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Canada Business Corporations Act (R.S.C., 1985, c. C-44)

Act current to 2023-01-11 and last amended on 2022-08-31. Previous Versions

PART XVIIILiquidation and Dissolution (continued)

Marginal note:Further grounds

  •  (1) A court may order the liquidation and dissolution of a corporation or any of its affiliated corporations on the application of a shareholder,

    • (a) if the court is satisfied that in respect of a corporation or any of its affiliates

      • (i) any act or omission of the corporation or any of its affiliates effects a result,

      • (ii) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner, or

      • (iii) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner

      that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer; or

    • (b) if the court is satisfied that

      • (i) a unanimous shareholder agreement entitles a complaining shareholder to demand dissolution of the corporation after the occurrence of a specified event and that event has occurred, or

      • (ii) it is just and equitable that the corporation should be liquidated and dissolved.

  • Marginal note:Alternative order

    (2) On an application under this section, a court may make such order under this section or section 241 as it thinks fit.

  • Marginal note:Application of s. 242

    (3) Section 242 applies to an application under this section.

  • R.S., 1985, c. C-44, s. 214
  • 2001, c. 14, s. 107(F)

Marginal note:Application for supervision

  •  (1) An application to a court to supervise a voluntary liquidation and dissolution under subsection 211(8) shall state the reasons, verified by an affidavit of the applicant, why the court should supervise the liquidation and dissolution.

  • Marginal note:Court supervision

    (2) If a court makes an order applied for under subsection 211(8), the liquidation and dissolution of the corporation shall continue under the supervision of the court in accordance with this Act.

  • 1974-75-76, c. 33, s. 208
  • 1978-79, c. 9, s. 1(F)

Marginal note:Application to court

  •  (1) An application to a court under subsection 214(1) shall state the reasons, verified by an affidavit of the applicant, why the corporation should be liquidated and dissolved.

  • Marginal note:Show cause order

    (2) On an application under subsection 214(1), the court may make an order requiring the corporation and any person having an interest in the corporation or claim against it to show cause, at a time and place specified in the order, within four weeks after the date of the order, why the corporation should not be liquidated and dissolved.

  • Marginal note:Powers of court

    (3) On an application under subsection 214(1), the court may order the directors and officers of the corporation to furnish the court with all material information known to or reasonably ascertainable by them, including

    • (a) financial statements of the corporation;

    • (b) the name and address of each shareholder of the corporation; and

    • (c) the name and address of each known creditor or claimant, including any creditor or claimant with unliquidated, future or contingent claims, and any person with whom the corporation has a contract.

  • Marginal note:Publication

    (4) A copy of an order made under subsection (2) shall be

    • (a) published as directed in the order, at least once in each week before the time appointed for the hearing, in a newspaper published or distributed in the place where the corporation has its registered office; and

    • (b) served on the Director and each person named in the order.

  • Marginal note:Person responsible

    (5) Publication and service of an order under this section shall be effected by the corporation or by such other person and in such manner as the court may order.

  • R.S., 1985, c. C-44, s. 216
  • 1999, c. 31, s. 64(E)

Marginal note:Powers of court

 In connection with the dissolution or the liquidation and dissolution of a corporation, the court may, if it is satisfied that the corporation is able to pay or adequately provide for the discharge of all its obligations, make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order to liquidate;

  • (b) an order appointing a liquidator, with or without security, fixing the liquidator’s remuneration and replacing a liquidator;

  • (c) an order appointing inspectors or referees, specifying their powers, fixing their remuneration and replacing inspectors or referees;

  • (d) an order determining the notice to be given to any interested person, or dispensing with notice to any person;

  • (e) an order determining the validity of any claims made against the corporation;

  • (f) an order, at any stage of the proceedings, restraining the directors and officers from

    • (i) exercising any of their powers, or

    • (ii) collecting or receiving any debt or other property of the corporation, and from paying out or transferring any property of the corporation, except as permitted by the court;

  • (g) an order determining and enforcing the duty or liability of any present or former director, officer or shareholder

    • (i) to the corporation, or

    • (ii) for an obligation of the corporation;

  • (h) an order approving the payment, satisfaction or compromise of claims against the corporation and the retention of assets for such purpose, and determining the adequacy of provisions for the payment or discharge of obligations of the corporation, whether liquidated, unliquidated, future or contingent;

  • (i) an order disposing of or destroying the documents and records of the corporation;

  • (j) on the application of a creditor, the inspectors or the liquidator, an order giving directions on any matter arising in the liquidation;

  • (k) after notice has been given to all interested parties, an order relieving a liquidator from any omission or default on such terms as the court thinks fit and confirming any act of the liquidator;

  • (l) subject to section 223, an order approving any proposed interim or final distribution to shareholders in money or in property;

  • (m) an order disposing of any property belonging to creditors or shareholders who cannot be found;

  • (n) on the application of any director, officer, security holder, creditor or the liquidator,

    • (i) an order staying the liquidation on such terms and conditions as the court thinks fit,

    • (ii) an order continuing or discontinuing the liquidation proceedings, or

    • (iii) an order to the liquidator to restore to the corporation all its remaining property; and

  • (o) after the liquidator has rendered a final account to the court, an order dissolving the corporation.

  • R.S., 1985, c. C-44, s. 217
  • 2001, c. 14, ss. 108, 135(E)
  • 2011, c. 21, s. 62(F)

Marginal note:Effect of order

 The liquidation of a corporation commences when a court makes an order therefor.

  • 1974-75-76, c. 33, s. 211
  • 1978-79, c. 9, s. 1(F)

Marginal note:Cessation of business and powers

  •  (1) If a court makes an order for liquidation of a corporation,

    • (a) the corporation continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation; and

    • (b) the powers of the directors and shareholders cease and vest in the liquidator, except as specifically authorized by the court.

  • Marginal note:Delegation by liquidator

    (2) The liquidator may delegate any powers vested in the liquidator by paragraph (1)(b) to the directors or shareholders.

  • R.S., 1985, c. C-44, s. 219
  • 2001, c. 14, s. 135(E)

Marginal note:Appointment of liquidator

  •  (1) When making an order for the liquidation of a corporation or at any time thereafter, the court may appoint any person, including a director, an officer or a shareholder of the corporation or any other body corporate, as liquidator of the corporation.

  • Marginal note:Vacancy

    (2) Where an order for the liquidation of a corporation has been made and the office of liquidator is or becomes vacant, the property of the corporation is under the control of the court until the office of liquidator is filled.

  • 1974-75-76, c. 33, s. 213
  • 1978-79, c. 9, ss. 1(F), 67

Marginal note:Duties of liquidator

 A liquidator shall

  • (a) forthwith after appointment give notice thereof to the Director and to each claimant and creditor known to the liquidator;

  • (b) without delay publish notice by insertion once a week for two consecutive weeks in a newspaper published or distributed in the place where the corporation has its registered office and take reasonable steps to give notice of the appointment in each province where the corporation carries on business, requiring any person

    • (i) indebted to the corporation, to render an account and pay to the liquidator at the time and place specified any amount owing,

    • (ii) possessing property of the corporation, to deliver it to the liquidator at the time and place specified, and

    • (iii) having a claim against the corporation, whether liquidated, unliquidated, future or contingent, to present particulars thereof in writing to the liquidator not later than two months after the first publication of the notice;

  • (c) take into custody and control the property of the corporation;

  • (d) open and maintain a trust account for the moneys of the corporation;

  • (e) keep accounts of the moneys of the corporation received and paid out by the liquidator;

  • (f) maintain separate lists of the shareholders, creditors and other persons having claims against the corporation;

  • (g) if at any time the liquidator determines that the corporation is unable to pay or adequately provide for the discharge of its obligations, apply to the court for directions;

  • (h) deliver to the court and to the Director, at least once in every twelve month period after appointment or more often as the court may require, financial statements of the corporation in the form required by section 155 or in such other form as the liquidator may think proper or as the court may require; and

  • (i) after the final accounts are approved by the court, distribute any remaining property of the corporation among the shareholders according to their respective rights.

  • R.S., 1985, c. C-44, s. 221
  • 2001, c. 14, ss. 109, 135(E)
  • 2018, c. 8, s. 31(E)

Marginal note:Powers of liquidator

  •  (1) A liquidator may

    • (a) retain lawyers, accountants, engineers, appraisers and other professional advisers;

    • (b) bring, defend or take part in any civil, criminal or administrative action or proceeding in the name and on behalf of the corporation;

    • (c) carry on the business of the corporation as required for an orderly liquidation;

    • (d) sell by public auction or private sale any property of the corporation;

    • (e) do all acts and execute or, in Quebec, sign any documents in the name and on behalf of the corporation;

    • (f) borrow money on the security of the property of the corporation;

    • (g) settle or compromise any claims by or against the corporation; and

    • (h) do all other things necessary for the liquidation of the corporation and distribution of its property.

  • Marginal note:Due diligence

    (2) A liquidator is not liable if the liquidator exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on

    • (a) financial statements of the corporation represented to the liquidator by an officer of the corporation or in a written report of the auditor of the corporation fairly to reflect the financial condition of the corporation; or

    • (b) a report of a person whose profession lends credibility to a statement made by the professional person.

  • Marginal note:Application for examination

    (3) If a liquidator has reason to believe that any person has in their possession or under their control, or has concealed, withheld or misappropriated any property of the corporation, the liquidator may apply to the court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.

  • Marginal note:Power of court

    (4) If the examination referred to in subsection (3) discloses that a person has concealed, withheld or misappropriated property of the corporation, the court may order that person to restore it or pay compensation to the liquidator.

  • R.S., 1985, c. C-44, s. 222
  • 2001, c. 14, ss. 110, 135(E)
  • 2011, c. 21, s. 63(E)

Marginal note:Costs of liquidation

  •  (1) A liquidator shall pay the costs of liquidation out of the property of the corporation and shall pay or make adequate provision for all claims against the corporation.

  • Marginal note:Final accounts

    (2) Within one year after appointment, and after paying or making adequate provision for all claims against the corporation, the liquidator shall apply to the court

    • (a) for approval of the final accounts and for an order permitting the liquidator to distribute in money or in kind the remaining property of the corporation to its shareholders according to their respective rights; or

    • (b) for an extension of time, setting out the reasons therefor.

  • Marginal note:Shareholder application

    (3) If a liquidator fails to make the application required by subsection (2), a shareholder of the corporation may apply to the court for an order for the liquidator to show cause why a final accounting and distribution should not be made.

  • Marginal note:Publication

    (4) A liquidator shall give notice of their intention to make an application under subsection (2) to the Director, to each inspector appointed under section 217, to each shareholder and to any person who provided a security, fidelity bond or fidelity insurance for the liquidation, and shall publish the notice in a newspaper published or distributed in the place where the corporation has its registered office, or as otherwise directed by the court.

  • Marginal note:Final order

    (5) If the court approves the final accounts rendered by a liquidator, the court shall make an order

    • (a) directing the Director to issue a certificate of dissolution;

    • (b) directing the custody or disposal of the documents and records of the corporation; and

    • (c) subject to subsection (6), discharging the liquidator.

  • Marginal note:Delivery of order

    (6) The liquidator shall forthwith send a certified copy of the order referred to in subsection (5) to the Director.

  • Marginal note:Certificate of dissolution

    (7) On receipt of the order referred to in subsection (5), the Director shall issue a certificate of dissolution in accordance with section 262.

  • Marginal note:Effect of certificate

    (8) The corporation ceases to exist on the date shown in the certificate of dissolution.

  • R.S., 1985, c. C-44, s. 223
  • 2001, c. 14, ss. 111(E), 135(E)
  • 2011, c. 21, s. 64
 
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