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An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act (S.C. 2018, c. 8)

Assented to 2018-05-01

An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act

S.C. 2018, c. 8

Assented to 2018-05-01

An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act

SUMMARY

Part 1 amends the Canada Business Corporations Act, the Canada Cooperatives Act and the Canada Not-for-profit Corporations Act to, among other things,

  • (a) reform some aspects of the process for electing directors of certain corporations and cooperatives;

  • (b) modernize communications between corporations or cooperatives and their shareholders or members;

  • (c) clarify that corporations and cooperatives are prohibited from issuing share certificates and warrants, in bearer form; and

  • (d) require certain corporations to place before the shareholders, at every annual meeting, information respecting diversity among directors and the members of senior management.

Part 2 amends the Competition Act to expand the concept of affiliation to a broader range of business organizations.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

PART 1Corporate Governance

R.S., c. C-44; 1994, c. 24, s. 1(F)Canada Business Corporations Act

 Subsection 2(1) of the Canada Business Corporations Act is amended by adding the following in alphabetical order:

incapable

incapable, in respect of an individual, means that the individual is found, under the laws of a province, to be unable, other than by reason of minority, to manage their property or is declared to be incapable by any court in a jurisdiction outside Canada; (incapable)

prior legislation

prior legislation means the various Acts of Parliament that were in force prior to the coming into force of this Act and that applied to the incorporation of federal companies under those Acts, other than any financial institution as defined in section 2 of the Bank Act; (législation antérieure)

 Section 5 of the Act is replaced by the following:

Marginal note:Incorporators

  • 5 (1) One or more individuals or bodies corporate may incorporate a corporation by signing articles of incorporation and complying with section 7.

  • Marginal note:Individuals

    (2) An individual may incorporate a corporation only if that individual

    • (a) is not less than 18 years of age;

    • (b) is not incapable; or

    • (c) does not have the status of bankrupt.

 Subsection 11(1) of the Act is replaced by the following:

Marginal note:Reserving name

  • 11 (1) The Director may, on request, reserve for a prescribed period a name for an intended corporation or for a corporation that intends to change its name.

Marginal note:1994, c. 24, s. 7(1)

  •  (1) Subsections 12(1) and (2) of the Act are replaced by the following:

    Marginal note:Prohibited names

    • 12 (1) A corporation shall not be incorporated or continued as a corporation under this Act with, change its name to, or have, carry on business under or identify itself by a name that is prohibited by the regulations or that does not meet the prescribed requirements.

    • Marginal note:Directing change of name

      (2) The Director may direct a corporation to change its name in accordance with section 173 if, through inadvertence or otherwise, the corporation acquires a name that is prohibited by the regulations or that does not meet the prescribed requirements.

  • Marginal note:1994, c. 24, s. 7(3)

    (2) Subsection 12(5) of the Act is replaced by the following:

    • Marginal note:Revoking name

      (5) If a corporation has not followed a directive under subsection (2), (4) or (4.1) within the prescribed period, the Director may revoke the name of the corporation and assign a name to it and, until changed in accordance with section 173, the name of the corporation is the name assigned by the Director.

Marginal note:2001, c. 14, s. 6

 Section 13 of the French version of the Act is replaced by the following:

Marginal note:Certificat de modification

  • 13 (1) En cas de changement de dénomination sociale au titre du paragraphe 12(5), le directeur délivre un certificat de modification indiquant la nouvelle dénomination sociale et publie, dans les meilleurs délais, un avis du changement dans une publication destinée au grand public.

  • Marginal note:Effet du certificat

    (2) Les statuts de la société sont modifiés en conséquence à compter de la date précisée dans le certificat de modification.

Marginal note:2001, c. 14, s. 9

 Subsection 19(2) of the French version of the Act is replaced by the following:

  • Marginal note:Avis

    (2) Avis du lieu où est maintenu le siège social est envoyé au directeur, en la forme établie par lui, avec les clauses pertinentes des statuts désignant ou modifiant la province où le siège social est situé.

 The Act is amended by adding the following after section 29:

Marginal note:Restriction regarding bearer shares

  • 29.1 (1) Despite section 29, a corporation shall not issue, in bearer form, a certificate, warrant or other evidence of a conversion privilege, option or right to acquire a share of the corporation.

  • Marginal note:Replacement

    (2) A corporation shall, on the request of a holder of a certificate, warrant or other evidence of a conversion privilege, option or right to acquire a share of the corporation that is in bearer form and that was issued before the coming into force of this section, issue in exchange to that holder, in registered form, a certificate, warrant or other evidence, as the case may be.

 Subsection 49(15) of the Act is replaced by the following:

  • Marginal note:Fractional share

    (15) A corporation may issue for each fractional share, a certificate in registered form or scrip certificates in registered form that entitle the holder to receive a certificate for a full share in exchange for scrip certificates equalling a full share.

  • Marginal note:Replacement

    (15.1) On the request of a holder of a certificate for a fractional share or of a scrip certificate, a corporation shall, if the certificate is in bearer form and was issued before the coming into force of this subsection, issue in exchange to that holder, in registered form, a certificate for a fractional share or a scrip certificate, as the case may be.

Marginal note:2001, c. 14, s. 31(1)

 Paragraph 51(2)(b) of the English version of the Act is replaced by the following:

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

Marginal note:2001, c. 14, s. 135 (Sch., s. 10)(E)

 Section 54 of the Act is replaced by the following:

Marginal note:Securities fungible

54 Unless otherwise agreed and subject to the provisions of this Act, of any other applicable Act of Parliament, of any applicable Act of the legislature of a province or of any applicable regulation made under any such Act or to any applicable stock exchange rule, a person required to deliver securities may deliver any security of the specified issue.

Marginal note:2001, c. 14, s. 32(E)

 Paragraph 65(1)(d) of the Act is replaced by the following:

  • (d) if a person described in paragraph (a) is an individual and is without capacity to act by reason of death, minority or incapability, the person’s fiduciary;

 Paragraph 105(1)(b) of the Act is replaced by the following:

  • (b) anyone who is incapable;

  •  (1) Subsection 106(3) of the Act is replaced by the following:

    • Marginal note:Election of directors

      (3) Subject to subsection (3.1) and paragraph 107(b), shareholders of a corporation shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, elect directors to hold office for a term ending not later than the close of the third annual meeting of shareholders following the election.

    • Marginal note:Election of directors — distributing corporations

      (3.1) Subject to paragraph 107(b), shareholders of a distributing corporation shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, elect directors to hold office for a term ending not later than the close of the next annual meeting of shareholders following the election.

    • Marginal note:Exceptions — certain distributing corporations

      (3.2) Despite subsection (3.1), in the case of any prescribed class of distributing corporations or in any prescribed circumstances respecting distributing corporations or classes of distributing corporations, the directors are to be elected in accordance with subsection (3).

    • Marginal note:Separate vote for each candidate

      (3.3) If the election of directors is for a prescribed corporation, a separate vote of shareholders shall be taken with respect to each candidate nominated for director.

    • Marginal note:Majority voting

      (3.4) If, at a meeting of shareholders of a distributing corporation — other than in the case of a prescribed class of distributing corporations — at which an election of directors is required, there is only one candidate nominated for each position available on the board, each candidate is elected only if the number of votes cast in their favour represents a majority of the votes cast for and against them by the shareholders who are present in person or represented by proxy, unless the articles require a greater number of votes.

  • Marginal note:2001, c. 14, s. 38(2)

    (2) Subsections 106(6) to (8) of the Act are replaced by the following:

    • Marginal note:Incumbent directors

      (6) Despite subsections (2), (3) to (3.2) and (5) and subject to subsection (6.1), if directors are not elected at a meeting of shareholders, the incumbent directors continue in office until their successors are elected.

    • Marginal note:Incumbent director not elected

      (6.1) If an incumbent director who was a candidate in an election held in accordance with subsection (3.4) was not elected during the election, the director may continue in office until the earlier of

      • (a) the 90th day after the day of the election; and

      • (b) the day on which their successor is appointed or elected.

    • Marginal note:Vacancy

      (7) If, for either of the following reasons, a meeting of shareholders fails to elect the number or the minimum number of directors required by the articles, the directors elected at that meeting may exercise all the powers of the directors if the number of directors so elected constitutes a quorum:

      • (a) a lack of consent, disqualification under subsection 105(1) or the death of any candidates; or

      • (b) a lack of a majority referred to in subsection (3.4).

    • Marginal note:Appointment of directors

      (8) The directors may, unless the articles otherwise provide, appoint one or more additional directors, who shall hold office for a term ending not later than the close of the next annual meeting of shareholders, but the total number of directors so appointed shall not exceed one third of the number of directors elected at the previous annual meeting of shareholders.

    • Marginal note:Exception

      (8.1) If an individual who was a candidate in an election held in accordance with subsection (3.4) was not elected during that election, the individual is not to be appointed, except in prescribed circumstances, as a director under subsection (8) or 111(1) before the next meeting of shareholders at which an election of directors is required.

 
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