for service by mail of the corporation.

(4) If the directors of a corporation designate a post office box as the corporation's address for service by mail. they shall by the same resolution revoke any designation of a records office filed with the Registrar.

(5) A corporation shall send to the Registrar. within 15 days of any change under subsection (3) or (4), a notice of that change in the prescribed form and the Registrar shall file it.

(6) The corporation shall ensure that its registered office and its records office, if any, are (

a) accessible to the public during normal business hours, and 19 Registered office, records office, address for service by mail 14

(

b) readily identifiable from the address or other description given in the notice referred to in subsection (2).

(7) Unless the directors designate a separate records office. the registered office of a corporation is also its records office. 20(

I) A corporation shall prepare and maintain at its records office records containing (

a) the articles and the by-laws. all amendments to the articles and by-laws. a copy of any unanimous shareholder agreement and any amendment to a unanimous shareholder agreement. (

b) minutes of meetings and resolutions of shareholders. (

c) copies of all notices required by

section 101 or 109. (

d) a securities register complying with

section 46. (

e) copies of the financial statement'>. reports and information referred to in

section 149( I ). and (n a register of disclosures made pursuant to

section 115.

(2) Notwithstanding subsection ( I ). a central securities register may be maintained at an office in Alberta of a corporation's agent referred to in

section 46(2)(a). and a branch securities register may be kept at any place in or out of Alberta designated by the directors.

(3) If a central securities register is maintained under subsection (2) at a place other than the records office. the corporation shall maintain at its records office a record containing the names and addresses of all agents and offices at which those registers are main­ tained and descriptions of all those registers.

(4) A corporation which (

a) complies with

section 22( 2), and (

b) maintains in Canada a register or record referred to in

section 20(3) complies with subsection ( I).

(5) In addition to the records described in subsection (I). a cor­ poration shall prepare and maintain adequate accounting records and records containing minutes of meetings and resolutions of the direc­ tors and any committee of the directors.

(6) For the purposes of subsections (I lib) and (2). if a body corporate is continued under this Act. "records" includes similar records re- 20 Corporate records

quired by law to be maintained by the body corporate before it was so continued.

(7) The records described in subsection (5) shall be kept at the registered office or records office of the corporation or at any other place the directors think fit and shall at all reasonable times be open to examination by the directors. (

X) If accounting records of a corporation are kept at a place outside Alherta. there shall he kept at the registered office or records office or at any other place in Alberta the directors think fit, accounting records adequate to enable the director ... tn ascertain the financial position of the corporation with reasonahle accuLKY on a quarterly hasi", and those records shall at all reasonable times be open to examination hy the directors. (

Y) A corporation that. without reasonable cause, contr'.i\enes this

section is guilty of an offence and liable on

summary conviction to a fine not exceeding 5500('. 21(

J) The director'i and ... hareholders of a corpnratinn, their a~ents and legal representative" may examine the record, refem.~d to in "cction 20(

I) durin~ the u<.,ual bU'iine<.,s hour" of the \.:orp()ratlon free uf charge. .

(2) A 'ihareholder of a corporation i'i entitled on request and without charge to one copy of the article'i and by-la\\ s and of any unanimous shareholder agreement. and amendments to them.

(3) Cr~tors of a corporation and their agents and legal represent­ ative" may examine the record'i referred to in

sectIon 20( I HaL (

c) and (d). other than a unanimous shareholder agreement or an amend­ ment to J unanimous shareholder agreement. '-dunng the usual busi­ ness hours of the corporation on payment of a reasonable fee and may make copies of those records.

(4) Any pcr<.,on may examine the record" referred to in 'icction 20( I )(

c) and (

d) during the usual busincs' hour, ut the corporation on payment of a reasonable fcc ;.tnd ma: make copie ... of tho"e records.

(5) If the corporation is a distributing corporation, any per'ion, on payment of a reasonable fee and on "ending to the corporation or its agent the statutory declaration referred tn In ... ubsection (lJl. may on application require the corporation or its agent to furnish \\ ithin 10 days from the receipt of the statutory declaration a Il"t (in this

section referred to as the "basic list") made up to a date not more than 10 days before the date of receipt of the "tatutory declaration setting: out (

a) the names of the shareholder ... of the corpt.)ration. (

b) the number of "hares owned by each sharehnlder, and 21 Accessto corporate records 16

(

c) the address of each shareholder, as shown on the records of the corporation.

(6) A person requiring a corporation to supply a basic list may, if hc states in the statutorv declaration refelTed to in subsection (5) that he requires supplemental lish. require the corporation or ih agent on paymcnt of a reasonable fee to furnish suppkmental lists setting out any changes from the basic list in the information pro\"ided in it for each business day following the date the basic list i" made up to.

(7) The corpl)ratinn llr its agent "hall furni"h a supplemental list required under suh"cL'tion (()) (

a) nn the date the ba"ic li"t i" turni"hed, if the information rclatcl.i to changes that took place prior to that date. and (

b) on the husine"" day tollowing the day to which the supple­ mental list relate", if the informatit1n rdates to chan~e" that take place on or after the date the ha,ic Iht I" turnished~ (

X) A pcr"on requiring a c()rp()r~jti()n to supply a hasic 11,( or a supplemental li..,t may also require the 1.:orporalJon to include In that li"t the name :md addn:"" or any kno\\, il hnlder uf an optiun or right to acquire "hares in the l·orporation.

(9) The "ututory declaration required under suhsection (-") shall state (

a) the name and addre"s of the applicant. (

b) the name and address for "ervice of the budy corporate if the applicant is a hody corporate. and (

c) that the basic list and any ..,upplemental li..,ts obtained pur­ suant to "ubsection (61 will not be u..,ed except a.., penllltted under subsection ( I I ).

(10) If the applicant i.., a boJy corporate. the ..,tatu[ory declaration shall be made b~ a director or (llliccr of the hod~ corporate" (II) A li"t of shareholders obtained under this ..,ection -.hall not be used by any person except in connection with (

a) an effort to intluence the voting of shareholders of the cor­ poration. (

b) an offer to acquire shares of the curporation. or (<:) any other matter relating to the affairs of the cllrroration.

tion is guilty of an offence and liable on "ummary convictIOn to a fine of not more than $5000 or to imprisonment for a term of not more than 6 months or to both. 22(

I) All registers and other records required by this Act to be prepared and maintained may be in a bound or loose-leaf form or in a photographic film form, or may be entered or recorded by any system of mechanical or electronic data pnxc .... sing or any other information storage device that is capable of reproducing any required information in legible written form within a reaslmahlc timc.

(2) If a person i .... entitled to examine any rcgiskr or record that is maintained by a corporation in a form other than J written form and makes a request of the corporation to do ,,0. the corporation shall (

a) make available to that per"on \\lthll1 .1 reasonabk time a reproduction of the text of the ret2'ister or record in legihle written form. or (

b) provide facilitie" to enable that per\()n to examine the text of the register or record in an legibk \\flttcn form othcrwl"e than by providing a reproduction of that tnt. and .... hall allow that person to make copic\ oj that register or record.

(3) A corporation and its agents "hall take rea\(lnahle precautions to (

a) prevent loss or dc .... truction of. (

b) prevent falsification of entries in, and (

c) facilitate detection and correction of inaccuracies in. the registers and other records required by this Act to he prepared and maintained.

(4) A person who, without reasonahle cause. contravene\ this \ce­ tion is guilty of an offence and liable on .... uml1lary conviction to a fine of not more than 55000 or to impri .... onmcnt for a tcrm of not more than 6 months or both. 22 Form of records 23(

I) A corporation may adopt and change a corpl..lrate seal that shall contain the name of the corporation.

(2) A document executed on behalf or a Ct)rporation b~ a director. an officer or an agent of the corporation. is not invalid only hecause the corporate seal is not affixed tn the document.

(3) Share certifil'ates of a corporation may be issued ul1lkr ih L'ur­ porate seal or a facsimile of that corporate "cal. 23 Corporate seal

(4) A document requiring authentication by a corporation may be signed by a director or the secretary or other authorized officer of the corporation and need not be under its corporate seal.

(5) A corporation may adopt a facsimile of its corporate ~eal for use in any other jurisdiction outside Alberta that complies with the laws of that jurisdiction.

PART 5 CORPORATE FINANCE 24(

I) Shares of a corporation shall he in regiqered form and shall be without nominal or par value.

(2) If a hody corporate i~ continued under thi"! Act. a "hare with nominal or par value i"!~ued hy the hody l'orporate hcfore it was ~o continued i..,. for the purpo .... e of .... uh"!cction (I). deemed to he a'ihare withllut nominal or par value.

(3) If a corporation ha'i only one cia"!"! of .... hare". the right"! of the holders of those share .... are e~ual in all re .... pects and include the rights (

a) to vote at any meeting of shareholder .... of the corporation. (

h) to receive any dividend declared hy the corporation. and (

C) to receive the remaining property of the corporation on dis­ solution.

(4) The articles may provide for more than one cla .... s of shares and, if they so provide. (

a) the rights. privileges, re .... trictions and condition .... attaching to the shares of each class shall he set out 111 the

article ..... and (

b) the rights set out in sub .... ection (3) shall he attached to at least one class of .... hares hut all of tho....e rights are not re~uired to be attached to one class.

(5) Subject to

section 27. if a corporation has more than one class of shares. the rights of the holders of the share .... of am cla"!s are equal in all resp~cts. . 24 Shares and classes of shares 2S(

I) Subject to the articles. the by-laws and any unanimou .... share­ holder agreement and to

section 2~L shares may be j"sued at the times and to the persons and for the consideratiun that the direi.."tors dc- 25 Issue of shares 1q

termine.

(2) Shares issued by a corporation are non-assessable and the holders are not liable to the corporation or to its creditors in respect of those shares.

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

(4) In determining whether property or past service i'i the fair equi­ valent of a money consideration. the directors may take into account reasonahle char~~'> and expen,>es of organization ·and reorganization and payments for property and past '>ervices rea'>onahly expected to benefit the corporation.

(5) For the purposes of this section. "property" docs not include a promissory note or promise to pay. 26(

I) A corporation ... hall maintain a '>eparate qated capital account for each class and '>erie,> of share" it i,>,>uc,>.

(2) A corporation shall add to the appropriate qated capital account the full amount of an~ consideration it receives for any shares it issues. (3) ~()tv,ith<.,tanding

section 25L~) and "uh",ection (.2) of this section. if a corporation issues "hares (

a) in exchange for (

i) property, other than a promis ... ory note or promisc to pay, or (ii) issued shares of the corporation of a different class or sene .... and all the share", i "''''lIed hy the corporation in the exchange are redeemable ... hares created for that purpose, ~)r shares which the corporation is reljuircd to issue pursuant to convcrsion rights or privileges attached to the share ... to be exchangcd at the timc that they were i",,,,ued. or (

b) pursuant to (

i) an amalgamation agreement referred to in

section 176 or 180.1, or (ii) an arrangement referred to in

section I ~6( 1)(

b) or (

c) to shareholders of an amalgamating body corporatc \\ hI,.) receive the shares in addition to or in",tcad of ,",ecuritie", of thc arnal~am- 26 Stated capital accounts ?O

ated body corporate. the corporation may add to the stated capital accounts maintained for the shares of the classes or series issued the whole or any part of the amount of the consideration it received in the exchange.

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

(5) If a corporation proposes to add any amount to a stated capital account it maintains in respect of a class or series of shares and (

a) the amount to be added wa .... not received by the corporation as consideration for the issue of shares. and (

b) the corporation has issued any outstanding shares of more than one class or series. the addition to the stated capital account must be appwved by special resolution unless all the issued and outstanJinl! "hare" are shares of not more than 2 classe .... of convertible shares '-referred to in

section 37(5).

(6) When a body corporate i .... continued unJer this :-\ct. it may add to a stated capital account any consideration recel\ed by it for a share it issued.

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

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

(9) When a body corporate is continued under this Act. any amount unpaid in respect of a share issued by the body corporate before it was so continued and paid after it was so continued shall be added to the stated capital account maintained for the share" of that class or "cries.

(10) For the purposes of sections 32(2). 36(3). '+0. '+2(

I) and 179(2)(a). when a body corporate is continued under this Act. its stated capital is deemed to include the amount that would have been included in the stated capital of the body corporate if it had been incorporated under this Act. ( II) A corporation shall not reduce its stated capital or any stated capital account except in the manner provided in this Act.

(12) Subsections (

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

(13) In subsection (12). "open-end mutual fund" means a corpor­ ation that makes a distribution to the public or its shares and that carries on only the business of investing the consideration it receives for the shares it issues. and all or substantially all of those shares are redeemable on the demand of a shareholder. 27(

I) The articles may authorize the issue of any clas'i of shares in one or more series and may authorize the directors to fix the number of shares in each series and to determine the dc"i~nation rights, privileges, restriction" and condition'i attaching to th~ share~ of each serie", subject to the limitations set uut in the

article .... (.2) If any cumulative dividends or amounts payable on return of capital in re ... pect of a serie ... of ... hares are not paid in full. the "hares of all series of the samc class participate rateably in respect of ac­ -:umulated dividends and return of capital. (J) :\u right-.. privi lege .... restriction ... or condition ... atlal'hed to a "eries of ... hare ... authorized under thi ...... ection ... hall LImier on a "eries a priority in respect 01 \oting. dividend" or return of capital o\er any other ... cries of ... hares of the ... ame clas" that are then out-.tanding. (-+) Suhectiun

n) docs not apply to a right or privilege to exchange a "hare or share ... for. or to convert a "hare or shares into. a ... hare or ... hares of another class. (.)) Before the is ... ue of shan:,'i of a serie'i authori/cd under this "ection. the dIrectors shall send to the Registrar articles of amendment in the prescribed form to designate a series of 'ihare".

(6) On receipt of articles of amendment designating a series of shares, the Registrar shall issue a certificate of amendment in ac­ cordance with

section 255.

(7) The articles of the corporation are amended accordingly on the date shown in the certificate of amendment. 27 Shares in series 2S(

I) If the

article or a unanimous shareholder agreement

V) pro­ vides. no shares of a class shall be issued unless the shares have first been offered to the shareholders holdi ng shares of that class. and those shareholders have a pre-emptive right to aCt.luire the offered shares in proportion to their holdings of the shares of that cia ... ". at the same price and on the same terms as those "hares are to be uffered to others.

(2) Nutwithstandinl! that the aI1icles provide the pre-emptive right referred to in subsec'-tion ( I), shareholders have no pre-emptiw right in respect of shares to be issued 28 Shareholder's pre-emptive right 22

(

a) for a consideration other than monev. (

b) as a share dividend. or (

c) pursuant to the exerci~c of conversion privileges, options or rights previously granted by the corporation. 29( 1) A corporation Illay issue certificate". \\arrants or other evi­ dences of conversion privileges. options or rights to i1l'4uire "ccurities of the corporation. and shall set out their conditions (

a) in the certificates. warrants or other C\'idences. or (

b) in certificates evidencin1! the "cL'uritics to "hich the con­ \ersion pri\'ikge". option" 0; rights are attached,

(2) Conversion privileges. options and rights to purchase seL'urities of a corporation may be maue transferahle or non-transferahle. and uptions and right.., to purchase rnay he made "eparahle or in..,eparabk from any ..,ecuritie.., to \\ hich they are attaL'hed,

(3) It a corporation ha.., granted privilege" to convert any "L'L'urities i..,..,ued hy the corporation Into "hare..,. or intI} ..,hare.., of another cia".., or ..,eries. or has i..,..,ueL1 or granted optiom or right'- to aC4uirc ..,hares. the l'orporJ.tion ,hall rL'..,erve and continue to rc"erve ..,ullicient au­ thoriled shares to meet the exercise of thmc conversion privileges. options and rights. 29 Options and other rights to acquire securities 30! 1) Except as provided in ..,ubsection (2) and sections 31 to 3"+. a curporation (

a) shall not hold shares in ihelf or in its holding bod) corporate. and (

b) shall not permit any of its ..,ub~idiary bodies corporate to aC4uire ..,hJre.., of the corporation, (2) :\ot more than I Cic of the issued share.., of each cla..,s of shares of a holding body corporatl' may be held hy all the suh..,idiaries of the holding body corporate,

(3) Suhject to subsections (2) and (-+1. a corporation shall cause a sub~idiary body corporate of tht: corporation that holds ..,hare:~ of the corporation to sell or otherwi..,e dispose of tho..,e "hares within) years from the date (

a) the body corporate hecame a subSidiary of the corporation, or (

b) the corporation was continued under this Act. H) Subsection (3) does not apply to share.., aC4uireJ hy the subsid- 30 Prohibited share holdings ?~

iary body corporate before the commencement of this Act. 31 (

I) A corporation may in the capacity of a legal representative hold ~hares in itself or in its holding body corporate unk"s it or the holding body corporate or a subsidiary of either of them has a ben­ eficial interest in the shares. (.2) A corporation may hold shares in itself or in its holding body corporate hy \vay of security for the purposes of a transaction entered into hy it in the ordinary course of a busine"s that includes the lending of money. (.~) .-\ corporation holding shares in itself or in it-- holding hody corpurate "hall not vote or permit those share" to he \ oted unk ... " the c"rporation (

a) holds the shares in the capacity of a legal representative. and i

h) has complied with ... cction 147. 31 Exception 32(

I) Subject to suh"cction (2) and to its

article .... a lurporation may purchase L)f otherwise acquire share" ("sued by it. (.2) A corpor;ltion shall not make ;lny payment to purchi.hc or oth­ erwl .... e acquire shares i"sued by it if there are rea"onabk grounds for belit"ving that L.1) the corporation is, or would after the payment be, unable to pay its li;lbilities as they become due. or (

b) the realizable value of the corporation's as"ets would after the payment be Ie"" than the aggregate of its liabilities and stated capital of all classes.

(3) Subject to any unanimous shareholder agreement. a corporation that is not a di"tributing corporation shall. within 30 days of the purchase of any of its issued shares. notify its shareholders in ac­ cordance with

section 246 (

a) of thc number of shares it has purchased. (

b) of the names of the shareholders from whom it has purcha-..;ed the shares. (

c) of the price paid for the share", (

d) if the consideration was other than cash, of the nature of the consideration given and the value attributed to it. and (

e) of the balancc. if any. remaining due to ~hareholders or shareholder~ from whom it purchased the share~. 32 Acquisition by co~poration of its own shares

(4) Subject to any unanimous shareholder agreement. a shareholder of a corporation other than a distributing corporation i~ entitled on request and without charge to a copy of the agreement between the corporation and any of its other shareholders under which the cor­ poration has agreed to purchase. or has purchased. any of its iI\vn shares. . 33( 1) Notwithstanding

section 32( 2). a corporation mav, ~uhlect to subsection (3) and to its articlc~, purcha~e or otherwise aCLjuire '~hares isslled by it to (a) ~ettlc or compromise a debt or claim a"erted h\ or a~~lin .. t the corpor~ltion, . i

h) eliminate fractional share .. , or (

c) fulfil the term, of a non-a .. sil!nablc al!reement under which the corporation ha .. an option or~ i, oblig~d to purchase .. hares 0\\ ned hy a director. an officer or an employee of the corporation.

(2) Notwithstandlll,S .. ection 32(2), a curporatlon 1l1~1\ purcha,e or otherwise anluire .. hare .. i .... ued hy it to (

a) satisfy the claim of a shan:holder who dl"enh under

section li·q, or (

b) comply with an order under

section 23-1-.

(3) A corporatiun shall not make any payment to purcha-..e or aCLjuire under subsection ( I ) ..,hares i..,sued hv it if there are rea .. onable urounds for believing that . ~ (

a) the corp{)fation is, or would after the payment be. unable to pay it'> liahilllie, a, they become due, or (

b) the realizable value of the corporation' .. asset.., would after the payment he lc,~ than the aggregate of it .. liabilitie .. and the amounts required for payment on a redemption or in a liquidation of all ..,hares the hulders of which have the right to he paid prior to the holders of the ..,han:.., to be purchased or acquired. 33 Alternative acquisition by corporation of its 34thAnN§~th~w.nding

section 32(2) or 33(3), a corporation may. subject to subsection (2) and to its articles. purcha .. e or redeem any redeemable shares issucd by it at prices nnt cxceeding the reJemption price of those .. hares ~tatcJ in the articles or calculated according to a formula stated in the articles.

(2) A corporation shall not make any payment tu purcha,e or redeem any redeemable shares issued by it if there are reasonable gmunds for believing that 34 Redemption of shares 25

(

a) the corporation is, or \vould after the paym~nt he. unable to pay its liabilities as they become dUt:, or (

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

i) its liabilities, and (ii) the amount that would be fl?4uired to pay the holders of shares that have a right to he paid, on a redemption or in a 1i4uidation, rateably with or prior to the huldns of the "hares to he purchased or redeemed. 3S(

I) A corporation Illay accept from an) "hareholder a "hare nf the corporation (

a) that is surrendered to it as a gift. or (

b) that has heen hcId in escrow pursuant to an c"crm\ agreement re4uired by the Cmnmission and that is <,urrenden:d pur<,uant t,,) that agreement.

(2) The corporation may not extinguish ()r redu~:e a liahllity in re­ "'pect of an amount unpaid nn a ..,hare surrendered under "ub"ection ( I )(

a) except in accordance with

section .36, 35 Donated and escrowed shares 36(

I) Subject to subsection (3), a corporation may hy "pecial re­ solution reduce its stated capital for any purpose including. without limiting the generality of the foregoing, the purpose of (

a) extinguishing or reducing a liability in re"pect of an amount unpaid on any share, (

b) distributing to the holders of the issued shares of ~tn) class or series of shares an amount not exceeding the stated capital of the class or seric". ;.lOd (

e) declaring its statec! capital to he reduced by an amount that i" not represented by real izahle as"ets.

(2) A special resolution under this

section shall specify the capital account or accounts from which the reduction of stated capital ef­ fected by. the special resolution is to he d~ducted.

(3) A corporation shall not reduce its stated capital for any purpose, other than the purpose mentioned in subsection (1)( c), if there are reasonable grounds for believing that (

a) the corporation is, or would after the reduction be, unable to pay its liabilities as they become due, or 36 Other reduction of stated capital 26

(

b) the realizable value of th~ corporation' s assets \\ Quid therehy be less than the aggregate of its lIahilities.

(4) A creditor of a corporation is entitled to apply to the Court for an order compelling a shareholder or other recipient (

a) to pay tL) the corporation an amount eyual to any liahilitv (If the shareholder that wa" extinguished or reduced L't)illrary to'thi" "edion. or (

h) to payor deliver to the corporation any money or property that was paid or distrihuted to the "hareholder t)r ~Hhcr recipient as a l'IJnseyuencl' of a reductinn of capital made l'llntrar~ to this section.

(5) An '!I.:tion to enforce a liahiiit:~ impo"cd hy thi" "el'tion may not he commenced after ~ years from the date uf the action complained of.

(6) This

section does not affect any liability that ari"es under

section 113. 37(

I) On a purchase. redemption or uther i.l,.:yui"ition hy a corpor­ ation under

section 32. 33. 34.43. IX-+ or 2.34U)(l!) of "hares or fractions of shares issued hy it. the i,'orporation "hi.l~lI dedul't from the stated capital account maintained lor the class or "efle" of shares purchased, redeemed or otherwi"e acyuired an am()unt eyu~t1 to the result obtained by multiplying the stated l'apita! of the ,hare" of that class or series bv the numher of share" or fraction" of "hare" of that class or series purchased, redeemed or otherwise acyuired. diyided by the number of issued shares of that class or sem~s immediately before the purchase, redemption or other acqui"ition.

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

section 234(.3)(

h) from the stated capital account maintained for the c1as') or series of .... hares in respect of which the payment was made.

(3) A corporation shall adjuq its stated capital account or accounts in accordance with a special resolution referred to in

section 36(2).

(4) On a conversion or a chan~e under

section 167, I X5, 186 or 23.+ of issued shares of a corpor;tion into shares 01 another class or series, the corporation shall (

a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or "eries bv the number of shares of that class or series converted or changed, divided by the number of iss~ed shares of that class or series immediately before the converSIOn or change, and 37 Adjustment of stated capital accou nt

(

b) add the result obtained under clause (

a) and any additional consideration pursuant to the conversion or change to the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been cOll\"Crted or changed.

(5) For the purposes of suhsection (-.

f) and subject to its articles, if a corporation issues :2 classes of "hares and there i" attached to each class a right to convert a share of the one clas" into a "hare 01 the other cla"s and a share of one cia"" is converted into a "hare of the other cla"", the amount of stated capital attrihutable to a "hare in either class i" the aggregate of the ....rated capital of hoth classes divided hy the numher of is"ued "hares of hoth cla""e" immediately hefore the convcr"ion.

(6) Shares or fractions of shares i""ued hy a corporation and pur­ chased, redeemed or othef"\\ise al'quired by it "hall either he cancelled or restored to the status 01 authorized hut unissued "hare". 0) For the purpme" of this "ection. a corporation h()lding "hares in itself a" permitted hy "l"I . ."tion J II

I) and (2) j" dccmed 1l11( to have purchased, redeemed or otherwi"e acquired tho"e "hares. (

X) Share" issued hy a corporation and converted pur"uant to their term" or changed under "ection 167, IX5. IX6 or 2J-.f into "hares of another class or series shall become issued ... hare" of the class or series of shares into \\ hich the "hare ... have heen cOll\'erted or changed. (<)) If i"sued ... hares of a class or serie ... have hecome. pur"uant to suhsection (X)' issued shares of another c1as" or ... erie" , the number of unissued shares of the first-mentioned cla"s or series ... hall. unless the articles of amendment or reorganization otherv .. i"e provide, be increased by the number of shares that. pursuant to subsection (8), became shares of another class or series. 37.1(

I) Deht ohligatiom issued. pledged. hypothecated or depos­ ited by a corporation arc not redeemed hy reason only that the in­ debtedness evidenced by the debt obligation" or in re"pect of which the debt obligations arc issued. pledged. hypothecated or deposited is repaid.

(2) Debt obligations issued by a corporation and purchased, re­ deemed or otherwise acquired by it may he cancelled or. \uhject to any applicable trust indenture or other agreement. may he rei"su~d. pledged or hypothecated to secure any obligation of the ~o~oratlOn then existing or thereafter incurred. and any such acqulSltlUn and reissue. pledge or hypothecation is not a cancellation of the debt obligations. 37.1 Repayment acquisition and reissue of debt 3lR+ ~~ ~~R\1ilJtt with a corporation providing for the purl'ha"e hy 38 Enforceability of contract against corporation

it of shares of the corporation is specifically enforceable again"t the corporation except to the extent that the corporation cannot perform the contract without being in breach of

section 32 or 33.

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

section 32 or :n.

(3) Until the corporation has fully performeJ a contract referred to in subsection (1)' the other party to that contract retain" the -;tatus of a claimant and j" entitled to be paid a" "oon as the corporation is lawfully able to do so or. in liquidation, to be ranked subordinate to the rights of creditors and to the rights of any class of shareholders whose rights were in priority to the rights given to the class of share ... which he contracted to "ell to the corporation. but in priority to the rights of the other shareholders. 39 The directors may authorize the corporation to pay a reast)nable commission to any person in consideration of his purchasing or agreeing to purchase shares of the corporation from the corporation or from any other person, or procuring or a~reeing to procure pur­ chasers for shares of the corpnrat ion, 39 Commission on sale of shares 40 A corporation shall not declare or pay a di\'idend if there are reasonable grounds for believing that (

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

b) the realizable value of the corporation's a"sets ,,"ould thereby be less than the aggregate of its liahilitie" and stated capital of all classes. 40 Dividends 41 ( 1) A corporation may pay a dividend by issuing fully paid shares of the corporation and, subject to

section .fO, a corporation may pay a dividend in money or property, (.2) If shares of a corporation are issued in payment of a dividend, the declared amount of the dividend "itated a" an amount of money shall be added to the stated capital account maintained or to be maintained for the shares of the class or serie" is .... ued in payment of the dividend. 41 Form of dividend 42(

I) Except as pennitted under subsection (2)' a corporation sh~l1 not, directly or indirectly, give financial assistance by means of a loan, guarantee or otherwise (

a) to a shareholder or director of the corporation or of an af­ filiated corporation, 42 Prohibited financial assistance by corporation 29

(

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

c) to any person for the purpose of or in connection with a purchase of a share issued or to be issued by the corporation or an affiliated corporation. if there are reasonable grounds for helieving that (

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

e) the realizable value of the corporation's a"..,cts. excluding the amount of anv financial assistance in the form of a loan or in the fonn of asse-ts pledged or encumbered to ,,('cure a guarantee, after giving the financial assistance, would be Ie,,, than the ag­ gregate of the corporation's liabilities and stated capital of all classes.

(2) A corporation may give financial a..,,,istance by means of a loan, guarantee or otherwise (

a) to any person' in the ordinary cour"e of businc..,.., if the lending of money is part of the ordinary business of the corporation, (

b) to any person on account of expenditur(" incurred or to be incurred on behalf of the corporation. (

c) to a holding body corporate if the corporation is a \vholly owned subsidiJ.ry of the holding body corporate. (

d) to a subsidiary body corporate of the corporation. or (

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

i) to enable or assist them to purchase or erect living ac­ commodation for their own occupation, or (ii) in accordance with a plan for the purchase of shares of the corporation or any of its affiliates to be held by a trustee.

(3) A contract made by a corporation in contravention of this

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

(4) Unless disclosure is otherwise made bv a corporation. a financial statement referred to in

section 149( I )( a) ~hall contain the following information with respect to each case in which financial assistance is given by the corporation by way of loan, guarantee or otherwise, whether in contravention of this

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

b) or (c). if the financial assistance was given during the financial year or period to which the statement relates or remains outstanding at the end of that financial year or 30

period: (

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

b) the nature of the financial assistance given: (

c) the terms on which the financial assistance wa~ given; (

d) the amount of the financial assistance initially gi\'l~n and the amount, if any. outstanding. 43(

I) The shareholders of a corporation are not, as ~hareht)ldcrs. liable for any liability. act or default of the l'orporatinn except under

section 36H). 1.+0(7) or 219('+).

(2) Subject to

section 45(~'n. the article~ may provide that the cor­ poration has a lien on a share reg.istered in the name of a shareholder or his legal representative for a debt of that ~hareholder to the cor­ poration. including an amount unpaid in re~pect of a ~hare i~sued hy a hody corporate on the date it wa~ contInued under thi~ AlJ.

(3) A corporation Illay enforce a lien ret'em:'d to in suhsectiun (2) in accordance with it'> hy-Iaw .... 43 Shareholder immunity

PART 6 SECURITY CERTIFICATES, REGISTERS AND TRANSFERS

Interpretation and General 44(

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

(2) In this Part. (a) "adverse claim" includes a claim that a transfer was or would be wrongful or that a particular ad\'er~e person is the owner of or has an interest in the security; (b) "bearer" means the person in po,,,ey,ion of a security pay­ able to bearer or endorsed in blank: (c) "bona fide purchaser" means a purchaser for v:.llue in good faith and without notice of any adverse claim \\ ho take, delivery of a security in bearer form or order form or of a ~ccurity in registered form (

i) issued to him. or 44

Definitions and

interpretation 31

(ii) endorsed to him or endorsed in blank by an appropriate person as defined in

section 61; (d) "broker" means a person who is engaged for all or part of his time in the business of buying and selling securities and who, in the transaction concerned. acts for. or buys a security from, or sells a security to, a customer; (e) "delivery" means voluntary transfer of pos~cssion: (f) "fiduciary" means (

i) a trustee, guardian, committec. curator or tutor. (ii) an executor, administrator ~)r representati vc of a lkceased person. and (iii) any othcr pcrson acting in a fiduciary capacity: (g) "fungible" means. in relation to securiti~s. securities of which any unit i..,. by nature or u..,agc of trade. the equivalent of any othcr like unit: (h) "genuine" means free of forgery or counterfeiting: (i) "good faith" means hone..,!\, in fact in the conduct of the transaction concerncd: (j) "holder" means a person in po..,session of a security issued or endorsed to him or to bcarer or in blank: (k) "issuer" includes a corporation (

i) that is required by this Act to maintai n a securities re­ gister, or (ii) that directly or indirectly creates fractional interests in its rights or propcrty and that issues securities as evidence of those fractional intcrests: (I) "overissuc" mcans the issuc of sccuritlcs in excc..,s of any maximum number of securities that the issuer is authorized by its articles or a trust indcnturc to issue: (m) "purchascr" means a person vvho takc" b~ sak. mortgagc. hypothcc, pledge, issue, reissue. gift or any olhcr voluntary trans­ action creating an intercst in a security: (n) "sccurity" or "security certificatc" means an instrument issued by a corporation that is (

i) in bearer. order or rcgistered form. 32

(ii) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment, (iii) one of a class or series or by its terms divisible into a class or series of instruments, and (iv) evidence of a share, participation or other interest in or obligation of a corporation; (0) . 'transfer" includes transmission by operation of law: (p) "trust indenture" means a trust indenture as defined in sec­ tion 77; (4) "unauthorized" in relation to a "ignature nr an endorsement means one made without actual. implied or apparent authority and includes a forgery; (r) "valid" means issued in accordance with the applicable law and the articles of the is'iuer or val idated under

section -lR.

(3) A security is a negotiable instrument eXl"l'pt \\ hen (

a) its transfer is restricted and noted on the "ecuritv in accord- ance with

section 4S( X). or . (

b) it is stated conspicuously on the security certificate that it is non-negotiable. (-

l) A security is in registered form if (

a) it specifies a person entitled to the security or to the rights it evidences, and (

b) either its transfer is capable of being recorded in a securities register or the security so states.

(5) A debt obligation is in order form if by its terms it is payable to the order or assigns of any person specified in it with reasonable certainty or to him or his orda.

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

(7) A guarantor for an issuer is deemed to be an t""uer to the extent of his guarantee whether or not his obligation is noted on the security. 4S(

I) A security holder is entitled at his option to a security cer­ tificate that complies with this Act or a non-transferable written acknowledgment of his right to obtain a security certiticate from a corporation in respect of the securities of that corporati\)n held by 45 Security certificates

him.

(2) A corporation may charge a fec of not more than S3 for a security certificate issued in re~pcct of a transfer.

(3) A corporat ion is not required to issue more lh"n one security certificate in respect of securities held jointly by several persons. and delivery of a certificate to one of several joint holders is sufficient delivery to all.

(4) A security ccrtit1cate shall be signed manually by at least one dircctor or officer of the corporation or by or on behalf of a registrar. transfer agent or branch transfer agent of the corpomtion. or by a trustee who certifies it in accord~mce with a trust indenture. and any additional signatures required on a security certificate may he printed or otherwise mechanically reproduced on it.

(5) Notwithstanding subsection (.;I). a m~tnmll signature is not re­ lIuired on (

a) a security certificate representing (

i) a fractional share. or (ii) an option or a right to acquire a security. or (

b) a scrip ccrtific<ltc.

(6) If a security certificate contains a printed or mechanically re­ produced signature Of'l person. the corporation may issue the security ccrtificate. notwithstanding that the person has ceased to be a director or an officer of the corporation. and the security certific"le is as valid as if he were a director or an ofticer ut the date of its issue.

(7) There shall be sr"ted on the face of each share ccrtific,ltc issued by a corporation (

a) the name of the corporation. (b) .. the words ··Incorporated under The Business Corpor(lIions Act. (

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

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

(8) If a security certificate isslied by a corporation or by a body corporate before the body corporate was continued under this Act. is or becomes subject to ("

a) a restriction on its transfer other than 4l constmint under

section 168. or 34

(

b) a lien in favour of the corporation, the restriction or lien is ineffective against a transferee of the security who has no actual knowledge of it unless (

c) it or a reference to it is noted conspicuously on the security certificate, . (

d) the security certificate contains a conspicuous statement that it is non-negotiable, or (

e) the transferee is not (

i) a bona fide purchaser. or (ii) a purchaser against whom the owner of the security may not assert the ineffectiveness of an endor ... ement under

section 64.

(9) A distributing corporation shall not restrict the transfer of its shares except by way of a constraint permitted under

section 16X. ( I

U) There shall he ... tated legibly on a share cenificate issued hy a corp.oration that is authorized to j", ... ue ... hares of more than onl: class or ",CrIes I

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

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

i) the rights. privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as they have been fixed by the directors, and (ii) the authority of the directors to fix the rights, privileges. restrictions and conditions of subsequent series. (II) If a share certificate isslled hy a corporation contain", the state­ ment mentioned in subsection (IO)(b). the corporation shall furmsh to a shareholder on demand and without charge a full copy of the text of (

a) the rights. privileges, restrictiom and conditions attached to each class authorized to be issued and to each series in so far as they have been fixed by the directors, and (

b) the authority of the directors to fix the rights, privileges. restrictions and conditions of subsequent series. 35

( 12) A corporation may issue a certi ficate for a fractional share or may issue in its place scrip certificates in a form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share. ( 13) The directors may attach conditions to any scrip certificates issued by a corporation. including conditions that (

a) the scrip certificates become void if they are not exchanged for a share certificate representing a full share before a specified date. and (

b) any shares for which those scrip ccrtific.ltcs are exchangeable may. notwithstanding any pre-emptive right. be issued by the corporation to any person and the pwceeds of those shares dis­ tributed rateably to the holders of the scrip l'cl1ificates. ( l-

l) A holder of a fractional share issued by a corporation is not entitled to exercise voting rights or to receive a dividend in respect of the fractitmal share. unless (

a) the fractional "hare re"ulrs from a con,,()lidation or shares. or (

b) the articles or the corpuration othelwise prmide. ( 15 I A holder of a scrip certificate is not entitku to exercise voting rights or to receive a diviuend in respcct of the scrip certifil'ate. 46( 1) A corporation shall maintain a securities register in \vhich it records the securities issued hy it in registered form. showing with res~ct to each class or series of securities (

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

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

C) the date and particulars of the issue and tnnsfer of each security. (2) :\ corporation may appoint (

a) one or more trust companies registered under The Trust Com­ panies Au as its agent or agents to maintain a cerHral securities register or registers. and (

b) an agent or agents to maintain a branch securities register or registers.

(3) Registration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and 46 Securities records 36

valid registration for all purposes. (-+) A branch securities register shall contain particulars of securities issued or transferred at that branch.

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

(6) Neither a corporation, nor its agent nor a trustee defined In

section 77(

I) is required to produce (

a) a cancelled security certificate in re£istered form, an instru­ ment referred to in

section 29( 1 ) that is ~cancelled or a like can­ ~:clled instrument in registered form 6 years after the date of its cancellation, (

h) a cancelled security certificate in bearer form or an instru­ ment referred to in

section 29(

I) that is cancelled or a like can­ celled instrument in bearer form after the date of its cancellation, or (

c) an instrument referred to in

section 29(

I) nr a like instrument. irrespective of its form. after the date of its expiry. 47(

I) A corporation or a trustee as defined in

section 77(

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

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

section 72( -4) to the corporation that he is (

a) the executor, administrator. heir or legal repre ... entative of the heirs of the estate of a deceased security holder, (

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

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

(3) If a person on whom the ownership of a security devolves by operation of law, other than a person described in subsection (2), furnishes proof of his authority to exercise rights or privileges 111 47 Dealings with registered holders and transmission on deat~7

respect of a security of the corporation that is not registered in his name, the corporation shall treat that person a~ entitled to exercise those rights or privileges.

(4) A corporation is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a 3rd person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this section, as the o~vner or registered holder of the securities.

(5) If an infant exercises any rights of ownership in the ~ecurities of a corporation. no subsequent repudiation or avoidance i" effective against the corporation.

(6) A corporation shall treat as owner of a ~ecurity the I.,urvivors of persons to whom the ~ecurity was issued if (

a) it receives proof sati~factory to It of the death of any joint holder of the security. and (

b) the security provides that the person" to whom the security was issued are joint holders with right of survivOf"hip.

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

a) is entitled to become a registered holder or to de~ignate a registered holder. if he deposits with the corporation or ih transfer agent (

a) the original grant of probate or of letters of admini ... tration, or a copy of it certified to be a true copy by or (

i) the court that granted the probate or letter ... of adminis­ tration. (ii) a tru~t company incorporated under the laws of Canada or a province, or (iii) a lawyer or notary acting on behalf of the per ... on referred to in subsection (2)(a). (

b) in the ca~e of tranl.,mission by notarial will in the Province of Quebec, a copy of the will authenticated pursuant to the laws of that provin(e, together with (

C) an affidavit. statutory declaration or declaration of trans­ mission made by a person referred to in ... ub ... ection (2)( a), "tatIng the particulars of the transmission. and (

d) the security certificate that was owned by the decea ... ed holder 38

(

i) in the case of a transfer to a per<;;on referred to in sub­ section (2)(a). with or without the endorsement of that perstm. and (ii) in the Gl"e of a tran~fer to any other perSt)n. enlh)fsed in accordance with

section n I. and accompanied h: an: as"uranl:e the l.'llrpnratinn m~l\, rt:quire under \t:ctil.m 72, (

X) Notwithstanding "uh"ection (7). if the 1~1\\" of thL' i urisdiction ~ovcrnin~ the transmi\\ion of a "l'l.:urit\, of a del.'ea"ed hl)ldt:r do not ;equire a'- grant of prohatt: or of !elkr; uf admini .... tratlPn in re .... peet of the transmission. a legal repn>enLlti\'l~ of thl' decea .... cd hllider is entitled. suhJect to any applicahk la\\ reiallng to the cl)lkctinn of taxe\. to become a rcgi\tered holder PI' to desigllate a registered holder. if he depo\its with the corporation or ih transfer agent (

a) the securit\' certificate that v,as l)\\ned h\ the deceased holder. and - (

h) reasonahk proof of the gmerning I~IW\, III th,: del.'ea\ed holder's interest in the securit\, and 01 the ri~ht III the Ic~al representati\c or the person he -de\ignate\ to h~com'" the rcg~i\­ tered holder, (':

i) Deposit of the documents required hy \uh"el.'tion (7) or O~) em­ powers a corporation or it" transfer agent to rC(()J'(j in a .... ecurities re~ister the transmission of a securit\' from the deceased holder to a person referred to in suh"ection (:2)(

a) or to any per"un that the person referred to in sub\cl.'tion (2)(

a) may de"ignatc and. thereafter. to treat the person who thus becollle" a registered holder a .... the owner of the security, 48(

I) The provisions of thi" Part that \'alidate a "ecurit! llr compel its issue or reissue do not apply to the cxtent that validation. j"sue or reissue would re"ult in overissue. hut (

a) if a valid securit!. similar in all re"pcl'(\' to the "ccurity involved in the uvcri",",ue, is reasonahly available for purcha"e. the person entitled to the validation or i..,suc may cllmpel the issuer to purchase and deliver ,",uch a security to him against surrender of the security that he holds, or (

b) if a valid security. similar in all respects to the ..,ecurity involved in the overissue, is not reasonably available for pur­ chase, the person entitled to the validation or i"sue rna! recover from the issuer an amount equal to the price the last purcha-.er for value paid for the invalid security,

(1) When an issuer subsequently amends its articles: or a trust m­ denture to which it is a party. to increa"e ih authorlled "Cl'lIr1tIe" 48 Overissue

t~ a number e~ual to or in excess of,the number of securities pre­ vIOusly authorIzed plus the amount at the securities overissucd. the securities so overissued are valid from the date of their issue. (3) Subsection (2) does not apply if the issuer has purchased and delivered a security in accordance with suhsection (I )(

a) or paid the amount referred to in subsection (I )(b). (-.1.) A purchase or paymcnt by an is..,ucr under suhsectinn (

I) i" not a purchase or payment to which

section 3~. 33. 3-.1. or 37 applies. 49 In an action on a security. (

a) unless specifically denied in the pleadings. each signature on the security or in a necessary endorsement is :.tdmitted. (

h) a signature on the security is presumed to he genuine and authori/ed hut. if the effectivenes.., of the signature i" put in j""ue, the burden of estahlishing that it is genuine :.tnd authorized is on the party claiming under the signature. (() if a signature j" :.tdmitted or e<"(ahli"he(.i. production of the instrument entitles a holder to recover un It unle"" the defendant e"tablishes a defence or a defed gOing to the valldit, of the 'iecurity. and (

d) if the defendant establishe'i that a defence or defect cxi ... ts. the plaintiff has the burden of estahli"hing th:.tt the de/cncc or defect is ineffective against him or some person under whom he claims. 49 Burden of proof in actons 50 Unless otherwise agreed. and subject to any applicable law. regulation or stock exchange rule. a person reljuired to deliver se­ curities may deliver any security of the <.,pecified issue in bearer form or registered in the name of the transferee or endor<.,ed to him elr in blank. 50 Securities are fungible Issue - Issuer 51(

I) Even against a purchaser for value and without notice of a defect going to the validity of a security. the terms of the security include those stated on the security and those incorporated in it by reference to another instrument. statute. rule, rcgulati()n or orda to the extent that the terms so referenced do not contlict \\ith the stated terms. hut such a reference is not of itself notice to a purcha"er for value of a defect going to the validity of the -,ecurity. nutwit~-,tanding that the security expressly ~tates that a person acceptIng It admits such notice. 51 Notice of defects

(2) A security is valid in the hands of a purchaser for \'alue without notice of any defect going to its validity.

(3) Except as provided in

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

(4) All other defences of an issuer. including non-delivery and con­ ditional delivery of a security. are ineffective against a purchaser for value without notice of the particular defence. 52 After an event that creates a right to immediate performance of the principal obligatiun evidenced by a security. or that sets a date on or after which a security is to be presented or surrenden:d for redemption or exchange. a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuer. (

a) if the event requires the payment of money or the delivery of ,>ccurities. or both. on presentatIOn or 'ourrender of the security, and such funds or securities arc a\ aibhle on the date set for payment or exchange. and the purchaser take,> the "ecurity more than one year after that date, or (

b) if the purchaser takes the securit) more than 2 year" after the date set for surrender or pre'oentation or the date on which such performance became due. 52 Staleness is notice of defect 53 An unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done by (

a) an authenticating trustee. registrar. transfer agent or other person entrusted by the issuer with the ..,igning of the security, or of similar securities. or their immediate preparation for sign­ mg. or (b) ~1Il employee of the issuer or of a per..,on referred to in clause (

a) who in the ordinary course of his duties handles the security. 53 Unauthorized signature 54(

I) If a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect. (

a) any person may complete it by filling in the blanks in ac­ cordance with his authority. and (

b) notwithstanding that the blanks are incorrectly filled in, th~ security as completed is enforceable by a purchaser who took It for value and without notice of th~ incorrectnt?ss. 54 Completion or alteration A~

(2) A completed security that has been improperlv altered. even if fraudulently altered. remains enforceable. but onl\' according to its original terms. . SS( I). A person signing a security as authenticating tru-..tee. registrar. tr~nster age~t or other person entrusted b.y the issuel: with the signing 01 the secunty. warrants to a purchaser lor value \\ tthnut notice that (

a) the security is genuine. (

b) his acts in connection with the issue of the securit\ arc v. ithin hi" authority. and . (

c) he has reasonable ground" for belie\'ing that the security is in the form and within the amount the issuer is authorized to issue.

(2) Unless otherwise agreed. a person referred to in subsection (

I) docs not assume any further ktbility for the \'alidity of a security. 55 Warranties of agents Purchase S6(

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

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

(3) A purchaser of a limited interest acquIres rights only to the extent of the interest purchased.

(4) Nothing in subsection (2) confers any rights on a purchaser unless all necessarv endorsements are made b\ an appropriate person as defined in secti~m 61. . 56 Title of purshaser S7(

I) A purchaser of a security. or an~ broker for a seller or pur­ chaser. is deemed to have notice of all adverse claims if (

a) the securitv. whether in bearer or registered form. has been endorsed .. for collection" or .. for surrender" or for some other purpose not involving transfer. or 57 Deemed notice of adverse claims

~b). the security is i~ bearer form and has on it a "tatement that It IS the property .~t a p~rson other than the transferor. except that the mere wntlllg ot a name on a security is not such a statement.

(2) Notwithstanding that a purchaser or any broker for a seller or purchaser has notice that a security is held for a third person or is rcg.ister~d i.n the nan:e o~- or endo~"ed hy a f~dllciary. he has no duty to 1n411lre Into the nghttulness 01 the transfer and has no notice of an adverse claim. except that if a purcha"er know ... that the consid­ eratit)Jl is to be used for. or that the tran,actinn i, fpr. the personal benefit of the fiduci~ry or is tHherv,ise in breach pf the fiduciary's duty. the purchaser IS deemed to have notIce \)1 an adhT,e claim. 58 An e\ ent that LTeate ... a nght t\) immedIate pertnflnanl'e of the principal obligation evidenced hy a security or that 'l'h a dah: on or after which the security i ... to be pre,ented or ,urremkred for re­ demption or exchan~e i ... nnt oj ihelt not I I.: l' of an adver"e claim. except in the case of a purchase (

a) after one vear from anv date 'L't for slll'h pre'l'ntat ion or surrcnder for r~dempti()n (lr ·exl·hangc. or (

b) after 6 months from any date ,et Inr payment of money against presentation or ,urrender ut the ,ecurity if lund .... are available for payment on that date. 58 Staleness as notice of adverse claims 59(

I) A person who present-.. a "ecurity for re~i ... tration of transfer or for payment or e.xchange warrant" to the ("suer that he is entitled to the regi>;(ration. payment or exchange. except that a purcha .... er for value without notice of an adver .... e claim \\ ho receive, a new. reissued or re-registered security on registration of tramfer warrant'; only that he has no knowledge of any unauthorized signature in a necessary endorsement.

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

a) the transfer is effective and rightful. (

b) th~ security is genuine and has not been materially altered. and (

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

(3) If a security is delivered by an intermediary known by the pur­ chaser to be entrusted with deliverv uf the security on behalf of another or with colle,..:tion of a draft or other claim to he collected against such deli\'ery. the intermediary by such delivery wan-ants only his own good faith and authority even if he has purchased or made advances against the dr:..tft or other claim to be collected agalllst 59 Warranties 43

the delivery.

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

(5) A broker gives (

a) to his customer and to a purchaser the \\arranties proviJcd in subsection (2). and (

b) to the i"isuer the warrantie" pnwided in "ub"cctinn ( I ).

(6) A brokt:r has the righh and privilege" of a purcha"er under this section.

(7) The warranties of and in favour of a broker actin!.! as an agent are in addition to warranties given by his cu...tomer a~d warra~ties given in favour of his customer. 60 If a security in registered form is delivered t() J purcha"er \\ ithout a necessary endorscmcnt. hI: may becnT1lc a bona fide purchaser only as of the time the endorsement is supplied. but against the transferor the transfer is complete on delivery and the purcha"er ha'-t a speci­ fically enforceable right to have any necessary endorsement supplicd. 60 Right to compel endorsement 61(

I) In this section. "appropriate person" means (

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

b) if a person described in clause (

a) is described as a fiduciary but is no longer serving in the Jescribed capacity. either that person or his successor. (

c) if the security or endorsement mentioned in ciame (

a) spec­ ifies more than one person as fiduciaries and one ~)r more are no longer serving in the described capacity. the remaining fiduciary or fiduciaries. whether or not a successor has heen appointed or qualified, (

d) if a person described in clause (

a) is an individual and ~s without capacity to act by reason of Jeath. incompetence. mi­ nority. or otherwise. his fiduciary, (

e) if the security or endorsement mentio~ed in. c1aus~ (

a) spec­ ifies more than one person with right of sUf\'lVor"ihlp and by reason of death all cannot sign. the survivor or survivors. (n a person having power to sign unda aprl icabk law or a 61 Endorsement

power of attorney, or (

g) to the extent that a person described in clauses (al to (

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

(2) Whether the person '>igning is an appropriate person is deter­ mined ;JS of the time of sig.ning and an endorst.:ment hy such a person dnes not become unauthorized tor the purpose" of this Part hv reason of any subse4uent change of circumstances. "

(3) An endorsement of a "ccurity in n:gj-"rcred form is madc \\hen an appropriate person signs. either un the security or on a separate document. an assignment or transfer of the '>ecuri!y or a p(lwer to assign or transfer it. or when the signaturL' of an apprllpriatc person is written without more on the hack of the sL'curi!y.

(4) An endorsement may he special or in hlank.

(5) An endor'>ement in hlank includes an endorsement to hearer.

(6) A speCIal endor"ement "peci fies the pcr"or. tu \"hum the security is to he transferred. or who has PO\\ er to !ran"fer it.

(7) A holder may com ,-'rt an cndor'>emen! in hlank into a special endorsement. (

X) L: nless otherwi"e a!.!reed. the endorser bY' hi'i L'ndorsement as­ sumes no obligation that the security will be h"unoured hy the Issuer.

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

(10) Failure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relation­ ship, including any la\-\,' re4uiring the fiduciary to obtain court ap­ proval of a transfer. docs not render his endor"ement unauthorized for the purposes of this Part. 62 An endorsement of a security. whether special or in hlank. does not constitute a transfer until delivery of the security on which it appears or. if the endorsement is on a separate do"cllment. until deliverv of both the security and that document. 62 Effect of endorsement withou~ delivery 63 An endorsement of a security in bearer form may give notice of an adverse claim under

section 57 hut does not otherwise affect any right to registration that the holder has. 63 Endorsement in bearer form 64 Unless the o\,-ner has ratified an unauthorized endorsement or i" otherwise precluded from asserting its indlcL,tivenc"". he may 64 Effect of unauthorized enforsement 45

assert its ineffectiveness against the issuer or any purchaser. other than a purchaser for value and without notice of adverse claims. who has in good faith received a new. reissued or re-n~gistered security on registration of transfer. SS(

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

a) the signatur~ was genuine. (

h) the signcr was an appropriak person J\ defined in ,>('ction 61 to endor ... e. and (l') the ... igner had legJI capacity to sign. (~) A person \1, ho gUJrantees a signature of an endorser does not otherwise warrant the rightfulnc..,.., of the particular transfer.

(3) A person who guarantees In endorsement of a security warrants hoth the ... ignature and the rightfulne..,.., of the tran ... tcr in a(1 respects. but an i ... ..,uer may not require a guarantee ()f endorsement as a con­ dition to n:gistratiol1 of tran,kr.

(4) The warrantIes referred to in this

section arc made to any person taking or dealing with the security relyIng on the guarantee and the guarantor is I iahle to that person for any Ims resulting from hreach of warranty. 65 Warranties of guarantees of signatures or end'66fllmmfi~ery to a purchaser occurs when (

a) he or a person designated hy him acquires possession of a security. (

b) his broker acquires possession of a ... ecurity specially en­ dorsed to or issued in the name or the purchaser. (

c) hi ... broker sends him confirmation of the purchase and the broker in his record ... identifie ... a ... pecific ... ecurity a" helonging to the purcha'>er. or (

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

(2) A purchaser is the owner of a security held for him by.his hroke.r, but a purchaser is not a holder except In the case'> referred to In subsection (I)(

b) and (c).

(3) If a security is part of a fungible hulk a purchaser of the ... ccurity is the owner of a proportionate intere'>t in the fungihle bulk.

(4) Notice of an adverse claim received by a broker ur by a purchaser . del;very and constructive ownership 66 Construct~ve .L Ilk

aftc.r the broker takcs delivery as a holder for value is not effective against the brokcr or the purchaser, except that. a'> between the broker and the pur~has~r. the purchaser. may dem~nd delivery of an equi­ valent secunty In relatIOn to whIch no notIce of an adverse claim has been received. 67(

I) Unless otherwise agreed. if a sale of a securitv i" made on an exchange or otherwise through brokers. - (

a) the selling customer fulfils his duty [0 deliver when and (

i) he ddiver" the "ecurity to the sclling broker or to a person designated hy the selling broker, or (ii) he cause, an aL'knowledgL'ment to be made to the "elling broker that the "I.xunty I" held lor him, (

b) the selling broker, including a corrL'spondent broker, acting for a ,>elling customer fulfil" hi" duty tu dL'liver (

i) bv delivering the 'L'L'uritv or a likL' 'L'L'urit\ to the buvin~ bnlke-r or to a per'>on de,ignateJ by the buying broker. ~)r ~ (ii) by effecting clearar1L"L' of the sale in accordanL'e with the rules of the exchange on which the tran"action took place_

(2) Except as otherwise provided in thi'>

section and unless otherwise agreed, a tramferor's duty to deliver a security under a cuntract of purchase is not fulfilled until he (

a) delivers the security in negotiable form to a purcha"er or to a person designated by the purchaser, or (

b) cau'e" an acknowledgement to be made to the purchaser that the security is held for him. (.3) A sale to a broker purcha"ing for hi, own account i" "lIbject to ,>ubsection (2) and not '>lIbsection ( I), Ullless thL' "ale is IllJdc on a '>tock exchange. 67 Delivery of security 68(

I) A person again'>t whom the transfer of a ,>ecurity i, \\ rongful for any reason, including his incapacity but not including an lIn.~u­ thorized endorscmcnt. lllay against any person e\cept a bona tIde. purchaser reclaim posse'>sion of the security or obtain possession .ot any new security evidencing all orpart of the '>ame rights or c1ann damages.

(2) If the transfer of a security is \\rongful by reason of an unau­ thorized endorsement. the owner may reclaim pos'>e"sion of the St> curity or obtain possession (If a new ,,(curity even from a purL'haser . of security 68 Right to reclaim possessLon 47

for value and without notice of an adverse claim if the ineffectiveness of the purported endorsement may be asserted against such purchaser under

section 64.

(3) The ri~ht to re~laim possession o~' a security may be specifically enforced. Its transter may be restraIned and the security may be impounded pending litigation. 69(

I) Unless otherwise agreed. a tran"fcror shall on demand supply a purchaser with proof of his authority to transfer or with any pther requisite that is necessary to ohtain registration of the transfer uf a securitv. but if the transfer is not for value a transferor need not do so unless the purchaser pay ... thc reasonable and necc"isary cosh of the proof and transfer.

(2) If the transferor fails to comply with a dcmand under suhsection (

I) within a reasonable time. the purchaser may reject or rescind the gansfer. ~ Right ot requisites of transfer 70 No seizure of a security of a distrihuting curporation or other interest evidenced hy a security , ...

L'lTe~:tive until the per ... on making the seizure obtains pmsession of the ... ecurity. 70 Seizure of security 70.1 An agent or bailee who in good faith. including oh"crvance of reasonable commercial standards if he is in the husines" of huying. selling or otherwise dealing with securities. has received ... ecurities and sold. pledged or delivered them according to the instructions of hi ... principal i" not liahk h)r conversion or for participation in breach of fiduciary duty although the prtncipal has no right to dispose of them. 70.1 No conversion if good faith delivery by agetl 71 (

I) If a security in registered form i" presented for regi...rration of transfer, the issuer shall register the transfer if (

a) the security is endorsed hy an appropriate person. as defined in ... eclion 61, (

b) reasonahle assurance is given that that endorsement i ... gen­ uine and effective. (

c) the issuer has no duty to inquire into adverse claims or has discharged any such duty, (

d) any applicable law relating to the collection of taxe" has been complied with, (

e) the transfer is rightful or is to a bona fide purcha"er. and (n any fee referTed to in

section -+)( 2) has been paid. 71 Dut~ to register transfer 48

~2) If ,an ,issuer has a duty to regist~r a ~ransfer of a security, the Issuer, IS lIable to the person presentmg It for registration for loss resultmg from any unreasonable delay in registration or from failure or refusal to register the transfer. 72(

I) An issuer may require an assurance that each neces'an' en­ dorsement ~n a ~ecurity is _ gL'nuine :.md effective by requirIng a guarantee ot the signature ot the person endorsing and by requiring (

a) if the endorsement is b\' an agent. reasonable a ... surance of the agent' ... authorit) to sign-, (

b) if the endorsement is h\' a fiduciary. c\idcnL'l~ til' hi ... ap_ pointment or incul1lhenc) , (

c) if there is more than one fiduciar\', reasonahle as ... urance that all who arc required to sign have done '0, and (

d) in any othcr Ca ... c, a ... sur~mce that corre"'pol1ll, as clo ... cly as practicahle to the foregl)ing,

(2) In suhsection (I). "L'uarantcc of the ,iL'naturc" mean, a L'uar­ antee signed by or on hd;alf of a person rca\onahl) hclic\cd h~ the i ... suer to be a re ... pon,ibk per ... un.

(3) An issuer may adopt reasonable \landard ... to determi ne re"pon­ sihle persons for the purpose of sub"ection (2),

(4) In subsection ( I )( h). "e\'idence of appointment or incumhency" means (

a) in the case of a fiduciary appointed

h) a court, a copy of the order certified in accordance with

section 47(7), and dated not earlier than 60 days before the date a security is pre ... ented for transfer, or (

b) in any other case. a copy of a document ... hO\ving the ap­ pointment or other evidence belie'ed by the i ... ,ucr to he appro­ priate, (::;) An issuer may adopt rca,onable standard ... \vith respect to evi­ dence for the purpmes of ,ub ... ection (4)(b). (6) :'\n issuer is not deemed to havc notice of the content-. of any document obtained pur ... uant to suh,>cction (4) c\.cept to thc c\tent that the contents relate directly to appointment or inculllhency.

(7) If an issuer demands a ... ,urance additional to that ... p~cified in this ,>ection for a purpose other than that "pecified in suh",cl,tion t41 and obtains a copy of a will, trust or partner"hlp agreelll~nt, h~ -Jav-, or similar document. the i'>suer i:-; deemed tll have notll'e ot all matters contained therein affecting the tran,fcr. 72 Assurance that endorsement is effective 4q

73(

I) An issuer to w~om .a s~curity is presented for registration of transfer has a duty to mqUlre mto adverse claims if (

a) written notice of an adverse claim is received at a time and in a manner that affords the issuer a reasonable opportunity to act on it before the is'iue of a ne\\'. reissued or re-registered security and the notice discloses the name and address .... of the ~Iaimant. the registered owner and the issue of which the security IS a part. or (

b) the issuer is deemed to have notice of an adverse claim from a document that is obtained under .... cl.:tion 72(7). (21 An issuer may discharge a duty of Inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address furnished bv him or. if no 'iuch address ha, been furnished, to his residence or re'gular place of bmincss, that ~t security has been pre .... cnted for regi-;tration of tran"fer by a named person", and that the transfer will be regi-;tcred unles" within 30 davs from the date of mailing the notice either ' (

a) the i"suer is served with a restraining order or other order of the Court. or (

b) the issuer is prmided with an indemnity bond sufficient in the issuer's judgment to protect the issuer and any registrar. transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a re-;ult of complying v. ith the adverse claim.

(3) Unless an issuer is deemed to have notice of an ad\'erse claim from a document that it obtained under

section 72(7) or has received notice of an adverse claim under subsection (I ), if a security presented for registration is endorsed by the appropriate person as defined in

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

a) an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into' the existence. extent or correct description nf the fiduciary relationship, and thereafter the issuer may assume \\ ith­ out inquiry that the fiduciary is no longer acting as "uch with respect to the particular ;"ccurity, (

b) an issuer registering a transfer on an endorse,ment by a t:i­ duciary has no duty to inquire whether the tran,ster ,I'i ,mJde, In compliance with the document or with the law ot the JUrisdiction governing the fiduciary relationship, and (

c) an issuer is not deemed to have notice of the contents ()f any court record or any registered document even ift~e record ,l)r document is in the is'iuer''i posses"il)ll and even 11 the tr~nskr 73 Limited dutyof inquiry as to adverse claims

is made on the endorsement of a fiduciary to the fiduciarv himself or to his nominee. .

(4) A written notice of adverse claim received bv an issuer is ef­ fective for 12 months from the date when it was received and thereon ceases to be effective unless the notice is renewed in writing.

(5) An issuer who re~isters the transfer of a security nn ;.tn unau­ thorized endl)rSCment Is liable for improper registration. 74(

I) Except as otherwi"e pmvided in any applicahle law relating to the collection of taxes. the issuer IS not liahle to the owna or any other person who incurs a loss ~IS a result of the rc~i"tratlOn of a transfer of a security if (

a) the necessar~ endorsements were on or \\ ith the security, and (

b) the i"suCf had no duty to in4uire into adverse claim:,> or had discharged any such duty,

(2) If an issuer hd" rq,:i"tered a tran"kr of a -.ecurity to ~l pcrsl1l1 not entitled to it. the ISSlIer "hall on demand deliver a lihe seL'untv to the 0\\ ner unkss . (

a) suhsection (

I) applies, (

b) the owner is precluded by

section 75(

I) trom assening any claim, or (

C) the dclivcf\ would result in o\'erissue. in which case the issuer's liabilitv is governed bv

section -lX. 74 Limitation of issuer's liability 7S(

I) If (

a) a security has been lost. app;.trently de"troycu or wrongfully taken. anu the owner fails to notifv the issuer of that fad by giving the issuer written notice of "his au verse claim within a reasonabk time after he knuws of the loss. uestruction or raking, and (

b) the issller has registereu a transfer of the secunty before receiving sllch nutice. the owner is prccluueu from assening agall1st the issuer an~ claim to a ne\', "ecurity.

(2) If the owner of a securit\ claims that the security has been lost. uestroyed o