PART 14Liquidation and Dissolution (continued)
Marginal note:Application for supervision
225 (1) An application to a court to supervise a voluntary liquidation and dissolution under subsection 221(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 221(8), the liquidation and dissolution of the corporation shall continue under the supervision of the court in accordance with this Act.
Marginal note:Application to court
226 (1) An application to a court under subsection 224(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 the application, the court may make an order requiring the corporation and any interested person to show cause, at a time and place specified in the order, within the prescribed period after the date of the order, why the corporation should not be liquidated and dissolved.
Marginal note:Powers of court
(3) On the application, 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 member 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.
(4) A copy of an order made under subsection (2) shall be
(a) published as directed in the order, at a prescribed minimum frequency, 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 any other person, and in any manner, that the court orders.
Marginal note:Powers of court
227 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 liabilities, make
(a) an order to liquidate;
(b) an order appointing or replacing a liquidator, with or without security, and fixing the remuneration of the liquidator or their replacement;
(c) an order appointing or replacing inspectors or referees and specifying the powers and fixing the remuneration of the inspectors or referees or their replacements;
(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
(i) from exercising any of their powers, or
(ii) from 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
(i) the duty of any present or former director, officer or member to the corporation, or
(ii) the liability of such a person for an obligation of the corporation;
(h) an order approving the payment, satisfaction or compromise or, in Quebec, transaction of claims against the corporation and the retention of assets for that purpose, and determining the adequacy of provisions for the payment or discharge of liabilities of the corporation, whether liquidated, unliquidated, future or contingent;
(i) an order determining the use of documents and records of the corporation or directing their disposition, including by destruction;
(j) on the application of a creditor, the inspectors or the liquidator, an order giving directions on any matter arising in the liquidation;
(k) an order specifying to whom the assets of the corporation will be distributed;
(l) after notice has been given to all interested parties, an order relieving a liquidator from any omission or default on any terms that the court thinks fit and confirming any act of the liquidator;
(m) subject to sections 233 to 236, an order approving any proposed interim or final distribution of money or other property;
(n) an order disposing of any property belonging to creditors or members who cannot be found;
(o) on the application of any director, officer, member or creditor or the liquidator,
(i) an order staying the liquidation on any terms and conditions that 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;
(p) after the liquidator has rendered a final account to the court, an order dissolving the corporation; and
(q) any other order that it thinks fit.
Marginal note:Effect of order
228 The liquidation of a corporation commences when a court makes a liquidation order.
Marginal note:Cessation of activities and powers
229 (1) If a court makes an order for the liquidation of a corporation,
(a) the corporation continues in existence but shall cease to carry on activities, except activities that are, in the opinion of the liquidator, required for an orderly liquidation; and
(b) the powers of the directors and members 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 members.
Marginal note:Appointment of liquidator
230 (1) When making an order for the liquidation of a corporation or at any time after making the order, the court may appoint any person, including a director, an officer or a member of the corporation or any other body corporate, as liquidator of the corporation.
(2) If 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.
Marginal note:Duties of liquidator
231 A liquidator shall
(a) immediately after appointment give notice of the appointment to the Director and to each claimant and creditor known to the liquidator;
(b) in each province where the corporation carries on activities, provide, without delay, notice in accordance with the regulations of the appointment
(i) requiring any person indebted to the corporation to render an account and pay to the liquidator at the time and place specified any amount owing,
(ii) requiring any person possessing property of the corporation to deliver it to the liquidator at the time and place specified, and
(iii) requiring any person having a claim against the corporation, whether liquidated, unliquidated, future or contingent, to present particulars of the claim in writing to the liquidator within the prescribed period;
(c) take into custody and control the property of the corporation;
(d) open and maintain a trust account for the money of the corporation;
(e) keep accounts of the money of the corporation received and paid out by the liquidator;
(f) maintain separate lists of the members, 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 liabilities, apply to the court for directions;
(h) deliver to the court and to the Director, at least once in the prescribed period after appointment or more often as the court may require, financial statements of the corporation in the form required by section 172 or in any other form that 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 in accordance with sections 234 to 236.
Marginal note:Powers of liquidator
232 (1) A liquidator may
(a) retain legal counsel, accountants, engineers, appraisers and other professional advisers;
(b) bring, defend or take part in any civil, criminal or administrative action or proceeding on behalf of the corporation;
(c) carry on the activities 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 on behalf of the corporation;
(f) borrow money on the security of the property of the corporation;
(g) settle or compromise or, in Quebec, transact on 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 public accountant 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 that person.
Marginal note:Liability for environmental matters
(3) Despite anything in federal or provincial law, a liquidator is not liable, in that capacity, for any environmental condition or environmental damage, unless the condition arose or the damage occurred after the liquidator’s appointment as a result of the liquidator’s gross negligence or wilful misconduct or, in Quebec, the liquidator’s gross or intentional fault.
Marginal note:Application for examination
(4) On the application of a liquidator, the court may — if it is satisfied that there are reasonable grounds to believe that any person has in their possession or under their control, or has concealed, withheld or misappropriated, any property of the corporation — make 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
(5) If the court is satisfied, on the examination, that the 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.
Marginal note:Costs of liquidation
233 (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 the prescribed period 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 in accordance with sections 234 to 236; or
(b) for an extension of time, setting out the reasons for the extension.
Marginal note:Member application
(3) On the application of a member of the corporation, the court may, if a liquidator fails to make the application required by subsection (2), order the liquidator to show cause why a final accounting and distribution should not be made.
(4) A liquidator shall give notice of their intention to make an application under subsection (2) to the Director, to each inspector appointed under paragraph 227(c), to each member and to any person who provided a security or 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) giving directions regarding the custody of documents and records of the corporation or their disposition, including by destruction; and
(c) discharging the liquidator.
Marginal note:Delivery of order
(6) The liquidator discharged under subsection (5) shall immediately send a certified copy of the order referred to in that subsection to the Director.
Marginal note:Certificate of dissolution
(7) On receipt of a certified copy of the order referred to in subsection (5), the Director shall issue a certificate of dissolution.
Marginal note:Effect of certificate
(8) The corporation ceases to exist on the date shown in the certificate of dissolution.
Marginal note:Transfer on condition of return
234 If a person has transferred property to a corporation subject to the condition that it be returned on the dissolution of the corporation, the liquidator shall transfer that property to that person.
235 (1) This section applies to
(a) a corporation that is a registered charity within the meaning of subsection 248(1) of the Income Tax Act;
(b) a soliciting corporation; and
(c) a corporation that has, in the prescribed period, received income in excess of the prescribed amount in the form of
(i) donations or gifts or, in Quebec, gifts or legacies of money or other property requested from any person who is not
(A) a member, director, officer or employee of the corporation at the time of the request,
(B) a spouse of a person referred to in clause (A) or an individual who is cohabiting with that person in a conjugal relationship, having so cohabited for a period of at least one year, or
(C) a child, parent, brother, sister, grandparent, uncle, aunt, nephew or niece of a person referred to in clause (A) or of a spouse or individual referred to in clause (B),
(ii) grants or similar financial assistance received from the federal government or a provincial or municipal government, or an agency of such a government, or
(iii) donations or gifts or, in Quebec, gifts or legacies of money or other property from a corporation or other entity that has, in the prescribed period, received income in excess of the prescribed amount in the form of donations, gifts or legacies referred to in subparagraph (i) or grants or similar financial assistance referred to in subparagraph (ii).
Marginal note:Articles to provide for distribution of property
(2) The articles of a corporation shall provide that any property remaining on liquidation after the discharge of any liabilities of the corporation, other than property referred to in section 234, shall be distributed to one or more qualified donees, within the meaning of subsection 248(1) of the Income Tax Act.
Marginal note:Distribution in accordance with order
(3) If the articles of a corporation do not provide for distribution to one or more qualified donees, the liquidator shall apply for an order under section 227 for the distribution of the remaining property of the corporation, other than the property referred to in section 234, to one or more qualified donees.
Marginal note:Notice of application
(4) The liquidator shall give notice to the Director of the application, and the Director may appear and be heard in person or by counsel.
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