CONSULTATION DRAFT

Table of Provisions ... continued

Third series of proposals to harmonize federal law with the civil law of the Province of Quebec and to amend certain Acts in order to ensure that each language version takes into account the common law and the civil law.

2001, c. 14, s. 18(2)

(2) Paragraph 31(3)(a) of the Act is replaced by the following:

(a) in the subsidiary’s capacity as a personal representative, unless the subsidiary would have a beneficial interest in the shares; or

Explanatory Notes

(2) Relevant portion of subsection 31(3):

(3) A corporation may permit any of its subsidiary bodies corporate to acquire shares of the corporation

(a) in the subsidiary’s capacity as a legal representative, unless the subsidiary would have a beneficial interest in the shares; or


15. Subsection 32(6) of the Act is replaced by the following:

Transfer not void, voidable or null

(6) No transfer of shares by a corporation shall be void or voidable or, in the Province of Quebec, null solely because the transfer is in contravention of subsection (2).

Explanatory Notes

Clause 15: Existing text of subsection 32(6):

(6) No transfer of shares by a corporation shall be void or voidable solely because the transfer is in contravention of subsection (2).


2001, c. 14, s. 19

16. Paragraph 33(1)(a) of the Act is replaced by the following:

(a) holds the shares in the capacity of a personal representative; and

Explanatory Notes

Clause 16: Relevant portion of subsection 33(1):

33. (1) A corporation holding shares in itself or in its holding body corporate shall not vote or permit those shares to be voted unless the corporation

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


17. Paragraph 35(1)(a) of the English version of the Act is replaced by the following:

(a) settle, compromise or, in the Province of Quebec, transact on a debt or claim asserted by or against the corporation;

Explanatory Notes

Clause 17: Relevant portion of subsection 35(1):

35. (1) Notwithstanding subsection 34(2), but subject to subsection (3) and to its articles, a corporation may purchase or otherwise acquire shares issued by it to

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


18. Section 37 of the Act is replaced by the following:

Donation and legacy of shares

37. A corporation may accept from any shareholder a share of the corporation surrendered to it as a gift and, in the Province of Quebec, a legacy but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 38.

Explanatory Notes

Clause 18: Existing text of section 37:

37. A corporation may accept from any shareholder a share of the corporation surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 38.


19. Subsection 38(5) of the English version of the Act is replaced by the following:

Limitation or prescription

(5) An action to enforce a liability imposed by this section may not be commenced after two years or, in the Province of Quebec, is prescribed by two years, from the date of the act complained of.

Explanatory Notes

Clause 19: Existing text of subsection 38(5):

(5) An action to enforce a liability imposed by this section may not be commenced after two years from the date of the act complained of.


2001, c. 14, s. 24 (F)

20. Subsections 39(11) and (12) of the French version of the Act are replaced by the following:

Acquittement

(11) Les titres de créance émis, déposés ou donnés en garantie par la société sous forme d’hypothèque mobilière, de gage ou de nantissement ne sont pas rachetés du seul fait de l’acquittement de la dette en cause.

Acquisition et réémission de titres de créance

(12) La société qui acquiert ses titres de créance peut soit les annuler, soit, sous réserve de tout acte de fiducie ou convention applicable, les réémettre ou les donner en garantie de l’exécution de ses obligations existantes ou futures, sous forme d’hypothèque mobilière, de gage ou de nantissement; l’acquisition, la réémission ou le fait de les donner en garantie ne constitue pas l’annulation de ces titres.

Explanatory Notes

Clause 20: Existing text of subsections 39(11) and (12):

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

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


2001, c. 14, s. 27

21. Subsections 45(2) and (3) of the Act are replaced by the following:

Lien or hypothec on shares

(2) Subject to subsection 49(8), the articles may provide that the corporation has a lien or hypothec on a share registered in the name of a shareholder or the shareholder’s personal representative for a debt of that shareholder to the corporation, including an amount unpaid in respect of a share issued by a body corporate on the date it was continued under this Act.

Enforcement of lien or hypothec

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

Explanatory Notes

Clause 21: Existing text of subsections 45(2) and (3):

(2) Subject to subsection 49(8), the articles may provide that the corporation has a lien on a share registered in the name of a shareholder or the shareholder’s personal representative for a debt of that shareholder to the corporation, including an amount unpaid in respect of a share issued by a body corporate on the date it was continued under this Act.

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


2001, c. 14, s. 135 (Sch., s. 4)(E)

22. Subsection 46(3) of the Act is replaced by the following:

Effect of sale

(3) If shares are sold by a corporation under subsection (1), the owner of the shares immediately before the sale shall by that sale be divested of their interest or right in the shares, and the person who, but for the sale, would be the registered owner of the shares or a person who satisfies the corporation that, but for the sale, they could properly be treated as the registered owner or registered holder of the shares under section 51 shall, from the time of the sale, be entitled to receive only the net proceeds of the sale, together with any income earned on the proceeds from the beginning of the month next following the date of the receipt by the corporation of the proceeds of the sale, less any taxes on the proceeds and any costs of administration of a trust fund constituted under subsection 47(1) in relation to the constitution of the fund.

Explanatory Notes

Clause 22: Existing text of subsection 46(3):

(3) Where shares are sold by a corporation under subsection (1), the owner of the shares immediately prior to the sale shall by that sale be divested of their interest in the shares, and the person who, but for the sale, would be the registered owner of the shares or a person who satisfies the corporation that, but for the sale, they could properly be treated as the registered owner or registered holder of the shares under section 51 shall, from the time of the sale, be entitled to receive only the net proceeds of the sale, together with any income earned thereon from the beginning of the month next following the date of the receipt by the corporation of the proceeds of the sale, less any taxes thereon and any costs of administration of a trust fund constituted under subsection 47(1) in relation thereto.


2001, c. 14, s. 29

23. (1) The definitions "adverse claim", "fiduciary" and "purchaser" in subsection 48(2) of the Act are replaced by the following:

"adverse claim"

« opposition »

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

"fiduciary"

« représentant »

"fiduciary" means any person acting in a fiduciary capacity or as the administrator of the property of others and includes a personal representative of a deceased person;

"purchaser"

« acquéreur »

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

Explanatory Notes

Clause 23: (1) Existing text of the definitions:

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

"fiduciary" means any person acting in a fiduciary capacity and includes a personal representative of a deceased person;

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


(2) The definition "issuer" in subsection 48(2) of the Act is amended by striking out the word or at the end of paragraph (a) and by replacing paragraph (b) with the following:

Explanatory Notes

(2) Relevant portion of the definition:

"issuer" includes a corporation

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


(3) Paragraph (d) of the definition "security" or "security certificate" in subsection 48(2) of the Act is replaced by the following:

(d) evidence of a share, participation or other interest or right in or obligation of a corporation;

Explanatory Notes

(3) Relevant portion of the definition:

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

  • ... 

  • (d) evidence of a share, participation or other interest in or obligation of a corporation;


2001, c. 14, s. 135 (Sch., s. 5(3))(E)

(4) Subsection 48(7) of the Act is replaced by the following:

Guarantor or surety for issuer

(7) A guarantor or, in the Province of Quebec, a surety for an issuer is deemed to be an issuer to the extent of the guarantee whether or not the obligation is noted on the security.

Explanatory Notes

(4) Existing text of subsection 48(7):

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


2001, c. 14, s. 30(2)

24. (1) Paragraph 49(4)(c) of the Act is replaced by the following:

(c) a trustee, as defined in subsection 82(1), who certifies it in accordance with a trust indenture.

Explanatory Notes

Clause 24: (1) Relevant portion of subsection 49(4):

(4) A security certificate shall be signed by at least one of the following persons, or the signature shall be printed or otherwise mechanically reproduced on the certificate:

  • ... 

  • (c) a trustee who certifies it in accordance with a trust indenture.


2001, c. 14, s. 30(4)

(2) The portion of subsection 49(8) of the Act before paragraph (a) is replaced by the following:

Restrictions

(8) No restriction, lien, hypothec, agreement or endorsement described in the following paragraphs is effective against a transferee of a security, issued by a corporation or by a body corporate before the body corporate was continued under this Act, who has no actual knowledge of the restriction, lien, hypothec, agreement or endorsement unless it or a reference to it is noted conspicuously on the security certificate:

2001, c. 14, s. 30(4)

(3) Paragraph 49(8)(b) of the Act is replaced by the following:

(b) a lien or hypothec in favour of the corporation;

Explanatory Notes

(2) and (3) Relevant portion of subsection 49(8):

(8) No restriction, charge, agreement or endorsement described in the following paragraphs is effective against a transferee of a security, issued by a corporation or by a body corporate before the body corporate was continued under this Act, who has no actual knowledge of the restriction, charge, agreement or endorsement unless it or a reference to it is noted conspicuously on the security certificate:

  • ... 

  • (b) a charge in favour of the corporation;


(4) Subsection 49(12) of the Act is replaced by the following:

Transitional

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

Explanatory Notes

(4) Existing text of subsection 49(12):

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


(5) Paragraph 49(16)(a) of the English version of the Act is replaced by the following:

(a) the scrip certificates become void or, in the Province of Quebec, null if not exchanged for a share certificate representing a full share before a specified date; and

Explanatory Notes

(5) Relevant portion of subsection 49(16):

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

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


25. (1) Subsection 50(2) of the English version of the Act is replaced by the following:

Central and branch registers

(2) A corporation may appoint an agent or mandatary to maintain a central securities register and branch securities registers.

Explanatory Notes

Clause 25: (1) Existing text of subsection 50(2):

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


(2) The portion of subsection 50(7) of the English version of the Act before paragraph (a) is replaced by the following:

Destruction of certificates

(7) A corporation, its agent or mandatary, or a trustee defined in subsection 82(1) is not required to produce

Explanatory Notes

(2) Relevant portion of subsection 50(7):

(7) A corporation, its agent or a trustee defined in subsection 82(1) is not required to produce


2001, c. 14, s. 31(1)

26. (1) Paragraphs 51(2)(a) and (b) of the English version of the Act are replaced by the following:

Explanatory Notes

Clause 26: (1) Relevant portion of subsection 51(2):

(2) Notwithstanding subsection (1), a corporation whose articles restrict the right to transfer its securities shall, and any other corporation may, treat a person as a registered security holder entitled to exercise all the rights of the security holder that the person represents, if the person furnishes the corporation with evidence as described in subsection 77(4) that the person is

  • (a) the heir of a deceased security holder, or the personal representative of the heirs, or the personal representative of the estate of a deceased security holder;

  • (b) a personal representative of a registered security holder who is an infant, an incompetent person or a missing person; or

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