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Trust and Loan Companies Act (S.C. 1991, c. 45)

Act current to 2023-01-11 and last amended on 2022-06-23. Previous Versions

PART VICorporate Governance (continued)

Financial Statements and Auditors (continued)

Simple Liquidation

Marginal note:No property and no liabilities

  •  (1) A company that has no property and no liabilities may, if authorized by a special resolution of the shareholders or, if there are no shareholders, by a resolution of all the directors, apply to the Minister for letters patent dissolving the company.

  • Marginal note:Dissolution by letters patent

    (2) Where the Minister has received an application under subsection (1) and is satisfied that all the circumstances so warrant, the Minister may issue letters patent dissolving the company.

  • Marginal note:Effect of letters patent

    (3) A company in respect of which letters patent are issued under subsection (2) ceases to exist on the day stated in the letters patent.

Marginal note:Proposing liquidation

  •  (1) The voluntary liquidation and dissolution of a company, other than a company referred to in subsection 347(1),

    • (a) may be proposed by its directors; or

    • (b) may be initiated by way of a proposal made by a shareholder who is entitled to vote at an annual meeting of shareholders in accordance with sections 146 and 147.

  • Marginal note:Terms must be set out

    (2) A notice of any meeting of shareholders at which the voluntary liquidation and dissolution of a company is to be proposed shall set out the terms of the proposal.

Marginal note:Shareholders’ resolution

 Where the voluntary liquidation and dissolution of a company is proposed, the company may apply to the Minister for letters patent dissolving the company if authorized by a special resolution of the shareholders or, where the company has issued more than one class of shares, by special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote.

Marginal note:Approval of Minister required

  •  (1) No action directed toward the voluntary liquidation and dissolution of a company shall be taken by a company, other than as provided in sections 348 and 349, until an application made by the company pursuant to section 349 has been approved by the Minister.

  • Marginal note:Conditional approval

    (2) Where the Minister is satisfied on the basis of an application made pursuant to section 349 that the circumstances warrant the voluntary liquidation and dissolution of a company, the Minister may, by order, approve the application.

  • Marginal note:Effect of approval

    (3) Where the Minister has approved an application made pursuant to section 349 with respect to a company, the company shall not carry on business except to the extent necessary to complete its voluntary liquidation.

  • Marginal note:Liquidation process

    (4) Where the Minister has approved an application made pursuant to section 349 with respect to a company, the company shall

    • (a) cause notice of the approval to be sent to each known claimant against and creditor of the company;

    • (b) publish notice of the approval once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company transacted any business within the preceding twelve months;

    • (c) proceed to collect its property, dispose of property that is not to be distributed in kind to its shareholders, discharge all its obligations and do all other acts required to liquidate its business;

    • (d) where the company is a trust company pursuant to subsection 57(2), make such arrangements as are necessary to transfer to another company that is a trust company pursuant to subsection 57(2) money or other assets held in trust by the company, other than assets held in respect of guaranteed trust money; and

    • (e) after giving the notice required under paragraphs (a) and (b) and adequately providing for the payment or discharge of all its obligations, distribute its remaining property, either in money or in kind, among its shareholders according to their respective rights.

Marginal note:Dissolution instrument

  •  (1) Unless a court has made an order in accordance with subsection 352(1), the Minister may, if satisfied that the company has complied with subsection 350(4) and that all the circumstances so warrant, issue letters patent dissolving the company.

  • Marginal note:Company dissolved

    (2) A company in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the day stated in the letters patent.

Court-supervised Liquidation

Marginal note:Application for court supervision

  •  (1) The Superintendent or any interested person may, at any time during the liquidation of a company, apply to a court for an order for the continuance of the voluntary liquidation under the supervision of the court in accordance with this section and sections 353 to 365 and on such application the court may so order and make any further order it thinks fit.

  • Marginal note:Idem

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

  • Marginal note:Notice to Superintendent

    (3) Where a person, other than the Superintendent, makes an application under subsection (1), the person shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Court supervision thereafter

  •  (1) When a court makes an order under subsection 352(1), the liquidation of the company shall continue under the supervision of the court.

  • Marginal note:Commencement of liquidation

    (2) The supervision of the liquidation of a company by the court pursuant to an order made under subsection 352(1) commences on the day the order is made.

Marginal note:Powers of court

 In connection with the liquidation and dissolution of a company, the court may, where it is satisfied

  • (a) that the company is able to pay or adequately provide for the discharge of all its obligations, and

  • (b) in the case of a company that is a trust company pursuant to subsection 57(2), that the company is able to make satisfactory arrangements for the protection of persons in relation to whom the company is acting in a fiduciary capacity,

make any order it thinks fit including, without limiting the generality of the foregoing,

  • (c) an order to liquidate,

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

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

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

  • (g) an order determining the validity of any claims made against the company,

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

    • (i) exercising any of their powers, or

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

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

    • (i) to the company, or

    • (ii) for an obligation of the company,

  • (j) an order approving the payment, satisfaction or compromise of claims against the company and the retention of assets for that purpose, and determining the adequacy of provisions for the payment, discharge or transfer of any trust obligation or other obligation of the company, whether liquidated, unliquidated, future or contingent,

  • (k) with the concurrence of the Superintendent, an order providing for the disposal or destruction of the documents, records or registers of the company,

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

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

  • (n) subject to sections 361 to 363, an order approving any proposed, interim or final distribution to shareholders, if any, or incorporators, in money or in property,

  • (o) an order disposing of any property belonging to creditors, shareholders and incorporators who cannot be found,

  • (p) on the application of any director, officer, shareholder, incorporator, creditor or the liquidator,

    • (i) an order staying the liquidation proceedings 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 company all of its remaining property, and

  • (q) after the liquidator has rendered the liquidator’s final account to the court, an order directing the company to apply to the Minister for letters patent dissolving the company.

  • 1991, c. 45, s. 354
  • 2005, c. 54, s. 442(F)

Marginal note:Cessation of business and powers

  •  (1) Where a court makes an order for the liquidation of a company,

    • (a) the company 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, if any, are vested in the liquidator and cease to be vested in the directors or shareholders, except as specifically authorized by the court.

  • Marginal note:Delegation by liquidator

    (2) A liquidator may delegate any of the powers vested by paragraph (1)(b) to the directors or shareholders, if any.

Marginal note:Appointment of liquidator

 When making an order for the liquidation of a company or at any time thereafter, the court may appoint any person, including a director, an officer or a shareholder of the company or any other company, as liquidator of the company.

Marginal note:Vacancy in liquidator’s office

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

Marginal note:Duties of liquidator

  •  (1) A liquidator shall

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

    • (b) forthwith after appointment publish notice thereof once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company has transacted any business within the preceding twelve months, requiring

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

      • (ii) any person possessing property of the company to deliver it to the liquidator at the time and place specified in the notice, and

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

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

    • (d) if the company is a trust company pursuant to subsection 57(2), make such arrangements as are necessary to transfer to another company that is a trust company pursuant to subsection 57(2) money or other assets held in trust by the company, other than assets held in respect of guaranteed trust money;

    • (e) open and maintain a trust account for the moneys received by the liquidator in the course of the liquidation of the company;

    • (f) keep accounts of the moneys received and paid out by the liquidator in the course of the liquidation of the company;

    • (g) maintain separate lists of each class of creditors, shareholders and other persons having claims against the company;

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

    • (i) deliver to the court and to the Superintendent, at least once in every twelve month period after the liquidator’s appointment or more often as the court requires, the annual statement of the company prepared in accordance with subsection 313(1) or prepared in such manner as the liquidator thinks proper or as the court requires; and

    • (j) after the final accounts are approved by the court, distribute any remaining property of the company among the shareholders, if any, or incorporators, according to their respective rights.

  • Marginal note:Powers of liquidator

    (2) A liquidator may

    • (a) retain lawyers, notaries, accountants, 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 company;

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

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

    • (e) if the company is a trust company pursuant to subsection 57(2), make such arrangements as are necessary to transfer to another company that is a trust company pursuant to subsection 57(2) money or other assets held in trust by the company, other than assets held in respect of guaranteed trust money;

    • (f) do all acts and execute documents in the name and on behalf of the company;

    • (g) borrow money on the security of the property of the company;

    • (h) settle or compromise any claims by or against the company; and

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

Marginal note:Due diligence

 A liquidator is not liable if they 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 company represented to the liquidator by an officer of the company or in a written report of the auditor of the company fairly to reflect the financial condition of the company; or

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

  • 1991, c. 45, s. 359
  • 2005, c. 54, s. 443

Marginal note:Examination of others

  •  (1) Where a liquidator has reason to believe that any property of the company is in the possession or under the control of a person or that a person has concealed, withheld or misappropriated any such property, 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:Restoration and compensation

    (2) Where an examination conducted pursuant to subsection (1) discloses that a person has concealed, withheld or misappropriated any property of the company, the court may order that person to restore the property or pay compensation to the liquidator.

 
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